The Reserve Petroleum Company

What they do

The company manages its owned mineral properties and engages in exploration and development of oil and natural gas. It holds non-producing mineral interests of 88,868 net acres across 12 states, with 92% concentrated in Arkansas, Kansas, Oklahoma, South Dakota, and Texas. Revenue comes from royalty interests, working interests, and participation in drilling programs with third-party operators.

Revenue drivers

• Oil and gas sales from royalty and other interests — In 2025, $3,425,011 (21% of oil and gas sales) came from royalty and other interests, down from $3,460,997 (23%) in 2024.
• Development drilling — In 2025, participated in 39 development wells; 33 (0.7 net) completed as producers. These wells add production and revenue.
• Exploration drilling — In 2025, participated in 10 exploratory wells; 2 (0.26 net) completed as producers, 6 dry holes, and 2 in progress at year end.

Recent performance

Annual revenue grew to $16.7M in 2025 from $15.1M in 2024, and net income rose to $4.9M from $2.0M. Diluted EPS was $32.32 in 2025, up from $13.18 in 2024. Operating cash flow increased to $9.9M in 2025 from $7.9M in 2024. Quarterly revenue has been rising: $3.5M (June 2025), $4.5M (Sept 2025), $4.9M (Dec 2025), and $5.5M (March 2026).

Strategy

The company focuses on managing its owned mineral properties, often by leasing or farming out acreage for royalties or participating as a working interest owner. It also develops exploratory prospects and sells interests to other companies. Management reviews industry activity to identify leasing and drilling opportunities. Investments are diversified to protect against energy sector volatility.

Risks

• Commodity price and reserve estimate volatility — Revenue and reserve estimates are subject to significant fluctuation from changes in oil and gas prices and production performance.
• Limited control over royalty operations — The company has little control over timing or extent of operations on its royalty properties, affecting revenue predictability.
• Impairment and depletion risk — Proved properties may become uneconomic, leading to impairment; depletion uses units-of-production, sensitive to reserve changes.
• Non-operating owner data limitations — As a non-operating owner, the company has limited access to underlying data for reserve estimates, making estimates uncertain.

Outlook

Management expects to continue funding operations from internal cash flows. There are no known material trends or uncertainties that would make the 2025 Form 10-K discussion unrepresentative of current position. The company has commitments to investments in VCC Venture Fund I, LP and 14501 N Rockwell LLC, and guarantees 20% of a $620,000 development loan.