The Reserve Company (RSRV) boosts H1 2026 income and cash from operations
Rhea-AI Filing Summary
The Reserve Petroleum Company reported strong year-to-date growth for the six months ended June 30, 2026. Operating revenues rose to $11.6 million from $7.8 million, driven by higher oil and natural gas prices and volumes. Net income attributable to common stockholders increased to $3.6 million, with basic EPS of $23.46 versus $19.60 a year earlier.
Cash from operating activities improved to $6.9 million, funding $4.9 million of capital spending, largely for proved oil and gas properties, and supporting cash and equivalents of $2.9 million, up 41% from year-end. Oil and gas properties, net, were $24.4 million, and the company continued to expand its investment portfolio, including new commitments such as White Whale and additional venture investments.
The balance sheet shows modest leverage with a $934,613 note payable at Grand Woods and an asset retirement obligation of $2.57 million. Management highlights increased DD&A and property impairments but affirms adequate liquidity, no legal proceedings, and effective disclosure controls as of June 30, 2026.
Positive
- Net income attributable to common stockholders rose 20% to $3,556,416 for the six months ended June 30, 2026, from $2,974,716 a year earlier, reflecting stronger oil and gas pricing and higher production volumes.
- Operating revenues increased 49% to $11,620,476 for the six months ended June 30, 2026, from $7,805,705 in the prior-year period, led by higher oil and natural gas sales.
- Net cash provided by operating activities grew 38% to $6,924,551 for the six months ended June 30, 2026, from $5,012,279, supporting both capital spending and dividends.
Negative
- None.
Filing Explained
The July 20 asset purchase completed the $1.23 million White Whale commitment, while a $934,613 Grand Woods note comes due November 23, 2026.
This Form 10-Q is an unaudited quarterly report for the three and six months ended
The transaction gives The Reserve Company a
White Whale is described as a standalone entity formed solely to hold non-operating oil and gas working-interest assets in the Permian Basin; the company had recorded a
Of the
At
The filing identifies the
Key Figures
Operating Revenues H1 2026: $11,620,476
Net Income to Common H1 2026: $3,556,416
Basic EPS H1 2026: $23.46
+5 more
8 metrics
Operating Revenues H1 2026
$11,620,476
Six months ended June 30, 2026 total operating revenues
Net Income to Common H1 2026
$3,556,416
Six months ended June 30, 2026 net income attributable to common stockholders
Basic EPS H1 2026
$23.46
Net income per share attributable to common stockholders, basic, six months ended June 30, 2026
Net Cash from Operations H1 2026
$6,924,551
Net cash provided by operating activities for six months ended June 30, 2026
Capital Expenditures H1 2026
$4,904,176
Cash applied to purchase of property, plant and equipment in six months ended June 30, 2026
Note Payable Balance
$934,613
Grand Woods note payable balance at June 30, 2026, classified as current
Asset Retirement Obligation
$2,568,001
Asset retirement obligation balance at June 30, 2026
Oil Sales Volume H1 2026
99,327 Bbls
Oil volume sold in six months ended June 30, 2026
Key Terms
Variable Interest Entities, Non-Controlling Interests, asset retirement obligation, successful efforts method, +2 more
6 terms
Variable Interest Entities financial
"we consolidate Variable Interest Entities (“VIEs”) under certain criteria discussed further below"
A variable interest entity (VIE) is a business that a company controls through contracts or special arrangements instead of owning a majority of its shares, like steering a puppet without holding its ticket. Investors care because these arrangements can hide who really bears the financial risks and rewards, affect how assets and liabilities appear on financial statements, and create extra legal or enforcement uncertainty that can change the value and risk of an investment.
Non-Controlling Interests financial
"we record a non-controlling interest as a component of equity on the Consolidated Balance Sheets"
An ownership stake in a subsidiary held by outside shareholders rather than the parent company, representing the portion of that subsidiary’s assets and profits the parent does not control. For investors, it shows what part of consolidated earnings and equity belongs to others — like a roommate who owns part of a house — which affects how much value and profit per share are truly attributable to the parent company’s shareholders.
asset retirement obligation financial
"The Company records the fair value of its estimated liability to retire its oil and natural gas producing properties"
A liability recorded for the future cost to retire, dismantle or clean up a long-lived asset — for example removing an oil rig, closing a mine, or decommissioning a plant. Investors care because it reduces reported profit and ties up capital: companies must estimate and set aside money now for a known future expense, and changes to that estimate can swing earnings, debt ratios and the company’s cash needs much like setting aside savings to repair or return a rented property later.
successful efforts method financial
"Oil and Gas Properties, at Cost, Based on the Successful Efforts Method of Accounting"
An accounting approach used mainly in oil and gas exploration where companies treat costs for failed exploration as immediate expenses while only keeping successful well and development costs as assets on the balance sheet. For investors, this matters because it makes a company’s profits and asset totals more sensitive to exploration results—like a shopper who throws out broken prototypes but shelves the ones that work—so earnings and book value can swing more sharply depending on drilling outcomes.
fair value hierarchy financial
"The Company uses a three-level valuation hierarchy for disclosure of fair value measurements"
build-to-rent financial
"Silverhorn is a build-to-rent duplex development in NE Oklahoma City"
Build-to-rent describes housing developments constructed specifically to be rented out and owned by a single investor or management company rather than sold as individual units. Think of it like a landlord building an entire apartment neighborhood to lease long-term: it matters to investors because it offers predictable rental income, professional management, and scale benefits that can reduce operating costs and vacancy risk, while being sensitive to interest rates, local demand, and housing policy.
Earnings Snapshot
Operating Revenues: $11,620,476
Six months ended June 30, 2026
Operating Revenues
$11,620,476
up from $7,805,705 in the prior-year period
Net Income Attributable to Common Stockholders
$3,556,416
up from $2,974,716 in the prior-year period
Net Cash from Operating Activities
$6,924,551
up from $5,012,279 in the prior-year period
FAQ
How did RSRV’s revenue perform in the six months ended June 30, 2026?
Revenue grew strongly, with operating revenues of $11.6 million versus $7.8 million a year earlier. This 49% increase was driven by higher oil and gas prices and volumes, particularly oil sales rising to $7.97 million and natural gas sales to $2.79 million.
What was RSRV’s profitability for the first half of 2026?
Net income attributable to common stockholders was $3,556,416, up from $2,974,716. Basic EPS increased to $23.46 from $19.60, supported by improved commodity pricing and higher production, partially offset by higher DD&A and exploration expenses.
What is The Reserve Petroleum Company’s liquidity position as of June 30, 2026?
Cash and cash equivalents were $2,892,936, up 41% from $2,051,330 at year-end 2025. The company generated $6,924,551 in operating cash flow, spent $4.9 million on property additions, and paid $1,515,944 in dividends while maintaining modest debt levels.
How much did RSRV invest in oil and gas properties during the first half of 2026?
The company applied $4,904,176 to the purchase of property, plant and equipment. About $728,429 was for unproved leasehold and minerals, and approximately $4,175,747 was for proved oil and gas assets, reflecting an active development and acquisition program.
What are RSRV’s main debt and asset retirement obligations?
Grand Woods has a $934,613 note payable at June 30, 2026, maturing November 23, 2026, guaranteed up to $1,200,000 by the company. The asset retirement obligation related to oil and gas properties totaled $2,568,001, reflecting expected future plugging and abandonment costs.
What off-balance sheet commitments does RSRV have as of June 30, 2026?
Commitments include a guaranty of 20% of a $620,000 QSN development loan, a $400,000 commitment to Westcreek Ranch (29% funded), and $1,168,010 committed for oil and gas assets in White Whale, alongside various minority investments in venture and real estate projects.
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the Quarterly Period Ended June 30, 2026
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission File Number 000-08157
THE RESERVE PETROLEUM CO MPANY
(Exact Name of Registrant as Specified in Its Charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | ||||
( | |||||
| (Address and telephone number, including area code, of registrant’s principal executive offices) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| None | None | None | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þYes oNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þYes oNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer o | Accelerated filer o | ||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þNo
As of August 7, 2026, 151,584 shares of the Registrant’s $0.50 par value common stock were outstanding.
Table of Contents
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
| Page | ||||||||
Item 1. | Consolidated Financial Statements (Unaudited) | 2 | ||||||
Consolidated Balance Sheets | 2 | |||||||
Consolidated Statements of Income | 4 | |||||||
Consolidated Statements of Equity | 5 | |||||||
Consolidated Statements of Cash Flows | 6 | |||||||
Notes to Consolidated Financial Statements | 8 | |||||||
Note 1 - Basis of Presentation | 8 | |||||||
Note 2 - Segment Reporting | 9 | |||||||
Note 3 - Revenue Recognition | 9 | |||||||
Note 4 - Other Income/(Loss), Net | 10 | |||||||
Note 5 - Investments and Related Commitments and Contingent Liabilities, Including Guaranties | 10 | |||||||
Note 6 - Non-Controlling Interest and Variable Interest Entities | 11 | |||||||
Note 7 - Note Payable | 12 | |||||||
Note 8 - Asset Retirement Obligation | 13 | |||||||
Note 9 - Fair Value Measurements | 13 | |||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 | ||||||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 18 | ||||||
Item 4. | Controls and Procedures | 18 | ||||||
PART II – OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 19 | ||||||
Item 1A. | Risk Factors | 19 | ||||||
Item 2. | Unregistered Sales of Equity Securities, Use of Proceeds, and Purchases of Equity Securities | 19 | ||||||
Item 3. | Defaults Upon Senior Securities | 19 | ||||||
Item 4. | Mine Safety Disclosures | 19 | ||||||
Item 5. | Other Information | 19 | ||||||
Item 6. | Exhibits | 20 | ||||||
1
Table of Contents
PART I – FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
THE RESERVE PETROLEUM COMPANY
CONSOLIDATED BALANCE SHEETS (1)
(Unaudited)
ASSETS
| June 30, 2026 | December 31, 2025 | ||||||||||
| Current Assets: | |||||||||||
| Cash and Cash Equivalents | $ | $ | |||||||||
| Equity Securities | |||||||||||
| Refundable Income Taxes | |||||||||||
| Accounts Receivable | |||||||||||
| Total Current Assets | |||||||||||
| Investments: | |||||||||||
| Equity Method Investments | |||||||||||
| Other Investments | |||||||||||
| Total Investments | |||||||||||
| Property, Plant and Equipment: | |||||||||||
| Oil and Gas Properties, at Cost, | |||||||||||
| Based on the Successful Efforts Method of Accounting – | |||||||||||
| Unproved Properties | |||||||||||
| Proved Properties | |||||||||||
| Oil and Gas Properties, Gross | |||||||||||
| Less – Accumulated Depreciation, Depletion, Amortization and Valuation Allowance | ( | ( | |||||||||
| Oil and Gas Properties, Net | |||||||||||
| Other Property and Equipment, at Cost | |||||||||||
| Less – Accumulated Depreciation | ( | ( | |||||||||
| Other Property and Equipment, Net | |||||||||||
| Total Property, Plant and Equipment, Net | |||||||||||
| Total Assets | $ | $ | |||||||||
See accompanying notes to unaudited consolidated financial statements
2
Table of Contents
CONSOLIDATED BALANCE SHEETS, CONTINUED (1)
(Unaudited)
LIABILITIES AND EQUITY
| June 30, 2026 | December 31, 2025 | ||||||||||
| Current Liabilities: | |||||||||||
| Accounts Payable & Other Current Liabilities | $ | $ | |||||||||
| Note Payable, Current Portion | |||||||||||
| Total Current Liabilities | |||||||||||
| Long-Term Liabilities: | |||||||||||
| Asset Retirement Obligation | |||||||||||
| Deferred Tax Liability, Net | |||||||||||
| Total Long-Term Liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Equity: | |||||||||||
| Common Stock | |||||||||||
| Additional Paid-in Capital | |||||||||||
| Retained Earnings | |||||||||||
| Equity Before Treasury Stock | |||||||||||
| Less – Treasury Stock, at Cost | ( | ( | |||||||||
| Total Equity Applicable to The Reserve Petroleum Company | |||||||||||
| Non-Controlling Interests | |||||||||||
| Total Equity | |||||||||||
| Total Liabilities and Equity | $ | $ | |||||||||
(1) At June 30, 2026, includes approximately $2,212,640 of assets related to consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and approximately $934,639 of liabilities of consolidated variable interest entities for which creditors do have partial recourse to the general credit of the Company. For more information, see Note 6 – Non-Controlling Interest and Variable Interest Entities.
See accompanying notes to unaudited consolidated financial statements
3
Table of Contents
THE RESERVE PETROLEUM COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Operating Revenues: | |||||||||||||||||||||||
| Oil and Gas Sales | $ | $ | $ | $ | |||||||||||||||||||
| Lease Bonuses and Other | |||||||||||||||||||||||
| Total Operating Revenues | |||||||||||||||||||||||
| Operating Costs and Expenses: | |||||||||||||||||||||||
| Production | |||||||||||||||||||||||
| Exploration | ( | ||||||||||||||||||||||
| Depreciation, Depletion, Amortization and Valuation Provision | |||||||||||||||||||||||
| Asset Retirement Obligation Accretion | |||||||||||||||||||||||
| Gain on Disposition of Oil and Gas Properties | ( | ( | ( | ( | |||||||||||||||||||
| General, Administrative and Other | |||||||||||||||||||||||
| Total Operating Costs and Expenses | |||||||||||||||||||||||
| Income from Operations | |||||||||||||||||||||||
| Equity Income in Investees | |||||||||||||||||||||||
| Interest Expense | ( | ( | ( | ( | |||||||||||||||||||
| Other Income/(Loss), Net | ( | ||||||||||||||||||||||
| Income Before Income Taxes and Non-Controlling Interests | |||||||||||||||||||||||
| Income Tax Provision/(Benefit): | |||||||||||||||||||||||
| Current | ( | ( | |||||||||||||||||||||
| Deferred | |||||||||||||||||||||||
| Total Income Tax Provision | |||||||||||||||||||||||
| Net Income | $ | $ | $ | $ | |||||||||||||||||||
| Less: Net Loss Attributable to Non-Controlling Interests | ( | ( | ( | ( | |||||||||||||||||||
| Net Income Attributable to Common Stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Per Share Data | |||||||||||||||||||||||
| Net Income Attributable to Common Stockholders, Basic | $ | $ | $ | $ | |||||||||||||||||||
| Cash Dividends Declared and/or Paid | $ | $ | $ | $ | |||||||||||||||||||
| Weighted Average Shares Outstanding, Basic | |||||||||||||||||||||||
See accompanying notes to unaudited consolidated financial statements
4
Table of Contents
THE RESERVE PETROLEUM COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
| Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Non- Controlling Interests | Total | ||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income/(Loss) | — | — | — | ( | |||||||||||||||||||||||||||||||
| Dividends Declared | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Capital Contributions | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income/(Loss) | — | — | — | ( | |||||||||||||||||||||||||||||||
| Dividends Declared | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Purchase of Treasury Stock | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Capital Contributions | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income/(Loss) | — | — | — | ( | |||||||||||||||||||||||||||||||
| Dividends Declared | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Capital Contributions | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
| Net Income/(Loss) | — | — | — | ( | |||||||||||||||||||||||||||||||
| Dividends Declared | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
| Purchase of Treasury Stock | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Capital Contributions | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||
See accompanying notes to unaudited consolidated financial statements
5
Table of Contents
THE RESERVE PETROLEUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Provided by/(Applied to) Operating Activities: | |||||||||||
| Net Income | $ | $ | |||||||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | |||||||||||
| Depreciation, Depletion, Amortization and Valuation Provisions | |||||||||||
| Accretion of Asset Retirement Obligation | |||||||||||
| Gain on Disposition of Oil and Gas Properties | ( | ( | |||||||||
| Cash Distributions from Equity Method Investees | |||||||||||
| Net (Gain) on Equity Method and Income from Other Investments | ( | ( | |||||||||
| Net (Gain)/Loss on Equity Securities | ( | ||||||||||
| Deferred Income Tax Provision | |||||||||||
| Change in Refundable Income Taxes and Accounts Receivable | ( | ( | |||||||||
| Change in Accounts Receivable | ( | ||||||||||
| Change in Accounts Payable and Other Current Liabilities | ( | ( | |||||||||
| Net Cash Provided by Operating Activities | $ | $ | |||||||||
| Cash Provided by/(Applied to) Investing Activities: | |||||||||||
| Proceeds from Disposal of Property, Plant and Equipment | |||||||||||
| Purchase of Property, Plant and Equipment | ( | ( | |||||||||
| Purchase of Investments | ( | ( | |||||||||
| Cash Distributions from Other Investments | |||||||||||
| Sale of Equity Securities | |||||||||||
| Purchase of Equity Securities | ( | ( | |||||||||
| Net Cash Applied to Investing Activities | $ | ( | $ | ( | |||||||
See accompanying notes to unaudited consolidated financial statements
6
Table of Contents
THE RESERVE PETROLEUM COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash Provided by/(Applied to) Financing Activities: | |||||||||||
| Dividends Paid to Stockholders | $ | ( | $ | ( | |||||||
| Purchase of Treasury Stock | ( | ( | |||||||||
| Principal Payments on Note Payable | ( | ( | |||||||||
| Capital Contributions from Non-Controlling Interests | |||||||||||
| Total Cash Applied to Financing Activities | ( | ( | |||||||||
| Net Change in Cash and Cash Equivalents | ( | ||||||||||
| Cash and Cash Equivalents, Beginning of Period | |||||||||||
| Cash and Cash Equivalents, End of Period | $ | $ | |||||||||
| Supplemental Disclosures of Cash Flow Information: | |||||||||||
| Interest Paid | $ | $ | |||||||||
| Income Taxes Paid (Net of Refunds Received) | $ | $ | |||||||||
| Supplemental Schedule of Noncash Investing and Financing Activities: | |||||||||||
| Net Decrease in Accounts Payable for Property, Plant and Equipment Additions | $ | $ | |||||||||
| Net (Increase)/Decrease in Asset Retirement Obligation | $ | $ | ( | ||||||||
See accompanying notes to unaudited consolidated financial statements
7
Table of Contents
THE RESERVE PETROLEUM COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2026
(Unaudited)
Note 1 – BASIS OF PRESENTATION
The Reserve Petroleum Company, a Delaware corporation, is an independent oil and gas company focused on exploration and production. In addition to its core operations, the Company manages a diverse investment portfolio. Our consolidated subsidiaries consist of Grand Woods Development, LLC (“Grand Woods”), an Oklahoma limited liability company and wholly owned Trinity Water Services, LLC ("TWS"), an Oklahoma limited liability company. Unless otherwise specified or the context otherwise requires, all references in these notes to “the Company,” “its,” “our,” and “we” are to The Reserve Petroleum Company and its consolidated subsidiaries.
The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of The Reserve Petroleum Company and its subsidiaries in which we hold a controlling interest, reflecting ownership of a majority of the voting interest, as of the financial statement date. Additionally, we consolidate Variable Interest Entities (“VIEs”) under certain criteria discussed further below. All intercompany accounts and transactions have been eliminated in consolidation. When necessary, reclassifications to the consolidated financial statements are made to prior period financial information to conform to the current year presentation. These reclassifications had no material impact on net income or retained earnings.
The accompanying consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (hereinafter the “2025 Form 10-K”).
In the opinion of management, the accompanying consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals), which are necessary for a fair statement of the results of the interim periods presented. The results of operations for the current interim periods are not necessarily indicative of the operating results to be expected for the full fiscal year.
Variable Interest Entities
The Company decides at the inception of each arrangement whether an entity in which an investment is made or in which we have other variable interests is considered a VIE. Generally, an entity is a VIE if (1) the entity does not have sufficient equity at risk to finance its activities without additional subordinated financial support from other parties, (2) the entity’s investors lack any characteristics of a controlling financial interest or (3) the entity was established with non-substantive voting rights. We consolidate VIEs when we are deemed to be the primary beneficiary. The primary beneficiary of a VIE is generally the party that both: (1) has the power to make decisions that most significantly affect the economic performance of the VIE and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be significant to the VIE. If the Company is not deemed to be the primary beneficiary of a VIE, we account for the investment or other variable interests in a VIE in accordance with other applicable GAAP.
Non-Controlling Interests
When the Company consolidates an entity, 100% of the assets, liabilities, revenues and expenses of the subsidiary are included in the consolidated financial statements. For those consolidated entities in which our ownership is less than 100%, we record a non-controlling interest as a component of equity on the Consolidated Balance Sheets, which represents the third-party ownership in the net assets of the respective consolidated subsidiary. Additionally, the portion of the net income or loss attributable to the non-controlling interest is reported as net income (loss) attributable to non-controlling interests on the Consolidated Statements of Income. Changes in ownership interests in an entity that do not result in deconsolidation are generally recognized within equity. See Note 6 for additional details on non-controlling interests.
8
Table of Contents
Note 2 – SEGMENT REPORTING
The Company has identified Oil and Gas as a reportable segment , which includes oil and natural gas exploration, development and minerals management with areas of concentration in Arkansas, Kansas, Oklahoma, South Dakota, Texas and Wyoming. This reportable segment's assets consist of oil and gas properties, net, presented on the Consolidated Balance Sheets. In our reconciliation to income before income taxes, in addition to segment information, we include Other Operating Income, Equity Income in Investees, Interest Expense and Other Income categories to reconcile segment revenues, segment profit and other business activities to our operating results. Components in these categories do not meet the criteria to be considered reportable segments. The following table presents financial information for our reportable segment and a reconciliation to income before income taxes:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Segment Revenues | |||||||||||||||||||||||
| Oil and Gas Sales, Lease Bonuses and Other | $ | $ | $ | $ | |||||||||||||||||||
| Reportable Segment Expenses: | |||||||||||||||||||||||
| Production | |||||||||||||||||||||||
| Exploration | ( | ||||||||||||||||||||||
| Depreciation, Depletion, Amortization and Valuation Provision | |||||||||||||||||||||||
| Asset Retirement Obligation Accretion | |||||||||||||||||||||||
| Gain on Disposition of Oil and Gas Properties | ( | ( | ( | ( | |||||||||||||||||||
| Total Reportable Segment Expenses | |||||||||||||||||||||||
| Total Reportable Segment Profit | |||||||||||||||||||||||
| General, Administrative and Other Expenses | ( | ( | ( | ( | |||||||||||||||||||
| Equity Income in Investees | |||||||||||||||||||||||
| Interest Expense | ( | ( | ( | ( | |||||||||||||||||||
| Other Income/(Loss), Net | ( | ||||||||||||||||||||||
| Income Before Income Taxes and Non-Controlling Interests | $ | $ | $ | $ | |||||||||||||||||||
Note 3 – REVENUE RECOGNITION
A portion of oil and natural gas sales recorded in the Consolidated Statements of Income are the result of estimated volumes and pricing for oil and natural gas payments not yet received for the period. For the six months ended June 30, 2026 and 2025, that estimate represented $4,722,548 and $2,504,320 , respectively, of oil and natural gas sales included in the Consolidated Statements of Income. The Company’s disaggregated revenue has two primary revenue sources, which are oil sales and natural gas sales. The following is an analysis of the components of oil and natural gas sales:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Oil Sales | $ | $ | $ | $ | |||||||||||||||||||
| Natural Gas Sales | |||||||||||||||||||||||
| Miscellaneous Oil and Gas Product Sales | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
9
Table of Contents
Note 4 – OTHER INCOME/(LOSS), NET
The following is an analysis of the components of Other Income/(Loss), Net:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net Realized and Unrealized Gain/(Loss), Equity Securities | $ | $ | $ | ( | $ | ||||||||||||||||||
| Interest Income | |||||||||||||||||||||||
| Dividend Income | |||||||||||||||||||||||
Income from Other Investments | |||||||||||||||||||||||
| Miscellaneous Income | ( | ||||||||||||||||||||||
Other Income/(Loss), Net | $ | $ | $ | ( | $ | ||||||||||||||||||
Note 5 – INVESTMENTS AND RELATED COMMITMENTS AND CONTINGENT LIABILITIES, INCLUDING GUARANTIES
The Company’s Equity Method Investments include:
Broadway Sixty-Eight, LLC (“Broadway 68”), an Oklahoma limited liability company, with a 33 % ownership, owns and operates an office building in Oklahoma City, Oklahoma. The Company leases its corporate office from Broadway 68 on a month-to-month basis under the terms of the modified lease agreement. Rent expense for lease of the corporate office from Broadway 68 was $22,358 169,888 and $153,502 at June 30, 2026, and December 31, 2025, respectively.
Broadway Seventy-Two, LLC (“Broadway 72”), an Oklahoma limited liability company, with a 40 % ownership, was acquired in 2024. Broadway 72 owns and operates a commercial building in Oklahoma City, Oklahoma. The Company’s investment in Broadway 72 totaled $957,850 and $971,829 at June 30, 2026, and December 31, 2025, respectively.
QSN Office Park, LLC (“QSN”), an Oklahoma limited liability company, with a 20 % ownership, was acquired in 2016. QSN is constructing and selling office buildings in a new office park. The Company has guaranteed 20 % of a development loan with a current balance of $620,000 that matures July 15, 2028. The Company’s investment in QSN totaled $322,678 and $347,053 at June 30, 2026, and December 31, 2025, respectively. The Company does not anticipate the need to perform on the guaranty of the loan.
Victorum BRH Investment, LLC (“BRH”), with a 15.06 % ownership, was acquired in November 2023. BRH serves as a special purpose investment vehicle to hold an investment in Berry-Rock Capital, LP (“Berry-Rock”). Berry-Rock is a provider of a rent-to-own program for individuals unable to qualify for a mortgage. The Company receives quarterly distributions on an 11 % annualized return on investment. The Company’s investment in BRH totaled $310,243 and $310,333 at June 30, 2026, and December 31, 2025, respectively.
White Whale, LLC ("White Whale"), with a 45 % ownership, was acquired in June 2026. White Whale serves as a stand alone entity designed for the sole purpose of holding non-operating oil and gas working interest assets in the Permian Basin. The Company committed to $1,230,510 for the purchase of assets and operating capital, with a scheduled closing date of July 20, 2026. The Company's investment in White Whale totaled $62,500 at June 30, 2026. Subsequent to June 30, 2026, the Company contributed $1,168,010 to White Whale on July 17, 2026 and the purchase of assets was executed on July 20, 2026.
The Company’s Other Investments primarily include:
Bailey Hilltop Pipeline, LLC (“Bailey”), with a 10 % ownership, was acquired in 2008. Bailey is a gas gathering system pipeline for the Bailey Hilltop Prospect oil and gas properties in Grady County, Oklahoma. The Company’s investment in Bailey totaled $5,434 at June 30, 2026, and December 31, 2025.
10
Table of Contents
Cloudburst International, Inc. (“Cloudburst”), with a 8.85 % ownership, was acquired in 2022. Cloudburst owns exclusive rights to a water purification process technology that is being developed and currently tested. The Company’s investment in Cloudburst totaled $1,240,000
Genlith, Inc. (“Genlith”), with a 5.15 % ownership, was acquired in July 2023. Genlith identifies and structures investments in the new energy economy through corporate ventures, advisory and fund management. The Company’s investment in Genlith totaled $50,000 at June 30, 2026, and December 31, 2025.
Victorum Capital Club (“VCC”) invests in and manages special purpose investment vehicles that hold investments in various startup companies. The Company participates with minority ownership in an assortment of investments held with VCC. The Company’s investment in VCC special purpose investment vehicles totaled $200,802
VCC Venture Fund I, LP (“VCC Venture”), with less than 2 % ownership, serves as a limited partnership to be used for investments in start-up entities and is managed by Victorum Capital Club. The Company’s investment in VCC Venture totaled $250,000 and $218,750 at June 30, 2026, and December 31, 2025, respectively.
Cortado Ventures Fund II-A, LP (“Cortado II-A”), with less than 2 % ownership, serves as a limited partnership to be used for investments in start-up entities and is managed by Cortado Capital II, LLC. The Company’s investment in Cortado II-A totaled $1,000,000 and $850,000 at June 30, 2026, and December 31, 2025, respectively.
Cypress MWC, LLC ("Cypress"), with 15 % ownership, acquired in 2024. Cypress is a town home development in Midwest City, Oklahoma. The Company committed to a $750,000 investment in Cypress. The Company’s investment in Cypress totaled $750,000 at June 30, 2026 and December 31, 2025. The balance at June 30, 2026, represents 100 % of the Company's capital commitment.
14501 N Rockwell, LLC ("Westcreek Ranch"), with a 3.74 % ownership, was acquired in 2025. Westcreek Ranch is a cottage style apartment community development in Oklahoma City, Oklahoma. The Company committed to a $400,000 investment in Westcreek Ranch. The Company's investment in Westcreek Ranch totaled $116,570 29
Silverhorn BTR-OKC LLC (“Silverhorn”), with a 2.50 % ownership, was acquired in January 2026. Silverhorn is a build-to-rent duplex development in NE Oklahoma City that will feature approximately 200 units on approximately 20 acres. The Company's investment in Silverhorn totaled $200,000 at June 30, 2026.
Note 6 – NON-CONTROLLING INTEREST AND VARIABLE INTEREST ENTITIES
Grand Woods is accounted for as a consolidated VIE. Grand Woods holds approximately 26.56 acres of undeveloped real estate in northeast Oklahoma City. The Company owns an 80.37 % interest in Grand Woods in the form of 47.08 Class A units and 546,735 Class C units, with the remaining non-controlling member interests held by other members, including 8.72 % owned by executive officers of the Company. The Company is the only guarantor of $1,200,000 of a note payable held by Grand Woods. See Note 7 for terms and guaranty of debt held by Grand Woods, which is included in the Consolidated Balance Sheets. As a result of the Company’s guaranty of $1,200,000 of Grand Woods debt, the note holder has partial recourse to the Company for the consolidated VIE’s liabilities.
TWS is accounted for as a consolidated VIE. TWS entered into an agreement with TWS South, LLC ("TWS South"), a Texas limited liability company, on March 19, 2021, to form a water well drilling company. The agreement was subsequently terminated on April 19, 2024. TWS South holds title to certain Texas assets with TWS as the lienholder. During the term of the agreement, the Company recorded $465,977 in accounts receivable from TWS South. Due to significant uncertainty regarding collectibility, the full amount has been reserved through an allowance for credit losses on the consolidated balance sheets.
The following table presents the summarized assets and liabilities of Grand Woods and TWS included in the Consolidated Balance Sheets as of June 30, 2026, and December 31, 2025. The assets of Grand Woods and TWS in the table below may only be used to settle obligations of Grand Woods or TWS, respectively.
11
Table of Contents
| June 30, 2026 | |||||||||||||||||
Grand Woods | TWS | Total | |||||||||||||||
| Assets: | |||||||||||||||||
| Cash | $ | $ | $ | ||||||||||||||
| Total Current Assets | |||||||||||||||||
| Other Property and Equipment, at Cost | |||||||||||||||||
| Total Assets | $ | $ | $ | ||||||||||||||
| Liabilities: | |||||||||||||||||
| Accounts Payable and Other Current Liabilities | $ | $ | |||||||||||||||
| Note Payable, Current Portion | |||||||||||||||||
| Total Current Liabilities | |||||||||||||||||
| Total Liabilities | $ | $ | $ | ||||||||||||||
| December 31, 2025 | |||||||||||||||||
| Grand Woods | TWS | Total | |||||||||||||||
| Assets: | |||||||||||||||||
| Cash | $ | $ | $ | ||||||||||||||
| Total Current Assets | |||||||||||||||||
| Other Property and Equipment, at Cost | |||||||||||||||||
| Total Assets | $ | $ | $ | ||||||||||||||
| Liabilities: | |||||||||||||||||
| Note Payable, Current Portion | |||||||||||||||||
| Total Current Liabilities | |||||||||||||||||
| Total Liabilities | $ | $ | $ | ||||||||||||||
Note 7 – NOTE PAYABLE
12
Table of Contents
Note 8 – ASSET RETIREMENT OBLIGATION
The Company records the fair value of its estimated liability to retire its oil and natural gas producing properties in the period in which it is incurred (typically the date of first sale). The estimated liability is calculated by obtaining current estimated plugging costs from the well operators and inflating it over the life of the property. Current year inflation rate used is 2.50 %. When the liability is first recorded, a corresponding increase in the carrying amount of the related long-lived asset is also recorded. Subsequently, the asset is amortized to expense over the life of the property and the liability is increased annually for the change in its present value which is currently 7.50 %.
A reconciliation of the Company’s asset retirement obligation liability is as follows:
| Balance at December 31, 2025 | $ | ||||
| Liabilities settled (wells sold or plugged) | ( | ||||
| Revision to estimate | |||||
| Accretion expense | |||||
| Balance at June 30, 2026 | $ | ||||
Note 9 – FAIR VALUE MEASUREMENTS
The Company uses a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
Level 1 – Unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2 – Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable.
Level 3 – Unobservable inputs that reflect the Company’s own assumptions.
Recurring Fair Value Measurements
Certain assets of the Company are reported at fair value in the accompanying Consolidated Balance Sheets on a recurring basis. The Company determined the fair value of equity securities and available-for-sale debt securities using quoted market prices, public Net Asset Values ("NAV") and where applicable, securities with similar maturity dates and interest rates.
| June 30, 2026 | |||||||||||||||||
| Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | |||||||||||||||
| Financial Assets: | |||||||||||||||||
| Equity Securities: | |||||||||||||||||
| Domestic Equities | $ | $ | $ | ||||||||||||||
| Others | |||||||||||||||||
Total | $ | $ | $ | ||||||||||||||
13
Table of Contents
| December 31, 2025 | |||||||||||||||||
| Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | |||||||||||||||
| Financial Assets: | |||||||||||||||||
| Equity Securities: | |||||||||||||||||
| Domestic Equities | $ | $ | $ | ||||||||||||||
| International Equities | |||||||||||||||||
Total | $ | $ | $ | ||||||||||||||
The fair value hierarchy tables do not include investments where the Company has elected to use the NAV as a practical expedient to determine the fair value. These assets consist of a private business development fund. Liquidity is only attained through sales on the secondary market.
A reconciliation to the balance sheet equity securities is as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Level 1 Assets | $ | $ | |||||||||
Assets using NAV as a practical expedient, with a remaining commitment of $ | |||||||||||
| Total | $ | $ | |||||||||
Non-Recurring Fair Value Measurements
The Company’s asset retirement obligation annually represents a non-recurring fair value liability, for which there were no liabilities incurred in the six months ended June 30, 2026 and $4,074 in the six months ended June 30, 2025. See Note 8 above for more information about this liability and the inputs used for calculating fair value.
The Company recorded impairment losses on oil and gas assets in the six months ended June 30, 2026 of $366,540 , with $165,214 in the six months ended June 30, 2025. This also relates to non-recurring fair value measurements calculated using Level 3 inputs. Certain oil and natural gas producing properties have been deemed to be impaired because the assets, evaluated on a property-by-property basis, are not expected to recover their entire carrying value through future cash flows. Impairment losses, when recorded, are included in the consolidated statements of income in the line-item Depreciation, Depletion, Amortization and Valuation Provision. Impairments are calculated by reducing the carrying value of the individual properties to an estimated fair value equal to the discounted present value of the future cash flow from these properties. Forward pricing is used for calculating future revenue and cash flow.
Fair Value of Financial Instruments
14
Table of Contents
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis should be read with reference to ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS in the 2025 Form 10-K, as well as the consolidated financial statements included in this Form 10-Q.
Forward-Looking Statements
This discussion and analysis includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give the Company’s current expectations of future events. They include statements regarding the drilling of oil and natural gas wells, the production that may be obtained from oil and natural gas wells, cash flow and anticipated liquidity and expected future expenses.
Although management believes the expectations in these and other forward-looking statements are reasonable, we can give no assurance they will prove to have been correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Factors that would cause actual results to differ materially from expected results are described under “Forward-Looking Statements” on page 3 of the 2025 Form 10-K.
We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q, and we undertake no obligation to update this information because of new information, future developments, or otherwise. You are urged to carefully review and consider the disclosures made in this and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect our business.
LIQUIDITY AND CAPITAL RESOURCES
Please refer to the Consolidated Balance Sheets and the Consolidated Statements of Cash Flows in this Form 10-Q to supplement the following discussion. In the first six months of 2026, the Company continued to fund its business activity using internal sources of cash. The Company had net cash provided by operating activities of $6,924,551 in the six months ended June 30, 2026. The Company had sales of equity securities of $121,277 and cash provided by property dispositions of $894,481, for total cash provided by investing activities of $1,015,758. The Company utilized cash for the purchase of property of $4,904,176, the purchase of equity securities of $191,170, and purchase of investments of $449,776, for cash applied to investing activities of $5,545,122. The Company paid $1,515,944 in stockholder dividends, $1,600 for the purchase of treasury stock, and $76,260 in payments on the Grand Woods note payable, for total cash applied to financing activities of $1,593,804. Cash provided by financing activities included Grand Woods Class C non-controlling interest contributions of $40,223. Cash and cash equivalents increased $841,606 (41%) to $2,892,936 at June 30, 2026, from $2,051,330 at December 31, 2025.
Discussion of Significant Changes in Working Capital. In addition to the changes in cash and cash equivalents discussed above, there were other changes in working capital line items from December 31, 2025. A discussion of these items follows.
Equity securities decreased $79,005 (2%) to $4,437,410 as of June 30, 2026, from $4,516,415 at December 31, 2025. The decrease resulted from $69,893 in net purchases and a $148,898 net decrease in market value.
Accounts receivable increased $258,801 (9%) to $3,253,374 as of June 30, 2026, from $2,994,573 at December 31, 2025, due to an increase in oil and gas receivables of $320,005 caused by an increase in the price and volume of expected oil production, offset by decreases in trade accounts receivable of $61,204.
Accounts payable and other current liabilities decreased $1,038,392 (88%) to $143,750 as of June 30, 2026, from $1,182,142 at December 31, 2025, primarily due to the timing of activity and invoices.
15
Table of Contents
Discussion of Significant Changes in the Consolidated Statements of Cash Flows. Net cash provided by operating activities was $6,924,551 in the six months ended June 30, 2026, an increase of $1,912,272 (38%) in net cash provided by operations in the comparable period in 2025 of $5,012,279. For more information see “Operating Revenues” and “Other Income/(Loss), Net” below.
Cash applied to the purchase of property, plant and equipment in the six months ended June 30, 2026, was $4,904,176, a decrease of $1,186,487 (19%) from cash applied to the purchase of property, plant and equipment in the comparable period in 2025 of $6,090,663. Of the $4,904,176 applied to the purchase of property, plant and equipment in the six months ended June 30, 2026, approximately $728,429 was for the purchase of unproved leasehold and minerals and approximately $4,175,747 was for the purchase of proved oil and gas assets. Cash provided by the disposal of oil and gas properties was $894,481, primarily resulting from the sale of unproved, non-producing leasehold and minerals in western Oklahoma.
Cash applied to equity method and other investments in the six months ended June 30, 2026, was $449,776, a decrease of $219,109 (33%) from cash applied in the comparable period of 2025 of $668,885.
Off-Balance Sheet Arrangements. The Company is a guarantor of 20% of a $620,000 development loan that matures July 15, 2028, held by QSN Office Park, LLC. The Company is committed to a $400,000 investment in 14501 N Rockwell LLC ("Westcreek Ranch"), of which $116,570 (29%) is invested at June 30, 2026. The Company is committed to $1,168,010 for the purchase of oil and gas assets in White Whale LLC. For more information about these entities and the related off-balance sheet arrangements, see Note 5 and Note 6 to the accompanying consolidated financial statements.
Conclusion. Management is unaware of any additional material trends, demands, commitments, events or uncertainties, which would impact liquidity and capital resources to the extent that the discussion presented in the 2025 Form 10-K would not be representative of the Company’s current position.
RESULTS OF OPERATIONS
Results of Operations – Six Months Ended June 30, 2026
Net income attributable to common stockholders increased $581,700 (20%) to $3,556,416 in the six months ended June 30, 2026, from $2,974,716 in the comparable period in 2025. Net income per share attributable to common stockholders, basic, increased $3.86 to $23.46 in the six months ended June 30, 2026, from $19.60 in the comparable period in 2025. A discussion of revenue from oil and natural gas sales and other significant line items in the Consolidated Statements of Income follows.
Operating Revenues. Revenues from oil and natural gas sales increased $3,564,223 (49%) to $10,891,971 in the six months ended June 30, 2026, from $7,327,748 in the comparable period in 2025. The increase is due to an increase in oil sales of $2,883,507, an increase in natural gas sales of $730,741, and a decrease in miscellaneous oil and natural gas product sales of $50,025.
The $2,883,507 (57%) increase in oil sales to $7,973,114 in the six months ended June 30, 2026, from $5,089,607 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per barrel (Bbl). The volume of oil sold increased 15,889 Bbls to 99,327 Bbls in the six months ended June 30, 2026, resulting in a positive volume variance of $969,229. The average price per Bbl increased $19.27 to $80.27 per Bbl in the six months ended June 30, 2026, from $61.00 per Bbl in the comparable period in 2025, resulting in a positive price variance of $1,914,278.
The $730,741 (35%) increase in natural gas sales to $2,791,775 in the six months ended June 30, 2026, from $2,061,034 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per thousand cubic feet ("MCF"). The volume of natural gas sold increased 155,024 MCF to 746,759 MCF in the six months ended June 30, 2026, from 591,735 MCF in the comparable period in 2025, resulting in a positive volume variance of $539,484. The average price per MCF increased $0.26 to $3.74 per MCF in the six months ended June 30, 2026, from $3.48 per MCF in the comparable period in 2025, resulting in a positive price variance of $191,257.
16
Table of Contents
For both oil and natural gas sales, the price change was mostly the result of a change in the spot market prices upon which most of the Company’s oil and natural gas sales are based. These spot market prices have had significant fluctuations in the past and these fluctuations are expected to continue.
Sales of miscellaneous oil and natural gas products were $127,082 in the six months ended June 30, 2026, compared to $177,107 in the comparable period in 2025.
Operating Costs and Expenses. Operating costs and expenses increased $2,571,982 (53%) to $7,466,237 in the six months ended June 30, 2026, from $4,894,255 in the comparable period of 2025.
Production Costs. Production costs increased $395,585 (19%) to $2,489,465 in the six months ended June 30, 2026, from $2,093,880 in the comparable period in 2025. Lease operating expenses increased $167,085 (12%), gas deductions and other costs increased by $31,987 (11%) and gross production taxes increased $196,515 (50%) due to increased revenues from oil and natural gas sales.
Exploration Costs. Exploration costs increased $233,820 (107%) to $452,520 in the six months ended June 30, 2026, from $218,700 in the comparable period in 2025, due to increases in geological and geophysical and other expenses of $5,102 and dry hole and plugging costs of $293,979, offset by a decrease in other costs of $65,261.
Depreciation, Depletion, Amortization and Valuation Provision (DD&A). DD&A increased $1,403,906 (78%) to $3,209,310 in the six months ended June 30, 2026, from $1,805,404 in the comparable period in 2025, due to an increase in long-lived assets impairments of $366,540, and a $1,086,017 net increase in depletion, depreciation, and amortization due to an increase in completions and production, offset by a decrease in leasehold impairment provision of $48,651.
General, Administrative and Other (G&A). G&A decreased $21,998 (1.69%) to $1,282,256 in the six months ended June 30, 2026, from $1,304,254 in the comparable period in 2025.
Gain on Disposition of Oil and Gas Properties. We had a gain on the sale of unproved, non-producing leasehold of $54,084 in the six months ended June 30, 2026, with $615,375 in the the comparable period in 2025.
Equity Income in Investees. Equity income in investees decreased $5,308 (8%) to $57,145 in the six months ended June 30, 2026, from $62,453 in the comparable period in 2025. Income in the six months ended June 30, 2026, was made up of income of $16,386 in Broadway Sixty-Eight, LLC (“Broadway 68”), income of $26,021 in Broadway Seventy-Two, LLC (“Broadway 72”), income of $15,539 from Victorum BRH Investment, LLC, offset by a loss of $801 in QSN Office Park, LLC (“QSN”). See Note 5 to the accompanying financial statements for additional information on equity method investments.
Other Income/(Loss), Net. Other Loss, net was $52,419 in the six months ended June 30, 2026, as compared $829,809 income in the comparable period in 2025. See Note 4 to the accompanying consolidated financial statements for an analysis of the components of this line item.
Income Tax Provision. Income tax provision decreased $222,515 (27%) to $593,301 in the six months ended June 30, 2026, from $815,816 in the comparable period in 2025. Of the 2026 tax provision, estimated current tax benefit was $11,335 and estimated deferred tax provision was $604,636. Of the 2025 income tax provision, the estimated current tax provision was $2,602 and the estimated deferred tax provision was $813,214.
Results of Operations – Three Months Ended June 30, 2026
Net income attributable to common stockholders increased $1,353,044 (113%) to $2,549,599 in the three months ended June 30, 2026, from $1,196,555 in the comparable period in 2025. The significant changes in the Consolidated Statements of Income are discussed below. Net income per share attributable to common stockholders, basic increased $8.94 to $16.82 in the three months ended June 30, 2026, from $7.88 in the comparable period in 2025.
Operating Revenues. Revenues from oil and gas sales increased $1,872,633 (54%) to $5,348,916 in the three months ended June 30, 2026, from $3,476,283 in the comparable period in 2025. The increase is due to an increase in oil sales of $1,775,443, an increase in natural gas sales of $102,454, and a decrease in miscellaneous oil and gas product sales of $5,264.
17
Table of Contents
The $1,775,443 (73%) increase in oil sales to $4,222,349 in the three months ended June 30, 2026, from $2,446,906 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per barrel (Bbl). The volume of oil sold increased 2,443 Bbls to 45,977 Bbls in the three months ended June 30, 2026, resulting in a positive volume variance of $137,321. The average price per Bbl increased $35.63 to $91.84 per Bbl in the three months ended June 30, 2026, from $56.21 per Bbl in the comparable period in 2025, resulting in a positive price variance of $1,638,122.
The $102,454 (11%) increase in natural gas sales to $1,039,772 in the three months ended June 30, 2026, from $937,318 in the comparable period in 2025 was the result of an increase in the volume sold and an increase in the average price per MCF. The volume of natural gas sold increased 34,947 MCF to 362,745 MCF in the three months ended June 30, 2026, from 327,798 MCF in the comparable period in 2025, resulting in a positive volume variance of $99,948. The average price per MCF increased $0.01 to $2.87 per MCF in the three months ended June 30, 2026, from $2.86 per MCF in the comparable period in 2025, resulting in a positive price variance of $2,506.
Operating Costs and Expenses. Operating costs and expenses increased $897,130 (34%) to $3,508,156 in the three months ended June 30, 2026, from $2,611,026 in the comparable period in 2025.
Production Costs. Production costs increased $212,110 (20%) to $1,257,629 in the three months ended June 30, 2026, from $1,045,519 in the comparable period in 2025. Lease operating expenses increased $93,298 (13%), gas deductions and other costs increased by $12,019 (8%), and gross production taxes increased $106,793 (58%).
Exploration Costs. Exploration costs decreased $136,286 to $(21,865) in the three months ended June 30, 2026, from $114,421 in the comparable period in 2025, due to decreased dry hole and plugging costs of $138,536, offset by an increase of $2,250 in geological and geophysical and other costs.
Depreciation, Depletion, Amortization and Valuation Provision (DD&A). DD&A increased $834,441 (93%) to $1,731,967 in the three months ended June 30, 2026, from $897,526 in the comparable period in 2025, due to an increase in long-lived assets impairments of $412,361 and a $422,080 net increase in depletion, depreciation, and amortization.
General, Administrative and Other (G&A). G&A increased $15,840 (2.50%) to $648,658 in the three months ended June 30, 2026, from $632,818 in the comparable period in 2025.
Gain on Disposition of Oil and Gas Properties. We had a gain on the sale of unproved, non-producing leasehold of $151,290 in the three months ended June 30, 2026, with $123,093 in the the comparable period in 2025.
Equity Income in Investees. Equity income in investees decreased $10,871 (47%) to $12,402 in the three months ended June 30, 2026, from $23,273 in the comparable period in 2025. See Note 5 to the accompanying financial statements for additional information on equity method investments.
Other Income/(Loss), Net. Other income, net decreased $252,200 in the three months ended June 30, 2026, to $309,905 from $562,105 in the comparable period in 2025. See Note 4 to the accompanying consolidated financial statements for an analysis of the components of this item.
Income Tax Provision. Income tax provision increased $58,853 (22%) to $327,133 in the three months ended June 30, 2026, from $268,280 in the comparable period in 2025. Of the 2026 tax provision, estimated current tax provision was $559 and estimated deferred tax provision was $326,574. Of the 2025 income tax provision, the estimated current tax benefit was $9,632 and the estimated deferred tax provision was $277,912.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
As defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure
18
Table of Contents
that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
The Company’s Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures. Based on this evaluation, they concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2026.
Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act).
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND PURCHASES OF EQUITY SECURITIES
| Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1 | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs1 | ||||||||||
| April 1 to April 30, 2026 | 0 | $— | 0 | $1,748,320 | ||||||||||
| May 1 to May 31, 2026 | 0 | $— | 0 | $1,748,320 | ||||||||||
| June 1 to June 30, 2026 | 10 | $160 | 10 | $1,717,120 | ||||||||||
| Total | 10 | $160 | 10 | |||||||||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the six months ended June 30, 2026, none of our officers or directors adopted terminated
19
Table of Contents
ITEM 6. EXHIBITS
The following documents are exhibits to this Form 10-Q. Each document marked by an asterisk is filed electronically herewith.
| Exhibit Number | Description | |||||||
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |||||||
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended. | |||||||
| 32* | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350. | |||||||
| 101.INS* | Inline XBRL Instance Document | |||||||
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101) | |||||||
20
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.
| THE RESERVE PETROLEUM COMPANY | ||||||||
| (Registrant) | ||||||||
Date: August 14, 2026 | /s/ Cameron R. McLain | |||||||
Cameron R. McLain | ||||||||
| Principal Executive Officer | ||||||||
Date: August 14, 2026 | /s/ Lawrence R. Francis | |||||||
| Lawrence R. Francis | ||||||||
| Principal Financial Officer | ||||||||
21