Supplemental Schedules of Oil and Gas Information

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Oil and Gas Exploration and Production Industries Disclosures [Text Block]

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1

THE RESERVE PETROLEUM COMPANY

WORKING INTEREST RESERVE QUANTITY INFORMATION

(Unaudited)

	Year Ended December 31,
	2016			2015
Oil and Condensate (Bbls)
Proved Developed and Undeveloped Reserves:
Beginning of Year		462,241			523,871
Revisions of Previous Estimates		(1,977	)		(580	)
Extensions and Discoveries		9,148			23,159
Purchase of Reserves		---			---
Production		(67,828	)		(84,209	)
End of Year		401,584			462,241
Proved Developed Reserves:
Beginning of Year		415,402			482,717
End of Year		358,822			415,402
Gas (MCF)
Proved Developed and Undeveloped Reserves:
Beginning of Year		3,637,626			4,477,027
Revisions of Previous Estimates		(49,227	)		(154,733	)
Extensions and Discoveries		71,715			73,220
Purchase of Reserves		---			---
Production		(636,360	)		(757,888	)
End of Year		3,023,754			3,637,626
Proved Developed Reserves:
Beginning of Year		3,309,750			4,188,946
End of Year		2,809,944			3,309,750

See notes on next page.

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THE RESERVE PETROLEUM COMPANY

WORKING INTEREST RESERVE QUANTITY INFORMATION

(Unaudited)

Notes:

1. Estimates of royalty interests’ reserves, on properties in which the Company does not own a working interest, have not been included because the information required for the estimation of such reserves is not available. The Company’s share of production from its net royalty interests was 17,423 Bbls of oil and 335,081 MCF of gas for 2016 and 21,507 Bbls of oil and 361,304 MCF of gas for 2015.

2. The preceding table sets forth estimates of the Company’s proved oil and gas reserves, together with the changes in those reserves, as prepared by the Company’s engineer for 2016 and 2015. The Company engineer’s qualifications set forth in the Proxy Statement and as incorporated into Item 10 of this Form 10 -K, are incorporated herein by reference. All reserves are located within the United States.

3. The Company emphasizes that the reserve volumes shown are estimates, which by their nature are subject to revision in the near term. The estimates have been made by utilizing geological and reservoir data, as well as actual production performance data available to the Company. These estimates are reviewed annually and are revised upward or downward as warranted by additional performance data. The Company’s engineer is not independent, but strives to use an objective approach in calculating the Company’s working interest reserve estimates.

4. The Company’s internal controls relating to the calculation of its working interests’ reserve estimates include review and testing of the accounting data flowing into the calculation of the reserve estimates. In addition, the average oil and natural gas product prices calculated in the engineer’s 2016 summary reserve report was tested by comparison to 2016 average sales price information from the accounting records.

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THE RESERVE PETROLEUM COMPANY

STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS

RELATING TO PROVED WORKING INTEREST

OIL AND GAS RESERVES

(Unaudited)

	At December 31,
	2016			2015
Future Cash Inflows	$	20,452,614		$	26,969,731
Future Production and Development Costs		(11,392,251	)		(13,382,527	)
Future Asset Retirement Obligation		(1,802,124	)		(1,873,242	)
Future Income Tax Benefit (Expense)		369,553			(1,057,870	)
Future Net Cash Flows		7,627,792			10,656,092
10% Annual Discount for Estimated Timing of Cash Flows		(2,373,717	)		(3,250,586	)
Standardized Measure of Discounted Future Net Cash Flows	$	5,254,075		$	7,405,506

Estimates of future net cash flows from the Company’s proved working interests in oil and gas reserves are shown in the table above. These estimates, which by their nature are subject to revision in the near term, were based on an average monthly product price received by the Company for

2015

and

2016,

with no escalation. The development and production costs are based on year-end cost levels, assuming the continuation of existing economic conditions. Cash flows are further reduced by estimated future asset retirement obligations and estimated future income tax expense calculated by applying the current statutory income tax rates to the pretax net cash flows, less depreciation of the tax basis of the properties and depletion applicable to oil and gas production.

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THE RESERVE PETROLEUM COMPANY

CHANGES IN STANDARDIZED MEASURE OF 

DISCOUNTED FUTURE NET CASH FLOWS FROM

PROVED WORKING INTEREST RESERVE QUANTITIES

(Unaudited)

	Year Ended December 31,
	2016			2015
Standardized Measure, Beginning of Year	$	7,405,506		$	21,693,023
Sales and Transfers, Net of Production Costs		(1,935,438	)		(3,145,463	)
Net Change in Sales and Transfer Prices, Net of Production Costs		(1,992,946	)		(17,350,045	)
Extensions, Discoveries and Improved Recoveries, Net of Future Production and Development Costs		347,007			745,025
Revisions of Quantity Estimates		(62,357	)		(226,084	)
Accretion of Discount		1,006,978			2,921,430
Purchases of Reserves in Place		---			---
Net Change in Income Taxes		1,009,435			4,836,078
Net Change in Asset Retirement Obligation		(13,669	)		15,800
Changes in Production Rates (Timing) and Other		(510,441	)		(2,084,258	)
Standardized Measure, End of Year	$	5,254,075		$	7,405,506