RESERVE PETROLEUM CO - Quarter Report: 2011 March (Form 10-Q)

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DELAWARE	73-0237060
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
6801 BROADWAY EXT., SUITE 300 OKLAHOMA CITY, OKLAHOMA  73116-9037 (405) 848-7551
(Address and telephone number, including area code, of registrant’s principal executive offices)

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.    Yes x No o

 

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting company

x

 

 

 

 

 

 

 

ITEM 1.

FINANCIAL STATEMENTS

		March 31,				December 31,
		2011				2010
		(Unaudited)				(Derived from
						audited financial
						Statements)
Current Assets:
Cash and Cash Equivalents		$	4,567,347			$	2,940,967
Available-for-Sale Securities			12,889,904				13,138,811
Trading Securities			440,502				414,124
Refundable Income Taxes			104,576				281,832
Receivables			1,417,481				1,800,659
			19,419,810				18,576,393
Investments:
Equity Investment			500,840				485,968
Other			148,839				151,839
			649,679				637,807
Property, Plant and Equipment:
Oil and Gas Properties, at Cost,
Based on the Successful Efforts Method of Accounting –
Unproved Properties			1,355,291				1,222,333
Proved Properties			26,996,262				26,323,648
			28,351,553				27,545,981
Less – Accumulated Depreciation, Depletion, Amortization and
Valuation Allowance			19,149,614				18,709,551
			9,201,939				8,836,430
Other Property and Equipment, at Cost			404,435				404,194
Less – Accumulated Depreciation and Amortization			233,294				225,708
			171,141				178,486
Total Property, Plant and Equipment			9,373,080				9,014,916
Other Assets			358,364				355,959
Total Assets		$	29,800,933			$	28,585,075
See Accompanying Notes

THE RESERVE PETROLEUM COMPANY
STATEMENTS OF INCOME
(Unaudited)
		Three Months Ended
		March 31,
		2011				2010
Operating Revenues:
Oil and Gas Sales		$	2,554,527			$	2,872,712
Lease Bonuses and Other			64,696				101,690
			2,619,223				2,974,402
Operating Costs and Expenses:
Production			456,137				479,820
Exploration			34,622				205,787
Depreciation, Depletion, Amortization and Valuation Provisions			452,438				367,959
General, Administrative and Other			396,275				390,351
			1,339,472				1,443,917
Income from Operations			1,279,751				1,530,485
Other Income, Net			38,450				35,421
Income Before Provision for Income Taxes			1,318,201				1,565,906
Provision for Income Taxes:
Current			213,464				83,195
Deferred			112,333				310,184
Total Provision for Income Taxes			325,797				393,379
Net Income		$	992,404			$	1,172,527
Per Share Data:
Net Income, Basic and Diluted		$	6.16			$	7.25
Weighted Average Shares Outstanding, Basic and Diluted			161,216				161,672
See Accompanying Notes

THE RESERVE PETROLEUM COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
		Three Months Ended
		March 31,
		2011				2010
Net Cash Provided by Operating Activities		$	2,080,723			$	1,740,433
Cash Flows Applied to Investing Activities::
Purchases of Available-for-Sale Securities			(1,849,690	)			(2,097,598	)
Maturity of Available-for-Sale Securities			2,098,597				2,096,318
Proceeds from Disposal of Property			1,323				11,636
Purchase of Property, Plant and Equipment			(653,453	)			(515,019	)
Cash Distribution from Investment			3,000				---
Net Cash Applied to Investing Activities			(400,223	)			(504,663	)
Cash Flows Applied to Financing Activities:
Dividends Paid to Stockholders			(39,240	)			(42,667	)
Purchase of Treasury Stock			(14,880	)			(4,480	)
Total Cash Applied to Financing Activities			(54,120	)			(47,147	)
Net Change in Cash and Cash Equivalents			1,626,380				1,188,623
Cash and Cash Equivalents, Beginning of Period			2,940,967				1,051,141
Cash and Cash Equivalents, End of Period		$	4,567,347			$	2,239,764
Supplemental Disclosures of Cash Flow Information,
Cash Paid During the Periods for:
Interest		$	3,849			$	3,855
Income Taxes		$	36,208			$	305,000
See Accompanying Notes

		Three Months Ended
		March 31,
		2011				2010
Net Realized and Unrealized Gain on Trading Securities		$	26,328			$	6,749
Gain on Asset Sales			1,323				11,170
Interest Income			6,288				8,131
Equity Earnings in Investees			14,872				12,880
Other Income			48				7,409
Interest and Other Expenses			(10,409	)			(10,918	)
Other Income, Net		$	38,450			$	35,421

Note 3 –

INVESTMENTS AND RELATED COMMITMENTS AND CONTINGENT LIABILITIES, INCLUDING GUARANTEES

 

Bakance at December 31, 2010		$	848,631
Liabilities incurred for new wells			29,417
Accretion expense			6,503
Balance at March 31, 2011		$	884,551

		March 31, 2011
		Level 1 Inputs				Level 2 Inputs				Level 3 Inputs
Financial Assets:
Available-for-Sale Securities		$	---			$	12,889,904			$	---
Trading Securities		$	440,502			$	---			$	---

		December 31, 2010
		Level 1 Inputs				Level 2 Inputs				Level 3 Inputs
Financial Assets:
Available-for-Sale Securities		$	---			$	13,138,811			$	---
Trading Securities		$	414,124			$	---			$	---

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

		Earnings
		2011				2010
Broadway Sixty-Eight, Ltd.		$	14,872			$	10,260
JAR Investments, LLC			---				2,620
		$	14,872			$	12,880

 

 

 

(1)

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer;

(2)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

(3)

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material adverse effect on the financial statements.

 

ITEM 1A.

RISK FACTORS

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

	ISSUER 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
	January 1 to January 31, 2011			46			$	160.00				---				---
	February 1 to February 28, 2011			39			$	160.00				---				---
	March 1 to March 31, 2011			8			$	160.00				---				---
	Total			93			$	160.00				---				---

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

ITEM 4.

(REMOVED AND RESERVED)

ITEM 5.

OTHER INFORMATION

 

ITEM 6.

EXHIBITS

 

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.

		THE RESERVE PETROLEUM COMPANY
		(Registrant)
		By:	/s/ Cameron R. McLain
Date:  May 16, 2011		Name:	Cameron R. McLain
		Title:	Principal Executive Officer
		By:	/s/ James L. Tyler
Date:  May 16, 2011		Name:	James L. Tyler
		Title:	Principal Financial and Accounting Officer