SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                 FORM 10-KSB

(Mark One)

  [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
            SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

               For the fiscal year ended December 31, 1995

  [ ]    TRANSITION REPORT UNDER  SECTION 13 OR 15 (D) OF THE
          SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                       Commission file number 0-8157

                       THE RESERVE PETROLEUM COMPANY
              (Name of small business issuer  in its charter)

       Delaware                                        73-0237060
       (State or other jurisdiction of            (I.R.S. Employer
        incorporation or organization)        identification number)

        6801 N. Broadway, Suite 300, Oklahoma City, Oklahoma     73116-9092
              (Address or principal executive offices)           (Zip Code)

  Issuer's telephone number:     (405)848-7551
  Securities registered under Section 12(b) of the Act: None

  Securities registered under Section 12(g) of the Act: Common
    stock $.50 Par Value      
         (Title of Class)
  Check  whether the issuer (1) filed all reports required to be filed by
  Section 13 or 15(d) of the Securities Exchange Act during the past 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 [ ]

  Check if there is no disclosure of delinquent filers in response to Item
  405 of Regulation S-B contained herein, and will not be contained,to the
  best of registrant's knowledge, in definitive proxy or information
  statements incorporated by reference in Part III of this Form 10-KSB or any
  amendment to this Form 10-KSB.  [X]

  Issuer's revenues for the fiscal year ended December 31, 1995 were
  $1,808,918. As of March 8, 1996, there were 169,353 common shares
  outstanding. The aggregate market value of the voting stock held by
  non-affiliates as determined by averaging the highest bid and lowest offer
  as of March 8, 1996 was $2,563,506.

                     DOCUMENTS INCORPORATED BY REFERENCE

  Items 9,10,11 and 12 required by Part III, are incorporated herein by
  reference to the Company's proxy statement to be mailed to security holders
  on or about April 8, 1996, in connection with its annual stockholders'
  meeting to be held on May 7, 1996.
  Transitional Small Business Disclosure Format (check one) Yes[ ] No[X]
  See Exhibit Index on Page 33.
<PAGE>



                              TABLE OF CONTENTS



                                                                PAGE

PART I

    Item  1. Description of Business..............................3

    Item  2. Description of Properties............................6

    Item  3. Legal Proceedings....................................7

    Item  4. Submission of Matters to a Vote of Security Holders..8

PART II

    Item  5. Market for Common Equity and Related Stockholder
             Matters..............................................9

    Item  6. Management's Discussion and Analysis................10

    Item  7. Financial Statements................................14

    Item  8. Changes in and Disagreements with Accountants on
             Accounting and Financial Disclosure.................35

PART III

    Item  9. Directors, Executive Officers, Promoters and
             Control Persons Compliance with Section 16(a)
             of the Exchange Act.................................35

    Item 10. Executive Compensation..............................35

    Item 11. Security Ownership of Certain Beneficial Owners
             and Management......................................35

    Item 12. Certain Relationships and Related Transactions......35

    Item 13. Exhibits and Reports on Form 8-K....................35









<PAGE>





                                    PART I



Item 1.  Description of Business

The  Reserve Petroleum Company (the "Company") is engaged principally  in  the
exploration  for and the development of oil and natural gas properties.  Other
business segments are not significant factors in the Company's operations. The
Company was organized under the laws of the State of Delaware in 1931.

OIL AND NATURAL GAS PROPERTIES

For a summary of certain data relating to the Company's oil and gas properties
including production, undeveloped acreage, producing and dry wells drilled and
recent activity  see  Item  2,  Properties.   For a discussion and analysis of
current and prior years' revenue and related costs  of oil and gas operations,
and a discussion of liquidity and capital resource requirements,  see  Item 6,
Management's  Discussion  and  Analysis of Financial Condition and Results  of
Operations.

MINERAL PROPERTY MANAGEMENT.  The Company owns non-producing mineral interests
in approximately 273,611 gross acres  equivalent  to  94,627 net acres.  These
mineral  interests are located in nine states with 57,880  net  acres  in  the
states of  Oklahoma   and  Texas, the area of concentration for the Company in
its present development programs.

A substantial amount of the  Company's  oil  and gas revenue has resulted from
its mineral property management.  As a result  of  its  mineral  ownership, in
1995 the Company had royalty interests in 10 gross ( .205 net) wells which
were drilled and  completed as producing  gas wells. The  most significant of
the royalty interest wells completed in 1995 was the #1 Brounkowski  located
in  Robertson  County, Texas, in  which the Company  has a .0604 net royalty
interest.  First sales from the well were  in late November,  1995, and the
well was producing at a rate of approximately 23 million cubic feet per day
at December 31, 1995.

DEVELOPMENT PROGRAM.  A development of a drilling program is usually initiated
in one of three ways.  The Company may participate as a working interest owner
with a third party  operator  in  the  development  of  non-producing  mineral
interests  which  it  owns;  along  with  the  joint interest operator, it may
participate in drilling additional wells on its  producing  leaseholds;  or if
its  exploration  program  discussed below results in a successful exploratory
well,  it may participate in  the  development  of  additional  wells  on  the
exploratory  prospect.   In  1995,  the  Company  did  not  participate in the
drilling of any  development wells.



                                      3
<PAGE>

EXPLORATION  PROGRAM  The Company's exploration program is normally  conducted
by purchasing  interests  in prospects developed by independent third parties,
participating  in  third  party  exploration  of  Company-owned  non-producing
minerals or developing its own exploratory prospects.

The Company normally acquires  interests in exploratory prospects from someone
in the industry with whom management has conducted business in the past and/or
has confidence in the quality of  the  geological  and geophysical information
presented  for evaluation by Company personnel.  If evaluation  indicates  the
prospect is  within  the  Company's  risk limits, the Company may negotiate to
acquire  an  interest  in  the prospect and  participate  in  a  non-operating
capacity.

The Company develops exploratory  drilling  prospects  by identification of an
area  of  interest,  purchase  of  leaseholds in the area and  development  of
geological and geophysical information  relating to the area.  The Company may
then attempt to sell an interest in the prospect  to  one or more companies in
the  petroleum  industry with one of the purchasing companies  functioning  as
operator, or it may  jointly  develop the prospect with a third party who will
function as operator.

At December 31, 1995, the Company's  exploration  program  involved fractional
interests in seventeen Oklahoma  prospects.   In 1995, three  of the prospects
were tested.  The test well on a prospect in which the Company  had an 18% net
working interest was successfully completed and two development wells  may  be
drilled in 1996.  A second prospect in which the Company had a 24% net working
interest was condemned after drilling two exploratory wells, one of which is a
salvage  well  producing  from a secondary formation.  An exploratory well in
which the Company has a 22.5% net working interest was drilling at year end on
a third prospect. This well  was   subsequently  completed  as a producing oil
well in a secondary formation, and the prospect is currently under evaluation.
Current plans include the drilling  of up to six test wells on  the  prospects
in 1996.

CUSTOMERS.    In  the  fourth  quarter of 1995, the Company entered into lease
agreements  relating to certain of its non-producing minerals in Robertson and
Leon  Counties,  Texas.  Lease bonuses  received  from  these  paid  up  lease
agreements were $690,000,  or 38% of operating revenues.  The Company does not
anticipate the receipt of comparable  amounts  from  lease  bonuses  in future
years.  Also, in 1995, the Company had one customer whose total purchases were
greater  than 10% of revenues from oil and gas sales.  This customer purchased
$175,143 or 16.37% of total oil and gas sales.

The Company  had  a gas purchase contract with a customer which provided for a
price of $4.112 per  MMBTU.   Gas  sold  under  this  contract during 1994 was
73,550  thousand  cubic feet (MCF) and amounted to approximately  21%  of  the
Company's revenues from oil  and gas sales.  This contract expired November 8,
1994.

The Company sells most  of  its  oil  and  gas on the spot market or has sales
contracts that are based on the spot market price.  A very minor amount of oil
and gas sales are made under fixed price contracts  having  terms of more than
one year.

COMPETITION.  The oil and gas industry is highly competitive  in  all  of  its
phases.   The  availability  of  a  ready market for the Company's oil and gas
production depends on numerous factors  beyond its control, including the cost

                                         4
<PAGE>

and  availability of alternative fuels, the  level  of  consumer  demand,  the
extent  of other domestic production of oil and gas, the extent of importation
of foreign  oil  and  gas,  the  cost  of and proximity of pipelines and other
transportation facilities, regulation by state and Federal authorities and the
cost of complying with applicable environmental regulations.  The Company is a
very minor factor in the industry and must  compete  with  other  persons  and
companies  having  far  greater  financial and other resources; therefore, the
Company's  ability  to  develop prospects  which  are  viable,  given  current
economic conditions, and  secure  the financial participation of other persons
and companies in exploratory drilling on these prospects is limited.

REGULATION.  The Company's operations  are  affected  in  varying  degrees  by
political developments and Federal and state laws and regulations.  Although
released  from  Federal  price  controls,  interstate sales of natural gas are
subject to regulation by the Federal Energy Regulatory Commission (FERC).  Oil
and gas operations are affected by environmental  laws and other laws relating
to  the  petroleum  industry  and  both  are affected by  constantly  changing
administrative regulations.  Rates of production of  oil and gas have for many
years been subject to a variety of conservation  laws and regulations, and the
petroleum industry is frequently affected by changes in the Federal tax laws.

Generally,  the respective state regulatory agencies  will  supervise  various
aspects of oil  and  gas operations within the state and transportation of oil
and gas sold intrastate.

ENVIRONMENTAL PROTECTION.   The  operation of the various producing properties
in which the Company has an interest  is  subject  to Federal, state and local
provisions regulating discharge of materials into the environment, the storage
of oil and gas products as well as the contamination of subsurface formations.
The Company's lease operations and exploratory activity  have  been  and  will
continue  to  be affected by regulation in future periods.  However, the known
effect to date  has  not been material as to capital expenditures, earnings or
industry competitive position nor are estimated expenditures for environmental
compliance expected to  be  material  in  the  coming year.  Such expenditures
produce  no increase in productive capacity or revenue  and  require  more  of
management's  time  and  attention,  a cost which cannot be estimated with any
assurance of certainty.

OTHER BUSINESS.

The Company has net equity of $144,801  in  its 33% limited partner's interest
in an Oklahoma limited partnership which was  formed  in  1978  principally to
invest in Oklahoma City real estate. The partnership has constructed an office
building in Oklahoma City at a total cost of approximately $2,300,000  for the
land and building.  The  Company has its office in the building under a  lease
with  the  partnership.   At  December 31, 1995, the partnership had assets in
excess of liabilities of $438,787   and had a net loss of $8,126  for the year
then ended.

The Company has net equity of $254,535 ($159,900  cost basis)  at December 31,
1995, in its 9% interest in an Oklahoma  limited liability company (LLC) which
developed and is operating a golf course in  the  Oklahoma  City  metropolitan
area.  Through  an  affiliated partnership, the LLC is developing real  estate
surrounding the golf  course.   The LLC had assets in excess of liabilities of
$2,690,998 at December 31, 1995, and net income of $566,912.

                                     5
<PAGE>

The Company has a net equity of $76,232 ($60,000 cost basis) at December 31,
1995 in its 10% interest in an Oklahoma limited liability  company  which
was formed  in  December  1992  to  purchase  and  hold  certain Oklahoma City
metropolitan  area real estate as an investment.  At December  31,  1995,  the
limited  liability   company   had   assets   in   excess  of  liabilities  of
$762,315,  and net income of $3,526 .

Reference is made to Note 7 of the accompanying financial  statements for more
information about the partnership and limited liability companies.

EMPLOYEES

At  December  31,  1995, the Company had eight employees, including  officers.
All of the Company's  employees devoted a portion of their time to duties with
affiliated companies and  received  compensation directly from those companies
during  1995.

Item 2.    Description of Properties

The Company's principal properties are  oil  and  natural  gas  properties  as
described below.

OIL AND NATURAL GAS OPERATION

OIL  AND  GAS  RESERVES.   Reference  is  made  to  the unaudited supplemental
financial  information  beginning  on  Page  30 for working  interest  reserve
quantity information.

Since  January  1, 1995, the Company has filed no  reports  with  any  Federal
authority or agency  which  included  estimates of total proved net oil or gas
reserves, except for its annual 1994 report  on  Form  10-K and Federal income
tax  return  for the year ended December 31, 1994.  Those  reserves  estimates
were identical.

PRODUCTION.  The  average  sales  price  of  oil and gas produced and, for the
Company's working interests, the average production  cost  (lifting  cost) per
equivalent  thousand  cubic  feet (MCF) of gas production is presented in  the
table below for the years ended  December 31, 1995, 1994 and 1993.  Equivalent
MCF was developed using approximate relative energy content.

           ROYALTIES                    WORKING INTERESTS
              SALES PRICE             SALES PRICE    Average Production
            Oil       Gas           Oil       Gas        Cost per
          PER BBL  PER MCF       PER BBL     PER MCF   EQUIVALENT MCF

    1995  $16.35    $ 1.67        $17.01     $1.42        $ .91

    1994  $14.15    $ 2.00        $15.52     $2.42        $ .84

    1993  $15.48    $ 2.15        $17.21     $2.39        $ .88

At December 31, 1995, the Company  had working interests in 69 gross (6.8 net)
wells producing primarily gas and/or gas liquids (condensates) and had working
interests  in  59  gross  (3.9  net) wells  producing  primarily  oil.   These
interests  were in 19,263 gross (1,852  net)  producing  acres.   These  wells
include 52 gross (.37 net) wells associated with secondary recovery projects.

                                          6 
<PAGE>

Thirty-six percent,  or  10,431 barrels of the Company's oil production during
1995 was derived from royalty interests in mature West Texas water-floods.

UNDEVELOPED ACREAGE.  The  Company's  undeveloped  acreage  consists  of  non-
producing  mineral  interests and undeveloped leaseholds.  The following table
summarizes the Company's gross and net acres in each:

                                                ACREAGE
                                           GROSS        NET

Non-producing Mineral Interests           273,611     94,627

Undeveloped Leaseholds                     18,054      3,839


NET PRODUCTIVE AND DRY  WELLS DRILLED.  The following table summarizes the net
wells drilled in which the Company had a working interest for the years ended
December 31, 1993 and there-after, as to net  productive  and dry exploratory
wells drilled and net productive and dry development wells drilled.

                              NUMBER OF NET WORKING INTEREST WELLS DRILLED
                                    EXPLORATORY         DEVELOPMENT
                                 PRODUCTIVE   DRY     PRODUCTIVE  DRY

   1995                              .45      .24        -0-      -0-

   1994                              .15      .34       .02       -0-

   1993                              .19      .52       .16        0-

RECENT ACTIVITIES.   At December 31, 1995, the  Company  had working interests
in  two  exploratory  wells in progress, both in the state of  Oklahoma.   One
well, in which the Company  had  a  24%  working interest was unsuccessful and
plugged and abandoned in January, 1996, resulting  in  the  abandonment of the
prospect  and  the  related  costs  incurred through December 31,  1995,  were
expensed in 1995.  The other well, in  which  the  Company had a 22.5% working
interest  was  completed  as  an  oil  producer  in a secondary  formation  in
February, 1996.  The prospect is under evaluation  to  determine if additional
drilling will be done.  On March 6, 1996,  a development  well  in  which  the
Company  has  a  16.6%  net working interest was spudded and was in process at
March 15, 1996.

Item 3. Legal Proceedings

In August 1993, the Company  filed  an  action  in  the District Court of Leon
County,  Texas  to quiet title to its 13/32nd interest  in  approximately  203
mineral acres associated  with  two  producing  oil and gas wells completed in
1988.  The Company claims title through deeds recorded in 1932; the defendants
claim title under a deed dated nine years prior to  the  Company's  deeds, but

                                           7
<PAGE>









not  recorded until seven years after the Company's deeds were recorded.   The
principal  defendants  are  McRae  Exploration  and Production Inc., and Torch
Energy Advisors. Approximately $850,000 of proceeds  from  oil  and  gas sales
were  held  in suspense by the unit operator at March 1996, and have not  been
recorded as revenue  by  the  Company.   The  Company has expended $428,000 in
drilling, completion and operating costs for these wells of which $233,750 was
included in the Company's net investment in oil and gas properties at December
31,  1995.   If the Company is successful in quieting  title  to  its  mineral
interests in this  litigation and recovers the suspended oil and gas proceeds,
management believes  the  outcome  will have a favorable effect on the Company
and  its  financial  condition.   If  the  Company  is  unsuccessful  in  this
litigation, management believes that such  outcome  will  not  have a material
adverse  effect  on  the Company's financial condition.  The case is  set  for
trial April 1, 1996.

Item 4. Submission of matters to a vote of Security Holders.

        Not Applicable. 








                                       8
<PAGE> 







                                   PART II

Item 5. Market for Common Equity  and Related Stockholder Matters

The Company's stock is  traded  over  the  counter  in the United States.  The
following high and low bid information is based on quotes  obtained  from  the
National  Association of Security Dealers through the NASD OTC Bulletin Board,
its  automated  system  for  reporting  non-NASDAQ  quotes  and  the  National
Quotation Bureau's pink sheets.  Prices do not include retail markup, markdown
or commission.

                                               QUARTERLY RANGES

           QUARTER ENDING                     HIGH BID   LOW BID


              03/31/94                          21 3/4    21
              06/30/94                          21 3/4    21
              09/30/94                          21 3/4    21
              12/31/94                          22 1/2    21 5/8
              03/31/95                          23        22
              06/30/95                          23 1/8    22
              09/30/95                          24 1/8    19 1/2
              12/31/95                          24 3/8    19 1/2

There  was  limited  public  trading in the Company's common stock in 1994 and
1995.   In  1994,  there  were  thirteen  brokered  trades  appearing  in  the
Company's transfer ledger and in 1995 there were  eight.

At March 11, 1996, the Company  had  approximately  1445 record holders of its
common stock.  The Company paid dividends on its common stock in the amount of
$1.00 per share in the second quarter of 1995 and 1994.   Unless  there  is an
unforeseen  change  in market conditions or the Company's financial condition,
management intends to  recommend  to  the  board  of directors that the annual
dividend remain at $1.00 per share in 1996.







                                         9
<PAGE>

Item 6.Management's Discussion and Analysis.

Please refer to the financial statements and related  notes  in Item 7 of this
Form 10-KSB to supplement  this discussion and analysis.

LIQUIDITY AND CAPITAL RESOURCES

OPERATING  ACTIVITIES.   As summarized in the Statements of Cash  Flows,  cash
flows from operating activities,  exclusive  of  oil and gas exploration costs
charged to operations, were $958,882 in 1995, a  $154,358  (19%) increase from
1994.  In  the  first  quarter  of  1995,  such  cash flows were projected  to
approximate $500,000 for the year, a decrease of $305,000 (38%) from 1994. The
actual decrease in oil and gas sales of $359,057   was  more than offset by an
unanticipated increase in lease bonus revenue of $659,108  as  discussed under
"Results of Operations," below.

INVESTING ACTIVITIES.  Net cash applied to investing activities  was  $551,456
in  1995,  a  $19,937 (4%) increase from 1994. To a great extent, cash applied
was either for  the purchase of available for sale securities or investment in
oil and gas property additions.

Available  for  sale   securities   are  US  Treasury  Bills  or  Notes,  bank
certificates of deposit and money market accounts which are used to store cash
flows which are not needed immediately.   For  the most part, these cash flows
are  from operating activities.  When current cash  requirements  are  greater
than operating  cash  flows,  the  additional required cash will be drawn from
available  for  sale  securities.  In  1995,  available  for  sale  securities
increased a net of $232,981.  For the most  part, the increase was a result of
decreased cash applied to oil and gas property  additions  as discussed in the
following  paragraph,  as  well  as  increased  net cash flows from  operating
activities.

Property  additions  are  directly  related  to  the  Company's  oil  and  gas
exploration and development drilling activity.  Expenditures  for unsuccessful
exploratory  and  development  drilling as well as geological and  geophysical
costs  are  included  in  operating  activities.   Cash  applied  to  property
additions in 1995 included  $351,287  classified  as  investing activities and
$172,023  classified as operating activities for a total  of  $523,310.   This
compares to  a total of $851,692 in 1994.  Expenditures for property additions
in  1995  were  originally    projected  to  be  $760,000;  however,  prospect
development is requiring more time  than  originally estimated and resulted in
some expenditures projected for 1995 to be deferred until 1996.

FINANCING ACTIVITIES.  Net cash flows applied  to financing activities consist
of cash dividends on common stock and cash used  for  the purchase of treasury
stock.  Management currently has no plans that would significantly change cash
requirements  for  financing  activities  other  than  the possible  need  for
external sources of funds for capital expenditures as discussed below.

FORWARD-LOOKING  SUMMARY.   In 1996, exclusive of any unexpected  increase  in
cash flows from exploratory and  development  drilling  or  significant  price
variances,  the  Company  anticipates  cash  flows  from operating activities,
before  any  expensing  of  exploration  and  development  costs,   of   about
$1,000,000.    Cash  flows  from  oil  and  gas sales are expected to increase
$700,000 as a result of new production which  came  on  line  around year end,
1995, as offset by the normal production decline of older wells.

The  most  significant  of  the  new  wells  is  Marathon  Oil  Company's   #1
Brounkowski,  in  Robertson  County,  Texas,  which was producing at a rate of
approximately 23 million cubic feet per day at  December  31,  1995.   If that
rate  of  production  is  maintained  through 1996, assuming the December 1995
                                          10
<PAGE>

average price, net revenues from the #1 Brounkowski would approximate $700,000
in  1996.   Although the #1 Brounkowski is  expected  to  make  a  significant
contribution  to  the  Company's oil and gas revenues for the next two or more
years, as a royalty interest  owner the Company has not had access to the well
data sufficient to compute a reasonable estimate of total reserves, and the #1
Brounkowski's production history  is too short to project a meaningful decline
curve.

Lease bonus income is projected to return to its normal immaterial amount.
Cash flows which may result from the successful resolution of the quiet title
litigation discussed in Item 3, Legal Proceedings, have not been included.

Management's  current  estimates  indicate  cash  requirements  for  investing
activities other than available for sale securities will approximate $800,000,
most  of which will be applied to oil  and  gas  exploration  and  development
activities.   Cash  applied  to  financing  activities  should remain at about
$170,000  for  a total of $970,000.  As noted above, $1,000,000  in  net  cash
flows  from operating  activities  before  expensing  of  any  exploration  or
development  costs  are projected for 1996 and should cover investing activity
cash requirements.

The Company's planned  drilling  program  may change during the year depending
upon the amount of successful drilling, the  amount  and  stability of product
prices and the availability of quality drilling prospects.   Also,  management
continues  to  be  alert for the purchase of producing oil and gas properties.
Therefore, the possible  need  for  additional  capital exists, and management
could seek funds from external sources.

RESULTS OF OPERATIONS.

For the year ended December 31, 1995, the Company  had  net income of $593,037
($3.50 per share) as compared to net income of $110,769 ($.65  per  share)  in
1994.   The  most significant factor contributing to the additional net income
was an increase  in  revenue from lease bonuses.  A discussion of the increase
in lease bonus revenues  as  well  as  other  material  year-to-year line item
changes follows.

OPERATING  REVENUES. Oil and gas sales fell $323,600 (23%)  to  $1,070,048  in
1995 from $1,393,648 in 1994. The following table presents certain information
concerning price  and  volume  components  of  oil and gas sales for the years
ended December 31, 1995 and 1994.  The table does  not  include an analysis of
revenues from plant products and other miscellaneous oil  and  gas sales which
totaled $19,411 in 1995 and $33,776 in 1994.

                                              VARIANCE
       PRODUCTION                  1995     PRICE   VOLUME  1994

       Oil -
           Bbls (000 omitted)       29       ----     (2)     31
           $(000 omitted)       $  488         47    (27)    468
           Unit Price           $16.68       1.59    ----  15.09

       Gas -
           MCF (000 omitted)       370       ----    (22)    392
           $(000 omitted)       $  562       (279)   (50)    891
           Unit Price           $ 1.52      ( .76)   ----   2.28

In  1995,  revenues  from  oil  sales increased $19,954 (4%) to $448,641.   An
increase in revenues of $46,588 resulting  from a $1.59 average price increase
per barrel was partially off-set by a $26,665  decline  in  revenues resulting
                                         11
<PAGE>

from a 1,767 barrel fall in volume produced.  Production of 2,674 barrels from
wells  which  first  produced  in  1995 was off-set by the normal  decline  in
production from older wells of 4,441  barrels.   The average price increase of
$1.59 per barrel resulted from an overall market increase in the price of oil.

Revenues from natural gas sales fell $329,190 (37%) in 1995 to $561,995.   The
decline attributable to a decrease in  average price  per  thousand cubic feet
(MCF)  of  $.76  was  $278,812.   An  additional decline in sales  of  $50,378
resulted from a decrease in volume produced  of  22,096  MCF.  The decrease in
average price was the result of an overall decline in the spot market price of
gas as well as the November 1994, expiration of a gas contract  with  a  sales
price  in excess of $4.00 per MCF.  The volume decline resulted as an increase
in production  of  30,900 MCF from wells which first produced in 1995 was off-
set by a 52,996 MCF  decrease  due  to  the natural decline of older producing
properties as well as a decrease in production from properties which were shut
in for pipeline construction to accommodate a new gas purchaser.

Lease bonuses and other increased $701,106 from $37,764 in 1994 to $738,870 in
1995.  The most significant item contributing  to the increase was the receipt
of bonuses of $690,000 from the leasing of East  Texas  non-producing minerals
which the Company owns.

OPERATING COSTS AND EXPENSES.  The Company experienced an  overall  decline in
operating costs and expenses of $64,153 (4%) as an increase in exploration and
development   costs  charged  to  expense  of $68,897 was more than offset  by
declines in each of the other line items.

   PRODUCTION COSTS.  The prior years upward  trend  in  production  costs was
reversed  in  1995  with  an  overall  decrease  of  $20,055 (6%) from 1994 to
$299,622.  A $26,811 decrease in gross production taxes  was  partially offset
by a $4,776 increase in lease operating expense.  The gross production  tax is
based  on  a  percentage of gross revenues and therefore varies as the related
oil and gas revenues increase or decrease.

   EXPLORATION AND DEVELOPMENT EXPENSE.  Exploration and development costs may
be either capitalized  or  charged  to operations under the successful efforts
method of accounting used by the Company.   Geological  and  geophysical costs
are  expensed  as  incurred, as are the costs of unsuccessful exploratory  and
development  drilling.   Total  costs  of  exploration  and  development  were
$354,049 in 1995  and  $367,089  in  1994.   Costs  charged to operations were
$183,409 in 1995 and $114,512 in 1994, inclusive of geological and geophysical
costs of $112,075 in 1995 and $23,142 in 1994.

   DEPRECIATION,  DEPLETION,  AMORTIZATION AND VALUATION  PROVISIONS.    Major
components  are  the provision for  impairment  of  non-producing  leaseholds,
depletion of producing  leaseholds and depreciation of tangible and intangible
lease and well costs.  Non-producing leaseholds are amortized over the life of
the leasehold using a straight  line  method  except  when  the  leasehold  is
impaired  or condemned by drilling and/or geological interpretation of seismic
data; if so, an adjustment to the provision is made at the time of impairment.
The provision for impairment was $94,747 in  1995 and $51,829 in 1994.

The depletion  and  depreciation of oil and gas properties are computed by the
units-of-production method.   The  amount  expensed in any year will fluctuate
with the change in estimated reserves of oil  and  gas or a change in the rate
of production.  The provision for depletion and depreciation  totaled $264,918
in 1995,  a $126,621 (32%) decrease from 1994.  The decrease in  depletion and
depreciation resulted because of the rapid amortization of wells with  initial
flush  production  in 1994, marginal wells which were mostly or fully reserved
in 1994 and properties  sold  in  1995  all  of  which  totaled  approximately
$201,000.  The decrease was partially offset by amortization of new properties
placed in service in 1995 of about $74,000.
                                         12 
<PAGE>

   GENERAL,  ADMINISTRATIVE  AND  OTHER EXPENSES (G&A).  G&A declined  $27,210
(4%) to $624,355 in 1995.  Although  numerous  variances  between  the periods
occurred  in  the  detail  of  expenses  included in G&A, the most significant
overall change was caused by an increase in  the  percentage  of  shared costs
allocated to affiliated entities.  This change resulted in a reduction  of G&A
by approximately $22,000.

OTHER  INCOME,  NET.   This category consists of interest and other investment
income as offset by investment  losses  and various other non-operating income
and expense items.  Although there was little  change  in  the  amount of this
line item between the periods, there were some significant changes  within the
category.   In  1994,  the Company received $120,272 related to settlement  of
litigation.  There was no  such  receipt  in  1995;  however,  the decline was
offset  by  receipt  of  additional  interest  income  on  available for  sale
securities  of $39,206, increased income from equity investments  of  $39,787,
additional realized  and  unrealized  gain  from trading securities of $36,062
plus changes in miscellaneous other non operating income and expense items.

BENEFIT FROM INCOME  TAXES.  In 1995, the Company  had  a  calculated  benefit
from  income  taxes as the net decrease in deferred tax liabilities of $67,000
exceeded current  tax  expense  of  $18,747  by $48,253.   Significant factors
contributing to the overall benefit was the utilization of statutory depletion
deductions and a decrease in the valuation allowance  for deferred tax assets.
Also, the utilization  of statutory depletion deductions  contributed  to  the
benefit from income taxes in 1994.  See Note 6 to the financial statements for
an analysis of the components of income taxes.

FORWARD-LOOKING  SUMMARY.  Management's current projections indicate operating
revenues for 1996  of  $1,800,000,  about  the  same  as 1995.  Given a stable
overall  average price which approximates 1995, oil and  gas  revenues  should
increase to around $1,770,000.  New production which  came on line around year
end 1995 should  increase  revenues  in  1996 by approximately $800,000 as the
normal decline of older properties reduces revenues by about $100,000.

The  most  significant  of  the  new  wells  is  Marathon   Oil  Company's  #1
Brounkowski,  in Robertson County, Texas, which was producing  at  a  rate  of
approximately 23  million  cubic  feet  per day at December 31, 1995.  If that
rate of production is maintained through  1996,  assuming  the  December  1995
average price, net revenues from the #1 Brounkowski would approximate $700,000
in  1996.   Although  the  #1  Brounkowski  is  expected to make a significant
contribution to the Company's oil and gas revenues  for  the  next two or more
years, as a royalty interest owner, the Company has not had access to the well
data sufficient to compute a reasonable estimate of total reserves, and the #1
Brounkowski's production history is too short to project a meaningful  decline
curve.

Lease  bonuses   should  be an immaterial amount as management does not expect
the receipt of significant lease bonuses to reoccur in 1996.

Operating costs and expenses  are  projected to increase $110,000, or 7%, from
1995 actual costs of $1,477,097.  Production  costs  are estimated to increase
$50,000 as the increased production will result in more gross production taxes
and additional costs of lease operations.  Exploration  and  development costs
charged to expense are projected to remain at the same level as  1995 because,
as  discussed  above,  a  significant part of such cost charged to expense  is
dependent  upon   the success  or  failure  of  the  prospect.   Depreciation,
depletion, amortization  and  valuation provisions are projected to increase a
total  of  $30,000,  mostly  as  a  result   of   new   production.   General,
administrative and other expense is also projected to increase $30,000 because
of additional payroll costs and inflationary increases in other administrative
expense.

Other income, net, should approximate the 1995 amount of $213,000.
                                         13
<PAGE>

The above projections are expected to result in  net income  before  taxes for
1996 of approximately $426,000. Tax expense after utilization of available tax
credits  and  statutory depletion deductions should approximate $45,000.   The
above projection does not include additional revenue which may result from the
successful resolution of the quiet title litigation discussed in Item 3, Legal
Proceedings.

Item 7.   Financial Statements


Index to Financial Statements

                                                                        PAGE

Report of Independent Certified Public Accountants-Grant Thornton LLP    15

Balance Sheets - December 31, 1995 and 1994                              16

Statements of Operations - Years Ended December 31, 1995 and 1994        18

Statements of Stockholders' Equity - December 31, 1995 and 1994          19

Statements of Cash Flow - Years Ended December 31, 1995 and 1994         20 

Notes to Financial Statements                                            22

Unaudited Supplemental Financial Information                             30










                                         14
<PAGE>






        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





Board of Directors
The Reserve Petroleum Company

We have audited the accompanying  balance  sheets  of  The  Reserve
Petroleum  Company (a Delaware  corporation) as of December 31, 1995 and
1994, and the related statements of operations, stockholders' equity, and
cash flows for the years then  ended.   These  financial  statements  are
the responsibility of the Company's management.  Our responsibility is to
express  an  opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally  accepted auditing
standards.   Those  standards  require that we plan and perform the  audit  to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures  in the financial statements.  An audit
also  includes  assessing  the  accounting  principles  used  and  significant
estimates  made  by management, as well as evaluating  the  overall  financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the  financial statements referred to above present fairly, in
all material respects,  the  financial  position  of   The  Reserve  Petroleum
Company  at December 31, 1995 and 1994, and the results of its operations  and
its cash flows  for the years then ended in conformity with generally accepted
accounting principles.






GRANT THORNTON LLP

GRANT THORNTON LLP

Oklahoma City, Oklahoma
March 11, 1996







                                         15
<PAGE>
                        THE RESERVE PETROLEUM COMPANY
                                BALANCE SHEETS

                                    ASSETS

                                                         DECEMBER 31,
                                                     1995           1994
Current Assets:
   Cash and Cash Equivalents (Note 2)            $  175,014     $  112,564
   Available for Sale Securities  (Note 5)        2,689,546      2,715,502
   Trading Securities (Note 5)                      372,705         87,574
   Receivables                                      154,012        163,729
   Refundable Income Taxes                             ----          1,449
   Prepayments & Deferred Income Taxes                8,577          6,042
                                                  ---------      ---------
                                                  3,399,854      3,086,860
                                                  ---------      ---------
Investments:
  Partnership and Limited
   Liability Companies (Note 2)                     495,379        459,251
  Other                                              11,430         11,430
                                                  ---------      ---------
                                                    506,809        470,681
                                                  ---------      ---------      
  Property, Plant & Equipment (Note 2): 
  Oil & Gas Properties, at Cost Based on the
    Successful Efforts Method of Accounting
      Unproved Properties                           488,859        444,831
      Proved Properties                           4,660,881      4,977,386
                                                  ---------      ---------
                                                  5,149,740      5,422,217
    Less - Valuation Allowance and Accumulated
      Depreciation, Depletion & Amortization      3,270,087      3,580,350
                                                  ---------      ---------
                                                  1,879,653      1,841,867
                                                  ---------      --------- 
  Other Property & Equipment, at Cost               323,136        329,431
    Less - Accumulated Depreciation,
      Depletion, & Amortization                     176,460        172,634
                                                  ---------      ---------  
                                                    146,676        156,797
                                                  ---------      --------- 
                                                  2,026,329      1,998,664
                                                  ---------      ---------
Other Assets                                        267,089        241,881
                                                  ---------      ---------     
                                                 $6,200,081     $5,798,086
                                                 ==========     ==========
(continued)
See Accompanying Notes
                                         16
<PAGE>

                        THE RESERVE PETROLEUM COMPANY
                                BALANCE SHEETS

(concluded)

                     LIABILITIES AND STOCKHOLDERS' EQUITY

                                                         DECEMBER 31,
                                                     1995           1994
Current Liabilities:
  Accounts Payable                               $   86,229     $   51,676
  Income Taxes Payable                               16,280           ----
  Other Current Liabilities
    Gas Balancing Commitment                         53,401         57,858
    Dividends Payable, Current Portion               10,000         10,000
                                                 ----------     ----------     
                                                    165,910        119,534
                                                 ----------     ----------   

Dividends Payable (Note 3)                          119,277        115,066
                                                 ----------     ----------

Deferred Income Taxes (Notes 2 &  6)                 54,864        119,329
                                                 ----------     ----------

Commitments & Contingencies (Notes 7 & 9) 

Stockholders' Equity (Notes 3 & 4):
  Common Stock                                       92,368         92,368
  Additional Paid-in Capital                         65,000         65,000
  Retained Earnings                               5,854,105      5,430,847
                                                 ----------     ----------
                                                  6,011,473      5,588,215

  Less  - Treasury Stock at Cost (Note 4)           151,443        144,058
                                                 ----------     ----------
                                                  5,860,030      5,444,157
                                                 ----------     ----------
                                                 $6,200,081     $5,798,086
                                                 ==========     ==========


See Accompanying Notes

                                        17
<PAGE>

                        THE RESERVE PETROLEUM COMPANY
                           STATEMENTS OF OPERATIONS



                                                YEAR ENDED DECEMBER 31,
                                                   1995         1994
Operating Revenues:
  Oil & Gas Sales                              $1,070,048   $1,393,648
  Lease Bonuses & Other                           738,870       37,764
                                               ----------   ----------
                                                1,808,918    1,431,412 
                                               ----------   ----------
Operating Costs and Expenses:
  Production                                      299,622      319,677
  Exploration and Development                     183,409      114,512
  Depreciation, Depletion, Amortization
     & Valuation Provisions                       369,711      455,496
  General, Administrative and Other               624,355      651,565
                                               ----------   ----------
                                                1,477,097    1,541,250
                                               ----------   ---------- 

Income (Loss) from Operations                     331,821     (109,838)

Other Income, Net                                 212,963      212,016
                                               ----------   ----------
Income before Income Taxes                        544,784      102,178
 
(Benefit from) Income Taxes                       (48,253)      (8,591)
                                               ----------   ---------- 
Net Income                                     $  593,037   $  110,769
                                               ==========   ==========
Per Share Data (Note 2):

   Net Income                                  $     3.50   $      .65
                                               ==========   ==========
   Cash Dividends                              $     1.00   $     1.00
                                               ==========   ==========
Weighted Average Shares Outstanding               169,679      170,149
                                               ==========   ==========



See Accompanying Notes
                                         18

<PAGE>








                        THE RESERVE PETROLEUM COMPANY
                      STATEMENTS OF STOCKHOLDERS' EQUITY
                  FOR THE TWO YEARS ENDED DECEMBER 31, 1995



                                            Additional
                                  Common      Paid-in    Retained    Treasury
                                   STOCK      CAPITAL    EARNINGS      STOCK

Balance at January 1, 1994       $ 92,368    $ 65,000   $5,490,295  $(138,703)

  Net Income                         ----        ----      110,769       ----

  Cash Dividends on Common Stock     ----        ----     (170,217)      ----

  Purchase of Treasury Stock         ----        ----         ----     (5,355)
                                 --------    --------   ----------  ---------

Balance at December 31, 1994       92,368      65,000    5,430,847   (144,058)

  Net Income                         ----        ----      593,037       ----

  Cash Dividends on Common Stock     ----        ----     (169,779)      ----

  Purchase of Treasury Stock         ----        ----         ----     (7,385)
                                 --------    --------   ----------  ---------
  
Blance at December 31, 1995      $ 92,368    $ 65,000   $5,854,105  $(151,443)
                                 ========    ========   ==========  ========= 






See Accompanying Notes



                                         19
<PAGE>

                        THE RESERVE PETROLEUM COMPANY
                           STATEMENTS OF CASH FLOWS
               Increase (Decrease) in Cash and Cash Equivalents

                                                 YEAR ENDED DECEMBER 31,
                                                    1995         1994
Cash Flows from Operating Activities:
 Cash Received-
   Oil and Gas Sales                             $1,080,929  $1,439,986
   Lease Bonuses and Rentals                        695,708      36,600
   Agricultural Rentals                               5,100       5,104
 Cash Paid-
   Production Costs                                (312,404)   (296,090)
   Exploration and Development Expenses            (172,023)    (93,639)
   General Suppliers, Employees and Taxes,
    Other than Income                              (617,251)   (673,746)
 Interest Received                                  119,197      96,560
 Interest Paid                                      (11,392)     (7,528)
 Dividends Received on Trading
   Securities                                         9,254       5,364
 Purchase of Trading Securities                  (1,159,613)    (90,088)
 Sale of Trading Securities                       1,150,372     146,321
 Income Taxes Paid                                  (13,018)    (12,111)
 Receipts of Refundable Income Taxes                 12,000      33,881
 Receipts from Take or Pay Settlement                  ----     120,271
                                                 ----------  ----------   
   Net Cash Provided by Operating
    Activities                                      786,859     710,885
                                                 ----------  ----------

Cash Flows from Investing Activities:
 Sale and maturity of Available
   for Sale Securities                              442,099     830,919
 Purchase of Available for Sale Securities         (675,080)   (657,896)
 Property Dispositions                               31,171      78,011
 Property Additions                                (351,287)   (758,053)
 Cash Distributions from Equity Investments          22,500      15,300
 Cash Payments for Equity Investments               (20,859)    (39,800)
                                                  ---------   ---------
   Net Cash Applied to Investing Activities       $(551,456)  $(531,519)
                                                  ---------   ---------

(Continued)

See Accompanying Notes
                                         20
<PAGE>

(Concluded)
                        THE RESERVE PETROLEUM COMPANY
                           STATEMENTS OF CASH FLOWS
               Increase (Decrease) in Cash and Cash Equivalents

                                                    YEAR ENDED DECEMBER 31,
                                                       1995          1994
Cash Flows Applied to Financing Activities:
 Dividends Paid to Shareholders                     $(165,568)   $(160,000)
 Purchase of Treasury Stock                            (7,385)      (5,355)
                                                    ---------    ---------
    Total Cash Applied to Financing  Activities      (172,953)    (165,355)
                                                    ---------    ---------
Net Change in Cash and Cash Equivalents                62,450       14,011

Cash and Cash Equivalents at Beginning of Year        112,564       98,553
                                                    ---------    ---------
Cash  and  Cash  Equivalents  at  End of Year       $ 175,014    $ 112,564
                                                    =========    =========
Reconciliation of Net Income to Net
   Cash Provided by Operating Activities:
Net Income                                          $ 593,037    $ 110,769
                                                    ---------    ---------
Net Income Increased (Decreased) by -
   Net Change in -
    Unrealized Holding (Gains) Losses
      on Trading Securities                         $ (25,808)   $  10,769
    Accounts Receivable                                14,215       17,968
    Interest and Dividends Receivable                 (22,579)      (7,432)
    Income Taxes Refundable/Payable                    17,729       21,770
    Prepayments                                          ----       50,022
    Accounts Payable                                    7,077       10,940
    Trading Securities                                    (82)      63,878
   Gain from Equity Investments                       (49,822)      (9,655)
   Gain on Disposition of Property
    & Equipment                                       (33,380)     (10,480)
   Depreciation, Depletion, Amortization
    and Valuation Provisions                          369,711      455,496
   Change in Cash Value of Officers'
    Life Insurance                                    (11,782)     (28,157)
   Change in Deferred Taxes                           (67,000)      (8,591)
   Gas Balancing Liabilities                           (4,457)      33,588
                                                     ---------   ---------
          Total Adjustments                            193,822     600,116
                                                     
Net Cash Provided by Operating Activities            $ 786,859   $ 710,885
                                                     =========   =========
See Accompanying Notes
                                         21                              
<PAGE>

                        THE RESERVE PETROLEUM COMPANY
                        NOTES TO FINANCIAL STATEMENTS

Note 1 - NATURE OF OPERATIONS

     The Company is principally engaged in oil and natural gas exploration and
    development  with  an  area of concentration in Texas and Oklahoma.  Other
    business  segments  are  not   a   significant  factor  in  the  Company's
    operations.

Note 2 - SUMMARY OF ACCOUNTING POLICIES

    PROPERTY AND EQUIPMENT

    Oil  and  gas properties are accounted  for  on  the  successful  efforts
    method.  The  acquisition,  exploration and development costs of producing
    properties  are  capitalized.    All   costs   relating   to  unsuccessful
    exploration, geological and geophysical costs, delay rentals and abandoned
    properties  are expensed.  Lease costs related to unproved properties  are
    amortized over  the  life of the lease and are assessed periodically.  Any
    impairment of value is charged to expense.

    Depreciation, depletion  and  amortization  of  producing  properties  is
    computed  on  the  units-of-production  method  on  a property-by-property
    basis.  The units-of-production method is based primarily  on estimates of
    reserve  quantities.   Due  to  uncertainties  inherent in this estimation
    process, it is at least reasonably possible that  reserve  quantities will
    be revised in the near term.

    Other  property  and  equipment  is  depreciated  on  the  straight-line,
    declining-balance or other accelerated methods.

    The following estimated useful lives are used for the different  types of
    property:

          Buildings and improvements  10 to 20 years
          Office furniture & fixtures  5 to 10 years
          Automotive equipment         5 to  8 years

    INVESTMENTS

    The  Company  accounts  for  its investments in a partnership and limited
    liability companies on the equity basis and adjusts the investment balance
    to agree with its equity in the  underlying  assets  of the entities.  See
    Note 7 for additional information.

    Trading  Securities are carried at fair value with unrealized  gains  and
    losses included in earnings.

    Available for sale securities, which consist primarily of U.S. Government
    securities,  are  carried  at  fair value with unrealized gains and losses
    excluded  from  earnings  and  reported   in   a   separate  component  of
    stockholders' equity, net of tax effects.

    CASH AND CASH EQUIVALENTS

    The Company considers all highly liquid debt instruments purchased with a
    maturity  of  three  months or less to be cash equivalents.   The  Company
    maintains its cash in  bank  deposit  accounts  which  at times may exceed
    federally insured limits.  The Company  believes it is not  exposed to any
    significant credit risk on such accounts.
                                         22
<PAGE>



    INCOME TAXES

    Deferred  income  taxes  are  provided for significant carryforwards  and
    temporary differences using the liability method.

    NET INCOME PER SHARE

    Net Income per share is calculated  based  on the weighted average of the
    number of shares outstanding during the year.   There  are  no outstanding
    stock options or common stock equivalents..

    CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

    The  Company's  receivables relate primarily to sales of oil and  natural
    gas to purchasers  with  operations  in  Texas  and Oklahoma.  In 1995 the
    Company had one purchaser whose purchases were $175,143 or 16.37% of total
    oil  and  gas  sales.  In 1994, a different purchaser  made  purchases  of
    $202,968, or 14.56% of total oil and gas sales.

    In the fourth quarter  of 1995, the Company entered into oil and gas lease
    agreements relating to certain  of its non-producing minerals in Robertson
    and Leon Counties, Texas.  Lease bonuses received from these paid up lease
    agreements were $690,000,  or 38% of operating revenues.  The Company does
    not anticipate the receipt of  comparable  amounts  from  lease bonuses in
    future years.

    USE OF ESTIMATES

    The  preparation of the financial statements in conformity with  generally
    accepted  accounting  principles requires management to make estimates and
    assumptions that affect  the  amounts reported in the financial statements
    and accompanying notes.  Actual results could differ from those estimates.

    RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT

    In March 1995, the FASB issued  Statement  No.  121,  "Accounting  for the
    Impairment  of  Long-Lived Assets and for Long-Lived Assets to Be Disposed
    Of," which requires  impairment losses to be recorded on long-lived assets
    used in operations when  indicators  of  impairment  are  present  and the
    undiscounted cash flows estimated to be generated by those assets are less
    than  the  assets'  carrying  amount.   Statement  121  also addresses the
    accounting for long-lived assets that are expected to be disposed of.  The
    Company  will adopt Statement 121 in the first quarter of  1996;  however,
    the effect of adoption has not been determined.

Note 3 - DIVIDENDS PAYABLE

    Dividends  payable  include  amounts that belong to stockholders whom the
    Company has been unable to locate  and  uncashed  dividend checks of other
    stockholders.

                                         23
<PAGE>


Note 4 - COMMON STOCK

    The  following table summarizes the changes in common  stock  issued  and
    outstanding:

                                                   Shares of
                                    Shares         Treasury         Shares
                                    ISSUED           STOCK       OUTSTANDING

     January 1, 1994, $.50
     par value stock, 400,000
     shares authorized            184,735.28      14,431.55      170,303.73

     Purchase of stock                   ---         306.00         (306.00)
                                  ----------      ---------      ----------

     December 31, 1994, $.50
     par value stock, 400,000
     shares authorized            184,735.28      14,737.55      169,997.73
     Purchase of stock                  ----         422.00         (422.00)
                                  ----------      ---------      ----------
    
     December 31, 1995, $.50
     par value stock, 400,000
     shares authorized            184,735.28      15,159.55      169,575.73
                                  ==========      =========      ==========


Note 5 - INVESTMENTS IN DEBT AND EQUITY SECURITIES


   At December  31,  1995  and 1994, the difference between the aggregate fair
   value  and amortized cost  basis  of  available  for  sale  securities  was
   immaterial   and  required  no  adjustment  to  stockholders'  equity.  All
   available for  sale  securities  mature prior to November 1, 1996. Proceeds
   from  sale  of  securities  prior to maturity  totaled  $596,841  in  1994,
   resulting in a gross loss of $3,159 on a specific identification basis.

   As  to the trading securities,  the  change  in  unrealized  holding  gains
   (losses) included in earnings was $25,808 for 1995 and $(10,768) for 1994.




                                         24
<PAGE>

Note 6 - INCOME TAXES

        Components of deferred taxes follow:
                                                     DECEMBER 31,
                                                 1995           1994
     Assets
      Leasehold Costs                        $  210,995     $  104,572
      Gas Balancing Receivable                   52,379         52,379
      Marketable Securities                       2,952            417
      Lease and Well Equipment                      854          1,265
      Charitable Contributions                    2,725         10,415
      Alternative Minimum Tax
        Credits Carry Forward                      ----         66,133
      Capital Loss Carry Forward                  5,821            ---
                                              ---------      ---------
                                                275,726        235,181
      Valuation Allowance                          ----        (66,133)
                                              ---------      ---------        
                                                275,726        169,048

     Liabilities
      Intangible Development Costs              327,638        287,960
                                              ---------      ---------
     Net Deferred Tax Liability               $  51,912      $ 118,912
                                              =========      =========
     Valuation Allowance Decrease
       for the Year                           $  66,133      $ 171,782
                                              =========      =========

    The following table summarizes the current and deferred portions of income
    tax expense.

                                                 YEAR ENDED DECEMBER 31,
                                                   1995          1994
    Current Tax Expense:
      Federal                                 $  18,747      $    ----
      State                                        ----           ----
                                              ---------      --------- 
                                                 18,747           ----
    Deferred (Benefit)                          (67,000)        (8,591)
                                              ---------      ---------  
    Total (Benefit)                           $ (48,253)     $  (8,591)
                                              =========      =========



                                         25 
<PAGE>






   The total  (benefit  from)  income  tax expressed as a percentage of income
   before income tax was (8.86%) in 1995  and  (8.41%) in 1994.  These amounts
   differ  from  the amounts computed by applying  the  statutory  US  Federal
   income tax rate  of  35%  for  1995 and 1994 to income before income tax as
   summarized in the following reconciliation:

                                                YEAR ENDED DECEMBER 31,
                                                   1995         1994
   Computed Federal Tax
     Provision                               $    190,674  $   35,762

   Increase (Decrease) in Tax  From:

     Allowable Depletion in Excess of
        Depletion for Financial Statements       (140,852)    (31,067)

     Change in Valuation Allowance                (66,133)       ----

     Non-conventional Fuel Credit                 (11,668)     (7,195)

     Corporate Graduated Tax Rate
        Structure                                  (7,282)     (6,759)

        Loss from Marketable
        Equity Securities                           -----       3,769

     Dividend Received Deduction                   (2,342)     (1,662)

     Change in Prior Year Estimates               (15,445)       ----

     Other                                          4,795      (1,439)
                                                ---------   ---------  
     (Benefit from) Income Tax                  $ (48,253)  $  (8,591)
                                                =========   =========

     Effective Tax Rate                             (8.86)%     (8.41)%
                                                =========   ========= 


                                         26
<PAGE>






Note 7 - INVESTMENTS AND RELATED COMMITMENTS AND CONTINGENT LIABILITIES

    The Company has a 33%  interest  in  Broadway  Sixty-Eight,  Ltd.,  an
    Oklahoma  limited  partnership  (the  Partnership).   The  Partnership had
    assets in excess of liabilities of $438,787 and $446,913 at
    December  31, 1995 and 1994, respectively, and its net losses for  the
    periods then ended were $8,126 and $31,510.

    The Partnership  was  organized for the purpose of owning and operating an
    office building which was  constructed  in  Oklahoma  City, Oklahoma, at a
    total  cost  for  the  land  and  building  of  approximately  $2,300,000.
    Although  the Company invested as a limited partner, along with the  other
    limited partners,  it  has  signed an indemnity agreement to reimburse the
    general partner for any losses suffered from operating the Partnership.

     The office building is financed  by  a  mortgage  loan  with a balance of
    $938,542 at December 31, 1995.  The loan matures in 2002 with  interest at
    New  York  prime  rate capped at 8 1/2% until December 1998.  The loan  is
    collateralized by a  first  mortgage  on  the  land  and building, and the
    assignment of leases and rents.

    The  Company  leases  its  corporate  office  from the Partnership.   The
    operating  lease  under which the space was rented  expired  December  31,
    1994, and the space  is currently rented on a year-to-year basis under the
    terms of the expired lease.   Rent  expense  was $ 26,015 and $27,319, for
    the years ended December 31, 1995 and 1994, respectively.

    The  Company has a 9% interest in the Coffee Creek  Golf  Course  Limited
    Liability  Company  (LLC), an Oklahoma limited liability company.  The LLC
    has developed and is  operating a golf course on real property it acquired
    in  Oklahoma.  The LLC is  also  developing  adjacent  real  property  for
    residential  construction.  At December 31, 1995, the Company's net equity
    in the LLC totaled $254,535, ($235,890 at December 31, 1994).

    In December,  1992 the Company invested $90,000 for a 10% interest in OKC
    Industrial Properties,  L.C., an Oklahoma limited liability company, which
    was formed to purchase and  hold  certain Oklahoma  City metropolitan area
    real estate as an investment.  At December  31,  1995,  the  Company's net
    equity in the limited liability company was $76,232, compared  to  $75,878
    at December 31, 1994.



                                       27
<PAGE>

Note 8 -COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION,
       EXPLORATION, AND DEVELOPMENT ACTIVITIES

    All  of  the  Company's oil and gas operations are within the Continental
    United States.   In  connection  with  its  oil  and  gas  operations, the
    following costs were incurred:

                                                YEAR ENDED DECEMBER 31,
                                                    1995         1994
     Acquisition of Properties
        Unproved                                $  253,031   $   97,970

        Proved                                       -----      149,601


    Exploration Costs                              324,238      299,668

    Development Costs                               29,811       67,421



Note 9 -LEGAL PROCEEDINGS

    In August 1993, the Company filed an action in the District Court of Leon
    County, Texas to quiet title to its 13/32nd interest in approximately  203
    mineral acres associated with two producing oil and gas wells completed in
    1988.   The  Company  claims  title  through  deeds  recorded in 1932; the
    defendants  claim  title  under  a  deed  dated  nine years prior  to  the
    Company's  deeds but not recorded until seven years  after  the  Company's
    deeds were recorded.   Approximately $850,000 of proceeds from oil and gas
    sales were held in suspense  by  the unit operator at March 1996, and have
    not been recorded as revenue by the  Company.   The  Company  has expended
    $428,000  in drilling, completion and operating costs for these  wells  of
    which $233,750 was included in the Company's net investment in oil and gas
    properties at December 31, 1995.  If the Company is successful in quieting
    title to its  mineral  interests  in  this  litigation  and  recovers  the
    suspended  oil and gas proceeds, management believes the outcome will have
    a material favorable  effect  on  the Company and its financial condition.
    If  the Company is unsuccessful in this  litigation,  management  believes
    that such outcome will not have a material adverse effect on the Company's
    financial condition.  The case is set for trial April 1, 1996.

Note 10 - FINANCIAL INSTRUMENTS

    The  following table includes various estimated fair value information as
    of December 31, 1995  as  required  by  Statement of Financial Accounting
    Standards No.107, "Disclosures about Fair Value of Financial Instruments"
    (SFAS 107).   Such  information, which pertains to the Company's financial
    instruments, is based  on  the requirements set forth in SFAS 107 and does
    not purport to represent the aggregate net fair value of the Company. The
    carrying amounts in the table below are the amounts at which the financial
    instruments are reported in the financial statements

    All of the Company's financial  instruments  are  held for purposes other
    than trading, except for trading securities.
                                         28
<PAGE>



    The following methods and assumptions were used to estimate the fair value
    of  each  class of financial instruments for which it  is  practicable  to
    estimate that value:

    1.CASH AND CASH EQUIVALENTS

    The carrying  amount approximates fair value because of the short maturity
    and highly liquid nature of those instruments.

    2.AVAILABLE FOR SALE SECURITIES

    The estimated fair values are based upon quoted market prices.

    3.TRADING SECURITIES

    The estimated fair values are based upon quoted market prices.

    4.DIVIDENDS PAYABLE

    The carrying amount   approximates  fair value due to the demand nature of
    these obligations.

    The carrying amounts and estimated fair  values of the Company's financial
    instruments are as follows:



                                         Carrying     Estimated
                                          AMOUNT      FAIR VALUE
   Financial Assets
    Cash and Cash Equivalents          $  175,014   $   175,014
    Available for Sale Securities       2,689,546     2,689,546
    Trading Securities                    372,705       372,705
   Financial Liabilities
    Dividends Payable                    (129,277)     (129,277)



                                         29
<PAGE>















                 UNAUDITED SUPPLEMENTAL FINANCIAL INFORMATION 












                                         30
<PAGE>

                                                    SUPPLEMENTAL SCHEDULE 1


                       THE RESERVE PETROLEUM COMPANY
              WORKING INTERESTS RESERVE QUANTITY INFORMATION
                                (Unaudited)

                                                  YEARS ENDED DECEMBER 31,
                                                     1995         1994
Oil & Natural Gas
   Liquids (Bbls)

   Proved Developed and
    Undeveloped Reserves
     Beginning of Year                              76,819       78,920
     Revisions of Previous Estimates               (12,911)      (9,157)

     Extensions and Discoveries                     29,166        7,177

     Purchase of Minerals in Place                    ----       15,429

     Production                                    (14,360)     (15,550)
                                                ----------   ----------
     End of Year                                    78,714       76,819
                                                ==========   ==========

   Proved Developed Reserves
     Beginning of Year                              76,819       78,920

     End of Year                                    78,714       76,819

Gas (MCF)

   Proved Developed and Undeveloped
     Reserves Beginning of Year                  1,537,949    1,618,464

     Revisions of Previous Estimates                 3,602       55,947

     Extensions and Discoveries                     52,256      119,269

     Production                                   (221,823)    (255,731)
                                                ----------    --------- 
     End of Year                                 1,371,984    1,537,949
                                                 =========    =========

   Proved Developed Reserves
    Beginning of Year                            1,537,949    1,618,464

    End of Year                                  1,371,984    1,537,949

(continued)

 See notes on next page

                                         31
<PAGE>





                                                    SUPPLEMENTAL SCHEDULE 1





                       THE RESERVE PETROLEUM COMPANY
              WORKING INTERESTS RESERVE QUANTITY INFORMATION
                                (Unaudited)


(Concluded)


Notes 1. Estimates  of  royalty  interests reserves  have not been included
         because  the  information required for the estimation of said
         reserves  is  not available.  The Company's share of production
         from its net royalty  interests  was 14,940 Bbls of oil and 147,716
         MCF of gas for the year ended  December  31,  1995, and 15,517
         Bbls  of  oil  and 135,903 MCF of gas for the  year  ended
         December 31, 1994.

      2. The  preceding  table  sets forth estimates  of  the Company's
         proved developed oil and  gas reserves, together  with  the changes
         in those reserves as prepared by the Company's engineer for the
         years  ended December 31, 1995 and 1994. 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 all
         available geological and reservoir data, as well as actual
         production performance data.  These  estimates  are reviewed
         annually  and  are revised upward or downward, as warranted by
         additional performance data.






                                         32
<PAGE>



                                                    SUPPLEMENTAL SCHEDULE 2




                       THE RESERVE PETROLEUM COMPANY
         STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
                   RELATING TO PROVED WORKING INTERESTS
                           OIL AND GAS RESERVES
                                (Unaudited)



                                                    AT DECEMBER 31,
                                                   1995         1994

Future Cash Inflows                             $3,640,464   $4,010,900

Future Production and
   Development Costs                            (1,447,683)  (1,597,992)

Future Income Tax Expense                         (553,158)    (621,958)
                                                ----------   ---------- 
Future Net Cash Flows                            1,639,623    1,790,950

   10% Annual Discount for
   Estimated Timing of Cash Flows                 (442,519)    (573,409)
                                                ----------   ----------

Standardized Measure of Discounted
   Future Net Cash Flows                        $1,197,104   $1,217,541
                                                ==========   ==========

   Estimates of future net cash flows from the Company's proved  working
   interest  oil  and  gas reserves are shown in the table above.  These
   estimates, which by their  nature are subject to revision in the near
   term,  are based on prices in effect at year end, with no escalation,
   except for fixed and determinable  amounts  attributable to gas under
   provisions of the Natural Gas Policy Act (NGPA).  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 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.





                                         33
<PAGE>

                                                    SUPPLEMENTAL SCHEDULE 3





                       THE RESERVE PETROLEUM COMPANY
           CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE
      NET CASH FLOW FROM PROVED WORKING INTERESTS RESERVE QUANTITIES
                                (Unaudited)



                                                YEAR ENDED DECEMBER 31,
                                                   1995         1994
Standardized Measure,
    Beginning of Year                           $1,217,541   $1,441,907

   Sales and Transfers, Net of
    Production Costs                              (279,677)    (587,828)

   Net Change in Sales and Transfer
    Prices, Net of Production Costs               (188,640)    (156,167)

   Extensions, Discoveries and Improved
    Recoveries, Net of Future Production
    and Development Costs                          296,452      102,811

   Purchase of Reserves in Place                      ----      112,783

   Sale of Reserves in Place                          ----      (27,902)

   Revisions of Quantity Estimates                 (30,277)      95,246

   Accretion of Discount                           177,702      197,521

   Net Change in Income Taxes                       19,126      110,372

   Changes in Production Rates
    (Timing) and Other                             (15,123)     (71,202)
                                                ----------   ----------
Standardized Measure,
   End of Year                                  $1,197,104   $1,217,541
                                                ==========   ==========




                                         34
<PAGE>







Item 8. Changes  in  and  Disagreements with Accountants on Accounting  and
Financial Disclosure.

Not Applicable


                                 PART III


Items 9, 10, 11, and 12 are  incorporated  by reference to the Company's
proxy statement to be mailed to security holders  on  or  about April 8,
1996 in connection with its annual stockholders' meeting to  be  held on
May 7, 1996.

Item 13.Exhibits and Reports on Form 8-K.

 (a)  Exhibits

    The following documents are exhibits to this Form 10-K.  Each  document
marked  by  an  asterisk is hereby incorporated herein by reference to  the
same document previously filed with the Securities and Exchange Commission.

Exhibit                                      S.E.C.        Exhibit
REFERENCE       DESCRIPTION              REPORT (DATE)      NUMBER       PAGE

  3.1      *Restated Certificate of
            Incorporation dated
            November 1, 1988             10-K (12/88)        3.1          39

  3.2      *By-Laws
            dated November 1, 1988       10-K(12/88)         3.2          50

 27        Financial Data Schedule       10KSB(12/95)

(b).  Reports on Form 8-K.        

      Reports on  Form 8-K have been filed with the Securities and Exchange
      Commission during the last quarter of the period covered by this report
      as follows.

       Item                      Report            Financial
      REPORTED                   DATE           STATEMENT FILED
      5.  Other Events       October 28, 1995           No

      5.  Other Events       December 29, 1995          No


                                       35
<PAGE>


                               SIGNATURES


In accordance with Section 13 or 15(d) of the Securities Exchange Act the
registrant  caused this  report  to  be  signed  on  its  behalf  by  the
undersigned, thereunto duly authorized.

                              THE RESERVE PETROLEUM COMPANY
                                        (Registrant)



                                   MASON W. MCLAIN
                              By:  Mason W. McLain, President
                              (Principal Executive Officer)




                                   JERRY L. CROW
                              By:  Jerry L. Crow, 2nd Vice President
                              (Principal Financial and Accounting Officer)


Date:  March 25, 1996




     Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons  on  behalf of
the Registrant and in the capacities and on the dates indicated:



MASON W. MCLAIN                    JERRY L. CROW
Mason W. McLain (Director)         Jerry L. Crow (Director)
March 25, 1996                     March 25, 1996



ROBERT L. SAVAGE                   MYRA D. RALSTON
Robert L. Savage (Director)        Myra D. Ralston (Director)
March 25, 1996                     March 25, 1996




                                         36
<PAGE>