<PAGE>
 
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                        

                                   FORM 10-K
                                 ANNUAL REPORT
                      PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

   For the fiscal year ended December 31, 1998 Commission file number 0-5426

                             THE WISER OIL COMPANY
                            A DELAWARE CORPORATION
                             --------------------
                 I.R.S. EMPLOYER IDENTIFICATION NO. 55-0522128
                         8115 PRESTON ROAD, SUITE 400
                              DALLAS, TEXAS 75225
                           TELEPHONE: (214) 265-0080

          Securities registered pursuant to Section 12(b) of the Act:
                                        
                                                Name of exchange on
     Title of each class                          which registered
     -------------------                        -------------------

     Common Stock-Par Value, $3.00 Per Share    New York Stock Exchange
     Preferred Stock Purchase Rights            New York Stock Exchange

Indicate by check mark whether registrant 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, and has been subject to such filing requirements for the
past 90 days.    X .
                ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not 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-K or any amendment to this
Form 10-K.    X .
             ---

As of February 26, 1999, registrant had outstanding 8,951,965 shares of common
stock, $3.00 par value ("Common Stock"), which is registrant's only class of
common stock.

The aggregate market value of registrant's Common Stock held by non-affiliates
based on the closing price on February 26, 1999 was approximately $15 million.

                      DOCUMENTS INCORPORATED BY REFERENCE
  (Specific incorporations are identified under the applicable item herein.)
                                        
Portions of the registrant's proxy statement furnished to stockholders in
connection with the May 17, 1999 Annual Meeting of Stockholders (the "Proxy
Statement") are incorporated by reference in Part III of this Report. The Proxy
Statement will be filed with the Securities and Exchange Commission within 120
days of the close of the registrant's fiscal year.
 
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<PAGE>
 
                               TABLE OF CONTENTS

                                  DESCRIPTION
Item                                                                        Page
----                                                                        ----

                                    PART I
 
1.   BUSINESS..........................................................       3
2.   PROPERTIES........................................................      25
3.   LEGAL PROCEEDINGS.................................................      25
4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............      25

                                    PART II

5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
       STOCKHOLDER MATTERS.............................................      26
6.   SELECTED FINANCIAL DATA...........................................      27
7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
       CONDITION AND RESULTS OF OPERATIONS.............................      29
8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................      36
9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
     ACCOUNTING AND FINANCIAL DISCLOSURE...............................      36

                                   PART III

10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT................      36
11.  EXECUTIVE COMPENSATION............................................      36
12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
       MANAGEMENT......................................................      36
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................      36

                                    PART IV

14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
       ON FORM 8-K.....................................................      37

                                       2
<PAGE>
 
                                                           The Wiser Oil Company

                             THE WISER OIL COMPANY

                                    PART I
Item 1. Business

General

Founded in 1905, The Wiser Oil Company (the "Company" or "Wiser") is one of the
oldest public independent oil and gas companies in the United States. The
Company's total proved reserves have grown to 48.0 MMBOE (approximately 58% of
which were oil and NGLs) at December 31, 1998 from 24.3 MMBOE at December 31,
1991, and its annual net production has grown to 5.1 MMBOE in 1998 from 2.3
MMBOE in 1991. The Company's primary operations, representing approximately 49%
of its proved reserves at December 31, 1998, are located in the Permian Basin in
West Texas and Southeast New Mexico. Wiser has additional operations in Alberta,
Canada, the Appalachian Basin in Kentucky, Tennessee and West Virginia, and the
San Juan Basin in New Mexico.

Prior to 1991 the Company focused primarily on the acquisition of non-operated
interests in oil and gas properties. In 1991 the Company moved its headquarters
from Sistersville, West Virginia to Dallas, Texas and began to assemble a team
of experienced management with substantial acquisition, exploitation and
development expertise. After reviewing the Company's existing property portfolio
and refining the new business strategy, the management team began disposing of
the Company's non-strategic assets and acquiring and operating properties in new
core areas with the potential for increased reserves and production volumes.
Pursuant to this strategy, the Company acquired and developed properties in the
Permian Basin and Canada, and added reserves and production through workovers,
recompletions, waterfloods and CO2 gas injections, as well as the drilling of
exploratory, development and infill wells.

A substantial portion of the Company's growth in reserves and production volumes
since 1991 has been the result of (i) two enhanced oil recovery projects on
properties acquired from 1992 to 1996 in the Permian Basin and (ii) the
Company's 1994 acquisition and subsequent exploration on and exploitation of
properties in Alberta, Canada. From June 1993 through December 1998, the Company
completed 178 producing wells on its Maljamar waterflood project in Southeast
New Mexico. As a result, the Company's average daily net production from the
three units in this project increased to 2,582 BOE in 1998 from 580 BOE in
January 1993 (on a pro forma combined basis, assuming the Company had acquired
all three units at January 1, 1993). At its Wellman Unit in West Texas, the
Company used CO2 gas injection to increase average daily net production to 1,257
BOE in 1998 from 650 BOE in December 1993. In June 1994 the Company acquired oil
and gas properties located primarily in Alberta, Canada for $52.0 million. From
the date of their acquisition through December 1998, the Company completed 56
net wells on these properties. As a result, the Company's average daily net
Canadian production increased to 3,877 BOE in 1998 from 1,860 BOE in June 1994.

The Company's principal executive offices are located at 8115 Preston Road,
Suite 400, Dallas, Texas 75225, and its telephone number is (214) 265-0080.

Certain oil and gas industry terms used herein are defined in the "Glossary of
Oil and Gas Terms" appearing at the end of this Item 1.

                                       3
<PAGE>
 
                                                           The Wiser Oil Company

Principal Oil and Gas Properties

The following table summarizes certain information with respect to each of the
Company's principal areas of operation at December 31, 1998.
<TABLE>
<CAPTION>
                                                       Proved Reserves
                                          -----------------------------------------
                                                                                        1998
                              Total                              Total     Percent     Average
                              Gross          Oil                Proved    of Total       Net
                             Oil and      and NGLs     Gas     Reserves    Proved    Production
                            Gas Wells      (MBbls)    (MMcf)    (MBOE)    Reserves    (BOE/Day)
                            ---------     --------   --------  --------   --------   ----------
<S>                      <C>              <C>        <C>       <C>        <C>        <C>
Permian Basin
  Maljamar.............           230       10,870      4,175    11,566        24%        2,582
  Wellman..............            16        8,463        965     8,624        18%        1,257
  Dimmitt/Slash Ranch..            81        1,660      9,931     3,315         7%          892
                                -----       ------    -------    ------       ---        ------
    Total..............           327       20,993     15,071    23,505        49%        4,731
Appalachian Basin......           450        1,034     36,784     7,165        15%        1,382
San Juan Basin.........         2,300           45     20,767     3,506         7%        1,255
Other..................           543        1,513     22,843     5,320        11%        2,752
                                -----       ------    -------    ------       ---        ------
Total United States....         3,620       23,585     95,465    39,496        82%       10,120
Canada.................           312        4,403     24,516     8,489        18%        3,877
                                -----       ------    -------    ------       ---        ------
Total Company..........         3,932       27,988    119,981    47,985       100%       13,997
                                =====       ======    =======    ======       ===        ======
</TABLE>

Permian Basin

Maljamar. The Company's Maljamar properties are situated in Southeast New
Mexico. At December 31, 1998, the Maljamar properties contained 11.6 MMBOE of
proved reserves, which represented 24% of the Company's total proved reserves
and 10% of the Company's Present Value of total proved reserves.

The Maljamar properties consist primarily of three oil producing units acquired
by the Company in separate transactions between 1992 and 1996: the Maljamar
Grayburg and Caprock Maljamar Units, both of which are in Lea County, New
Mexico, and the Skelly Unit in Eddy County, New Mexico. The Maljamar Grayburg
Unit produces from the Grayburg and San Andres formations at depths ranging from
3,800 to 4,500 feet, and the Caprock Maljamar Unit produces from the same
formations at depths ranging from 4,000 to 5,000 feet. The Skelly Unit is
located approximately five miles west of the two Lea County units and produces
from the Seven Rivers, Grayburg and San Andres formations at depths ranging from
2,100 to 4,000 feet. The Company has a 100% working interest in each of these
units, which, along with some smaller adjacent properties, have been combined
into a single large scale waterflood project encompassing approximately 12,800
gross leasehold acres.

Exploitation efforts at the project are essentially complete and included
conversion of existing wells to injection wells and the drilling of infill
development wells on 20-acre spacing to create 40-acre five-spot water injection
patterns. From June 1, 1993 through December 31, 1998, the Company made capital
expenditures of approximately $75 million and completed 168 producing wells at
the project. At December 31, 1998, the project included 230 producing wells and
174 water injection wells, virtually all of which were operated by the Company.
During 1998, Wiser placed a total of 13 wells on production.

The Company's net production from the Maljamar properties averaged 2,308 Bbls of
oil, 68 Bbls of NGLs and 1,238 Mcf of natural gas per day in 1998. The Company's
cumulative net production from the Maljamar properties since acquired by the
Company has been 3,171 MBbls of oil and 1.6 Bcf of natural gas through December
31, 1998.

Wellman Unit. In 1993 the Company acquired a 62% working interest in and became
operator of the Wellman Unit in Terry County, Texas, located in the northwestern
edge of the Horseshoe Atoll. During 1998, the Company acquired an additional 28%
working interest in the Wellman Unit which increased the Company's working
interest to 90% as of December 31, 1998. At December 31, 1998, the Company's
Wellman property contained 8.6 MMBOE 

                                       4
<PAGE>
 
                                                           The Wiser Oil Company

of proved reserves, which represented 18% of the Company's total proved reserves
and 8% of the Company's Present Value of total proved reserves.

The Company owns approximately 2,300 gross (2,100 net) leasehold acres in the
Wellman Unit. The Wellman Unit produces oil from the Wolfcamp Reef formation at
depths ranging from 9,100 to 10,000 feet through the injection of water and CO2
into the reservoir. Water injection at the unit began in 1979, and CO2 injection
began in 1983. The unit also includes a gas processing plant, which processes
wellhead gas produced from the unit. Wiser's interest in this plant is
proportionate to its working interest in the Wellman Unit. Processing at the
plant involves subjecting the wellhead gas to high pressure and low temperature
treatments that cause the gas to separate into various products, including NGLs,
residual natural gas and CO2. The NGLs and residual natural gas are sold to
pipeline companies, and the CO2 is reinjected into the unit's reservoir. At
December 31, 1998, the unit included 16 productive wells, three water injection
wells, three CO2 injection wells and three water disposal wells, all of which
were operated by the Company.

The Company's net production from the Wellman Unit averaged 754 Bbls of oil, 453
Bbls of NGLs and 300 Mcf of natural gas per day in 1998. The Company's
cumulative net production from the unit since acquired by the Company has been
1,801 MBbls of oil, 601 MBbls of NGLs and 421 MMcf of natural gas through
December 31, 1998.

In 1994 the Company began reconditioning the gas processing plant at the Wellman
Unit to enhance the extraction of NGLs and residual natural gas from the
wellhead gas. The Company completed the reconditioning project in June 1995 at a
total cost of approximately $6.0 million. For the year ended December 31, 1998,
the gas plant processed an average of 34 MMcf of gross natural gas and CO2 per
day and recovered an average of 611 Bbls of NGLs and 419 Mcf of residual natural
gas per day. The plant currently operates at 96% of its maximum capacity of 35
MMcf of gas per day.

Dimmitt/Slash Ranch Fields. The Company's Dimmitt/Slash Ranch properties are
situated in Loving County, Texas, 80 miles west of Midland, Texas. At December
31, 1998, the Dimmitt/Slash Ranch properties contained 3.3 MMBOE of proved
reserves, which represented 7% of the Company's total proved reserves and 8% of
the Company's Present Value of total proved reserves.

The Company owns approximately 5,320 gross (5,290 net) leasehold acres in the
Dimmitt Field, and has working interests in this acreage ranging from 75% to
100%. The Company acquired its initial interest in and became operator of the
field in 1993. The Dimmitt Field produces oil and gas from the Cherry Canyon and
Bell Canyon formations at depths ranging from 4,700 to 6,700 feet. At December
31, 1998, the field included 77 productive wells.

The Slash Ranch Field is a natural gas field that underlies the Dimmitt Field.
The Company owns approximately 4,160 gross (3,390 net) leasehold acres in the
Slash Ranch Field. The Slash Ranch Field produces from the Atoka, Fusselman and
Ellenburger formations at depths ranging from 15,000 to 20,000 feet. At December
31, 1998, the field included four producing wells, all of which were operated by
the Company. The Company's working interests in these wells range from 34% to
100%.

The Company's net production from the Dimmitt/Slash Ranch properties averaged
442 Bbls of oil and 2,701 Mcf of natural gas per day in 1998. The Company's
cumulative net production from the properties since acquired by the Company has
been 616 MBbls of oil and 5.0 Bcf of natural gas through December 31, 1998.

Appalachian Basin

The Company's Appalachian Basin properties are situated in Kentucky, Tennessee
and West Virginia. At December 31, 1998, these properties contained 7.2 MMBOE of
proved reserves, which represented 15% of the Company's total proved reserves
and 16% of the Company's Present Value of total proved reserves. The Appalachian
Basin reserves are long-lived reserves (generally, over 40 years) characterized
by gradual decline rates.

                                       5
<PAGE>
 
                                                           The Wiser Oil Company

The Company has operated in Kentucky and Tennessee since 1917 and owns
approximately 123,000 gross (108,000 net) leasehold acres in 22 shallow natural
gas fields in southeastern Kentucky and northeastern Tennessee. The Company's
working interests in this acreage range from 33% to 100%. The Company has a 100%
working interest in approximately 90% of the total acreage. The primary
producing formations in these fields are the Maxon, Big Lime and Corniferous at
a maximum depth of less than 3,000 feet. At December 31, 1998, the Company owned
329 gross (296 net) productive wells in these fields, of which approximately 98%
were operated by the Company. Although daily production from individual wells in
the fields is low (on average, 30 Mcf per day), the production generally
receives a higher sales price than the Company's other natural gas production
because of the proximity of the fields to the northeastern United States gas
markets. The Company completed four development wells and one exploratory well
in Kentucky and Tennessee in 1998.

The Company owns approximately 20,000 gross (14,000 net) leasehold acres in the
Blue Creek Field in Clay and Kanawha Counties, West Virginia. The Company has an
average 70% working interest in this acreage, which it acquired in February
1996. The Blue Creek Field produces from the Rosedale, Injun, Keener and Weir
formations, ranging from depths of 1,200 to 2,800 feet. At December 31, 1998,
the Company owned 121 gross (88 net) productive gas wells in this field, all of
which were operated by another company. During 1998, the Company participated in
the drilling of 28 gross (21 net) development wells in the Blue Creek Field and
an additional 55 low-risk exploratory drilling locations have been identified in
this field.

The Company owns and operates an extensive natural gas gathering and
transportation system located in its producing areas of Kentucky and Tennessee.
The system consists of approximately 340 miles of gas gathering pipelines, 6 gas
compressor stations, two gas processing plants and two gas storage reservoirs.
The pipelines have a throughput capacity of approximately 20 MMcf of natural gas
per day. During the year ended December 31, 1998, the pipelines gathered an
average of 11.3 MMcf of natural gas per day. The two processing plants have a
total capacity of 15 MMcf of natural gas per day. During the year ended December
31, 1998, the plants processed an average of 9.5 MMcf of natural gas per day and
recovered an average of 148 Bbls of NGLs per day. See "-Marketing of
Production."

The Company's net production from its Appalachian Basin properties averaged
6,967 Mcf of natural gas, 65 Bbls of oil and 156 Bbls of NGLs per day in 1998.

San Juan Basin

The Company's San Juan Basin properties are located in Rio Arriba County in
northwestern New Mexico. At December 31, 1998, the San Juan Basin properties
contained 3.5 MMBOE of proved reserves, which represented 7% of the Company's
total proved reserves and 10% of the Company's Present Value of total proved
reserves. The Company owns approximately 11,100 gross (5,300 net) leasehold
acres in the San Juan Basin. The Company's average 48% working interest in the
acreage was contributed in connection with a unitization of the wells in the San
Juan Basin fields in the 1950's, resulting in the ownership by the Company of
small non-operated working interests in the wells. At December 31, 1998, the
Company owned working interests in approximately 2,300 producing gas wells in
the San Juan Basin. These working interests range from 0.21% to 4.2% and average
approximately 1.8%. The Company's San Juan Basin properties produce from
multiple formations ranging from depths of 3,500 feet to 8,000 feet.

The Company's net production from these properties averaged 6,964 Mcf of natural
gas and 94 Bbls of oil per day in 1998. During the year ended December 31, 1998,
approximately 35% of the Company's net production from these properties was from
the Fruitland Coal seams. Such production generates nonconventional fuels income
tax credits for Wiser under Section 29 of the Internal Revenue Code of 1986, as
amended. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Results of Operations." The Company expects that future
development of the properties will depend on natural gas prices, and that its
share of the costs of any such future development activities will not be
significant.

Other U.S. Properties

                                       6
<PAGE>
 
                                                           The Wiser Oil Company

The Company's other United States properties include properties located in the
Anadarko Basin in Texas and Oklahoma and the Gulf Coast onshore region.

Canada

In June 1994, Wiser established an important new core area with the completion
of a $52.0 million acquisition of Canadian oil and gas properties from Eagle
Resources, Ltd. The purchase included 7.2 MMBOE of proved reserves and 2.8 MMBOE
of probable reserves, approximately 127,000 net undeveloped acres, seven
exploration prospects and an existing staff of 23 persons. At December 31, 1998,
the Company's Canadian properties contained 8.5 MMBOE of proved reserves, which
represented 18% of the Company's total proved reserves and 29% of the Present
Value of the Company's total proved reserves.

The following table summarizes certain information with respect to each of the
Company's principal Canadian areas of operation at December 31, 1998:
<TABLE>
<CAPTION>
                                            Proved Reserves
                                 ---------------------------------------
                                                                 Percent      1998
                     Total                             Total    of Total     Average
                     Gross          Oil               Proved    Canadian       Net
                    Oil and      and NGLs     Gas    Reserves    Proved    Production
                   Gas Wells      (MBbls)   (MMcf)    (MBOE)    Reserves    (BOE/Day)
                   ---------     --------   ------   --------   --------   ----------
<S>                <C>           <C>        <C>      <C>        <C>        <C>
Evi...........            14        1,895       --      1,895         22%         930
Provost.......            75          853    1,252      1,062         13%         857
Portage.......            13           --    3,939        657          8%         407
Elm...........             5          309    1,484        556          7%          52
Pine Creek....             7          122    1,370        350          4%         163
Other.........           198        1,224   16,471      3,969         46%       1,468
                         ---        -----   ------      -----        ---        -----
Total Canada..           312        4,403   24,516      8,489        100%       3,877
                         ===        =====   ======      =====        ===        =====
</TABLE>

Evi. The Company's Evi Field is located approximately 400 miles north of
Calgary. At December 31, 1998, the Evi Field contained 1,895 MBOE of proved
reserves, which represented 22% of the Company's total Canadian proved reserves
and 31% of the Present Value of the Company's total Canadian proved reserves.

The Company owns approximately 5,280 gross (2,080 net) leasehold acres in the
Evi Field, and has an average 42% working interest in this acreage. The Evi
Field produces oil from the Granite Wash formation at depths ranging from 4,900
to 5,000 feet. The Company's net production from the Evi Field averaged 930 Bbls
of oil per day in 1998. At December 31, 1998, the Company owned 14 gross (5.1
net) productive wells and 2 gross (0.4 net) water disposal wells in the field,
of which 11 productive wells and both water disposal wells were operated by
Wiser.

Provost. The Company's Provost properties are located approximately 210 miles
northeast of Calgary. At December 31, 1998, the Provost properties contained
1,062 MBOE of proved reserves, which represented 13% of the Company's total
Canadian proved reserves and 9% of the Present Value of the Company's total
Canadian proved reserves.

The Company owns approximately 7,090 gross (4,630 net) leasehold acres in the
Provost properties, and has an average 65% working interest in this acreage. The
Provost properties produce mainly from the Dina formation at depths of 3,070 to
3,170 feet. The Provost Dina `X' and Cummings W3W Pools are the Company's main
producing pools in these properties and water injection in these pools began in
1990 and 1998, respectively. The Company drilled 4 wells in the Provost
properties in 1998 and plans to drill 3 additional wells in Provost in 1999.

The Company's net production from the Provost properties averaged 857 Bbls of
oil per day in 1998. At December 31, 1998, the Company owned 75 gross (51.8 net)
productive wells and 4 gross (3 net) water injection wells on the properties, of
which 56 gross productive wells and all four water injection wells were operated
by the Company.

                                       7
<PAGE>
 
                                                           The Wiser Oil Company

Portage. The Company's Portage properties are located approximately 350 miles
northeast of Calgary. At December 31, 1998, the Portage properties contained 657
MBOE of proved reserves, which represented 8% of the Company's total Canadian
proved reserves and 12% of the Present Value of the Company's total Canadian
proved reserves.

The Company owns approximately 19,200 gross (11,488 net) leasehold acres in the
Portage properties, and has an average 60% working interest in this acreage. The
Portage properties produce from the Grand Rapids and Nisku formations at depths
of 850 and 1,400 feet, respectively. At December 31, 1998, the Company owned 13
gross (11.3 net) productive wells, 11 of which were operated by Wiser. The
Portage properties commenced production in March 1998 and net production from
the Portage properties averaged 2,442 Mcf of natural gas per day in 1998.

Elm. The Company's Elm properties are located approximately 500 miles northwest
of Calgary in British Columbia. At December 31, 1998, the Elm properties
contained 556 MBOE of proved reserves, which represented 7% of the Company's
total Canadian proved reserves and 4% of the Present Value of the Company's
total Canadian proved reserves.

The Company owns approximately 9,140 gross (4,570 net) leasehold acres in the
Elm properties, and has an average 50% working interest in this acreage. The Elm
properties produce from the Gething formation at depths of 4,000 to 4,100 feet.
At December 31, 1998, the Company owned 5 gross (3.0 net) productive wells, all
of which were operated by Wiser. The Company's net production from the Elm
properties averaged 52 Bbls of oil per day in 1998.

Pine Creek. The Company's Pine Creek properties are located approximately 240
miles northwest of Calgary. At December 31, 1998, the Pine Creek properties
contained 350 MBOE of proved reserves, which represented 4% of the Company's
total Canadian proved reserves and 3% of the Present Value of the Company's
total Canadian proved reserves. The Company owns approximately 9,120 gross
(2,480 net) leasehold acres in the Pine Creek properties, and has a 27% working
interest in this acreage. The Pine Creek properties produce gas from the Bluesky
and Gething formations at depths of 8,000 to 8,200 feet. At December 31, 1998,
the Company owned 7 gross (1.7 net) productive wells in the Pine Creek
properties, all of which were operated by a third party. The Company's net
production from the Pine Creek properties averaged 521 Mcf of natural gas per
day and 165 Bbls of NGLs per day in 1998.

Other Canadian Properties. The Company owns interests in approximately 30 other
Canadian properties, primarily located in its principal areas of operation. For
the year ended December 31, 1998, these properties individually represented less
than 5%, and in the aggregate represented approximately 46%, of the Company's
total Canadian proved reserves.

Exploration Activities

United States

The objective of Wiser's domestic exploration program is to maintain and develop
an inventory of high quality drilling opportunities. Exploration prospects have
been generated in-house and through alliances with other oil companies by
utilizing advanced technology that includes 3-D seismic, and pre and post-stack
inversion techniques.

In 1998 the Company's exploration efforts were, and continue to be, focused on
specific exploration plays that are economically viable during this period of
depressed oil prices.  Specifically, the Company is concentrating on relatively
low-risk, largely gas prone areas. Wiser has deferred or dropped higher-risk oil
or gas prospects, and long-term projects that will not yield an adequate return
on investment. Wiser will retain control of most of these deferred projects, and
will have the option of continuing work when prices improve.

In 1998, Wiser participated in 29 gross (18 net) domestic exploration wells,
compared with 18 gross (10 net) wells in 1997, spending $10.5 million in 1998
and $8.9 million in 1997 on domestic exploration. The Company has budgeted a
nominal amount for its 1999 domestic exploration program pending improvement in
oil prices during 1999.

                                       8
<PAGE>
 
                                                           The Wiser Oil Company

The Company is currently focusing its domestic exploration activities in the
following geographical areas:

South Texas. In this area the Company has continued to utilize 3-D seismic
surveys to identify relatively shallow (3,000-8,500 ft), Frio and Yegua drilling
prospects, primarily in Jim Wells and Refugio Counties. During 1998 three
additional 3-D seismic surveys were acquired, adding 75 square miles of data to
an existing 80 square mile grid of 3-D seismic data. In 1998 Wiser participated
in 21 gross wells (15 net) in South Texas of which 11 were completed as gas
wells (7 net), 2 as oil wells (2 net), and 9 wells were plugged and abandoned (6
net).

While the interpretation of the most recently acquired seismic data is
continuing, approximately 30 low-risk, gas-prone drilling prospects have been
identified for future drilling. The Company's working interests in these
prospects range from approximately 40% to 80%.

West Texas. At the Coyonosa Prospect in Pecos County, the Company drilled one
dry hole and drilled and completed one oil well during 1998. The Company has a
38% working interest in the Coyonosa Prospect and may drill an additional well 
at the Coyonosa Prospect in 1999.

Wiser has also identified for future drilling several shallow gas prospects
(6,500 ft.) in the Indian Mesa and Panther Bluff Prospects in Pecos County.
Wiser has a 25% working interest in both the Indian Mesa and Panther Bluff
Prospects.

Gulf Coast. During 1998, the Company participated in the drilling of two dry
holes (.8 net) at the Tecumseh Prospect in West Feliciana Parish, Louisiana.
Wiser does not plan to drill any additional wells at this prospect. The Company
completed the acquisition and processing of two 3-D seismic surveys in the Gulf
Coast area during 1998. At the Bison Ridge Prospect in Lafayette Parish,
Louisiana, a 62 square mile 3-D seismic survey was completed and is currently
being interpreted. Wiser has a 25% working interest in the Bison Ridge prospect.
The Company has also completed the processing and interpretation of a 3-D
seismic survey and identified a future drilling location in the Castleberry
Prospect, in Conecuh County, Alabama where the Company has a 50% working
interest. Wiser also has a 50% working interest at the Little Crow Prospect in
southwest Mississippi, where seismic interpretation is complete and a future
drilling location has been identified.


Canada

Wiser focuses its Canadian exploration activities in specific regions within the
Western Canadian Sedimentary Basin in close proximity to known producing
horizons where the potential for significant reserves exists. The Company's
technical personnel have considerable experience in this focus area. During
1998, the Company drilled 6 gross (3 net) exploratory wells, of which 3 gross (2
net) were successful. The Company spent $2.1 million on exploration in Canada in
1998 and has budgeted a nominal amount for its 1999 Canadian exploration program
pending improvement in oil prices during 1999.

The Company is currently focusing its Canadian exploration activities in the
following geographical areas:

West Central Alberta. In 1998, the Company successfully completed an exploratory
well at the Sunchild prospect and identified a second prospect to the south of
Sunchild at the Ferrier prospect.  A follow-up well location has been identified
at Sunchild, and an exploratory well location has been identified at Ferrier for
future exploratory drilling. The Company's working interests in the Sunchild and
Ferrier prospects range from 27% to 50%.

At the Wild River prospect, the Company finsihed drilling a 14,000 foot
exploratory well in March of 1999 and this well is currently being tested. The
Company has a 50% working interest in the Wild River prospect.

                                       9
<PAGE>
 
                                                           The Wiser Oil Company

Southeast Alberta. The Company initiated a waterflood in the Cummings W3W Pool
at Provost during 1998. Wiser's average working interest in the Provost
properties is 65%.

International

Peru.  The Company participated in an unsuccessful exploratory well in Peru in
1998 at a net cost of $1.6 million to Wiser and currently the Company has no
additional plans to participate in exploration programs in Peru.

Brazil.  In 1998, Wiser elected to withdraw from its Brazilian exploration and
development program.

Marketing of Production

The Company markets its production of oil, natural gas and NGLs to a variety of
purchasers, including large refiners and resellers, pipeline affiliate
marketers, independent marketers, utilities and industrial end-users. To help
manage the impact of potential price declines, Wiser has developed a portfolio
of long- and short-term contracts with prices that are either fixed or related
to market conditions in varying degrees. Most of the Company's production is
sold pursuant to contracts that provide for market-related pricing for the areas
in which the production is located.

During the year ended December 31, 1998, revenues from the sale of production to
Highland Energy Company, Koch Oil Co. Ltd. and Enron Oil Trading and
Transportation represented approximately 34%, 13% and 9%, respectively, of the
Company's total oil and gas revenues. The sales to Koch Oil Co. Ltd. accounted
for approximately 55% of the Company's revenues from sales of its Canadian
production in 1998. The Company believes it would be able to locate alternate
purchasers in the event of the loss of any one or more of these purchasers, and
that any such loss would not have a material adverse effect on the Company's
financial condition or results of operations.

Crude Oil. The Company sells its crude oil and condensate to various refiners
and resellers in the United States and Canada at posting-related and spot-
related prices that also depend on factors such as well location, production
volume and product quality. The Company typically sells its crude oil and
condensate production at or near the well site, although in some cases it is
gathered by the Company or others and delivered to a central point of sale. The
Company's crude oil and condensate production is transported by truck or by
pipeline and is typically committed to arrangements having a term of one year or
less. The Company has not engaged in crude oil trading activities.  Revenue from
the sale of crude oil and condensate totaled $29.8 million for the year ended
December 31, 1998 and represented 50% of the Company's total oil and gas
revenues for 1998.

From time to time, the Company enters into crude oil and natural gas price
hedges to reduce its exposure to commodity price fluctuation. See "Quantitative
and Qualitative Disclosures about Market Risk - Commodity Price Risk" and Note 
1 to the Company's Consolidated Financial Statements included elsewhere in this 
Report.

                                       10
<PAGE>
 
                                                           The Wiser Oil Company

Natural Gas. The Company sells its produced natural gas and gathered gas to
utilities, marketers, processor/resellers and industrial end-users primarily
under market-sensitive, long-term contracts or daily, monthly or multi-month
spot agreements. An insignificant amount of the Company's natural gas is
committed to long-term, fixed-price sales agreements. To accomplish the delivery
and sale of certain of its natural gas, the Company has entered into long-term
agreements with various natural gas gatherers that deliver its gas to points of
sale on major transmission pipelines.

In Kentucky and Tennessee, the Company owns and operates an extensive natural
gas gathering and transportation system consisting of approximately 340 miles of
pipeline, 8 gas compressor stations, two gas processing plants and two gas
storage reservoirs. The Company utilizes this system to procure, aggregate and
deliver natural gas produced from over 260 wells that are owned and operated by
the Company, comprising most of its Appalachian Basin natural gas production,
together with natural gas produced from wells owned and operated by others, in
meeting its delivery obligations under a sales contract with a local utility.
This sales contract, which expires on October 31, 1999, provides for market-
related pricing plus payment of a stated standby demand charge based on an
established peak-day delivery obligation. The maximum daily volume of natural
gas that the utility may demand is subject to annual adjustment (never to exceed
12,000 Mcf per day) and currently is fixed at 8,910 Mcf per day. The maximum
annual volume of natural gas that the utility may demand under this contract is
limited to 2,200,000 Mcf. The Company also utilizes its Kentucky/Tennessee
gathering and transportation system to transport natural gas on behalf of third
parties and natural gas purchased from third parties for resale.

The Company believes that it has sufficient production from its properties, and
from those of others tied to its gathering and transportation system, to meet
the Company's delivery obligations under its existing natural gas sales
contracts.

NGLs. From its natural gas processing plants in West Texas and Kentucky, the
Company sells NGLs to independent marketers for resale. A direct pipeline
connection to the Texas Gulf Coast market area facilitates the sale of NGLs from
the Company's Wellman Unit, and enables the Company to receive prices that are
representative of the daily market value of NGLs on the Texas Gulf Coast, less
transportation and fractionation costs. The market for NGLs in Kentucky is less
competitive, with higher transportation costs in that region due to the absence
of product pipelines. The Company's average price in 1998 for NGLs sold from
Company-operated plants or under processing agreements with others was $9.25 per
Bbl.  Prices for NGLs attributable to natural gas sold to plants operated by
others are generally included in the prices reported by the Company for the sale
of its natural gas.

Price Considerations. Crude oil prices are established in a highly liquid,
international market, with average crude oil prices received by the Company
generally fluctuating with changes in the futures price established on the
NYMEX for West Texas Intermediate Crude Oil ("NYMEX-WTI"). The average crude oil
price per Bbl received by the Company in 1998 was $12.46. The average NYMEX-WTI
closing price per Bbl for 1998 was $14.43.

Natural gas prices in each of the geographical areas in which the Company
operates are closely tied to established price indices which are heavily
influenced by national and regional supply and demand factors and the futures
price per MMBtu for natural gas delivered at Henry Hub, Louisiana established on
the NYMEX ("NYMEX-Henry Hub"). At times, these indices correlate closely with
the NYMEX-Henry Hub price, but often there are significant variances between the
NYMEX-Henry Hub price and the indices used to price the Company's natural gas.
Average natural gas prices received by Wiser in each of its operating areas
generally fluctuate with changes in these established indices. The average
natural gas price per Mcf received by the Company in 1998 was $1.84. The average
NYMEX-Henry Hub price per MMBtu for 1998 was $2.14, computed by averaging the
closing price on the last three trading days for the prompt month NYMEX natural
gas futures contract applicable to each month in 1998. The average natural gas
price received by the Company in 1998 was lower than such 1998 NYMEX-Henry Hub
price as a result of pricing differentials determined by the location of the
Company's natural gas production relative to the Henry Hub trading point and
lower natural gas prices generally applicable to Canadian natural gas production
relative to U.S. production.

                                       11
<PAGE>
 
                                                           The Wiser Oil Company

Oil and Gas Reserves

The following table sets forth the proved developed and undeveloped reserves of
the Company at December 31, 1998:

<TABLE>
<CAPTION>
                                       Oil and NGLs (MBbls)                 Gas (Mmcf)                 Total Reserves (MBOE)
                                --------------------------------  -------------------------------  ------------------------------
                                Developed    Undeveloped  Total   Developed  Undeveloped   Total   Developed  Undeveloped  Total
                                ---------    -----------  ------  ---------  -----------  -------  ---------  -----------  ------
<S>                          <C>           <C>            <C>     <C>        <C>          <C>      <C>        <C>          <C>
Permian Basin                                             
  Maljamar.................        10,218        652      10,870      4,101       74        4,175     10,902       664     11,566
  Wellman..................         8,463         --       8,463        965       --          965      8,624        --      8,624
  Dimmitt/Slash Ranch......         1,439        221       1,660      9,501      430        9,931      3,022       293      3,315
                                   ------      -----      ------    -------    -----      -------     ------     -----     ------
    Total..................        20,120        873      20,993     14,567      504       15,071     22,548       957     23,505
Appalachian Basin..........         1,034         --       1,034     30,194    6,590       36,784      6,067     1,098      7,165
San Juan Basin.............            34         11          45     19,006    1,761       20,767      3,201       305      3,506
Other......................         1,513         --       1,513     22,843       --       22,843      5,320        --      5,320
                                   ------      -----      ------    -------    -----      -------     ------     -----     ------
Total United States........        22,701        884      23,585     86,610    8,855       95,465     37,136     2,360     39,496
Canada.....................         4,253        150       4,403     23,736      780       24,516      8,209       280      8,489
                                   ------      -----      ------    -------    -----      -------     ------     -----     ------
Total Company..............        26,954      1,034      27,988    110,346    9,635      119,981     45,345     2,640     47,985
                                   ======      =====      ======    =======    =====      =======     ======     =====     ======
</TABLE>

The following table summarizes the Company's proved reserves, the estimated
future net revenues from such proved reserves and the Present Value and
Standardized Measure of Discounted Future Net Cash Flows attributable thereto at
December 31, 1998, 1997 and 1996:

<TABLE>
<CAPTION>
                                                                           At December 31,
                                                             ------------------------------------------
                                                               1998             1997             1996
                                                             --------         --------         --------
                                                            (000's except weighted average sales prices)
<S>                                                         <C>              <C>              <C>
Proved reserves:
  Oil and NGLs (Bbl).................................          27,988           29,721           31,612
  Gas (Mcf)..........................................         119,981          120,094          113,377
   BOE...............................................          47,985           49,737           50,508
  Estimated future net revenues before income taxes..        $218,969         $359,293         $705,723
  Present Value......................................        $123,831         $210,087         $414,314
  Standardized Measure(1)............................        $113,232         $174,489         $317,180
Proved developed reserves:                                                                  
  Oil and NGLs (Bbl).................................          26,954           28,202           28,117
  Gas (Mcf)..........................................         110,346          109,459          103,129
   BOE...............................................          45,345           46,444           45,305
  Estimated future net revenues before income taxes..        $207,884         $335,338         $631,406
  Present Value......................................        $122,502         $200,647         $381,169
Weighted average sales prices:                                                              
  Oil (per Bbl)......................................        $  10.39         $  15.92         $  24.63
  Gas (per Mcf)......................................            1.98             2.35             3.45
  NGLs (per Bbl).....................................            8.44            11.40            19.79
 
</TABLE>
(1) The Standardized Measure of Discounted Future Net Cash Flows prepared by the
    Company represents the present value (using an annual discount rate of 10%)
    of estimated future net revenues from the production of proved reserves,
    after giving effect to income taxes. See the Supplemental Financial
    Information attached to the Consolidated Financial Statements of the Company
    included elsewhere in this Report for additional information regarding the
    disclosure of the Standardized Measure information in accordance with the
    provisions of Statement of Financial Accounting Standards ("SFAS") No. 69,
    "Disclosures about Oil and Gas Producing Activities."

All information set forth in this Report relating to the Company's proved
reserves, estimated future net revenues and Present Values is taken from reports
prepared by DeGolyer and MacNaughton (with respect to the Company's

                                       12
<PAGE>
 
                                                           The Wiser Oil Company

United States properties) and Gilbert Lausten Jung Associates Ltd. (with respect
to the Company's Canadian properties), each of which is a firm of independent
petroleum engineers. The estimates of these engineers were based upon review of
production histories and other geological, economic, ownership and engineering
data provided by the Company. No reports on the Company's reserves have been
filed with any federal agency. In accordance with guidelines of the Securities
and Exchange Commission ("SEC"), the Company's estimates of proved reserves and
the future net revenues from which Present Values are derived are made using
year end oil and gas sales prices held constant throughout the life of the
properties (except to the extent a contract specifically provides otherwise). A
decline in prices relative to year end 1998 could cause a significant decline in
the Present Value attributable to the Company's proved reserves at December 31,
1998. Operating costs, development costs and certain production-related taxes
were deducted in arriving at estimated future net revenues, but such costs do
not include debt service, general and administrative expenses and income taxes.

There are numerous uncertainties inherent in estimating oil and gas reserves and
their values, including many factors beyond the Company's control. The reserve
data set forth in this Report represents estimates only. Reservoir  engineering
is a subjective process of estimating the sizes of underground accumulations of
oil and gas that cannot be measured in an exact manner. The accuracy of any
reserve estimate is a function of the quality of available data, engineering and
geological interpretation, and judgment. As a result, estimates of different
engineers, including those used by the Company, may vary. In addition, estimates
of reserves are subject to revision based upon actual production, results of
future development, exploitation and exploration activities, prevailing oil and
gas prices, operating costs and other factors, which revisions may be material.
Accordingly, reserve estimates are often  different from the quantities of oil
and gas that are ultimately recovered and are highly dependent upon the accuracy
of the assumptions upon which they are based. There can be no assurance that
these estimates are accurate predictions of the Company's oil and gas reserves
or their values. Estimates with respect to proved reserves that may be developed
and produced in the future are often based upon volumetric calculations and upon
analogy to similar types of reserves rather than actual production history.
Estimates based on these methods are generally less reliable than those based on
actual production history. Subsequent evaluation of the same reserves based upon
production history will result in variations, which may be substantial, in the
estimated reserves.

                                       13
<PAGE>
 
                                                           The Wiser Oil Company

Net Production, Sales Prices and Costs

The following table presents certain information with respect to oil and gas
production, prices and costs attributable to all oil and gas property interests
owned by the Company for the three-year period ended December 31, 1998.

 
                                                   Year Ended December 31,
                                                  -------------------------
                                                   1998     1997     1996
                                                  -------  -------  -------
Production volumes:
      Oil (MBbl)
       United States............................    1,577    1,769    1,732
       Canada...................................      816      672      693
                                                  -------  -------  -------
         Total Company..........................    2,393    2,441    2,425
      Gas (MMcf)                                  
       United States (1)........................   11,143   10,095    9,479
       Canada...................................    3,221    2,734    2,809
                                                  -------  -------  -------
         Total Company (1)......................   14,364   12,829   12,288
      NGLs (MBbl)                                 
       United States............................      260      267      301
       Canada...................................       62       52       50
                                                  -------  -------  -------
         Total Company..........................      322      319      351
Weighted average sales prices (2):                
      Oil (per Bbl)                               
       United States............................  $ 12.68  $ 18.30  $ 18.91
       Canada...................................    12.04    17.28    18.55
         Total Company..........................    12.46    18.02    18.81
      Gas (per Mcf)                               
       United States (1)........................  $  2.05  $  2.46  $  1.95
       Canada...................................     1.12     1.26     1.16
         Total Company..........................     1.84     2.21     1.77
      NGLs (per Bbl)                              
       United States............................  $  9.41  $ 13.34  $ 12.88
       Canada...................................     8.56    16.64    16.21
         Total Company..........................     9.25    13.87    13.36
Selected expenses per BOE (3):                    
      Lease operating                             
       United States............................  $  5.01  $  5.03  $  4.53
       Canada...................................     3.05     3.50     3.04
         Total Company..........................     4.45     4.65     4.14
      Production taxes (4)                        
       United States............................  $  0.84  $  1.02  $  0.93
      Depreciation, depletion and amortization    
       United States............................  $  4.48  $  3.88  $  3.36
       Canada...................................     6.54     7.58     6.49
         Total Company..........................     5.15     4.79     4.16
      General and administrative                  
       United States............................  $  2.11  $  2.17  $  2.11
       Canada...................................     1.41     1.54     1.61
         Total Company..........................     1.96     2.02     1.98
--------------------
(1) Calculated by including volumes of natural gas purchased for resale as
    follows: 1998 - 608 MMcf, 1997-629 MMcf and 1996-605 MMcf.
(2) Reflects results of hedging activities. See "Management's Discussion and
    Analysis of Financial Condition and Results of Operations-Other Matters."
(3) Calculated without including volumes of natural gas purchased for resale.

                                       14
<PAGE>
 
                                                           The Wiser Oil Company

(4) Canada does not assess production taxes on revenue derived from oil and gas
    production from Crown lands. However, in Canada, royalties are payable to
    the provincial governments on production from Crown lands, subject to
    certain programs that provide for royalty rate reductions, royalty holidays
    and tax credits for the purpose of encouraging oil and gas exploration and
    development. See "-Governmental Regulation-Canada."

Productive Wells and Acreage

Productive Wells

The following table sets forth the Company's domestic and Canadian productive
wells at December 31, 1998:

 
                                           Productive Wells
                            ----------------------------------------------
                                 Oil              Gas             Total
                            -------------    -------------   -------------
                            Gross     Net    Gross     Net   Gross     Net
                            -----     ---    -----     ---   -----     --- 
United States..              739      644    2,881 (1) 523   3,620    1,167
Canada.........              234       71       78      32     312      103
                             ---      ---    -----     ---   -----    -----
  Total........              973      715    2,959     555   3,932    1,270
                             ===      ===    =====     ===   =====    =====

(1) 2,300 of the Company's gross natural gas wells are located in the San Juan
    Basin. The Company has non-operated working interests in these wells ranging
    from 0.21% to 4.2%.

Acreage

The following table sets forth the Company's undeveloped and developed gross and
net leasehold acreage at December 31, 1998. Undeveloped acreage includes leased
acres on which wells have not been drilled or completed to a point that would
permit the production of commercial quantities of oil and gas, regardless of
whether or not such acreage contains proved reserves.

                              Undeveloped        Developed          Total
                           ----------------  ----------------  ----------------
                            Gross     Net     Gross      Net    Gross     Net
                           -------  -------  -------  -------  -------  -------
Permian Basin                                                  
  Maljamar...............       --       --   13,013   13,001   13,013   13,001
  Wellman................       --       --    2,280    1,952    2,280    1,952
  Dimmitt/Slash Ranch....    3,389    3,178    6,035    5,229    9,423    8,408
                           -------  -------  -------  -------  -------  -------
    Total................    3,389    3,178   21,328   20,183   24,716   23,361
  Appalachian Basin......   10,379    7,222  114,376   96,377  124,755  103,599
  San Juan Basin.........       --       --   11,160    5,831   11,160    5,831
  Other..................   95,096   42,834   46,118   15,349  141,213   58,183
                           -------  -------  -------  -------  -------  -------
    Total United States..  108,864   53,235  192,981  137,739  301,844  190,973
  Canada.................  141,436   75,237   56,795   25,359  198,231  100,596
                           -------  -------  -------  -------  -------  -------
  Total..................  250,299  128,471  249,776  163,098  500,075  291,569
                           =======  =======  =======  =======  =======  =======
 
(1) Excluded is acreage in which the Company's interest is limited to a mineral
    or royalty interest. At December 31, 1998, the Company held mineral or
    royalty interests in 212,228 gross (18,480 net) developed acres and
    1,520,897 gross (216,836 net) undeveloped acres.

All the leases for the undeveloped acreage summarized in the preceding table
will expire at the end of their respective primary terms unless prior to that
date the existing leases are renewed or production has been obtained from the
acreage subject to the lease, in which event the lease will remain in effect
until the cessation of production. The following table sets forth the minimum
remaining lease terms for the gross and net undeveloped acreage:

                                       15
<PAGE>
 
                                                           The Wiser Oil Company
 
                                                  Acres Expiring
                                                 ----------------
                                                  Gross     Net
                                                 -------  -------
Twelve Months Ending:                            
  December 31, 1999..........................     42,631   22,278
  December 31, 2000..........................     24,772   14,320
  Thereafter.................................    182,896   91,873
                                                 -------  -------
    Total....................................    250,299  128,471
                                                 =======  =======

As is customary in the industry, the Company generally acquires oil and gas
acreage without any warranty of title except as to claims made by, through or
under the transferor. Although the Company has title to developed acreage
examined prior to acquisition in those cases in which the economic significance
of the acreage justifies the cost, there can be no assurance that losses will
not result from title defects or from defects in the assignment of leasehold
rights. In many instances, title opinions may not be obtained if in the
Company's judgment it would be uneconomical or impractical to do so.

Drilling Activity

The following table sets forth for the three-year period ended December 31, 1998
the number of exploratory and development wells drilled by or on behalf of the
Company.

                         1998        1997        1996
                      ----------  ----------  ----------
                      Gross  Net  Gross  Net  Gross  Net
                      -----  ---  -----  ---  -----  ---
Exploratory Wells:                     
------------------
  United States                        
    Producing.......     16   11     10    6      1    1
    Dry.............     14    7      8    4      2    1
  Canada                               
    Producing.......      3    2      3    2      1    1
    Dry.............      3    1      1    1      6    4
Development Wells:                     
------------------
  United States                        
    Producing.......     58   44     80   71     93   85
    Dry.............      2    1      2    1      2    1
  Canada                               
    Producing.......     19   12     39   18     21   15
    Dry.............      7    4      6    4      5    3
Total Wells:                           
------------
    Producing.......     96   69    132   97    116  102
    Dry.............     26   13     17   10     15    9
                        ---  ---    ---  ---    ---  ---
      Total.........    122   82    149  107    131  111
                        ===  ===    ===  ===    ===  ===
 
Operations

The Company generally seeks to be named as operator for wells in which it has
acquired a significant interest, although, as is common in the industry, this
typically occurs only when the Company owns the major portion of the working
interest in a particular well or field. At December 31, 1998, the Company
operated 100% of its properties in the Permian Basin, comprising approximately
49% of the Company's total proved reserves, including Maljamar (230 gross
wells), Wellman (16 gross wells) and Dimmitt/Slash Ranch (81 gross wells). At
December 31, 1998, the Company owned 368 gross wells on its Kentucky and
Tennessee properties, of which approximately 98% were operated by the Company.
At that same date, the Company also operated 106 (out of a total of 312) gross
wells on its Canadian properties.

                                       16
<PAGE>
 
                                                           The Wiser Oil Company

As operator, the Company is able to exercise substantial influence over the
development and enhancement of a well and to supervise operation and maintenance
activities on a daily basis. The Company does not conduct the  actual drilling
of wells on properties for which it acts as operator, but engages independent
contractors who are supervised by the Company. The Company employs petroleum
engineers, geologists and other operations and production specialists who strive
to improve production rates, increase reserves and/or lower the cost of
operating its oil and gas properties.

Oil and gas properties are customarily operated under the terms of a joint
operating agreement, which provides for reimbursement of the operator's direct
expenses and monthly per-well supervision fees. Per-well supervision fees vary
widely depending on the geographic location and producing formation of the well,
whether the well produces oil or gas and other factors. Such fees received by
the Company in 1998 ranged from $95 to $870 per well per month.

Competition

The oil and gas industry is highly competitive. The Company encounters
competition from other oil and gas companies in all areas of its operations,
including the acquisition of producing properties. The Company's competitors
include major integrated oil and gas companies and numerous independent oil and
gas companies, individuals and drilling and income programs. Many of its
competitors are large, well established companies with substantially larger
operating staffs and greater capital resources than the Company. Such companies
may be able to pay more for productive oil and gas properties and exploratory
prospects and to define, evaluate, bid for and purchase a greater number of
properties and prospects than the Company's financial or human resources permit.
The Company's ability to acquire additional properties and to discover reserves
in the future will depend upon its ability to evaluate and select suitable
properties and to consummate transactions in a highly competitive environment.

Drilling and Operating Risks

Drilling activities are subject to many risks, including the risk that no
commercially productive oil or gas reservoirs will be encountered. There can be
no assurance that new wells drilled by the Company will be productive or that
the Company will recover all or any portion of its investment. Drilling for oil
and gas may involve unprofitable efforts, not only from dry wells, but from
wells that are productive but do not produce sufficient net revenues to return a
profit after drilling, operating and other costs. The cost of drilling,
completing and operating wells is often uncertain. The Company's drilling
operations may be curtailed, delayed or canceled as a result of a variety of
factors, many of which are beyond its control, including economic conditions,
mechanical problems, pressure or irregularities in formations, title problems,
weather conditions, compliance with governmental requirements and shortages in
or delays in the delivery of equipment and services. Such equipment shortages
and delays sometimes involve drilling rigs, especially in Canada, where weather
conditions result in a short drilling season, causing a high demand for rigs by
a large number of companies during a relatively short period of time. The
Company's future drilling activities may not be successful. Lack of drilling
success could have a material adverse effect on the Company's financial
condition and results of operations.

In addition, the Company's use of 3-D seismic requires greater pre-drilling
expenditures than traditional drilling strategies. Although the Company believes
that its use of 3-D seismic will increase the probability of success of its
exploratory wells and should reduce average finding costs through the
elimination of prospects that might otherwise be drilled solely on the basis of
2-D seismic and other traditional methods, unsuccessful wells are likely to
occur.

The Company's operations are subject to all the hazards and risks normally
incident to the development, exploitation, production and transportation of, and
the exploration for, oil and gas, including unusual or unexpected geologic
formations, pressures, downhole fires, mechanical failures, blowouts, cratering,
explosions, uncontrollable flows of oil, gas or well fluids and pollution and
other environmental risks. These hazards could result in substantial losses to
the Company due to injury and loss of life, severe damage to and destruction of
property and equipment, pollution and other environmental damage and suspension
of operations. The Company maintains comprehensive

                                       17
<PAGE>
 
                                                           The Wiser Oil Company

insurance coverage, including a $1.0 million general liability insurance policy
and a $30.0 million excess liability policy. The Company believes that its
insurance is adequate and customary for companies of a similar size engaged in
comparable operations, but losses could occur for uninsurable or uninsured risks
or in amounts in excess of existing insurance coverage.

Title to Properties

The Company's land department and contract land professionals have reviewed
title records or other title review materials relating to substantially all of
its producing properties. The title investigation performed by the Company
prior to acquiring undeveloped properties is thorough, but less rigorous than
that conducted prior to drilling, consistent with industry standards. The
Company believes it has satisfactory title to all its producing properties in
accordance with standards generally accepted in the oil and gas industry. The
Company's properties are subject to customary royalty interests, liens incident
to operating agreements, liens for current taxes and other inchoate burdens
which the Company believes do not materially interfere with the use of or affect
the value of such properties. At December 31, 1998, the Company's leaseholds for
approximately 58% of its net acreage were being kept in force by virtue of
production on that acreage in paying quantities. The remaining net acreage was
held by lease rentals and similar provisions and requires production in paying
quantities prior to expiration of various time periods to avoid lease
termination.

The Company expects to make acquisitions of oil and gas properties from time to
time. In making an acquisition, the Company generally focuses most of its title
and valuation efforts on the more significant properties. It is generally not
feasible for the Company to review in-depth every property it purchases and all
records with respect to such properties. However, even an in-depth review of
properties and records may not necessarily reveal existing or potential
problems, nor will it permit the Company to become familiar enough with the
properties to assess fully their deficiencies and capabilities. Evaluation of
future recoverable reserves of oil and gas, which is an integral part of the
property selection process, is a process that depends upon evaluation of
existing geological, engineering and production data, some or all of which may
prove to be unreliable or not indicative of future performance. To the extent
the seller does not operate the properties, obtaining access to properties and
records may be more difficult. Even when problems are identified, the seller may
not be willing or financially able to give contractual protection against such
problems, and the Company may decide to assume environmental and other
liabilities in connection with acquired properties.

Governmental Regulation

The Company's operations are affected from time to time in varying degrees by
political developments and federal, state, provincial and local laws and
regulations. In particular, oil and gas production and related operations are or
have been subject to price controls, taxes and other laws and regulations
relating to the oil and gas industry. Failure to comply with such laws and
regulations can result in substantial penalties. The regulatory burden on the
oil and gas industry increases the Company's cost of doing business and affects
its profitability. Although the Company believes it is in substantial compliance
with all applicable laws and regulations, because such laws and regulations are
frequently amended or reinterpreted, the Company is unable to predict the future
cost or impact of complying with such laws and regulations.

United States. Sales of natural gas by the Company are not regulated and are
generally made at market prices. However, the Federal Energy Regulatory
Commission ("FERC") regulates interstate natural gas transportation rates and
service conditions, which affect the marketing of natural gas produced by the
Company, as well as the revenues received by the Company for sales of such
production. Sales of the Company's natural gas currently are made at
uncontrolled market prices, subject to applicable contract provisions and price
fluctuations which normally attend sales of commodity products. The FERC's
jurisdiction over natural gas transportation was unaffected by the Decontrol
Act. While sales by producers of natural gas, and all sales of crude oil,
condensate and NGLs, can currently be made at uncontrolled market prices,
Congress could re-enact prices controls in the future.

Since the mid-1980's, the FERC has issued a series of orders, culminating in
Order Nos. 636, 636-A and 636-B ("Order 636"), that have significantly altered
the marketing and transportation of natural gas. Order 636 mandated a

                                       18
<PAGE>
 
                                                           The Wiser Oil Company

fundamental restructuring of interstate pipeline sales and transportation
service, including the unbundling by interstate pipelines of the sale,
transportation, storage and other components of the city-gate sales services
such pipelines previously performed. One of the FERC's purposes in issuing the
orders was to increase competition within all phases of the natural gas
industry. Order 636 and subsequent FERC orders issued in individual pipeline
restructuring proceedings have been the subject of appeals, and the courts have
largely upheld Order 636. Because further review of certain of these orders is
still possible, and other appeals remain pending, it is difficult to exactly
predict the ultimate impact of the orders on the Company and its natural gas
marketing  efforts. Generally, Order 636 has eliminated or substantially reduced
the interstate pipelines' traditional role as wholesalers of natural gas, and
has substantially increased competition and volatility in natural gas markets.
While significant regulatory uncertainty remains, Order 636 may ultimately
enhance the Company's ability to market and transport its natural gas, although
it may also subject the Company to greater competition, more restrictive
pipeline imbalance tolerances and greater associated penalties for violation of
such tolerances.

The FERC has announced several important transportation-related policy
statements and proposed rule changes, including the appropriate manner in which
interstate pipelines release capacity under Order 636 and, more recently, the
price which shippers can charge for their released capacity. In addition, in
1996, the FERC issued a policy statement on how interstate natural gas pipelines
can recover the costs of new pipeline facilities. In January 1998, the FERC
issued a policy statement and a request for comments concerning alternatives to
its traditional cost-of-service ratemaking methodology. A number of pipelines
have obtained FERC authorization to charge negotiated rates as one such
alternative. While any additional FERC action on these matters would affect the
Company only indirectly, these policy statements and proposed rule changes are
intended to further enhance competition in natural gas markets. The Company
cannot predict what action the FERC will take on these matters, nor can it
predict whether the FERC's actions will achieve its stated goal of increasing
competition in natural gas markets. However, the Company does not believe that
it will be treated materially differently than other natural gas producers and
marketers with which it competes.

Commencing in May 1994, the FERC issued a series of orders in individual cases
that delineate its new gathering policy. Among other matters, the FERC slightly
narrowed its statutory tests for establishing gathering status and reaffirmed
that, except in situations in which the gatherer acts in concert with an
interstate pipeline affiliate to frustrate the FERC's transportation policies,
it does not generally have jurisdiction over natural gas gathering facilities
and services, and that such facilities and services located in state
jurisdictions are properly regulated by state authorities. In addition, the FERC
has approved numerous transfers by interstate pipelines of gathering facilities
to unregulated independent or affiliated gathering companies, subject to the
transferee providing service for two years from the date of transfer to the
pipeline's existing customers pursuant to a default contract or pursuant to
mutually agreeable terms. In August 1998, the United States Court of Appeals for
the District of Columbia largely upheld the FERC's new gathering policy, but
remanded the FERC's default contract condition. The FERC has not yet issued an
order on remand. This new gathering policy may tend to increase competition
among gatherers, like the Company. This policy may also result in increased
state regulation of the Company's gathering facilities. However, the Company
does not believe that it will be affected materially differently by this policy
than other producers, gatherers and marketers with which it competes.

The Company's gathering operations are subject to safety and operational
regulations relating to the design, installation, testing, construction,
operation, replacement and management of facilities. Pipeline safety issues have
recently been the subject of increasing focus in various political and
administrative arenas at both the state and federal levels. The Company believes
its operations, to the extent they may be subject to current gas pipeline safety
requirements, comply in all material respects with such requirements. The
Company cannot predict what effect, if any, the adoption of this or other
additional pipeline safety legislation might have on its operations, but the
industry could be required to incur additional capital expenditures and
increased costs depending upon future legislative and regulatory changes.

The price the Company receives from the sale of oil and NGLs is affected by the
cost of transporting such products to market. Effective January 1, 1996, the
FERC implemented regulations establishing an indexing system for transportation
rates for oil pipelines, which, generally, would index such rates to inflation,
subject to certain conditions and limitations. These regulations could increase
the cost of transporting oil and NGLs by interstate 

                                       19
<PAGE>
 
                                                           The Wiser Oil Company

pipelines, although the most recent adjustment generally decreased rates. These
regulations have generally been approved on judicial review. The Company is not
able to predict with certainty the effect, if any, of these regulations on its
operations. However, the regulations may increase transportation costs or reduce
wellhead prices for oil and NGLs.

The State of Texas and many other states require permits for drilling
operations, drilling bonds and reports concerning operations and impose other
requirements relating to the exploration for and production of oil and gas. Such
states also have statutes or regulations addressing conservation matters,
including provisions for the unitization or pooling of oil and gas properties,
the establishment of maximum rates of production from wells and the regulation
of spacing, plugging and abandonment of such wells. The statutes and regulations
of certain states limit the rate at which oil and gas can be produced from the
Company's properties. However, the Company does not believe it will be affected
materially differently by these statutes and regulations than any other
similarly situated oil and gas company.

Canada. In Canada producers of oil negotiate sales contracts directly with oil
purchasers, with the result that sales of oil are generally made at market
prices. The price of oil received by the Company depends in part on oil quality,
prices of competing fuels, distance to market, the value of refined products and
the supply/demand balance. Oil exports may be made pursuant to export contracts
with terms not exceeding one year in the case of light crude, and not exceeding
two years in the case of heavy crude, provided that an order approving any such
export has been obtained from the National Energy Board ("NEB"). Any oil export
to be made pursuant to a contract of a longer duration requires an exporter to
obtain an export license from the NEB and the issue of such license requires the
approval of the Governor General in Council.

In Canada the price of natural gas sold is determined by negotiation between
buyers and sellers. Natural gas exported from Canada is subject to regulation by
the NEB and the government of Canada. Exporters are free to negotiate prices and
other terms with purchasers, provided that export contracts in excess of two
years must continue to meet certain criteria prescribed by the NEB and the
government of Canada. As is the case with oil, natural gas exports for a term of
less than two years must be made pursuant to an NEB order, or, in the case of
exports for a longer duration, pursuant to an NEB license and Governor General
in Council approval. The government of Alberta also regulates the volume of
natural gas that may be removed from Alberta for consumption elsewhere based on
such factors as reserve availability, transportation arrangements and marketing
considerations.

In addition to Canadian federal regulation, Alberta and certain other provinces
have legislation and regulations that govern royalties payable on production
from Crown lands. The royalty regime that is in place at a particular time or
location is a significant factor in the profitability of oil and gas production.
Royalties payable on production from lands other than Crown lands are determined
by negotiations between the mineral owner and the lessee. Crown royalties are
determined by governmental regulation and are generally calculated as a
percentage of the value of the gross production. The rate of royalties payable
generally depends in part on prescribed reference prices, well productivity,
geographical location, field discovery date and the type and quality of the
petroleum product produced.

From time to time the government of Alberta has established incentive programs
that have included royalty rate reductions, royalty holidays and tax credits for
the purpose of encouraging oil and gas exploration or enhanced production
projects. For example, a producer of oil or gas is entitled to a credit against
the royalties payable to the Crown by virtue of the Alberta Royalty Tax Credit
("ARTC") program. The ARTC program provides a rebate on Crown royalties paid in
respect of eligible producing properties. The ARTC program is based on a price-
sensitive formula, and the ARTC rate currently varies between 25% and 75% of the
royalty otherwise payable on production. The ARTC rate is currently applied to a
maximum of $2.0 million of Alberta Crown royalties otherwise payable by each
producer or associated group of producers in each tax year. The rate is
established quarterly based on average "par price," as determined by the Alberta
Department of Energy for the previous quarterly period. Producing properties
acquired from corporations claiming maximum entitlement to ARTC will generally
not be eligible for ARTC.

                                       20
<PAGE>
 
                                                           The Wiser Oil Company

Environmental Matters

The Company's operations and properties are subject to extensive and changing
federal, state, provincial and local laws and regulations relating to
environmental protection, including the generation, storage, handling and
transportation of oil and gas and the discharge of materials into the
environment, and relating to safety and health. The recent trend in
environmental legislation and regulation generally is toward stricter standards,
and this trend will likely continue. These laws and regulations may require the
acquisition of a permit or other authorization before construction or drilling
commences and for certain other activities; limit or prohibit construction,
drilling and other activities on certain lands lying within wilderness and other
protected areas; and impose substantial liabilities for pollution resulting from
the Company's operations. The permits required for various of the Company's
operations are subject to revocation, modification and renewal by issuing
authorities. Governmental authorities have the power to enforce compliance with
their regulations, and violations are subject to fines, penalties or
injunctions. In the opinion of management, the Company is in substantial
compliance with current applicable environmental laws and regulations, and the
Company has no material commitments for capital expenditures to comply with
existing environmental requirements. Nevertheless, changes in existing
environmental laws and regulations or in interpretations thereof could have a
significant impact on the Company. The impact of such changes, however, would
not likely be any more burdensome to the Company than to any other similarly
situated oil and gas company.

The Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), also known as the "Superfund" law, and similar state laws impose
liability, without regard to fault or the legality of the original conduct, on
certain classes of persons that are considered to have contributed to the
release of a "hazardous substance" into the environment. These persons include
the owner or operator of the disposal site or sites where the release occurred
and companies that disposed or arranged for the disposal of the hazardous
substances found at the site. Persons who are or were responsible for releases
of hazardous substances under CERCLA may be subject to joint and several
liability for the costs of cleaning up the hazardous substances that have been
released into the environment and for damages to natural resources. Furthermore,
neighboring landowners and other third parties may file claims for personal
injury and property damage allegedly caused by the hazardous substances released
into the environment.

The Company generates typical oil and gas field wastes, including hazardous
wastes, that are subject to the federal Resources Conservation and Recovery Act
and comparable state statutes. The United States Environmental Protection Agency
and various state agencies have limited the approved methods of disposal for
certain hazardous and nonhazardous wastes. Furthermore, certain wastes generated
by the Company's oil and gas operations that are currently exempt from
regulation as "hazardous wastes" may in the future be designated as "hazardous
wastes," and therefore be subject to more rigorous and costly operating and
disposal requirements.

The Oil Pollution Act ("OPA") imposes a variety of requirements on responsible
parties for onshore and offshore oil and gas facilities and vessels related to
the prevention of oil spills and liability for damages resulting from such
spills in waters of the United States. The "responsible party" includes the
owner or operator of an onshore facility or vessel or the lessee or permittee
of, or the holder of a right of use and easement for, the area where an onshore
facility is located. OPA assigns liability to each responsible party for oil
spill removal costs and a variety of public and private damages from oil spills.
Few defenses exist to the liability for oil spills imposed by OPA. OPA also
imposes financial responsibility requirements. Failure to comply with ongoing
requirements or inadequate cooperation in a spill event may subject a
responsible party to civil or criminal enforcement actions.

The Company's Canadian operations are also subject to environmental regulation
pursuant to local, provincial and federal legislation. Canadian environmental
legislation provides for restrictions and prohibitions on releases or emissions
of various substances produced in association with certain oil and gas industry
operations and can affect the location of wells and facilities and the extent to
which exploration and development is permitted. In addition, legislation
requires that well and facilities sites be abandoned and reclaimed to the
satisfaction of provincial authorities. In most cases, an environmental
assessment and review is required prior to initiating exploration or development
projects or undertaking significant changes to existing projects. A breach of
such legislation may result in the imposition of fines and issuance of clean-up
orders. Environmental legislation in Alberta has recently undergone a major
revision and has been consolidated in the Environmental Protection and
Enhancement Act. 

                                       21
<PAGE>
 
                                                           The Wiser Oil Company

Under the new Act, environmental standards and compliance for releases, clean-up
and reporting are stricter. Also, the range of enforcement actions available and
the severity of penalties have been significantly increased. These changes will
have an incremental effect on the cost of conducting operations in Alberta.

The Company owns, leases or operates numerous properties that for many years
have produced or processed oil and gas. The Company also owns and operates
natural gas gathering, transportation and processing systems. It is not uncommon
for such properties to be contaminated with hydrocarbons or polychlorinated
biphenyls. Although the Company or previous owners of these interests may have
used operating and disposal practices that were standard in the industry at the
time, hydrocarbons, polychlorinated biphenyls or other wastes may have been
disposed of or released on or under the properties or on or under other
locations where such wastes have been taken for disposal. These properties may
be subject to federal or state requirements that could require the Company to
remove any such wastes or to remediate the resulting contamination. In addition,
some of the Company's properties are operated by third parties over whom the
Company has no control. Notwithstanding the Company's lack of control over
properties operated by others, the failure of the previous owners or operators
to comply with applicable environmental regulations may, in certain
circumstances, adversely impact the Company.

Abandonment Costs

The Company is responsible for payment of plugging and abandonment costs on its
oil and gas properties pro rata to its working interest. Based on its
experience, the Company anticipates that the ultimate aggregate salvage value of
lease and well equipment located on its properties will exceed the costs of
abandoning such properties. There can be no assurance, however, that the Company
will be successful in avoiding additional expenses in connection with the
abandonment of any of its properties. In addition, abandonment costs and their
timing may change due to many factors, including actual production results,
inflation rates and changes in environmental laws and regulations.

Employees

At February 26, 1999, the Company employed 100 full-time employees, of whom five
were executive officers, 19 were technical personnel, 51 were field personnel
and 25 were administrative personnel. Of the total employees, 86 were located in
the United States and 14 were located in Canada. At February 26, 1999, none of
the Company's employees were represented by a labor union. The Company considers
its relations with its employees to be good.

Facilities

The Company's principal executive and administrative offices are located at 8115
Preston Road, Suite 400, Dallas, Texas. The offices contain approximately 21,000
square feet of space and are leased through December 31, 2001. Rental payments
are approximately $37,000 per month. The Company also maintains a regional
office in Corbin, Kentucky consisting of a one-story building containing
approximately 7,400 square feet of office space. The Company owns this building.
The office of the Company's Canadian subsidiary, The Wiser Oil Company of
Canada, is located at 645 7th Avenue, S.W., Suite 2550, Calgary, Alberta. This
office contains approximately 14,000 square feet of space and is leased through
June 30, 1999. Rental payments are approximately $12,500 per month.

Glossary of Oil and Gas Terms

The following are abbreviations and definitions of terms commonly used in the
oil and gas industry that are used in this Report.

"Bbl" means a barrel of 42 U.S. gallons.

"Bcf" means billion cubic feet.

"BOE" means barrels of oil equivalent, converting volumes of natural gas to oil
equivalent volumes using a ratio of six Mcf of natural gas to one Bbl of oil.

                                       22
<PAGE>
 
                                                           The Wiser Oil Company

"completion" means the installation of permanent equipment for the production of
oil or gas.

"development well" means a well drilled within the proved area of an oil or gas
reservoir to the depth of a stratigraphic horizon known to be productive.

"dry hole" or "dry well" means a well found to be incapable of producing
hydrocarbons in sufficient quantities such that proceeds from the sale of such
production exceed production expenses and taxes.

"exploratory well" means a well drilled to find and produce oil or gas reserves
not classified as proved, to find a new production reservoir in a field
previously found to be productive of oil or gas in another reservoir or to
extend a known reservoir.

"farm-in" means an agreement pursuant to which the owner of a working interest
in an oil and gas lease assigns the working interest or a portion thereof to
another party who desires to drill on the leased acreage. Generally, the
assignee is required to drill one or more wells in order to earn its interest in
the acreage. The assignor usually retains a royalty or reversionary interest in
the lease. The interest received by an assignee is a "farm-in."

"gas" means natural gas.

"gross" when used with respect to acres or wells, refers to the total acres or
wells in which the Company has a working interest.

"infill drilling" means drilling of an additional well or wells provided for by
an existing spacing order to more adequately drain a reservoir.

"MBbl" means thousand Bbls.

"MBOE" means thousand BOE.

"Mcf" means thousand cubic feet.

"MMBOE" means million BOE.

"MMBtu" means one million British Thermal Units. British Thermal Unit means the
quantity of heat required to raise the temperature of one pound of water by one
degree Fahrenheit.

"MMcf" means million cubic feet.

"net" when used with respect to acres or wells, refers to gross acres or wells
multiplied, in each case, by the percentage working interest owned by the
Company.

"net production" means production that is owned by the Company less royalties
and production due others.

"NGL" means natural gas liquid.

"operator" means the individual or company responsible for the exploration,
development and production of an oil or gas well or lease.

"Present Value" when used with respect to oil and gas reserves, means the
estimated future gross revenues to be generated from the production of proved
reserves calculated in accordance with the guidelines of the SEC, net of
estimated production and future development costs, using prices and costs as of
the date of estimation without future escalation (except to the extent a
contract specifically provides otherwise), without giving effect to non-property
related expenses such as general and administrative expenses, debt service,
future income tax expense and depreciation, depletion and amortization, and
discounted using an annual discount rate of 10%.

                                       23
<PAGE>
 
                                                           The Wiser Oil Company

"productive wells" or "producing wells" consist of producing wells and wells
capable of production, including wells waiting on pipeline connections.

"proved developed reserves" means reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods. Additional
oil and gas expected to be obtained through the application of fluid injection
or other improved recovery techniques for supplementing the natural forces and
mechanisms of primary recovery will be included as "proved developed reserves"
only after testing by a pilot project or after the operation of an installed
program has confirmed through production response that increased recovery will
be achieved.

"proved reserves" means the estimated quantities of crude oil, natural gas and
NGLs which upon analysis of geological and engineering data appear with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions, i.e., prices and costs as of
the date the estimate is made. Prices include consideration of changes in
existing prices provided only by contractual arrangements, but not on
escalations based upon future conditions.

  (i)   Reservoirs are considered proved if economic producibility is supported
        by either actual production or conclusive formation tests. The area of a
        reservoir considered proved includes (A) that portion delineated by
        drilling and defined by gas-oil and/or oil-water contacts, if any; and
        (B) the immediately adjoining portions not yet drilled, but which can be
        reasonably judged as economically productive on the basis of available
        geological and engineering data. In the absence of information on fluid
        contacts, the lowest known structural occurrence of hydrocarbons
        controls the lower proved limit of the reservoir.

  (ii)  Reserves which can be produced economically through application of
        improved recovery techniques (such as fluid injection) are included in
        the "proved" classification when successful testing by a pilot project,
        or the operation of an installed program in the reservoir, provides
        support for the engineering analysis on which the project or program was
        based.

  (iii) Estimates of proved reserves do not include the following: (A) oil that
        may become available from known reservoirs but is classified separately
        as "indicated additional reserves"; (B) crude oil, natural gas and NGLs,
        the recovery of which is subject to reasonable doubt because of
        uncertainty as to geology, reservoir characteristics or economic
        factors; (C) crude oil, natural gas, and NGLs, that may occur in
        undrilled prospects; and (D) crude oil, natural gas and NGLs that may be
        recovered from oil shales, coal, gilsonite and other such resources.

"proved undeveloped reserves" means reserves that are expected to be recovered
from new wells on undrilled acreage, or from existing wells where a relatively
major expenditure is required for completion. Reserves on undrilled acreage
shall be limited to those drilling units offsetting productive units that are
reasonably certain of production when drilled. Proved reserves for other
undrilled units can be claimed only where it can be demonstrated with certainty
that there is continuity of production from the existing productive formation.
Under no circumstances should estimates for proved undeveloped reserves be
attributable to any acreage for which an application of fluid injection or other
improved recovery technique is contemplated, unless such techniques have been
proved effective by actual tests in the area and in the same reservoir.

"recompletion" means the completion for production of an existing well bore in
another formation from that in which the well has been previously completed.

"reserves" means proved reserves.

"reservoir" means a porous and permeable underground formation containing a
natural accumulation of producible oil and/or gas that is confined by
impermeable rock or water barriers and is individual and separate from other
reservoirs.

                                       24
<PAGE>
 
                                                           The Wiser Oil Company

"royalty" means an interest in an oil and gas lease that gives the owner of the
interest the right to receive a portion of the production from the leased
acreage (or of the proceeds of the sale thereof), but generally does not require
the owner to pay any portion of the costs of drilling or operating the wells on
the leased acreage. Royalties may be either landowner's royalties, which are
reserved by the owner of the leased acreage at the time the lease is granted, or
overriding royalties, which are usually reserved by an owner of the leasehold in
connection with a transfer to a subsequent owner.

"2-D seismic" means an advanced technology method by which a cross-section of
the earth's subsurface is created through the interpretation of reflecting
seismic data collected along a single source profile.

"3-D seismic" means an advanced technology method by which a three dimensional
image of the earth's subsurface is created through the interpretation of
reflection seismic data collected over surface grid. 3-D seismic surveys allow
for a more detailed understanding of the subsurface than do conventional surveys
and contribute significantly to field appraisal, development and production.

"working interest" means an interest in an oil and gas lease that gives the
owner of the interest the right to drill for and produce oil and gas on the
leased acreage and requires the owner to pay a share of the costs of drilling
and production operations. The share of production to which a working interest
owner is entitled will always be smaller than the share of costs that the
working interest owner is required to bear, with the balance of the production
accruing to the owners of royalties.

"workover" means operations on a producing well to restore or increase
production.

Item 2. Properties

The information required by this Item is contained in Item 1. Business, and is
incorporated herein by reference.

Item 3. Legal Proceedings

The Company and its subsidiaries and affiliates are named defendants in lawsuits
and are involved in governmental proceedings from time to time, all arising in
the ordinary course of business. Although the outcome of these lawsuits and
proceedings cannot be predicted with certainty, management does not expect these
matters to have a material adverse effect on the financial position of the
Company.

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

No matters were submitted to security holders during the fourth quarter of the
year ended December 31, 1998.

                                       25
<PAGE>
 
                                                           The Wiser Oil Company

                                    PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Common Stock is traded on the New York Stock Exchange under the symbol WZR.

The quarterly high and low sales prices and dividends per share of Common Stock
during the three years ended December 31, 1998, were as follows:
 
                                              High     Low    Dividends
                                             ------   ------  ---------
1998                         
  First Quarter...........................   $14.25   $11.75     $.03
  Second Quarter..........................    13.25     8.75      .03
  Third Quarter...........................    12.50     5.00      .03
  Fourth Quarter..........................     5.75     1.63      .03
1997                                                             
  First Quarter...........................   $22.38   $17.63     $.03
  Second Quarter..........................    18.88    15.13      .03
  Third Quarter...........................    18.75    14.06      .03
  Fourth Quarter..........................    18.75    13.06      .03
1996                                                             
  First Quarter...........................   $13.38   $11.00     $.03
  Second Quarter..........................    14.00    12.25      .03
  Third Quarter...........................    15.50    12.88      .03
  Fourth Quarter..........................    21.13    14.38      .03

At February 26, 1999, there were 8,951,965 shares of Common Stock outstanding
held by approximately 850 shareholders of record and approximately 3,450
beneficial owners.

Each share of Common Stock also represents one preferred stock purchase right
which entitles the holder thereof to purchase from the Company one-one
thousandth of a share (a "Unit") of Series B Preferred Stock of the Company at
an exercise price of $72.00 per Unit.

Although the Company does not have a written dividend policy, it has paid cash
dividends on the Common Stock for the previous 109 quarters. Dividends on the
Common Stock are reviewed by the Board of Directors of the Company each quarter,
and no assurances can be given that such cash dividends will continue in the
future or, if such dividends are paid, as to the amount of such dividends. On
December 10, 1999, the Board of Directors approved a cost reduction plan which
included suspending payments of cash dividends on the Company's common stock. In
addition, under the terms of the Credit Agreement (see Note 4 to the Company's
Consolidated Financial Statements) the payment of dividends in any year is
limited to the greater of (i) 80% of the Company's adjusted consolidated net
income (as defined in the Credit Agreement) for such year (which excludes gains
from sales of marketable securities) and (ii) $4.5 million.

                                       26
<PAGE>
 
                                                           The Wiser Oil Company

Item 6. Selected Financial Data

The following selected consolidated financial data of the Company are derived
from information contained in the Company's consolidated financial statements.
The selected consolidated financial and operating data presented below should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Company's Consolidated Financial
Statements and notes thereto included elsewhere in this Report.

<TABLE>
<CAPTION>
                                                                         Year Ended December 31,
                                                           -------------------------------------------------
                                                             1998       1997      1996      1995      1994
                                                           --------   --------  --------  --------  --------
<S>                                                        <C>        <C>       <C>       <C>       <C>
Income Statement Data (000's except per share amounts):    
Revenues:                                                  
  Oil and gas sales......................................  $ 59,197   $ 76,729  $ 72,012  $ 54,400  $ 53,559
  Dividends and interest.................................       269      1,113       683     1,241     1,641
  Marketable security sales gains........................        --      7,495    12,977    13,101     7,475
  Other..................................................     1,164      2,478     1,017     2,939     2,681
                                                           --------   --------  --------  --------  --------
    Total revenues.......................................    60,630     87,815    86,689    71,681    65,356
                                                           --------   --------  --------  --------  --------
Costs and expenses:                                        
  Production and operating...............................    26,529     27,183    23,970    20,690    22,313
  Purchased natural gas..................................     1,440      1,622     1,462       727       759
  Depreciation, depletion and amortization ("DD&A")......    25,811     22,977    19,653    19,778    18,313
  Property impairments...................................     3,838      3,289    12,112     4,893        --
  Exploration............................................    15,328      9,655     4,176     5,801     4,130
  General and administrative.............................     9,793      9,661     9,364     8,193     6,502
  Interest expense.......................................    13,097      9,845     5,452     5,618     3,907
                                                           --------   --------  --------  --------  --------
    Total costs and expenses.............................    95,836     84,232    76,189    65,700    55,924
                                                           --------   --------  --------  --------  --------
Earnings (loss) before income taxes......................   (35,206)     3,583    10,500     5,981     9,432
Income tax expense (benefit).............................   (10,740)       264     4,072     3,788       444
                                                           --------   --------  --------  --------  --------
Net income (loss)........................................  $(24,466)  $  3,319  $  6,428  $  2,193  $  8,988
                                                           ========   ========  ========  ========  ========
                                                           
Average outstanding shares (000's) (1)...................     8,952      8,949     8,939     8,939     8,941
Basic earnings (loss) per share..........................  $  (2.73)  $   0.37  $   0.72  $   0.25  $   1.01
Cash dividends per share.................................  $   0.12   $   0.12  $   0.12  $   0.40  $   0.40
                                                           
Other Financial Data (000's):                              
EBITDA (2)...............................................  $ 23,020   $ 40,741  $ 38,233  $ 27,729  $ 26,666
Operating cash flow......................................     7,106     34,486    34,287    20,541    24,334
Capital and exploration expenditures.....................    40,402     78,323    47,115    30,153    74,610
                                                           
Balance Sheet Data  end of period (000's):                 
Cash and cash equivalents................................  $  2,779   $ 13,255  $  5,870  $  1,397  $  2,714
Working capital (3)......................................     1,652      7,809     3,493     1,034     2,313
Marketable securities....................................        --         --     7,176    19,592    27,337
Net property, plant and equipment........................   213,295    220,708   179,718   169,089   167,371
Total assets.............................................   231,810    254,556   208,617   203,407   210,791
Long-term debt...........................................   145,452    124,304    78,654    74,171    78,013
Stockholders' equity.....................................    72,091     97,424    99,262   101,132   105,427
</TABLE>

                                       27
<PAGE>
 
                                                           The Wiser Oil Company

<TABLE>
<CAPTION>
                                                                              Year Ended December 31,
                                                                -----------------------------------------------------
                                                                  1998       1997        1996       1995       1994
                                                                --------   --------    --------   --------   --------
<S>                                                             <C>        <C>       <C>         <C>        <C>
Reserve and Operating Data:
Production and volumes:
  Oil and NGLs (MBbl)........................................      2,715      2,760      2,776      2,332      2,277
  Gas (MMcf) (4).............................................     14,364     12,829     12,288     12,171     11,076
    BOE (000's) (4)..........................................      5,109      4,898      4,824      4,361      4,123
Weighted average sales prices (5):
  Oil (per Bbl)..............................................   $  12.46   $  18.02   $  18.81   $  16.91   $  15.60
  Gas (per Mcf)..............................................       1.84       2.21       1.77       1.37       1.73
  NGLs (per Bbl).............................................       9.25      13.87      13.36      10.11       9.00
    BOE (per Bbl)............................................      11.59      15.66      14.93      12.47      12.99
Selected expenses per BOE (6):
  Lease operating............................................   $   4.45   $   4.65   $   4.14   $   4.06   $   4.54
  Production taxes...........................................       0.84       1.02       0.93       0.78       0.97
  DD&A.......................................................       5.15       4.79       4.16       4.62       4.53
  General and administrative.................................       1.96       2.02       1.98       1.92       1.61
Proved reserves (end of year) (7):
  Oil and NGLs (MBbls).......................................     27,988     29,721     31,612     32,208     23,430
  Gas (MMcf).................................................    119,981    120,094    113,377    109,915    107,920
    BOE (MBbls)..............................................     47,985     49,737     50,508     50,527     41,417
  Estimated future net revenues before income taxes (000's)..   $218,969   $359,293   $705,723   $401,037   $272,776
  Present Value..............................................    123,831    210,087    414,314    235,416    160,804
  Standardized Measure (000's) (8)...........................    113,232    174,489    317,180    194,602    142,032
Weighted average sales prices (end of year) (7)(9):
  Oil (per Bbl)..............................................   $  10.39   $  15.92   $  24.63   $  18.19   $  16.11
  Gas (per Mcf)..............................................       1.98       2.35       3.45       1.84       1.57
  NGLs (per Bbl).............................................       8.44      11.40      19.79      12.87       9.80
</TABLE>

(1) Basic earnings per share is calculated without including dilutive effect of
    common stock equivalents consisting of stock options. See Note 12 to the
    Company's Consolidated Financial Statements.
(2) EBITDA is not a generally accepted accounting measure, but is presented as a
    supplemental financial indicator of the Company's ability to service or
    incur debt. EBITDA is calculated by adding interest expense, income tax
    expense, depreciation, depletion and amortization, property impairment costs
    and exploration costs to net income (excluding marketable security sales
    gains and dividends and interest). EBITDA should not be considered in
    isolation or as a substitute for net income, operating cash flows or any
    other measure of financial performance prepared in accordance with generally
    accepted accounting principles or as a measure of the Company's
    profitability or liquidity.
(3) Working capital represents the difference between current assets and current
    liabilities.
(4) Calculated by including volumes of natural gas purchased for resale as
    follows: 1998-608 MMcf, 1997-629 MMcf, 1996-605 MMcf, 1995-500 MMcf and
    1994-469 MMcf.
(5) Reflects results of hedging activities. See "Management's Discussion and
    Analysis of Financial Condition and Results of Operations-Other Matters."
(6) Calculated without including volumes of natural gas purchased for resale.
(7) Estimates of proved reserves and future net revenues from which Present
    Values are derived are based on year end prices of oil and gas held constant
    (except to the extent a contract specifically provides otherwise) in
    accordance with SEC regulations.
(8) The Standardized Measure of Discounted Future Net Cash Flows prepared by the
    Company represents the present value (using an annual discount rate of 10%)
    of estimated future net revenues from the production of proved reserves,
    after giving effect to income taxes. See the Supplemental Financial
    Information attached to the Company's Consolidated Financial Statements
    included elsewhere in this Report for additional information regarding the
    disclosure of the Standardized Measure of Discounted Future Net Cash Flows.
(9) Year end prices used to estimate proved reserves and future net revenues
    from which Present Values are derived. See footnotes 7 and 8 above.

                                       28
<PAGE>
 
                                                           The Wiser Oil Company

Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

The following discussion is intended to assist in an understanding of the
Company's historical financial position and results of operations for each year
in the three-year period ended December 31, 1998. The Company's Consolidated
Financial Statements and notes thereto included elsewhere in this Report contain
detailed information that should be referred to in conjunction with the
following discussion.

General

The Company's future results of operations and growth are substantially
dependent upon (i) its ability to acquire or find and successfully develop
additional oil and gas reserves and (ii) the prevailing prices for oil and gas.
At December 31, 1998, the Company's proved reserves were comprised of
approximately 95% proved developed reserves, and the Company does not have a
large inventory of development drilling locations or enhanced recovery projects
to pursue after 1998. If the Company is unable to economically acquire or find
significant new reserves for development and exploitation, the Company's oil and
gas production, and thus its revenues, would likely decline gradually as its
reserves are produced. In addition, oil and gas prices are dependent upon
numerous factors beyond the Company's control, such as economic, political and
regulatory developments and competition from other sources of energy. The oil
and gas markets have historically been very volatile. In particular, oil prices
during 1998 were at their lowest levels since 1986. As a result, the Company's
results of operations were adversely affected. Any significant and extended
decline in the price of oil or gas would have a material adverse effect on the
Company's financial condition and results of operations, and could result in a
reduction in the carrying value of the Company's proved reserves and adversely
affect its access to capital.

The Company liquidated portions of its marketable securities portfolio in order
to fund a portion of the Company's capital and exploration expenditures in 1997
and 1996. The Company recognized pretax gains from the sale of marketable
securities of $7.5 million and $13.0 million in 1997 and 1996, respectively. In
the absence of such gains, the Company would have reported net losses in 1997
and 1996. The Company completed the liquidation of its marketable securities
portfolio in 1997.

During 1996, the Company adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires
the Company to assess the need for an impairment of capitalized costs of oil and
gas properties on a property-by-property (rather than a company-wide) basis.
Applying SFAS No. 121, the Company recognized non-cash property impairment
charges of $3.8 million in 1998, $3.3 million in 1997 and $12.1 million in 1996.

                                       29
<PAGE>
 
                                                           The Wiser Oil Company

Results of Operations

Production information presented below includes volumes of natural gas purchased
for resale; however, per unit of production information with respect to
production and operating expenses, depreciation, depletion and amortization and
general and administrative costs is calculated without including such volumes.
Such volumes were 608 MMcf in 1998, 629 MMcf in 1997 and 605 MMcf in 1996.

Comparison of 1998 to 1997

Revenues

Oil and gas sales decreased 23% to $59.2 million in 1998 from $76.7 million in
1997, primarily because of lower oil and gas prices received during 1998. The
average oil price received in 1998 decreased 31% to $12.46 per Bbl from $18.02
per Bbl in 1997 and the average gas price received in 1998 decreased 17% to
$1.84 per Mcf from $2.21 per Mcf in 1997.  Gas production during 1998 increased
12% to 14.4 Bcf from 12.8 Bcf in 1997.  The increase in gas production was
primarily attributable to the Welder Ranch field in South Texas which produced
2.3 Bcf  of gas during 1998 compared to 0.8 Bcf of gas in 1997. The Welder Ranch
field was acquired in June 1997. Oil production in 1998 decreased 2% to 2,393
MBbls from 2,441 MBbls in 1997.  As a result of development activity in 1997 and
1998, oil production in 1998 from the Evi and Provost fields in Canada was 88
MBbls and 150 MBbls higher than 1997, respectively. Oil production from the
Maljamar and Wellman fields in 1998 was 102 MBbls and 70 MBbls lower than 1997,
respectively, as development activities at these fields was substantially
complete in 1997.  As a result of hedging activities, oil and gas sales were
increased by $0.2 million in 1998 and reduced by $2.4 million during 1997. On an
equivalent unit basis, total production increased 4% to 5,109 MBOE in 1998 from
4,898 MBOE in 1997.

Dividends and interest decreased 76% to $0.3 million in 1998 compared to $1.1
million in 1997 as the Company completed the liquidation of its remaining
marketable securities in 1997.

Marketable security sales gains were $7.5 million in 1997 as the Company
completed the liquidation of its remaining marketable securities in 1997.

Other revenues decreased 53% to $1.2 million in 1998 from $2.5 million in 1997
primarily as a result of lower sales of non-strategic oil and gas properties in
1998.

Costs and Expenses

Production and operating expense decreased 2% to $26.5 million in 1998 from
$27.2 million in 1997 primarily due to lower production taxes associated with
lower oil and gas sales in 1998. On a BOE basis, production and operating
expense decreased 7% to $5.29 per BOE in 1998 from $5.67 per BOE in 1997 as a
result of higher BOE production and lower production taxes in 1998.

DD&A increased 12% to $25.8 million in 1998 from $23.0 million in 1997 and
increased 8% to $5.15 per BOE in 1998 from $4.79 per BOE in 1997.  The increases
were primarily attributable to additional wells drilled at the Maljamar field
combined with increased depletion from the Welder field in South Texas.

Impairment expense increased 17% to $3.8 million in 1998 from $3.3 million in
1997. Impairment expense in 1998 and 1997 was due primarily to low oil prices
used to value reserves at year-end 1998 and year-end 1997.

Exploration expense increased 59% to $15.3 million in 1998 from $9.7 million in
1997 as the Company increased its exploration activities during 1998.  Dry hole
expense increased 49% to $6.1 million in 1998 from $4.1 million in 1997 and
included dry hole expense of $1.6 million in Peru and $2.0 million in South
Texas during 1998. Surrendered and abandoned lease expense in 1998 increased
227% to $4.9 million from $1.5 million in 1997 

                                       30
<PAGE>
 
                                                           The Wiser Oil Company

primarily as a result of increased lease abandonment expense associated with
unsuccessful exploration drilling in 1998 and the curtailment of exploration
activities due to low oil prices.

General and administrative expense ("G&A")  increased slightly to $9.8 million
in 1998 from $9.7 million in 1997 and decreased 3% to $1.96 per BOE in 1998 from
$2.02 per BOE in 1997.  The decrease in G&A per BOE was attributable primarily
to higher BOE production in 1998 compared to 1997.

Interest expense increased 33% to $13.1 million in 1998 from $9.8 million in
1997 due primarily to incurring a full year of interest expense in 1998 under
the 9  1/2% Senior Subordinated Notes ("2007 Notes"), which were issued in May
1997, and increased long-term debt in 1998 compared to 1997.

Income tax expense decreased $11.0 million to a benefit of $10.7 million in 1998
from tax expense of $0.3 million in 1997 primarily as a result of a decrease in
earnings before income taxes of $38.8 million.

Net income decreased $27.8 million to a net loss of $24.5 million in 1998 from
net income of $3.3 million in 1997 primarily as a result of  lower oil and gas
prices and higher DD&A, exploration and interest expense in 1998.

Comparison of 1997 to 1996

Revenues

Oil and gas sales increased 7% to $76.7 million in 1997 from $72.0 million in
1996, primarily because of higher gas production and higher gas prices received
during 1997.  Gas production during 1997 increased 4% to 12.8 Bcf from 12.3 Bcf
in 1996.  The increase in gas production was primarily attributable to the
acquisition of the Welder Ranch field in South Texas which added 0.8 Bcf  of gas
production during 1997.  The average gas price received in 1997 increased 25% to
$2.21 per Mcf from $1.77 per Mcf in 1996.  Oil production in 1997 increased less
than 1% to 2,441 MBbls from 2,425 MBbls in 1996.  The Company completed 50 wells
in the Maljamar field during 1997 which increased 1997 production by 246 MBbls
over 1996 and offset declining oil production in other fields during 1997.  The
average oil price received in 1997 decreased 4% to $18.02 per Bbl from $18.81
per Bbl in 1996.  As a result of hedging activities, oil and gas sales were
reduced by $2.4 million and $6.9 million during 1997 and 1996, respectively.  On
an equivalent unit basis, total production increased 2% to 4,898 MBOE in 1997
from 4,824 MBOE in 1996.

Marketable security sales gains decreased 42% to $7.5 million in 1997 from $13.0
million in 1996 as the Company completed the liquidation of its remaining
marketable securities in 1997.

Other revenues increased 144% to $2.5 million in 1997 from $1.0 million in 1996
primarily as a result of the sale of non-strategic oil and gas properties in
Michigan during 1997.

Costs and Expenses

Production and operating expense increased 13% to $27.2 million in 1997 from
$24.0 million in 1996 and also increased 12% to $5.67 per BOE in 1997 from $5.07
per BOE in 1996.  The increases were primarily attributable to additional wells
drilled at the Maljamar and Provost fields and increased production taxes
associated with the 7% increase in oil and gas sales during 1997.

DD&A increased 17% to $23.0 million in 1997 from $19.7 million in 1996 and
increased 15% to $4.79 per BOE in 1997 from $4.16 per BOE in 1996.  The
increases were primarily attributable to additional wells drilled at the
Maljamar field to develop proved undeveloped reserves combined with increased
depletion from the Shouldice and other Canadian properties which have a higher
than average cost basis and shorter than average reserve life.

Impairment expense decreased 73% to $3.3 million in 1997 from $12.1 million in
1996. Impairment expense in 1997 was due primarily to low oil prices used to
value reserves at year-end 1997 while impairment expense in 1996 was due
primarily to downward revisions in reserve estimates for certain properties in
Michigan and Canada.

                                       31
<PAGE>
 
                                                           The Wiser Oil Company

Exploration expense increased 131% to $9.7 million in 1997 from $4.2 million in
1996 as the Company increased its exploration activities in the U.S. during
1997.  Dry hole expense increased 141% to $4.1 million in 1997 from $1.7 million
in 1996. Dry hole expense in 1997 included $1.2 million at the South Lakeside
prospect in Louisiana, $1.0 million at the Tecumseh prospect in Louisiana and
$0.7 million at the Bronson prospect in Canada.  Seismic expense also increased
to $3.4 million in 1997 from $0.3 million in 1996.

G&A increased 3% to $9.7 million in 1997 from $9.4 million in 1996 and also
increased 2% to $2.02 per BOE in 1997 from $1.98 per BOE in 1996.  The increase
in G&A was attributable primarily to the addition of exploration personnel and
higher compensation costs.

Interest expense increased 81% to $9.8 million in 1997 from $5.5 million in 1996
as a result of the increase in long-term debt and the higher interest rate
associated with the sale of  the 2007 Notes on May 21, 1997.

Income tax expense decreased $3.8 million to $0.3 million in 1997 from $4.1
million in 1996 as a result of a decrease in earnings before income taxes of
$6.9 million combined with a lower effective tax rate of 7% in 1997 compared to
39% in 1996.  The lower effective tax rate in 1997 was attributable primarily to
the inclusion of Canadian operations in the Company's consolidated tax return
beginning in 1997.

Net Income

Net income decreased 48% to $3.3 million in 1997 from $6.4 million in 1996
primarily as a result of higher production and operating expense, DD&A,
exploration and interest expense in 1997.

Liquidity and Capital Resources

Cash flows

Cash flows from operating activities were $7.1 million in 1998 compared to $34.5
million in 1997.  Cash flows from operating activities in 1998 were $27.4
million lower than 1997 due primarily to lower oil and gas sales, higher
interest expense and a $7.9 million reduction in accounts payable.  Cash flows
from financing activities of $19.9 million in 1998 were provided primarily by
$21 million in borrowings under the Credit Agreement. In 1997, the sale of the
2007 Notes provided $120.9 million of net cash proceeds to the Company, and
$78.7 million of borrowings under the Credit Agreement and the Company's
Maljamar Credit Facility were repaid during 1997. The Maljamar Credit Facility
was terminated in 1997 in connection with such repayment of borrowings.  Cash
flows used in investing activities in 1998 were $37.5 million compared to $66.9
million in 1997.  Capital and exploration expenditures were $40.4 million in
1998, a decrease of $37.9 million from 1997.  The major components of capital
and exploration expenditures for 1998 were $21.6 million for development
activities, $14.3 million for exploration activities and $4.1 million for
property acquisitions.  Proceeds from the sale of marketable securities and oil
and gas properties were $2.9 million in 1998, down $8.5 million from 1997,
primarily as a result of reduced oil and gas property sales and the absence of
marketable securities sales in 1998.

Financial Position

Cash and cash equivalents were utilized to fund capital and exploration
expenditures in 1998 resulting in a decrease in cash and cash equivalents of
$10.5 million during 1998 to $2.8 million at December 31, 1998. Working capital
of $1.7 million at December 31, 1998 was $6.1 million lower than working capital
at December 31, 1997 due primarily to reduced cash and cash equivalents offset
by lower accounts payable.  Total assets decreased $22.7 million during 1998 to
$231.8 million at December 31, 1998, and stockholders' equity decreased $25.3
million during 1998 to $72.1 million at December 31, 1998.

At December 31, 1998, capitalization totaled $217.5 million and consisted of
$145.5 million of long-term debt (67%) and $72.1 million of stockholders' equity
(33%).

                                       32
<PAGE>
 
                                                           The Wiser Oil Company

Capital Sources

Funding for the Company's business activities has been provided by cash flow
from operations, borrowings and sales of marketable securities.  The Company
completed the liquidation of its marketable securities in 1997 and, accordingly,
this source of funds is no longer available.

While the Company regularly engages in discussions relating to potential
acquisitions of oil and gas properties, the Company has no current agreement or
commitment with respect to any such acquisitions which would be material to the
Company.  Any future acquisitions may require additional financing and will be
dependent upon financing arrangements available at the time.

The Company has entered into a Credit Agreement with a group of banks which
provides for the issuance of letters of credit and for revolving credit loans to
the Company (the "Credit Agreement"). The Credit Agreement's borrowing base is
currently $25 million. Outstanding borrowings under the Credit Agreement at
December 31, 1998 were $21 million. The borrowing base is redetermined annually
by the lenders based on the most recent valuation of the Company's oil and gas
reserves. Accordingly, the current borrowing base of $25 million could be
reduced in 1999.

On March 23, 1999, A Financial Institution ("New Lender") purchased all of the
rights and obligations of the Credit Agreement from NationsBank of Texas, N.A.
and the Bank of Montreal and became the new Agent under the Credit Agreement.
The outstanding borrowings by the Company under the Credit Agreement at March
23,1999 and through April 15, 1999 are $21 million.

Subsequently, the Company notified the New Lender that the Company was not able
to maintain one of the ratios required under the Financial Covenants of the
Credit Agreement as of December 31, 1998, and through the date of notification.
On April 15, 1999, the Company and the New Lender entered into an agreement
whereby the Company will repay the outstanding balance under the Credit
Agreement of $21 million plus interest and fees from the anticipated cash
proceeds available from the sale of oil and gas properties as discussed further
below. The Company began negotiating various purchase and sale agreements to
sell a portion of its oil and gas properties prior to March 1999, and plans to
use the sales proceeds to reduce existing debt, fund capital expenditures and
for general corporate purposes.

The New Lender has agreed to waive any default or possible event of default
through December 31, 1998, and has agreed to stand still and not to enforce any
remedies under the Credit Agreement relating to any default or event of default
that has occurred or may occur through May 14, 1999. The New Lender also agreed
to deliver releases of its liens on any properties to be sold by the Company
until the outstanding balance of $21 million is repaid in full. The Company is
not in default of any covenants under the 9 1/2% Senior Subordinated Notes due
in May 2007.

The Company is pursuing several alternatives that would allow it to repay the
outstanding balance under the Credit Agreement through the sale of oil and gas
properties and/or refinancing. The Company believes the Credit Agreement will be
repaid in full on or before May 14, 1999 from the proceeds of property sales
and/or refinancing as discussed below.

On April 13, 1999, the Company entered into a Purchase and Sale Agreement with
Prince Minerals, Ltd. to sell certain producing and non-producing mineral
interests ("Mineral Properties") for $10 million effective April 1, 1999. The
sale is expected to close by April 23, 1999. The producing portion of the oil
and gas properties comprising the Mineral Properties represent approximately 2%
of the Company's total proved oil and gas reserves at December 31, 1998. The
sales proceeds will be used to reduce the outstanding balance under the Credit
Agreement to approximately $11 million. The Purchase and Sale Agreement with
Prince Minerals, Ltd. is subject to the buyer successfully completing a due
diligence review, which was substantially complete as of April 15, 1999. The
Company is not aware of and does not anticipate any conditions that would delay
or terminate the closing of this sale.

On April 12, 1999, the Company entered into a Purchase and Sale Agreement with
Columbia Natural Resources to sell all of the Company's oil and gas properties
in Kentucky, Tennessee and West Virginia ("Appalachia Properties") for $28
million effective April 1, 1999. The sale is expected to close on or before May
12, 1999. The oil and gas properties comprising the Appalachia Properties
represent approximately 15% of the Company's total proved oil and gas reserves
at December 31, 1998. The sales proceeds will be used to repay in full the
outstanding balance under the Credit Agreement, and for general corporate
purposes. The Purchase and Sale Agreement with Columbia Natural Resources is
also subject to the buyer successfully completing a due diligence review, which
was in progress as of April 15, 1999. The Company is not aware of and does not
anticipate any conditions that would delay or terminate the closing of this
sale.

In addition, the Company is negotiating several other purchase and sale
agreements involving a number of smaller, non-strategic oil and gas properties
in Texas and New Mexico that the Company plans to sell for an aggregate sales
price in the range of $7 million to $8 million. These sales are expected to
close in the second quarter of 1999. The sales proceeds will be used for general
corporate purposes.

The Company is currently negotiating with a bank to obtain a new credit
facility. The Company expects to complete the negotiations and obtain a new
credit facility in the second quarter of 1999, however successful completion of
these negotiations cannot be assured. The Company plans to use any funds





                                                           The Wiser Oil Company


provided by a new credit facility to fund capital expenditures and for general
corporate purposes. If a new credit facility is available prior to the closing
date of the Appalachia Properties sale, the Company may use funds provided by a
new credit facility to reduce any existing indebtedness under the Credit
Agreement with the New Lender.

Management of the Company is highly confident that the purchase and sale
agreements for the Mineral and Appalachia Properties discussed above will be
closed as planned and that the funds provided by the property sales will enable
the Company to reduce indebtedness and continue to meet all of its financial
obligations while maintaining a smaller level of capital expenditures during
1999. See Notes 2 and 4 to the Company's Consolidated Financial Statements.

The Company believes that cash flows from operations and borrowings under the
Credit Agreement will be sufficient to meet anticipated capital and exploration
expenditure requirements (excluding any material property acquisitions) in 1999.
If the Company's cash flows from operations and borrowings under the Credit
Agreement are not sufficient to satisfy its capital and exploration expenditure
requirements, there is no assurance that additional equity or debt financing
will be available to meet such requirements.

Capital and Exploration Expenditures

The Company requires capital primarily for the acquisition, development and
exploitation of, and the exploration for, oil and gas properties, the repayment
of indebtedness and general working capital needs.  During 1999, subject to
market conditions and drilling and operating results, the Company expects to
spend approximately $2.7 million on acquisition, development, exploitation and
exploration activities.

Other Matters

Environmental and Other Regulatory Matters

The Company's business is subject to certain federal, state, provincial and
local laws and regulations relating to the development, exploitation, production
and gathering of, and the exploration for, oil and gas, including those relating
to the protection of the environment. Many of these laws and regulations have
become more stringent in recent years, often imposing greater liability on a
larger number of potentially responsible parties. Although the Company believes
it is in substantial compliance with all applicable laws and regulations, the
requirements imposed by laws and regulations are frequently changed and subject
to interpretation, and the Company is unable to predict the 

                                       33
<PAGE>
 
                                                           The Wiser Oil Company

ultimate cost of compliance with these requirements or their effect on its
operations. Although significant expenditures may be required to comply with
governmental laws and regulations applicable to the Company, compliance has not
had a material adverse effect on the earnings or competitive position of the
Company.

Year 2000 Issue

The Company has assessed and continues to assess the impact of the "year 2000"
("Y2K") issue on its reporting systems and operations.  The Y2K issue exists
because many computer systems and applications currently use two-digit date
fields to designate a year.  As the century date occurs, two-digit date systems
will recognize the year 2000 as 1900 or not at all.  This inability to recognize
or properly treat the year 2000 may cause systems to process critical financial
and operational information incorrectly.

In 1998 and the first quarter of 1999, the Company's U.S. and Canadian
computerized accounting systems were upgraded to versions which are Y2K
compliant. These upgrades were completed at a nominal cost to the Company. In
addition, the Company's personal computer systems were analyzed for Y2K
compliance during 1998 and certain components were upgraded at a nominal cost to
the Company. Virtually all of the Company's personal computer systems are
currently Y2K compliant. Wiser is currently reviewing computer-controlled oil
field equipment for Y2K compliance and expects the suppliers of such equipment
to provide upgrades or modifications, if necessary, before the end of 1999 at a
nominal cost to the Company. Wiser is also in the process of surveying its
primary business partners to seek assurances that they will be Y2K compliant
during 1999. Despite these efforts to seek assurances, the Company cannot
provide assurance that all significant business partners will achieve Y2K
compliance in a timely manner. If there is a high risk that a business partner
will not be Y2K compliant in a timely manner, a contingency plan will be
developed or an alternate business partner will be used to minimize the Y2K
risk.

New Accounting Standards

The Company adopted the following pronouncements in 1998:

     SFAS No. 130, "Reporting Comprehensive Income" requires that all items that
     are to be recognized under accounting standards as components of
     comprehensive income be reported in a financial statement that is displayed
     with the same prominence as other financial statements, and

     SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
     Information" requires reporting of financial and descriptive information
     about a company's reportable operating segments. The Company has identified
     only one operating segment, which is the exploration for and production of
     oil and gas.

The Company will be required to comply with the provisions of SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" which must be
adopted for fiscal years beginning after June 15, 1999. SFAS No. 133 requires
that derivatives be reported on the balance sheet at fair value and, if the
derivative is not designated as a hedging instrument, changes in fair value must
be recognized in earnings in the period of change. If the derivative is
designated as a hedge and to the extent such hedge is determined to be
effective, changes in fair value are either offset by the change in fair value
of the hedged asset or liability (if applicable) or reported as a component of
other comprehensive income in the period of change, and subsequently recognized
in earnings when the offsetting hedged transaction occurs. The definition of
derivatives has also been expanded to include contracts that require physical
delivery of oil and gas if the contract allows for net cash settlement. The
Company currently uses derivatives to hedge oil and gas price risk and gains or
losses on such derivatives are recorded as adjustments to oil and gas sales.
Accordingly, adoption of SFAS No. 133 should not have a significant impact on
reported earnings, but could have a material impact on comprehensive income and
the reported financial position of the Company.

Disclosure Regarding Forward-Looking Statements

                                       34
<PAGE>
 
                                                           The Wiser Oil Company

This Report includes "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. All statements other than statements of historical facts included in
this Report, including without limitation statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
under "Business" and "Properties" regarding proved reserves, estimated future
net revenues, Present Values, planned capital expenditures (including the amount
and nature thereof), increases in oil and gas production, the number of wells
anticipated to be drilled in 1998 and thereafter and the Company's financial
position, business strategy and other plans and objectives for future
operations, are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable,
there can be no assurance that the actual results or developments anticipated by
the Company will be realized or, even if substantially realized, that they will
have the expected consequences to or effects on its business or operations.
Among the factors that could cause actual results to differ materially from the
Company's expectations are the volatility of oil and gas prices, the ability to
acquire or find and successfully develop additional oil and gas reserves, the
uncertainty of estimates of reserves and future net revenues, risks relating to
acquisitions of producing properties, drilling and operating risks, general
economic conditions, competition, domestic and foreign government regulations
and other factors which are beyond the Company's control. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by such factors.
The Company assumes no obligation to update any such forward-looking statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company only uses derivative financial instruments such as commodity futures
agreements to hedge against fluctuations in oil and gas prices. Gains and losses
on these derivative instruments are recorded as adjustments to oil and gas
sales. The Board of Directors of the Company have adopted a policy governing the
use of derivative instruments which requires that all derivatives used by the
Company relate to an anticipated transaction and prohibits the use of
speculative or leveraged derivatives.

Interest Rate Risk

Total debt at December 31, 1998 included $124.5 million of fixed-rate debt and
$21.0 million of floating-rate debt attributed to borrowings under the Credit
Agreement. As a result, the Company's annual interest cost will fluctuate based
on changes in short-term interest rates. The impact on annual cash flow of a 10%
change in the short-term interest rate (approximately 60 basis points) would be
approximately $0.13 million.

At December 31, 1998, it was not practicable to estimate the fair value of the
Company's fixed-rate debt of $124.5 million because the trading volume was too
small to establish a reasonable basis of fair value. The fixed-rate debt will
mature in May 2007 and the floating-rate debt will mature in March 2002.

Commodity Price Risk

The Company has in the past entered into and may in the future enter into
hedging arrangements with respect to portions of its oil, natural gas and NGL
production to reduce its sensitivity to volatile commodity prices. The Company
believes that hedging, although not free of risk, allows the Company to achieve
a more predictable cash flow and to reduce exposure to price fluctuations.
However, hedging arrangements limit the benefit to the Company of increases in
the prices of the hedged commodity. Moreover, the Company's hedging arrangements
apply only to a portion of its production and provide only partial price
protection against declines in prices. Such arrangements may expose the Company
to risk of financial loss in certain circumstances. The Company expects that the
amount of production it hedges will vary from time to time. During 1998, the
Company entered into various natural gas forward sale agreements and during 1997
and 1996, the Company entered into natural gas price swap and oil price collar
agreements to hedge against price fluctuations. Oil and gas sales are adjusted
for the effects of hedging transactions as the underlying hedged production is
sold. Adjustments to oil and gas sales from the Company's hedging activities
resulted in an increase in revenues of $0.2 million in 1998 and reductions in
revenues of $2.4 million and $6.9 million in 1997 and 1996, respectively. During
February, March and April of 1999, the Company entered into forward sale/swap
agreements to hedge a portion of the Company's oil and gas production as
follows:

                                       35
<PAGE>
 
                                                           The Wiser Oil Company

<TABLE> 
<CAPTION> 
    Period                              Daily Volume - Product          Price (Floor/Ceiling)
    ------                              ----------------------          ---------------------
<S>                                     <C>                             <C> 
    March 1, 1999 to July 31, 1999      23,832 MMBTU - Natural Gas      $1.72 per MMBTU
    May 1, 1999 to August 31, 1999      800 Bbls - Crude Oil            $13.40 per Bbl   
    May 1, 1999 to August 31, 1999      455 Bbls - Crude Oil            $14.50/16.60 per Bbl   
    May 1, 1999 to September 30, 1999   500 Bbls - Crude Oil            $13.00/17.35 per Bbl   
</TABLE> 

The 455 Bbls per day crude oil hedge is a "collar" hedge whereby the Company 
will receive the actual market price if the actual market price is between the 
floor price of $14.50 per Bbl and the ceiling price of $16.60 per Bbl. If the 
actual market price is below or above the floor or ceiling prices, the price 
received by the Company will be limited to the floor price or ceiling price, 
respectively.

The 500 Bbls per day crude oil hedge is also a "collar" hedge whereby the
Company will receive the actual market price if the actual market price is
between $15.00 per Bbl and the ceiling price of $17.35 per Bbl. If the actual
market price is between the floor price of $13.00 per Bbl and $15.00 per Bbl,
the Company will receive $15.00 per Bbl. If the actual market price is less than
the floor price of $13.00 per Bbl, the Company will receive the actual market
price plus $2.00 per Bbl. If the actual market price is above the ceiling price
of $17.35 per Bbl, the price received by the Company will be limited to $17.35
per Bbl. The Company continuously reevaluates its hedging program in light of
market conditions, commodity price forecasts, capital spending and debt service
requirements. Also see Note 1 to the Company's Consolidated Financial Statements
included elsewhere in this Report.

Foreign Currency Exchange Risk

The Company receives a substantial portion of its revenue in Canadian dollars
(24% in 1998). As a result, fluctuations in the exchange rates of the Canadian
dollar with respect to the U.S. dollar could have an adverse effect on the
Company's financial condition and results of operations. Historically however,
exchange rate fluctuations have not been material to the Company.

Item 8. Financial Statements and Supplementary Data

The Report of Independent Accountants, Consolidated Financial Statements and
supplementary financial data required by this Item are set forth on pages F-1
through F-20 of this Report and are incorporated herein by reference.

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

Not applicable.


                                   PART III

Item 10. Directors and Executive Officers of the Registrant

The information required by this Item will be contained in the Proxy Statement
under the headings "Election of Directors" and "Executive Officers" and is
incorporated herein by reference.

Item 11. Executive Compensation

The information required by this Item will be contained in the Proxy Statement
under the heading "Executive Compensation" and is incorporated herein by
reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this Item will be contained in the Proxy Statement
under the heading "Beneficial Ownership of Common Stock" and is incorporated
herein by reference.

Item 13. Certain Relationships and Related Transactions

The information required by this Item, if any, will be contained in the Proxy
Statement under the heading "Executive Compensation" and is incorporated herein
by reference.

                                       36
<PAGE>
 
                                                           The Wiser Oil Company

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

A. Financial Statements

   The following documents are filed as part of this Report:

   1. Report of Independent Accountants

      Consolidated Statements of Income
 
      Consolidated Balance Sheets

      Consolidated Statements of Changes in Stockholders' Equity

      Consolidated Statements of Cash Flows

      Notes to Consolidated Financial Statements

   2. Schedules are omitted because of the absence of conditions under which
      they are required or because the required information is given in the
      financial statements or notes thereto.

B. Reports on Form 8-K.
 
   There were no reports on Form 8-K filed by the Company during the last
   quarter of 1998.
 
C. Exhibits

   Exhibits not incorporated herein by reference to a prior filing are
   designated by an asterisk (*) and are filed herewith; all exhibits not so
   designated are incorporated herein by reference as indicated.

Exhibit
Numbers
-------
(3.1)     Certificate of Incorporation of the Company, as amended, incorporated
          by reference to Exhibit 4.2 to the Company's report on Form 8-K
          (Commission File No. 0-5426), dated November 9, 1993 (Date of Event:
          October 25, 1993).

(3.2)     Bylaws of the Company, as amended, incorporated by reference to
          Exhibit 4.3 to the Company's report on Form 8-K (Commission File No. 
          0-5426), dated November 9, 1993 (Date of Event: October 25, 1993).

(4)       Rights Agreement dated as of October 25, 1993 by and between the
          Company and The Chase Manhattan Bank (as successor to Chemical Bank),
          as Rights Agent, which includes as Exhibit 2 thereto the Form of
          Rights Certificate, incorporated by reference to Exhibit 4.1 to the
          Company's report on Form 8-K (Commission File No. 0-5426), dated
          November 9, 1993 (Date of Event: October 25, 1993).

(4a)      Amendment No. 1 to the Rights Agreement dated as of October 25, 1993
          by and between the Company and The Chase Manhattan Bank (as successor
          to Chemical Bank), as Rights Agent, which includes as Exhibit 2
          thereto the Form of Rights Certificate, incorporated by reference to
          the Company's report on Form 8 -K/A filed on September 29,1995.

                                       37
<PAGE>
 
                                                           The Wiser Oil Company

(4.1)     Indenture dated May 21, 1997, among the Company, certain subsidiaries
          of the Company and Texas Commerce Bank National Association, as
          Trustee, incorporated by reference to Exhibit 4.1 to the Company's
          Registration Statement on Form S-4 (Commission File No. 333-29211),
          filed on June 13, 1997.

(4.2)     Form of 9 1/2% Senior Subordinated Notes due 2007 (included in the
          indenture filed as Exhibit 4.1), incorporated by reference to Exhibit
          4.2 to the Company's Registration Statement on Form S-4 (Commission
          File No. 333-29211), filed on June 13, 1997.

(4.3)     Registration Agreement dated May 21, 1997, among the Company, certain
          subsidiaries of the Company and Salomon Brothers Inc., NationsBanc
          Capital Markets, Inc. and Nesbitt Burns Securities Inc., as the
          Initial Purchasers, incorporated by reference to Exhibit 4.3 to the
          Company's Registration Statement on Form S-4 (Commission File No. 333-
          29211), filed on June 13, 1997.

(4.4)     Credit Agreement dated June 23, 1994 among The Wiser Oil Company and
          The Wiser Oil Company of Canada, as Borrowers, and NationsBank of
          Texas, N.A. (NationsBank), as Agent, and Certain Financial
          Institutions Listed on the Signature Pages Thereto, as Banks,
          incorporated by reference to the Exhibit 10.1 to the Company's report
          on Form 8-K dated July 11, 1994 as amended on Form 8-K/A filed on
          August 17, 1994.

(4.5)     First Amendment to Credit Agreement dated November 29, 1995 among The
          Wiser Oil Company and The Wiser Oil Company of Canada, as Borrowers,
          and NationsBank, as Agent, and Certain Financial Institutions Listed
          on the Signature Pages Thereto, as Banks, incorporated by reference to
          Exhibit 4.5 to the Company's Registration Statement on Form S-4
          (Commission File No. 333-29211), filed on June 13, 1997.

(4.6)     Second Amendment to Credit Agreement dated May 20, 1997 among The
          Wiser Oil Company and The Wiser Oil Company of Canada, Inc., as
          Borrowers, and NationsBank, as Agent, and Certain Financial
          Institutions Listed on the Signature Pages thereto, as Banks,
          incorporated by reference to Exhibit 4.6 to the Company's Registration
          Statement on Form S-4 (Commission File No. 333-29211), filed on June
          13, 1997.

(4.7)     Guaranty Agreement dated May 20, 1997, by Wiser Oil Delaware, Inc., in
          favor of NationsBank and PNC Bank, National Association ("PNC"),
          incorporated by reference to Exhibit 4.7 to the Company's Registration
          Statement on Form S-4 (Commission File No. 333-29211), filed on June
          13, 1997.

(4.8)     Guaranty Agreement dated May 20, 1997, by Wiser Delaware LLC, in favor
          of NationsBank and PNC, incorporated by reference to Exhibit 4.5 to
          the Company's Registration Statement on Form S-4 (Commission File No.
          333-29211), filed on June 13, 1997.

(4.9)     Guaranty Agreement dated May 20, 1997, by The Wiser Marketing Company,
          in favor of NationsBank and PNC, incorporated by reference to Exhibit
          4.9 to the Company's Registration Statement on Form S-4 (Commission
          File No. 333-29211), filed on June 13, 1997.

(4.10)    Guaranty Agreement dated May 20, 1997, by The Wiser Oil Company of
          Canada, in favor of NationsBank and PNC, incorporated by reference to
          Exhibit 4.10 to the Company's Registration Statement on Form S-4
          (Commission File No. 333-29211), filed on June 13, 1997.

(4.11)    Guaranty Agreement dated May 20, 1997, by T.W.O.C., Inc., in favor of
          NationsBank and PNC, incorporated by reference to Exhibit 4.11 to the
          Company's Registration Statement on Form S-4 (Commission File No. 333-
          29211), filed on June 13, 1997.

(4.13)    Credit Agreement dated December 23, 1997 among The Wiser Oil Company,
          as borrowers, and NationsBank of Texas, N.A., as agent, and The
          Financial Institutions Listed on the Signature Pages thereto, as
          Banks, incorporated by reference to Exhibit 4.13 to the Company's
          Annual Report on Form 10-K filed on March 30, 1998.

                                       38
<PAGE>
 
                                                           The Wiser Oil Company

(4.13a)   First Amendment to Credit Agreement dated September 30, 1998 among The
          Wiser Oil Company, as borrowers, and NationsBank of Texas, N.A., as
          agent, and The Financial Institutions Listed on the Signature Pages
          thereto, as Banks, incorporated by reference to Exhibit 4.13a to the
          Company's Annual Report on Form 10-Q filed on November 12, 1998.

(4.13b)*  Second Amendment to Credit Agreement dated January 11, 1999 among The
          Wiser Oil Company, as borrowers, and NationsBank of Texas, N.A., as
          agent, and The Financial Institutions Listed on the Signature Pages
          thereto, as Banks.

(10.3)    Purchase and Sale Agreements made as of May 31, 1994 among Eagle
          Resources Ltd., Caneagle Resources Corporation, The Erin Mills
          Investment Corporation and The Wiser Oil Company, incorporated by
          reference to Exhibit 10 to the Company's report on Form 8-K dated July
          11, 1994 as amended by Form 8-K/A filed on August 17, 1994.

(10.3a)*  Purchase and Sale Agreement dated April 12, 1999 between Columbia 
          Natural Resources, Inc. and the Wiser Oil Company.

(10.4)+   Employment Agreement dated August 1, 1994 between the Company and
          Allan J. Simus, incorporated by reference to Exhibit 10(d) to the
          Company's Annual Report on Form 10-K for the year ended December 31,
          1994.

(10.4a)+* Amendment to Employment Agreement dated August 1, 1994 between the
          Company and Alan J. Simus dated March 22, 1996.

(10.4b)+  Second Amendment to Employment Agreement dated August 1, 1994 between
          the Company and Alan J. Simus dated May 20, 1997, incorporated by
          reference to Exhibit 10.4a to the Company's Annual Report on Form 10-K
          filed on March 30, 1998.

(10.4c)+* Third Amendment to Employment Agreement dated August 1, 1994 between
          the Company and Alan J. Simus dated January 1, 1999.

(10.5)+   Employment Agreement dated July 1, 1991 between the Company and Andrew
          J. Shoup, Jr., incorporated by reference to Exhibit 10(a) to the
          Company's Annual Report on Form 10-K for the year ended December 31,
          1993.

(10.5a)+* Amendment to Employment Agreement dated July 1, 1991 between the
          Company and Andrew J. Shoup, Jr. dated June 1, 1994.

(10.5b)+  Second Amendment to Employment Agreement dated July 1, 1991 between
          the Company and Andrew J. Shoup, Jr. dated May 20, 1997, incorporated
          by reference to Exhibit 10.5a to the Company's Annual Report on Form
          10-K filed on March 30, 1998.

(10.5c)+* Third Amendment to Employment Agreement dated July 1, 1991 between the
          Company and Andrew J. Shoup, Jr. dated January 1, 1999.

(10.6)+   The Wiser Oil Company 1991 Stock Incentive Plan, as amended,
          incorporated by reference to Exhibit 4.1 to the Company's Registration
          Statement on Form S-8 (Commission File No. 33-62441), filed on
          September 8, 1995.

(10.6a)+  Amendment to The Wiser Oil Company 1991 Stock Incentive Plan,
          incorporated by reference to the Company's Registration Statement on
          Form S-8 (Commission File No. 333-29973), filed on June 25, 1997.

(10.7)+   The Wiser Oil Company 1991 Non-Employee Directors' Stock Option Plan,
          as amended, incorporated by reference to Exhibit 99.1 to the Company's
          Registration Statement on Form S-8 (Commission File No. 333-22525),
          filed on February 28, 1997.

                                       39
<PAGE>
 
                                                           The Wiser Oil Company

(10.8)+    Employment Agreement dated November 1, 1993 between the Company and
           Lawrence J. Finn, incorporated by reference to Exhibit 10(b) to the
           Company's Annual Report on Form 10-K for the year ended December 31,
           1993.

(10.8a)+*  Amendment to Employment Agreement dated November 1, 1993 between the
           Company and Lawrence J. Finn dated March 22, 1996.

(10.8b)+   Second Amendment to Employment Agreement dated November 1, 1993
           between the Company and Lawrence J. Finn dated May 20, 1997,
           incorporated by reference to Exhibit 10.8a to the Company's Annual
           Report on Form 10-K filed on March 30, 1998.

(10.8c)+*  Third Amendment to Employment Agreement dated November 1, 1993
           between the Company and Lawrence J. Finn dated January 1, 1999.

(10.9)+    Employment Agreement dated January 24, 1994 between the Company and
           A. Wayne Ritter, incorporated by reference to Exhibit 10(c) to the
           Company's Annual Report on Form 10-K for the year ended December 31,
           1993.

(10.9a)+*  Amendment to Employment Agreement dated January 24, 1994 between the
           Company and A. Wayne Ritter dated March 22, 1996.

(10.9b)+   Second Amendment to Employment Agreement dated January 24, 1994
           between the Company and A. Wayne Ritter dated May 20, 1997,
           incorporated by reference to Exhibit 10.8a to the Company's Annual
           Report on Form 10-K filed on March 30, 1998.

(10.9c)+*  Third Amendment to Employment Agreement dated January 24, 1994
           between the Company and A. Wayne Ritter dated January 1, 1999.

(10.10)+   Employment Agreement dated September 30, 1996 between the Company and
           Kent E. Johnson, incorporated by reference to Exhibit 10.10 to the
           Company's Annual Report on Form 10-K (Commission File No. 0-5426),
           filed on March 26, 1997.

(10.10a)+  Amendment to Employment Agreement dated September 30, 1996 between
           the Company and Kent E. Johnson dated May 20, 1997, incorporated by
           reference to Exhibit 10.2 of the Company's Quarterly Report on Form
           10-Q filed on August 13, 1997.

(10.10b)+* Second Amendment to Employment Agreement dated September 30, 1996
           between the Company and Kent E. Johnson dated January 1, 1999.

(10.11)+   The Wiser Oil Company Equity Compensation Plan For Non-Employee
           Directors, incorporated by reference to Exhibit 10.11 to the
           Company's Annual Report on Form 10-K (Commission File No. 0-5426),
           filed on March 26, 1997.

(10.12)    The Wiser Oil Company Savings Restoration Plan dated February 24,
           1998, incorporated by reference to Exhibit 10.12 to the Company's
           Annual Report on Form 10-K filed on March 30, 1998.

(10.13)    Retirement Restoration Plan dated March 23, 1995, incorporated by
           reference to Exhibit 10.13 to the Company's Quarterly Report on Form
           10-Q filed on August 12, 1998.
           
(21)*      Subsidiaries of registrant.

(23.1)*    Consent of Independent Public Accountants.

                                       40
<PAGE>
 
                                                           The Wiser Oil Company

(23.2)*   Consent of DeGolyer and MacNaugton, Independent Petroleum Engineers.

(23.3)*   Consent of Gilbert Lausten Jung Associates Ltd., Independent Petroleum
          Engineers.

(27)*     Financial Data Schedule.

--------------------

+ Represent management compensatory plans or agreements.
* Filed herewith.

                                       41
<PAGE>
 
                                                           The Wiser Oil Company
  
                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 15th day of April
1999.


                                         The Wiser Oil Company

                                    By:  /s/ Andrew J. Shoup, Jr.
                                         -----------------------------------
                                         Andrew J. Shoup, Jr.
                                         President and Chief
                                         Executive Officer

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.
 
          Signature              Title                          Date
          ---------              -----                          ----
        
    /s/ ANDREW J. SHOUP, JR.   President, Chief Executive   April 15, 1999
-----------------------------    Officer and Director 
        ANDREW J. SHOUP, JR.     (Principal Executive
                                 Officer)
        
    /s/ PAUL D. NEUENSHWANDER  Director                     April 15, 1999
-----------------------------
        PAUL D. NEUENSHWANDER
        
    /s/ C. FRAYER KIMBALL      Director                     April 15, 1999
-----------------------------
        C. FRAYER KIMBALL
        
    /s/ HOWARD G. HAMILTON     Director                     April 15, 1999
-----------------------------
        HOWARD G. HAMILTON
        
    /s/ A. W. SCHENCK, III     Director                     April 15, 1999
-----------------------------
        A. W. SCHENCK, III
        
    /s/ JOHN W. CUSHING, III   Director                     April 15, 1999
-----------------------------
        JOHN W. CUSHING, III
        
    /s/ JON L. MOSLE, JR.      Director                     April 15, 1999
-----------------------------
        JON L. MOSLE, JR.
        
    /s/ LORNE H. LARSON        Director                     April 15, 1999
-----------------------------
        LORNE H. LARSON
        
    /s/ LAWRENCE J. FINN       Vice President and Chief     April 15, 1999
-----------------------------    Financial Officer 
        LAWRENCE J. FINN         (Principal Financial and
                                 Accounting Officer)

                                       42
<PAGE>
 
                             THE WISER OIL COMPANY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 
                                                              Page
                                                              ----
 
Report of Independent Public Accountants....................  F-2
Consolidated Statements of Income...........................  F-3
Consolidated Balance Sheets.................................  F-4
Consolidated Statements of Changes in Stockholders' Equity..  F-5
Consolidated Statements of Cash Flows.......................  F-6
Notes to Consolidated Financial Statements..................  F-7
 

                                      F-1
<PAGE>
 
                    Report of Independent Public Accountants

To the Shareholders of The Wiser Oil Company:

We have audited the accompanying consolidated balance sheets of The Wiser Oil
Company (a Delaware corporation) and subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for the years ended December 31, 1998, 1997
and 1996. 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 consolidated financial position of The Wiser Oil
Company and subsidiaries as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for the years ended December 31, 1998,
1997 and 1996, in conformity with generally accepted accounting principles.



                                    ARTHUR ANDERSEN LLP



Dallas, Texas,
April 15, 1999

                                      F-2
<PAGE>
 
                             THE WISER OIL COMPANY

                       CONSOLIDATED STATEMENTS OF INCOME

              For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
 
                                                 1998       1997      1996
                                              ----------  --------  --------
                                              (000's except per share data)
<S>                                           <C>         <C>       <C>
Revenues:
  Oil and gas sales.........................   $ 59,197    $76,729   $72,012
  Dividends and interest....................        269      1,113       683
  Marketable security sales.................         --      7,495    12,977
  Other.....................................      1,164      2,478     1,017
                                               --------    -------   -------
                                                 60,630     87,815    86,689
                                               --------    -------   -------
 
Costs and Expenses:
  Production and operating..................     26,529     27,183    23,970
  Purchased natural gas.....................      1,440      1,622     1,462
  Depreciation, depletion and amortization..     25,811     22,977    19,653
  Property impairments......................      3,838      3,289    12,112
  Exploration...............................     15,328      9,655     4,176
  General and administrative................      9,793      9,661     9,364
  Interest expense..........................     13,097      9,845     5,452
                                               --------    -------   -------
                                                 95,836     84,232    76,189
                                               --------    -------   -------
 
Earnings (Loss) Before Income Taxes.........    (35,206)     3,583    10,500
Income Tax Expense (Benefit)................    (10,740)       264     4,072
                                               --------    -------   -------
 
NET INCOME (LOSS)...........................   $(24,466)   $ 3,319   $ 6,428
                                               ========    =======   =======
 
Earnings (Loss) Per Share (Note 12):
  Basic.....................................   $  (2.73)   $   .37   $   .72
                                               ========    =======   =======
 
  Diluted...................................   $  (2.73)   $   .37   $   .72
                                               ========    =======   =======
 
Cash Dividends Per Share....................   $    .12    $   .12   $   .12
                                               ========    =======   =======
 
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-3
<PAGE>
 
                             THE WISER OIL COMPANY

                          CONSOLIDATED BALANCE SHEETS
                                        
                           December 31, 1998 and 1997
<TABLE>
<CAPTION>
 
                                                                   1998        1997
                                                                ----------  ----------
                                                                        (000's)
<S>                                                             <C>         <C>
Assets
Current Assets:
 Cash and cash equivalents....................................  $   2,779   $  13,255
 Accounts receivable..........................................      9,102      13,765
 Inventories..................................................        669       1,007
 Income taxes receivable......................................      1,270         725
 Prepaid expenses.............................................      1,035         438
                                                                ---------   ---------
    Total current assets......................................     14,855      29,190
                                                                ---------   ---------
Property, Plant and Equipment, at cost:
 Oil and gas properties (successful efforts method)...........    367,974     346,655
 Other properties.............................................      5,523       5,399
                                                                ---------   ---------
                                                                  373,497     352,054
 Accumulated depreciation, depletion and amortization.........   (160,202)   (131,346)
                                                                ---------   ---------
 Net property, plant and equipment............................    213,295     220,708
Other Assets..................................................      3,660       4,658
                                                                ---------   ---------
                                                                $ 231,810   $ 254,556
                                                                =========   =========
 
Liabilities and Stockholders' Equity
Current Liabilities:
 Accounts payable.............................................  $  10,473   $  18,396
 Current portion of long-term debt............................     21,000          --
 Accrued liabilities..........................................      2,730       2,985
                                                                ---------   ---------
   Total current liabilities..................................     34,203      21,381
                                                                ---------   ---------
Long-Term Debt................................................    124,452     124,304
Deferred Benefit Cost.........................................        378       1,169
Deferred Income Taxes.........................................        686      10,278
Stockholders' Equity:
  Common stock - $3 par value; 20,000,000 shares authorized;
    9,128,169 shares issued; 8,951,965 shares outstanding.....     27,385      27,385
 Paid-in capital..............................................      3,223       3,223
 Retained earnings............................................     43,090      68,630
 Foreign currency translation.................................      1,122         915
 Treasury stock; 176,204 shares, at cost......................     (2,729)     (2,729)
                                                                ---------   ---------
   Total stockholders' equity.................................     72,091      97,424
                                                                ---------   ---------
                                                                $ 231,810   $ 254,556
                                                                =========   =========
 
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>
 
                             THE WISER OIL COMPANY

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

              For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
 
 
                                                                           Marketable
                                                                           Securities     Foreign
                                             Common    Paid-in  Retained    Valuation    Currency    Treasury
                                  Total       Stock    Capital  Earnings   Adjustment   Translation    Stock
                                ----------  ---------  -------  ---------  -----------  -----------  ---------
                                                                 (000's)
<S>                             <C>         <C>        <C>      <C>        <C>          <C>          <C>
 
December 31, 1995.............   $101,132   $ 27,347    $3,078  $ 61,030      $11,684        $  722   $(2,729)
 
  Net income..................      6,428         --        --     6,428           --            --        --
  Other comprehensive income
     (loss), net of tax.......     (7,225)        --        --        --       (7,356)          131        --
                                 --------
  Comprehensive income (loss).       (797)        --
 
  Dividends paid..............     (1,073)        --        --    (1,073)          --            --        --
                                 --------   --------   -------  --------   ----------   -----------  --------
 
December 31, 1996.............     99,262     27,347     3,078    66,385        4,328           853    (2,729)
 
  Net income..................      3,319         --        --     3,319           --            --        --
  Other comprehensive income
     (loss), net of tax.......     (4,266)        --        --        --       (4,328)           62        --
                                 --------
  Comprehensive income (loss).       (947)        --
 
  Stock options exercised.....        183         38       145        --           --            --        --
 
  Dividends paid..............     (1,074)        --        --    (1,074)          --            --        --
                                 --------   --------   -------  --------   ----------   -----------  --------
 
December 31, 1997.............     97,424     27,385     3,223    68,630           --           915    (2,729)
 
  Net income (loss)               (24,466)        --        --   (24,466)          --            --        --
  Other comprehensive income
     (loss), net of tax.......        207         --        --        --           --           207        --
                                 --------
  Comprehensive income (loss).    (24,259)        --
 
  Dividends paid..............     (1,074)        --        --    (1,074)          --            --        --
                                 --------   --------   -------  --------   ----------   -----------  --------
 
December 31, 1998.............   $ 72,091   $ 27,385    $3,223  $ 43,090      $    --        $1,122   $(2,729)
                                 ========   ========   =======  ========   ==========   ===========  ========
 
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-5
<PAGE>
 
                             THE WISER OIL COMPANY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

              For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
 
                                                                1998        1997       1996
                                                             -----------  ---------  ---------
                                                               (000's except per share data)
<S>                                                          <C>          <C>        <C>
Cash Flows from Operating Activities:
        Net income (loss)                                      $(24,466)  $  3,319   $  6,428
        Adjustments to reconcile to cash flows from
          operating activities:
         Depreciation, depletion and amortization..........      25,811     22,977     19,653
         Deferred income taxes.............................      (9,592)     1,530      2,056
         Marketable securities and property sales gains....        (615)    (9,370)   (13,099)
         Exploration expense...............................      15,328      9,655      4,176
         Property impairments..............................       3,838      3,289     12,112
         Foreign currency translation......................         207         62         (2)
         Amortization of other assets......................         556        282         --
           Other changes:
           Accounts receivable.............................       4,663        326     (3,665)
           Inventories.....................................         338        282        228
           Income taxes receivable.........................        (545)      (725)        --
           Prepaid expenses................................        (597)        35        360
           Accounts payable................................      (7,923)     3,400      4,853
           Accrued income taxes............................          --     (1,697)       170
           Accrued liabilities.............................        (255)     1,449         88
           Deferred benefit costs..........................        (791)      (328)       376
           Other...........................................       1,149         --        553
                                                               --------   --------   --------
             Operating Cash Flows..........................       7,106     34,486     34,287
                                                               --------   --------   --------
Cash Flows From Investing Activities:
     Capital and exploration expenditures..................     (40,402)   (78,323)   (47,115)
     Proceeds from sales of property, plant and equipment..       2,894      3,288      1,022
     Proceeds from sales of marketable securities..........          --      8,115     14,035
                                                               --------   --------   --------
             Investing Cash Flows..........................     (37,508)   (66,920)   (32,058)
                                                               --------   --------   --------
Cash Flows From Financing Activities:
     Borrowings of long-term debt..........................      21,000    125,000     25,508
     Repayments of long-term debt..........................          --    (78,654)   (22,191)
     Long-term debt issuance costs and fees................          --     (5,636)        --
     Common stock issued...................................          --        183         --
     Dividends paid........................................      (1,074)    (1,074)    (1,073)
                                                               --------   --------   --------
             Financing Cash Flows..........................      19,926     39,819      2,244
                                                               --------   --------   --------
Net Increase (Decrease) in Cash............................     (10,476)     7,385      4,473
Cash and Cash Equivalents, beginning of year...............      13,255      5,870      1,397
                                                               --------   --------   --------
Cash and Cash Equivalents, end of year.....................    $  2,779   $ 13,255   $  5,870
                                                               ========   ========   ========
 
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                      F-6
<PAGE>
 
                             THE WISER OIL COMPANY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 1998, 1997 and 1996

1. Summary of Significant Accounting Policies
 
   a.  Principles of Consolidation - The consolidated financial statements
   include the accounts of The Wiser Oil Company (Company), a Delaware
   corporation, and its wholly owned subsidiaries: T.W.O.C., Inc., The Wiser
   Marketing Company, Maljamar Wiser Inc., Maljamar Development Partnership,
   L.P., and The Wiser Oil Company of Canada ("Wiser Canada").  T.W.O.C., Inc.
   is a Delaware holding company responsible for the management of investment
   activities.  The Wiser Marketing Company functions as a natural gas marketer
   and broker.  Maljamar Wiser Inc. was formed in 1995 as a wholly-owned
   subsidiary of the Company.  It was formed in order for the Company to fund
   its $53,000,000 development of the Maljamar area with the use of nonrecourse
   debt.  The Maljamar Development Partnership, L.P. was formed in 1995 for the
   same reason.  The Company is the limited partner of the Maljamar Development
   Partnership, L.P. and owns 99% of the partnership.  Maljamar Wiser Inc. owns
   1% of the Maljamar Development Partnership, L.P. as a general partner.
   Effective May 14, 1997, Maljamar Wiser Inc. was merged into The Wiser Oil
   Company and Maljamar Development Partnership, L.P. was terminated. Wiser
   Canada was formed in 1994 to conduct the Company's Canadian activities. Prior
   to the formation of Wiser Canada, the Company's oil and gas operations were
   conducted primarily in the United States.  Intercompany accounts and
   transactions have been eliminated. Certain reclassifications have been made
   to conform prior years' amounts to current presentation.

   b.  Risks and Uncertainties - The preparation of financial statements in
   conformity with generally accepted accounting principles requires management
   to make estimates and assumptions that affect the reported amounts of assets
   and liabilities and disclosure of contingent assets and liabilities at the
   date of the financial statements and the reported amounts of revenues and
   expenses during the reporting period.  Actual results could differ from those
   estimates.

   c.  Oil and Gas Properties - The Company is engaged in the exploration and
   development of oil and gas in the United States and Canada. The Company
   follows the "successful efforts" method of accounting for its oil and gas
   properties.  Under this method of accounting, all costs of property
   acquisitions and exploratory wells are initially capitalized.  If a well is
   unsuccessful, the capitalized costs of drilling the well, net of any salvage
   value, are charged to expense.  The capitalized costs of unproven properties
   are periodically assessed to determine whether their value has been impaired
   below the capitalized cost, and if such impairment is indicated, a loss is
   recognized.  Geological and geophysical costs and the costs of retaining
   undeveloped properties are expensed as incurred.  Expenditures for
   maintenance and repairs are charged to expense, and renewals and betterments
   are capitalized.  Upon disposal, the asset and related accumulated
   depreciation, depletion and amortization are removed from the accounts, and
   any resulting gain or loss is reflected currently in income.

   Prior to 1995, the Company evaluated the carrying value of its oil and gas
   properties based on undiscounted future net revenues on a company wide basis.
   During 1995, the Company adopted Statement of Financial Accounting Standards
   ("SFAS")  No. 121, "Accounting for the Impairment of Long-Lived assets and
   for Long-Lived Assets to Be Disposed Of".  SFAS 121 requires the Company to
   assess the need for an impairment of capitalized costs of oil and gas
   properties on a property-by-property basis.  If an impairment is indicated
   based on undiscounted expected future cash flows, then an impairment is
   recognized to the extent that net capitalized costs exceed discounted  future
   cash flows. For 1998, the impairment test was based on estimates of future
   cash flows for each field. Crude oil price estimates were based on NYMEX
   future prices,

                                      F-7
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996


   which were $12.35, $13.63 and $14.57 per barrel for 1999, 2000 and 2001,
   respectively, and increased 3% per year thereafter up to a maximum of $20 per
   barrel. Gas price estimates were also based on NYMEX future prices, which
   where $1.96, $2.25, $2.34 and $2.55 per MMBTU for 1999, 2000, 2001 and 2002,
   respectively, and increased 3% per year thereafter up to a maximum of $3.50
   per MMBTU. These prices were applied to production profiles developed by the
   Company's engineers using proved developed reserves at December 31, 1998.
   During 1998, 1997 and 1996, the Company provided impairments of $3,838,000,
   $3,289,000 and $12,112,000, respectively. The impairments were determined
   based on the difference between the carrying value of the assets and the
   present value of future cash flows discounted at 10%. It is reasonably
   possible that a change in reserve or price estimates could occur in the near
   term and adversely impact management's estimate of future cash flows and
   consequently the carrying value of properties.

   d.  Depreciation, Depletion and Amortization ("DD&A")  DD&A of the
   capitalized costs of producing oil and gas properties are computed for
   individual properties using the units-of-production method based on total
   proved reserves.  Depreciation of transportation, office and other properties
   is computed generally using the straight-line method over the estimated
   useful lives of these assets.

   e.  Cash and Cash Equivalents - Cash equivalents generally consist of short-
   term investments maturing in three months or less from the date of
   acquisition.  These investments of $2,675,000 at December 31, 1998 and
   $15,083,000 at December 31, 1997 are recorded at cost plus accrued interest,
   which approximates market.

   f.  Inventories - Oil and gas product inventories are recorded at the average
   cost of production.  Materials and supplies are recorded at the lower of
   average cost or market.

   g.  Accrued Liabilities - Accrued liabilities include accrued vacation and
   payroll of $323,000 at December 31, 1998 and $334,000 at December 31, 1997.

   h.  Postretirement Benefits - SFAS No. 106, "Employers' Accounting for
   Postretirement Benefits Other Than Pensions", has no significant impact on
   the Company.  The Company has no significant liabilities for postretirement
   benefits, other than pensions, and has historically recognized such
   liabilities as they are incurred.

   i.  Gas Imbalances - Gas imbalances are accounted for using the sales method.
   The Company's net imbalance position is not material at December 31, 1998 and
   1997.

   j.  Financial Instruments - The following table sets forth the book value and
   estimated fair values of financial instruments at December 31, 1998 and 1997,
   respectively (000's):

<TABLE>
<CAPTION>
 
                                      1998                1997
                               ------------------  -------------------
                                 Book      Fair      Book      Fair
                                Value     Value     Value      Value
                               --------  --------  --------  ---------
<S>                            <C>       <C>       <C>       <C>
   Cash and equivalents        $  2,779  $ 2,779   $ 13,255   $13,255
   Floating-rate debt            21,000   21,000         --        --
   Fixed-rate debt              124,452      (A)    124,304       (A)
</TABLE>

     (A) It was not practicable to estimate the fair value of the Company's
   fixed-rate debt because the trading volume was too small to establish a
   reasonable basis of fair value.

                                      F-8
<PAGE>
 
                             THE WISER OIL COMPANY
                                        
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996


   During 1998, the Company entered into various natural gas forward sale
   agreements and during 1997 and 1996, the Company entered into natural gas
   price swap and oil price collar agreements to hedge against price
   fluctuations. Oil and gas sales in the accompanying Consolidated Statements
   of Income are adjusted for the effects of hedging transactions as the
   underlying hedged production is sold. Adjustments to oil and gas sales from
   the Company's hedging activities resulted in an increase in revenues of
   $210,000 in 1998 and reductions in revenues of $2,372,000 and $6,923,000 in
   1997 and 1996, respectively. As of December 31, 1998 and December 31, 1997,
   the Company had no deferred net gains or net losses. In February, March and
   April of 1999, the Company entered into forward sale agreements to hedge a
   portion of the Company's oil and gas production as follows:
<TABLE>
<CAPTION>
 
   Period                            Daily Volume - Product      Price (Floor / Ceiling)
   --------------------------------  --------------------------  -----------------------
<S>                                  <C>                         <C>
   March 1, 1999 to July 31, 1999    23,832 MMBTU - Natural Gas  $1.72 per MMBTU
   May 1, 1999 to August 31, 1999    800 Bbls - Crude Oil        $13.40 per Bbl
   May 1, 1999 to August 31, 1999    455 Bbls - Crude Oil        $14.50/16.60 per Bbl   
   May 1, 1999 to September 30, 1999 500 Bbls - Crude Oil        $13.00/17.35 per Bbl   
</TABLE>

   The 455 Bbls per day crude oil hedge is a "collar" hedge whereby the Company
   will receive the actual market price if the actual market price is between
   the floor price of $14.50 per Bbl and the ceiling price of $16.60 per Bbl. If
   the actual market price is below or above the floor or ceiling prices, the
   price received by the Company will be limited to the floor price or ceiling
   price, respectively.

   The 500 Bbls per day crude oil hedge is also a "collar" hedge whereby the
   Company will receive the actual market price if the actual market price is
   between $15.00 per Bbl and the ceiling price of $17.35 per Bbl. If the actual
   market price is between the floor price of $13.00 per Bbl and $15.00 per Bbl,
   the Company will receive $15.00 per Bbl. If the actual market price is less
   than the floor price of $13.00 per Bbl, the Company will receive the actual
   market price plus $2.00 per Bbl. If the actual market price is above the
   ceiling price of $17.35 per Bbl, the price received by the Company will be
   limited to $17.35 per Bbl. 
 
   k.  Foreign Currency Translation - The functional currency of Wiser Canada is
   the Canadian dollar.  In accordance with SFAS No. 52, "Foreign Currency
   Translation", Wiser Canada's financial statements have  been translated from
   Canadian dollars to U.S. dollars with the cumulative translation adjustment
   gain of $1,122,000 for 1998 and $915,000 for 1997 classified in Stockholders'
   Equity.

   l.  Comprehensive Income - In 1998, the Company adopted Statement of
   Financial Accounting Standards No. 130 "Reporting Comprehensive Income"("SFAS
   130") which establishes standards for reporting and display of comprehensive
   income and its components in a full set of general purpose financial
   statements.  Comprehensive income includes net income and other comprehensive
   income, which includes, but is not limited to, unrealized gains for
   marketable securities and future contracts, foreign currency translation
   adjustments and minimum pension liability adjustments.  The impact of
   adopting SFAS No. 130 for the three years ended December 31, 1998 was not
   material.

2.  Liquidity

   On March 23, 1999, a financial institution ("New Lender") purchased all of
   the rights and obligations of the Credit Agreement from NationsBank of Texas,
   N.A. and the Bank of Montreal and became the new Agent under the Credit
   Agreement. The outstanding borrowings by the Company under the Credit
   Agreement at March 23,1999 and through April 15, 1999 are $21 million.

   Subsequently, the Company notified the New Lender that the Company was not
   able to maintain one of the ratios required under the Financial Covenants of
   the Credit Agreement as of December 31, 1998, and through the date of
   notification. On April 15, 1999, the Company and the New Lender entered into
   an agreement whereby the Company will repay the outstanding balance under the
   Credit Agreement of $21 million plus interest and fees from the anticipated
   cash proceeds available from the sale of oil and gas properties as discussed
   further below. The Company began negotiating various purchase and sale
   agreements to sell a portion of its oil and gas properties prior to March
   1999, and plans to use the sales proceeds to reduce existing debt, fund
   capital expenditures and for general corporate purposes.

   The New Lender has agreed to waive any default or possible event of default
   through December 31, 1998, and has agreed to stand still and not to enforce
   any remedies under the Credit Agreement relating to any default or event of
   default that has occurred or may occur through May 14, 1999. The New Lender
   also agreed to deliver releases of its liens on any properties to be sold by
   the Company until the outstanding balance of $21 million is repaid in full.
   The Company is not in default of any covenants under the 9 1/2% Senior
   Subordinated Notes due in May 2007.



 
                             THE WISER OIL COMPANY
                                        
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996


   The Company is pursuing several alternatives that would allow it to repay the
   outstanding balance under the Credit Agreement through the sale of oil and
   gas properties and/or refinancing. The Company believes the Credit Agreement
   will be repaid in full on or before May 14, 1999 from the proceeds of
   property sales and/or refinancing as discussed below.

   On April 13, 1999, the Company entered into a Purchase and Sale Agreement
   with Prince Minerals, Ltd. to sell certain producing and non-producing
   mineral interests ("Mineral Properties") for $10 million effective April 1,
   1999. The sale is expected to close by April 23, 1999. The producing portion
   of the oil and gas properties comprising the Mineral Properties represent
   approximately 2% of the Company's total proved oil and gas reserves at
   December 31, 1998. The sales proceeds will be used to reduce the outstanding
   balance under the Credit Agreement to approximately $11 million. The Purchase
   and Sale Agreement with Prince Minerals, Ltd. is subject to the buyer
   successfully completing a due diligence review, which was substantially
   complete as of April 15, 1999. The Company is not aware of and does not
   anticipate any conditions that would delay or terminate the closing of this
   sale.

   On April 12, 1999, the Company entered into a Purchase and Sale Agreement
   with Columbia Natural Resources to sell all of the Company's oil and gas
   properties in Kentucky, Tennessee and West Virginia ("Appalachia Properties")
   for $28 million effective April 1, 1999. The sale is expected to close on or
   before May 12, 1999. The oil and gas properties comprising the Appalachia
   Properties represent approximately 15% of the Company's total proved oil and
   gas reserves at December 31, 1998. The sales proceeds will be used to repay
   in full the outstanding balance under the Credit Agreement, and for general
   corporate purposes. The Purchase and Sale Agreement with Columbia Natural
   Resources is also subject to the buyer successfully completing a due
   diligence review, which was in progress as of April 15, 1999. The Company is
   not aware of and does not anticipate any conditions that would delay or
   terminate the closing of this sale.

   In addition, the Company is negotiating several other purchase and sale
   agreements involving a number of smaller, non-strategic oil and gas
   properties in Texas and New Mexico that the Company plans to sell for an
   aggregate sales price in the range of $7 million to $8 million. These sales
   are expected to close in the second quarter of 1999. The sales proceeds will
   be used for general corporate purposes.

   The Company is currently negotiating with a bank to obtain a new credit
   facility. The Company expects to complete the negotiations and obtain a new
   credit facility in the second quarter of 1999, however successful completion
   of these negotiations cannot be assured. The Company plans to use any funds
   provided by a new credit facility to fund capital expenditures and for
   general corporate purposes. If a new credit facility is available prior to
   the closing date of the Appalachia Properties sale, the Company may use funds
   provided by a new credit facility to reduce any existing indebtedness under
   the Credit Agreement with the New Lender.

   Management of the Company is highly confident that the purchase and sale
   agreements for the Mineral and Appalachia Properties discussed above will be
   closed as planned and that the funds provided by the property sales will
   enable the Company to reduce indebtedness and continue to meet all of its
   financial obligations while maintaining a smaller level of capital
   expenditures during 1999.

3. Marketable Securities

   The Company follows the accounting procedures as established by SFAS No. 115,
   "Accounting for Certain Investments in Debt and Equity Securities".  Under
   SFAS No. 115 marketable securities, such as those owned by the Company, are
   classified as available-for-sale securities and are to be reported at market
   value, with unrealized gains and losses, net of income taxes, excluded from
   earnings and reported as a separate component of stockholders' equity. All of
   these securities were liquidated during 1997.

   The Company recognized a pretax gain of $7,495,000 and $12,977,000 for 1997
   and 1996, respectively, from the sale of its marketable securities.

                                      F-9
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996


4.  Long-Term Debt
 
 a.  On May 21, 1997, the Company sold $125 million in principal amount of 9
     1/2% Senior Subordinated Notes ("2007 Notes") due May 15, 2007, providing
     net proceeds to the Company of $120,898,000.  The original issue price was
     99.718%.  The Company used the net proceeds from the sale of the 2007 Notes
     to repay all outstanding indebtedness under the Credit Agreement and the
     Maljamar Credit Facility and for general corporate purposes.

     The 2007 Notes are redeemable at the option of the Company, in whole or in
     part, at any time on or after May 15, 2002 at a redemption price of
     104.75%, plus accrued interest to the date of redemption, and declining at
     the rate of 1.583% per year to May 15, 2005 and 100% thereafter.  Prior to
     May 15, 2000, the Company may, at its option, redeem up to 33 1/3% of the
     original principal amount at a redemption price of 109.5%, plus accrued
     interest to the date of redemption, with the net proceeds from any future
     public offering of Company stock.

     Under the terms of the 2007 Notes, the Company must meet certain tests
     before it is able to pay cash dividends or make other restricted payments,
     incur additional indebtedness, engage in transactions with its affiliates,
     incur liens and engage in certain sale and leaseback arrangements.  The
     terms of the 2007 Notes also limit the Company's ability to undertake a
     consolidation, merger or transfer of all or substantially all of its
     assets.  In addition, the Company is, subject to certain conditions,
     obligated to offer to repurchase the 2007 Notes at par value plus accrued
     interest to the date of repurchase with the net cash proceeds of certain
     sales or dispositions of assets.  Upon a change of control, as defined, the
     Company will be required to make an offer to purchase the 2007 Notes at
     101% of the principal amount thereof, plus accrued interest to the date of
     purchase.

 b.  On June 23, 1994, the Company entered into a Credit Agreement with
     NationsBank of Texas, N. A. as agent, which provided for a term loan to
     Wiser Canada and a revolving credit facility to the Company. On December
     23, 1997, the Credit Agreement was renewed under the same basic terms. The
     Credit Agreement provides the Company with up to a $150 million line of
     credit through March 31, 2002.  The amounts available for borrowing are
     determined under formulas related to oil and gas reserves and the Company's
     borrowing base at December 31, 1998 was $25 million.  The indebtedness
     outstanding under the Credit Agreement is secured by a guaranty from Wiser
     Canada.  Available loan and interest options are (i) Base Rate Advances, at
     the bank's prime interest rate plus the Applicable Margin and (ii)
     Eurodollar Advances, at LIBOR plus the Applicable Margin.  Based on the
     amount of outstanding advances, the Applicable Margin ranges between 0% and
     1.25% and the commitment fee on the unused borrowing base ranges from 0.25%
     to 0.375%.  The average interest rate during 1998 under the Credit
     Agreement was 6.15%. The Credit Agreement requires the Company to, among
     other things, maintain certain financial ratios and imposes certain
     restrictions on sales of assets, payment of dividends and incurrence of
     indebtedness. At December 31, 1998 and through March 31, 1999, the Company
     was not able to maintain one of the financial ratios required by the Credit
     Agreement. After March 31, 1999 and through April 15, 1999, the Company was
     not able to maintain two of the financial ratios required by the Credit
     Agreement. The Company intends to repay the indebtedness under the Credit
     Agreement in full in 1999. Accordingly, the outstanding balance of $21
     million has been classified as a current liability at December 31, 1998 in
     the accompanying Consolidated Balance Sheets. See Note 2 for further
     discussion.


                                      F-10
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996




c.   On November 29, 1995, the Company entered into a credit agreement with
     NationsBank of Texas, NA as agent (the "Maljamar Credit Facility").  The
     Maljamar Credit Facility provided the Company with up to a $50 million
     nonrecourse facility to develop the expanded Maljamar project area. The
     average interest rate during 1997 under the Maljamar Credit Facility was
     7.49%. The Maljamar Credit Facility was repaid and canceled in May 1997.

   The Company paid $12,375,000 in interest during 1998, $8,120,000 during 1997,
   and $4,971,000 during 1996.

   Long-term debt consists of the following (000's):
<TABLE>
<CAPTION>
                                                                     December 31,
                                                                 --------------------
                                                                   1998       1997
                                                                 ---------  ---------
<S>                                                              <C>        <C>
 
   2007 Notes  9.5% interest rate at December 31, 1998.........   $124,452   $124,304
   Credit Agreement - 6.2% interest rate at December 31, 1998..     21,000         --
                                                                  --------  ---------
                                                                   145,452    124,304
   Less current maturities.....................................     21,000         --
                                                                  --------  ---------
                                                                  $124,452   $124,304
                                                                  ========  =========
</TABLE>
   The annual requirements for reduction of principal of long-term debt
   outstanding as of December 31, 1998 are estimated as follows (000's):

   1999....................................................  $     --
   2000....................................................        --
   2001....................................................        --
   2002....................................................        --
   Thereafter..............................................   124,452
                                                           ----------
                                                            $ 124,452
                                                           ==========
 

                                      F-11
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996

5.  Income Taxes

   The Company provides deferred income taxes for differences between the tax
   reporting basis and the financial reporting basis of assets and liabilities.
   The Company follows the accounting procedures established by SFAS No. 109,
   "Accounting for Income Taxes". The Company paid income taxes of $566,000 in
   1997 and $900,000 in 1996.

   Income tax expense (benefit) for the three years ended December 31, 1998 were
   as follows (000's):
<TABLE>
<CAPTION>
 
                                                                                                     1998        1997       1996
                                                                                                  -----------  ---------  ---------
<S>                                                                                               <C>          <C>        <C>
      Current:
         Federal................................................................................    $ (1,248)   $   375     $1,911
         State..................................................................................         100        200        105
                                                                                                    --------    -------     ------
                                                                                                      (1,148)       575      2,016
                                                                                                    --------    -------     ------
      Deferred:
         Federal................................................................................      (9,592)      (311)     1,919
         State..................................................................................          --         --        137
                                                                                                    --------    -------     ------
                                                                                                      (9,592)      (311)     2,056
                                                                                                    --------    -------     ------
     Total income tax expense (benefit).........................................................    $(10,740)   $   264     $4,072
                                                                                                    ========    =======     ======
</TABLE>
      A reconciliation of the statutory federal income tax rate to the Company's
      effective tax rate follows:
<TABLE> 
<CAPTION>
                                                                                                      1998       1997       1996
                                                                                                    --------    -------     ------
    <S>                                                                                             <C>         <C>       <C>
     Statutory federal income tax rate..........................................................        34.0%      34.0%      34.0%
     Statutory depletion in excess of cost basis................................................          --       (5.4)      (2.0)
     Non-deductible Canadian operating loss.....................................................          --         --       22.6
     State taxes, net of federal income taxes...................................................          --        5.8        1.5
     Dividends received credit..................................................................          --       (1.3)      (1.2)
     Non-conventional fuels credit..............................................................          --       (7.3)     (14.6)
     Other......................................................................................        (3.5)     (18.4)      (1.5)
                                                                                                    --------    -------     ------
     Effective tax rate.........................................................................        30.5%       7.4%      38.8%
                                                                                                    ========    =======     ======
</TABLE> 
      The deferred tax liabilities and assets at December 31, 1998 and 1997 were
      as follows (000's):
 
<TABLE>
<CAPTION>
                                                                                                     1998        1997
                                                                                                   ---------   ---------
     <S>                                                                                           <C>         <C>
      Deferred tax liabilities (assets):
       Intangible drilling and development cost.................................................    $ 13,041    $14,966
       Deferred pensions and compensation.......................................................        (296)      (468)
       Alternative minimum tax credit carryforwards.............................................      (3,040)    (3,040)
       Property impairment reserve..............................................................      (2,424)    (1,118)
       Net operating loss carryforward..........................................................      (6,013)        --
       Wiser Canada excess property basis.......................................................      (3,866)    (3,866)
       Valuation allowance......................................................................       3,866      3,866
       Other....................................................................................        (582)       (62)
                                                                                                    --------    -------
                                                                                                    $    686    $10,278
                                                                                                    ========    =======
</TABLE>

                                      F-12
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996


   The Company will only realize the benefits of alternative minimum tax credit
   carryforwards by generating future regular tax liability in excess of
   alternative minimum tax liability. In addition, the Company will only realize
   the benefit of the net operating loss carryforward by generating future
   taxable income. The Company believes it is more likely than not that both the
   net operating loss carryforward and the alternative minimum tax credits will
   be fully realized.  As of December 31, 1998, Wiser had Canadian net deferred
   tax assets of $3,866,000 and a valuation allowance has been provided against
   the Canadian net deferred tax assets at December 31, 1998. Beginning in 1997,
   Wiser Canada's operating results are included in the Company's consolidated
   federal income tax return.

6.  Oil and Gas Producing Activities

   Set forth below is certain information regarding the aggregate capitalized
   costs of oil and gas properties and costs incurred in oil and gas property
   acquisitions, exploration and development activities (000's):
<TABLE>
<CAPTION>
 
                                                                U.S.      Canada      Total
                                                             ----------  ---------  ----------
<S>                                                          <C>         <C>        <C>
      December 31, 1998:
      ------------------
      Capitalized Costs:
         Proved properties.................................  $ 261,361   $ 83,668   $ 345,029
         Unproved properties...............................     18,007      4,938      22,945
                                                             ---------   --------   ---------
           Total...........................................    279,368     88,606     367,974
         Accumulated DD&A..................................   (114,769)   (41,825)   (156,594)
                                                             ---------   --------   ---------
         Net capitalized cost..............................  $ 164,599   $ 46,781   $ 211,380
                                                             =========   ========   =========
 
      Costs Incurred during 1998:
         Property acquisition..............................  $   2,946   $  1,181   $   4,127
         Exploration (A)...................................     12,162      2,147      14,309
         Development.......................................     10,226     11,397      21,623
        (A) U.S. includes $1,615 for exploration in Peru.
 
      December 31, 1997:
      ------------------
      Capitalized Costs:
         Proved properties.................................  $ 247,809   $ 76,325   $ 324,134
         Unproved properties...............................     17,315      5,206      22,521
                                                             ---------   --------   ---------
           Total...........................................    265,124     81,531     346,655
         Accumulated DD&A..................................    (95,038)   (34,589)   (129,627)
                                                             ---------   --------   ---------
         Net capitalized cost..............................  $ 170,086   $ 46,942   $ 217,028
                                                             =========   ========   =========
 
      Costs Incurred during 1997:
         Property acquisition..............................  $  22,399   $  5,377   $  27,776
         Exploration.......................................      8,906      3,461      12,367
         Development.......................................     27,380      9,593      36,973
</TABLE>

                                      F-13
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
 
                                        U.S.      Canada      Total
                                     ----------  ---------  ----------
<S>                                  <C>         <C>        <C>
      December 31, 1996:
      ------------------
      Capitalized Costs:
         Proved properties.........  $ 226,411   $ 62,937   $ 289,348
         Unproved properties.......      9,659      7,709      17,368
                                     ---------   --------   ---------
           Total...................    236,070     70,646     306,716
         Accumulated DD&A..........   (100,016)   (29,094)   (129,110)
                                     ---------   --------   ---------
         Net capitalized cost......  $ 136,054   $ 41,552   $ 177,606
                                     =========   ========   =========
 
      Costs Incurred during 1996:
         Property acquisition......  $   1,782   $  1,054   $   2,836
         Exploration...............        875      1,888       2,763
         Development...............     33,994      6,230      40,224
         Gas plants................        408         --         408
</TABLE>
7.  Employee Pension Plan

   The Company has a noncontributory defined benefit pension plan, which covers
   substantially all full-time employees.  Plan participants become fully vested
   after five years of continuous service.  The retirement benefit formula is
   based on the employee's earnings, length of service and age at retirement.
   Contributions required to fund plan benefits are determined according to the
   Projected Unit Credit Method.  The assets of the plan are primarily invested
   in equity and debt securities. An amendment to the pension plan, effective
   January 1, 1993, reduced the normal retirement age from 65 years to 62 years.
   Effective December 11, 1998, the pension plan was further amended to curtail
   certain pension benefits.

   The net periodic pension costs (000's) and principal assumptions utilized in
   computing pension expense were as follows:
<TABLE>
<CAPTION>
                                                             1998     1997     1996
                                                            -------  ------  --------
<S>                                                         <C>      <C>     <C>
 
           Current service cost...........................   $ 375   $ 345   $   381
           Interest cost on projected benefit obligation..     729     682       824
           Actual return on assets........................    (711)   (930)    1,890
           Curtailment adjustment.........................    (778)     --        --
           Net amortization and deferral..................     126     384    (2,652)
                                                             -----   -----   -------
           Net periodic pension cost (credit).............   $(259)  $ 481   $   443
                                                             =====   =====   =======
 
           Discount rate..................................     7.0%    8.0%      8.0%
           Rate of return on plan assets..................     8.5%    8.5%      8.5%
           Rate of increase in compensation levels........     5.0%    5.0%      5.0%
 
</TABLE>

                                      F-14
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996

The following table presents the actuarial valuation of the plan's funded
   status, as of December 31 (000's):
<TABLE>
<CAPTION>
 
                                                                     1998      1997      1996
                                                                    -------  --------  --------
<S>                                                                 <C>      <C>       <C>
        Actuarial present value of pension benefits obligations:
         Vested...................................................   $9,666   $8,212    $8,155
         Nonvested................................................       --      289       415
                                                                     ------   ------    ------
         Accumulated..............................................    9,666    8,501     8,570
         Projected salary increases...............................       --      768       751
                                                                     ------   ------    ------
         Projected benefits obligations...........................    9,666    9,269     9,321
         Plan assets at fair value................................    9,477    8,547     8,010
                                                                     ------   ------    ------
         Plan assets less than projected benefits obligations.....   $  189   $  722    $1,311
                                                                     ======   ======    ======
 
      Items not yet recognized:
         Unrecognized net gain....................................   $   16   $1,032    $  473
         Unamortized transition amount............................       65       87       121
         Unamortized prior service cost...........................       --     (812)     (957)
                                                                     ------   ------    ------
         Net pension liability....................................   $  270   $1,029    $  948
                                                                     ======   ======    ======
</TABLE>
  As a result of the curtailment of certain pension benefits in 1998, the
  Company's net pension liability was reduced by $778,000.

8.  Employee Savings Plan
 
   The Company has a qualified Savings Plan available to all employees.  An
   employee may elect to have up to 15% of the employee's base monthly
   compensation, exclusive of other forms of special or extra compensation,
   withheld and placed in the Savings Plan account.  On a monthly basis, the
   Company contributes to this account an amount equal to 50% of the employee's
   contribution, limited to 3% of the employee's base compensation.  Company
   contributions to the Savings Plan were $156,000, $142,000 and $126,000, in
   1998, 1997 and 1996, respectively.

                                      F-15
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996


9. Business Segment Information
 
  In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
  Enterprise and Related Information" which requires reporting of financial and
  descriptive information about a company's reportable operating segments. The
  Company has identified only one operating segment, which is the exploration
  for and production of oil and gas with sales made to domestic and Canadian
  energy customers. Sales to major customers for the year ended December 31,
  1998 were $20,684,000 to Highland Energy Company and $7,656,000 to Koch Oil
  Co. Ltd. which represented 34% and 13%, respectively, of the Company's total
  oil and gas revenues. The sales to Koch Oil Co. Ltd. accounted for
  approximately 55% of the Company's revenues from sales of its Canadian
  production in 1998. However, due to the nature of the oil and gas industry,
  the Company is not dependent upon any of these customers. The loss of any
  major customer would not have a material adverse impact on the Company's
  business.

  The following table summarizes the oil and gas activity of the Company by
  geographic area for the years ended December 31, 1998, 1997 and 1996.

<TABLE>
<CAPTION>
 
                                               U.S.      Canada      Total
                                            ----------  ---------  ----------
<S>                                         <C>         <C>        <C>
     1998:
     -----
     Total revenues.......................   $ 46,328    $14,302    $ 60,630
     Costs and expenses:
       Production and operating...........     22,217      4,312      26,529
       Purchased natural gas..............      1,440         --       1,440
       DD&A...............................     16,548      9,263      25,811
       Property impairments...............      1,766      2,072       3,838
       Exploration........................     13,046      2,282      15,328
       Other operating....................     20,891      1,999      22,890
                                             --------    -------    --------
          Total costs and expenses........     75,908     19,928      95,836
                                             --------    -------    --------
     Earnings (loss) before income taxes..    (29,580)    (5,626)    (35,206)
     Income tax expense (benefit).........    (10,740)        --     (10,740)
                                             --------    -------    --------
     Net income (loss)....................   $(18,840)   $(5,626)   $(24,466)
                                             ========    =======    ========
 
Identifiable assets (end of year).........   $181,013    $50,797    $231,810
                                             ========    =======    ========
 
</TABLE>

                                      F-16
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
 
 
                                            U.S.      Canada      Total
                                          ---------  ---------  ---------
<S>                                       <C>        <C>        <C>
     1997:
     -----
     Total revenues.....................   $ 71,706   $16,109    $ 87,815
     Costs and expenses:
       Production and operating.........     23,058     4,125      27,183
       Purchased natural gas............      1,622        --       1,622
       DD&A.............................     14,032     8,945      22,977
       Property impairments.............      1,786     1,503       3,289
       Exploration......................      6,956     2,699       9,655
       Other operating..................     16,407     3,099      19,506
                                           --------   -------    --------
          Total costs and expenses......     63,861    20,371      84,232
                                           --------   -------    --------
     Earnings before income taxes.......      7,845    (4,262)      3,583
     Income tax expense.................        264        --         264
                                           --------   -------    --------
     Net income.........................   $  7,581   $(4,262)   $  3,319
                                           ========   =======    ========
 
     Identifiable assets (end of year)..   $202,474   $52,082    $254,556
                                           ========   =======    ========
 
     1996:
     -----
     Total revenues.....................   $ 69,595   $17,094    $ 86,689
     Costs and expenses:
       Production and operating.........     20,288     3,682      22,970
       Purchased natural gas............      1,462        --       1,462
       DD&A.............................     11,783     7,870      19,653
       Property impairments.............      7,276     4,836      12,112
       Exploration......................      1,837     2,339       4,176
       Other operating..................      9,475     5,341      14,816
                                           --------   -------    --------
          Total costs and expenses......     52,121    24,068      76,189
                                           --------   -------    --------
     Earnings before income taxes.......     17,474    (6,974)     10,500
     Income tax expense.................      4,072        --       4,072
                                           --------   -------    --------
     Net income.........................   $ 13,402   $(6,974)   $  6,428
                                           ========   =======    ========
 
     Identifiable assets (end of year)..   $161,687   $46,930    $208,617
                                           ========   =======    ========
</TABLE>
10. Stock Compensation Plans

    Stock Options

   SFAS No. 123, "Accounting for Stock-Based Compensation," encourages but does
   not require companies to record compensation cost for stock-based employee
   compensation plans at fair value.  During 1996, the Company adopted the
   disclosure provisions of SFAS No. 123.  The Company continues to apply the
   accounting provisions of APB Opinion 25, "Accounting for Stock Issued to
   Employees," and related interpretations to account for stock-based
   compensation.  Accordingly, compensation cost for stock options is measured
   as the excess, if any, of the quoted market price of the Company's stock at
   the date of the grant over the amount an employee must pay to acquire the
   stock.

                                      F-17
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996


 
   The Company has two stock option plans, the 1991 Stock Incentive Plan
   ("Incentive Plan") and the 1991 Non-Employee Directors' Stock Option Plan
   ("Directors' Plan").  The Incentive Plan provides for the issuance of ten-
   year options with a variable vesting period and a grant price equal to the
   fair market value at the issue date.  The Directors' Plan, as amended,
   provides for the issuance of ten-year options with a six month vesting period
   and a grant price equal to the fair market value at the issue date.

   A summary of the status of the Company's two stock option plans at December
   31, 1998, 1997 and 1996 and changes during the years then ended follows:
<TABLE>
<CAPTION>
                                                   1998                      1997                   1996
                                          -----------------------  ------------------------  -----------------------
                                                        Exercise                  Exercise                Exercise
                                            Shares      Price(1)      Shares      Price(1)     Shares     Price(1)
                                          -----------  -----------  -----------  -----------  ---------  -----------
<S>                                       <C>          <C>          <C>          <C>          <C>        <C>
      Outstanding at beginning of year..   1,022,475     $15.62        879,500     $15.02      254,500     $16.88
      Granted...........................      10,500      11.94        164,500      18.87      647,250      14.35
      Exercised.........................          --         --        (15,025)     15.68           --         --
      Expired and cancelled.............      (5,625)     11.25         (6,500)     15.76      (22,250)     16.88
                                          ----------     ------     ----------     ------     --------     ------
      Outstanding at end of year........   1,027,350     $15.61      1,022,475     $15.62      879,500     $15.02
                                          ==========     ======     ==========     ======     ========     ======
      Exercisable at end of year........     868,850     $15.40        773,975     $15.23      145,650     $16.47
                                          ==========     ======     ==========     ======     ========     ======
      Fair value of options granted(1)..       $3.66                     $6.07                   $4.30
                                          ==========                ==========                ========
</TABLE>
(1)  Weighted average per option granted.

     667,750 of the 1,027,350 options outstanding at December 31, 1998 have
     exercise prices between $11 and $15, with a weighted average exercise price
     of $14.35 and a weighted average remaining contractual life of 7.7 years.
     609,750 of these options are currently exercisable with a weighted average
     exercise price of $14.60.  The remaining 359,600 options have exercise
     prices between $15 and $20, with a weighted average exercise price of
     $17.94 and a weighted average contractual life of 6.3 years. 259,100 of
     these options are currently exercisable with a weighted average exercise
     price of $17.30.

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes option pricing model with the following weighted-average
     assumptions used for grants for both the Incentive Plan and the Directors'
     Plan:

<TABLE>
<CAPTION>
                                              1998    1997    1996
                                             ------  ------  ------
<S>                                          <C>     <C>     <C>
                 Risk free interest rate...   5.58%   6.29%   6.36%
                 Expected dividend yields..   1.01%    .64%    .84%
                 Expected lives, in years..   5.00    5.06    4.85
                 Expected volatility.......  25.99%  23.66%  22.22%
</TABLE>

                                      F-18
<PAGE>
 
                             THE WISER OIL COMPANY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

                        December 31, 1998, 1997 and 1996

   Had compensation cost been determined consistent with SFAS No. 123, the
   Company's net income and basic earnings per share would have been reduced to
   the following pro forma amounts:
<TABLE>
<CAPTION>
 
                                                                  1998      1997     1996
                                                               ----------  -------  -------
<S>                                                            <C>         <C>      <C>
             Net income (loss) - as reported (in thousands)..   $(24,466)   $3,319   $6,428
             Net income (loss) - pro forma (in thousands)....    (24,685)    2,256    5,576
             Earnings (loss) per share - as reported.........   $  (2.73)   $  .37   $  .72
             Earnings (loss) per share - pro forma...........      (2.76)      .25      .62
</TABLE>

   Because the SFAS No. 123 method of accounting has not been applied to options
   granted prior to January 1, 1995, the resulting pro forma compensation cost
   may not be representative of compensation cost to be expected in future
   years.

   Share Appreciation Rights Plan

   The Company has a share appreciation rights ("SARs") plan which authorizes
   the granting of SARs to employees of the Company.  Upon exercise, SARs allow
   the holder to receive the difference between the SARs exercise price and the
   fair market value of the Company's common stock covered by the SARs on the
   exercise date.  The holders of the SARs vest at 25% per year and the SARs
   expire at the earlier of 5 years or termination of employment. At December
   31, 1998, 85,000 SARs were outstanding with an exercise price of $14.63 per
   share.

11.  Preferred Stock

  In addition to Common Stock, the Company is authorized to issue 300,000 shares
  of Preferred Stock with a par value of $10 per share, none of which has been
  issued.

12.  Earnings Per Share

  The Company accounts for earnings per share ("EPS") in accordance with SFAS
  No. 128, "Earnings Per Share".  Under SFAS No. 128, basic EPS is computed by
  dividing net income by the weighted average common shares outstanding without
  including any potentially dilutive securities.  Diluted EPS is computed by
  dividing net income by the weighted average common shares outstanding plus,
  when their effect is dilutive, common stock equivalents consisting of stock
  options. Previously reported EPS were equivalent to the diluted EPS calculated
  under SFAS No. 128.  Following are the weighted average common shares
  outstanding used in the computation of basic EPS and diluted EPS for the years
  ended December 31, 1998, 1997 and 1996 (000's):

<TABLE>
<CAPTION>
                            1998   1997   1996
                            -----  -----  -----
<S>                         <C>    <C>    <C>
 
      Basic EPS shares....  8,952  8,949  8,939
                            =====  =====  =====
 
      Diluted EPS shares..  8,952  8,982  8,954
                            =====  =====  =====
 
</TABLE>

                                      F-19
<PAGE>
 
                             THE WISER OIL COMPANY

                       Supplemental Financial Information

        For the years ended December 31, 1998, 1997 and 1996 (Unaudited)


  The following pages include unaudited supplemental financial information as
  currently required by the Securities and Exchange Commission (SEC) and the
  Financial Accounting Standards Board.

13. Estimated Quantities of Oil and Gas Reserves (Unaudited)

  Proved reserves are the estimated quantities of crude oil, natural gas and
  natural gas liquids, which upon analysis of geological and engineering data
  appear with reasonable certainty to be recoverable in future years from known
  reservoirs under existing economic and operating conditions.  Proved developed
  reserves are proved reserves which can be expected to be recovered through
  existing wells with existing equipment and under existing operating
  conditions.

  The estimation of reserves requires substantial judgment on the part of
  petroleum engineers and may result in imprecise determinations, particularly
  with respect to new discoveries.  Accordingly, it is expected that the
  estimates of reserves will change as future production and development
  information becomes available and that revisions in these estimates could be
  significant.

                                      F-20
<PAGE>
 
                             THE WISER OIL COMPANY

                       Supplemental Financial Information

        For the years ended December 31, 1998, 1997 and 1996 (Unaudited)

Following is a reconciliation of the Company's estimated net quantities of
proved oil and gas reserves, as estimated by independent petroleum consultants.
<TABLE>
<CAPTION>
                                                            Oil (MBbls)                     Gas (MMcf)
                                                   -----------------------------  ------------------------------
                                                    U.S.      Canada      Total     U.S.      Canada     Total
                                                   -------  -----------  -------  --------  ----------  --------
<S>                                                <C>      <C>          <C>      <C>       <C>         <C>
  Balance December 31, 1995......................  28,440        3,768   32,208    84,950      24,965   109,915
    Revisions of previous estimates..............    (301)         (25)    (326)    2,738        (535)    2,203
    Properties sold and abandoned................     (78)          --      (78)      (72)         --       (72)
    Reserves purchased in place..................      12           --       12        17         505       522
    Extensions, discoveries and other additions..   2,040          533    2,573    10,787       1,705    12,492
    Production...................................  (2,033)        (744)  (2,777)   (8,874)     (2,809)  (11,683)
                                                   ------        -----   ------   -------      ------   -------
  Balance December 31, 1996......................  28,080        3,532   31,612    89,546      23,831   113,377
    Revisions of previous estimates..............  (2,614)         274   (2,340)    1,208       1,988     3,196
    Properties sold and abandoned................    (810)        (344)  (1,154)     (902)     (2,606)   (3,508)
    Reserves purchased in place..................   1,493        1,013    2,506     8,961          --     8,961
    Extensions, discoveries and other additions..   1,205          653    1,858     7,601       2,667    10,268
    Production...................................  (2,037)        (724)  (2,761)   (9,466)     (2,734)  (12,200)
                                                   ------        -----   ------   -------      ------   -------
  Balance December 31, 1997......................  25,317        4,404   29,721    96,948      23,146   120,094
    Revisions of previous estimates..............  (2,773)         689   (2,084)   (4,001)      1,362    (2,639)
    Properties sold and abandoned................    (215)        (118)    (333)     (237)       (882)   (1,119)
    Reserves purchased in place..................   2,686           --    2,686       319          --       319
    Extensions, discoveries and other additions..     407          306      713    12,971       4,111    17,082
    Production...................................  (1,837)        (878)  (2,715)  (10,535)     (3,221)  (13,756)
                                                   ------        -----   ------   -------      ------   -------
  Balance December 31, 1998......................  23,585        4,403   27,988    95,465      24,516   119,981
                                                   ======        =====   ======   =======      ======   =======
 
Proved Developed Reserves at December 31, (1):
    1995.........................................  17,939        3,617   21,556    77,915      24,111   102,026
    1996.........................................  24,892        3,225   28,117    80,652      22,477   103,129
    1997.........................................  23,798        4,404   28,202    87,688      21,771   109,459
    1998.........................................  22,701        4,253   26,954    86,610      23,736   110,346
</TABLE>

   (1)  Reserve volumes as assigned by third party engineers have been increased
   to reflect the effect of the  Alberta Royalty Tax Credit refund.  Total
   proved and proved developed reserves were increased by 186 MBBL and 1,258
   MMCF for 1996, 364 MBBL and 1,914 MMCF for 1997 and 389 MBBL and 2,088 MMCF
   for 1998.

Standardized Measure of Discounted Future
Net Cash Flows of Proved Oil and Gas Reserves (Unaudited)

   The Company has estimated the standardized measure of discounted future net
   cash flows and changes therein relating to proved oil and gas reserves in
   accordance with the standards established by the Financial Accounting
   Standards Board through its Statement No. 69.  The estimates of future cash
   inflows and future production and development cost are based on current year
   end sales prices for oil and gas. Estimated future production of proved
   reserves and estimated future production and development costs of proved
   reserves are based on current costs and economic conditions.

                                      F-21
<PAGE>
 
                             THE WISER OIL COMPANY

                       Supplemental Financial Information

        For the years ended December 31, 1998, 1997 and 1996 (Unaudited)

   This standardized measure of discounted future net cash flows is an attempt
   by the Financial Accounting Standards Board to provide the users of financial
   statements with information regarding future net cash flows from proved
   reserves.  However, the users of these financial statements should use
   extreme caution in evaluating this information.  The assumptions required to
   be used in these computations are subjective and arbitrary.  Had other
   equally valid assumptions been used, significantly different results of
   discounted future net cash flows would result.  Therefore, these estimates do
   not necessarily reflect the current value of the Company's proved reserves or
   the current value of discounted future net cash flows for the proved
   reserves.

   The following are the Company's estimated standardized measure of discounted
   future net cash flows from proved reserves (000's):
<TABLE>
<CAPTION>
 
                                                                     U.S.        Canada       Total
                                                                 ------------  ----------  ------------
<S>                                                              <C>           <C>         <C>
       December 31, 1998:
       ------------------
       Future cash flows.......................................   $  440,715    $ 87,869    $  528,584
       Future production and development costs.................     (278,468)    (31,147)     (309,615)
       Future income tax expense...............................      (15,091)     (5,063)      (20,154)
                                                                  ----------    --------    ----------
       Future net cash flows...................................      147,156      51,659       198,815
       10% Annual discount for estimated timing of cash flows..      (67,065)    (18,518)      (85,583)
                                                                  ----------    --------    ----------
        Standardized measure of discounted cash flows..........   $   80,091    $ 33,141    $  113,232
                                                                  ==========    ========    ==========
 
       December 31, 1997:
       ------------------
       Future cash flows.......................................   $  650,810    $ 98,143    $  748,953
       Future production and development costs.................     (357,598)    (32,062)     (389,660)
       Future income tax expense...............................      (60,477)     (6,512)      (66,989)
                                                                  ----------    --------    ----------
       Future net cash flows...................................      232,735      59,569       292,304
       10% Annual discount for estimated timing of cash flows..      (97,116)    (20,699)     (117,815)
                                                                  ----------    --------    ----------
        Standardized measure of discounted cash flows..........   $  135,619    $ 38,870    $  174,489
                                                                  ==========    ========    ==========
 
       December 31, 1996:
       ------------------
       Future cash flows.......................................   $1,029,971    $116,203    $1,146,174
       Future production and development costs.................     (415,276)    (25,175)     (440,451)
       Future income tax expense...............................     (172,024)         --      (172,024)
                                                                  ----------    --------    ----------
       Future net cash flows...................................      442,671      91,028       533,699
       10% Annual discount for estimated timing of cash flows..     (187,332)    (29,187)     (216,519)
                                                                  ----------    --------    ----------
       Standardized measure of discounted cash flows...........   $  255,339    $ 61,841    $  317,180
                                                                  ==========    ========    ==========
 
</TABLE>

                                      F-22
<PAGE>
 
                             THE WISER OIL COMPANY

                       Supplemental Financial Information

        For the years ended December 31, 1998, 1997 and 1996 (Unaudited)

The following are the sources of changes in the standardized measure of
   discounted net cash flows (000's):
<TABLE>
<CAPTION>
 
                                                               1998        1997        1996
                                                            ----------  ----------  ----------
<S>                                                         <C>         <C>         <C>
 
  Standardized measure, beginning of year.................   $174,489   $ 317,180    $194,602
  Sales, net of production costs..........................    (31,445)    (47,959)    (46,580)
  Net change in price and production costs................    (78,321)   (204,859)    142,806
  Reserves purchased in place.............................      1,817      30,570         581
  Extensions, discoveries and improved recoveries.........     11,259      11,751      42,582
  Change in future development costs......................      9,316      16,339      27,080
  Revisions of previous quantity estimates and disposals..     (4,846)     (6,992)        314
  Sales of reserves in place..............................     (1,698)    (10,756)       (987)
  Accretion of discount...................................     21,007      41,431      23,542
  Changes in timing and other.............................    (13,327)    (33,752)    (10,440)
  Net change in income taxes..............................     24,981      61,536     (56,320)
                                                             --------   ---------    --------
  Standardized measure, end of year.......................   $113,232   $ 174,489    $317,180
                                                             ========   =========    ========
</TABLE>
14.  Quarterly Financial Data

  The supplementary financial data in the table below for each quarterly period
  within the years ended December 31, 1998 and 1997 are derived from the
  unaudited consolidated financial statements of the Company.

<TABLE>
<CAPTION>
                                         Net      Earnings
                                       Income      (Loss)
                           Revenues    (Loss)    Per Share
                           ---------  ---------  ----------
                            (000's)    (000's)
<S>                        <C>        <C>        <C>
      1998:
         First quarter...   $17,415    $(3,556)      $(.40)
         Second quarter..    16,019     (4,675)       (.52)
         Third quarter...    13,833     (8,153)       (.91)
         Fourth quarter..    13,363     (8,082)       (.90)
 
      1997:
         First quarter...   $25,575    $ 6,141       $ .69
         Second quarter..    17,826     (1,944)       (.22)
         Third quarter...    17,027     (1,878)       (.21)
         Fourth quarter..    27,387      1,000         .11
</TABLE>

                                      F-23
<PAGE>
 
                             THE WISER OIL COMPANY

                       Supplemental Financial Information

        For the years ended December 31, 1998, 1997 and 1996 (Unaudited)

15.  Summary of Guaranties of 9 1/2% Senior Subordinated Notes

   In May 1997, the Company issued $125 million aggregate principal amount of
   its 9  1/2% senior Subordinated Notes due 2007 pursuant to an offering exempt
   from registration under the Securities Act of 1933.  The notes are unsecured
   obligations of the Company, subordinated in right of payment to all existing
   and any future senior indebtedness of the Company.  The notes rank pari passu
   with any future senior subordinated indebtedness and senior to any future
   junior subordinated indebtedness of the Company.  The notes are fully and
   unconditionally guaranteed, jointly and severally, on an unsecured, senior
   subordinated basis by certain wholly owned subsidiaries of the Company (the
   "Subsidiary Guarantors").  At the time of the initial issuance of the notes,
   Wiser Oil Delaware, Inc., The Wiser Marketing Company, Wiser Delaware LLC,
   T.W.O.C., Inc. and The Wiser Oil Company of Canada were the Subsidiary
   Guarantors (the "Initial Subsidiary Guarantors").  Except for two wholly
   owned subsidiaries that are inconsequential to the Company on a consolidated
   basis, the Initial Subsidiary Guarantors comprise all of the Company's direct
   and indirect subsidiaries.

   Sections 13 and 15(d) of the Securities Exchange Act of 1934 require
   presentation of the following unaudited summarized financial information of
   the Subsidiary Guarantors.  The Company has not presented separate  financial
   statements and other disclosures concerning each Subsidiary Guarantor because
   such information is not material to investors.  There are no significant
   contractual restrictions on distributions from each of the Subsidiary
   Guarantors to the Company.

                                      F-24
<PAGE>
 
                             THE WISER OIL COMPANY

                       Supplemental Financial Information

        For the years ended December 31, 1998, 1997 and 1996 (Unaudited)
<TABLE>
<CAPTION>
 
 
                                                   Subsidiary Guarantors
                                          -------------------------------------------
                                                                  The Wiser
                                          Wiser        T.W.O.C.   Marketing  Combined
                                          Canada(1)    Inc.       Company    Total
                                          --------     --------   ---------  --------
<S>                                       <C>          <C>        <C>        <C>
Revenues:
  For the Year Ended December 31, 1998..  $ 14,303      $     1      $2,141  $ 16,445
  For the Year Ended December 31, 1997..    16,109        7,687       2,304    26,100
  For the Year Ended December 31, 1996..    17,094       16,304       2,237    35,635
 
Earnings (Loss) Before Income Taxes:
  For the Year Ended December 31, 1998..  $ (5,626)     $   (14)     $  243  $ (5,397)
  For the Year Ended December 31, 1997..    (4,262)       7,671         231     3,640
  For the Year Ended December 31, 1996..    (6,974)      16,287         338     9,651
 
Net Income (Loss):
  For the Year Ended December 31, 1998..  $ (3,882)     $   (10)     $  168  $ (3,724)
  For the Year Ended December 31, 1997..    (3,947)       7,103         214     3,370
  For the Year Ended December 31, 1996..    (6,974)      12,492         259     5,777
 
Current Assets:
  December 31, 1998.....................  $  3,782      $     3      $  213  $  3,998
  December 31, 1997.....................     4,808           44         165     5,017
  December 31, 1996.....................     4,958           53         170     5,181
 
Total Assets:
  December 31, 1998.....................  $ 50,797      $     3      $  526  $ 51,326
  December 31, 1997.....................    52,083           44         492    52,619
  December 31, 1996.....................    39,132        7,229         718    47,079
 
Current Liabilities:
  December 31, 1998.....................  $  4,806      $    --      $  361  $  5,167
  December 31, 1997.....................     6,646           --         250     6,896
  December 31, 1996.....................     4,931           --         508     5,439
 
Noncurrent Liabilities:
  December 31, 1998.....................  $ 17,846      $    --      $   --  $ 17,846
  December 31, 1997.....................     9,474           --          --     9,474
  December 31, 1996.....................    52,439        2,227          --    54,666
 
Stockholders' Equity (Deficit):
  December 31, 1998.....................  $ 28,145      $     3      $  165  $ 28,313
  December 31, 1997.....................    35,963           44         242    36,249
  December 31, 1996.....................   (18,238)       5,002         210   (13,026)
</TABLE>
(1)  Includes the accounts of Wiser Oil Delaware, Inc., Wiser Delaware LLC and
     The Wiser Oil Company of Canada.

                                      F-25