Mexco Energy Corporation Reports Profitable Second Quarter

MIDLAND, Texas, Nov. 16, 2010 /PRNewswire-FirstCall/ -- Mexco Energy Corporation (Amex: MXC) today reported net income of $70,040 for the quarter ending September 30, 2010, the Company's second quarter of fiscal 2011, compared to a net income of $158,350 for the same quarter of fiscal 2010.  

Operating revenues in the second quarter of fiscal 2011 were $788,639, an increase of $42,345 or 6% from $746,294 for the first quarter of fiscal 2010.

The average sales price for the quarter ending September 30, 2010 was $5.49 per Mcfe compared to $4.24 per Mcfe for the quarter ending September 30, 2009, an increase of 29%.  Oil production increased 2% and gas production decreased 22% during the second quarter of fiscal 2011 as compared to the second quarter of fiscal 2010.  This decrease in gas production is attributable to natural decline and certain production shut-in for repairs and maintenance.  

During the quarter ended September 30, 2010, the Company made two significant acquisitions including overriding royalty interests averaging .28% in 5,120 gross acres covering eight sections in the Haynesville trend area of DeSoto Parish, Louisiana, for an approximate purchase price of $1.65 million.  This acreage currently contains five (5) horizontal wells producing from the Haynesville Shale formation and an additional 59 potential drill sites.  Most of the wells will be operated by Petrohawk Operating Company with the balance operated by Chesapeake Energy.  Other wells drilled in the Haynesville area show the presence of at least two (2) other potential producing zones, the Bossier and Cotton Valley, which are held by production and available for development as conditions warrant.  Any development of these royalties will be free to Mexco of expenses for drilling and operations.  The Haynesville area has been estimated to become the largest gas resource in the United States and the fourth largest in the world subject to realization of technical estimates, according to World Oil in its June 2010 edition.  World Oil recognizes DeSoto Parish as one of the top six (6) parishes of Louisiana where the most productive Haynesville wells are located.  

Also during the second quarter of fiscal 2011, the Company acquired all of the outstanding stock of a Texas corporation which owns royalties producing primarily natural gas for a purchase price of $478,000.  These royalties consist of over 200 properties covering 60 counties and parishes in Oklahoma, Texas, Louisiana, New Mexico, Mississippi and Alabama.  

For the six months ended September 30, 2010, the Company reported net income of $75,816, compared to $90,347 for the same period of fiscal 2010.  Operating revenues increased 16% to $1,625,032 for the six months ended September 30, 2010 from $1,404,471 for the same period of fiscal 2010.  

Mexco Energy Corporation owns oil and gas properties in twelve states, with the majority of its activity centered in West Texas.  The Company plans to continue to focus its efforts to increase oil and natural gas reserves through exploration and development as well as acquisition of royalties with significant development potential.


Mexco Energy Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS






September 30,


March 31,






2010


2010






(Unaudited)



ASSETS







Current assets






Cash and cash equivalents

$      142,760


$      160,439



Accounts receivable:







Oil and gas sales

402,436


538,444




Trade

31,855


63,455




Related parties

-


55



Prepaid costs and expenses

111,471


17,161





Total current assets

688,522


779,554


Property and equipment, at cost






Oil and gas properties, using the full cost method

29,604,335


27,353,016



Other


78,520


76,161






29,682,855


27,429,177



Less accumulated depreciation, depletion and amortization

14,698,342


14,179,156





Property and equipment, net

14,984,513


13,250,021






$ 15,673,035


$ 14,029,575









LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities






Accounts payable and accrued expenses

$      266,875


$      301,160


Long-term debt

2,150,000


700,000


Asset retirement obligation

511,343


486,305


Deferred income tax liabilities

802,597


902,757










Commitments and contingencies













Stockholders' equity






Preferred stock - $1.00 par value;







10,000,000 shares authorized; none outstanding

-


-



Common stock - $0.50 par value; 40,000,000 shares authorized;







2,006,366 and 2,003,866 shares issued;

1,949,199 and 1,919,866 shares outstanding as of







September 30, 2010 and March 31, 2010, respectively

1,003,183


1,001,933



Additional paid-in capital

5,997,423


5,907,899



Retained earnings

5,231,954


5,156,138



Treasury stock, at cost (57,167 and 84,000 shares as of







September 30, 2010 and March 31, 2010, respectively)

(290,340)


(426,617)


Total stockholders' equity

11,942,220


11,639,353






$ 15,673,035


$ 14,029,575





Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)






Three Months Ended


Six Months Ended






September 30


September 30






2010


2009


2010


2009

Operating revenue:









Oil and gas

$  783,990


$  737,944


$1,616,000


$1,391,754


Other

4,649


8,350


9,032


12,717



Total operating revenues

788,639


746,294


1,625,032


1,404,471

Operating expenses:









Production

253,138


269,251


621,365


510,224


Accretion of asset retirement obligation

8,544


7,879


16,974


15,607


Depreciation, depletion, and amortization

267,691


275,072


519,186


538,534


General and administrative

199,544


198,229


447,683


430,414



Total operating expenses

728,917


750,431


1,605,208


1,494,779

Operating profit (loss)

59,722


(4,137)


19,824


(90,308)

Other income (expenses):









Interest income

22


61


26


227


Interest expense

(6,857)


(8,737)


(10,196)


(18,361)



Net other expense

(6,835)


(8,676)


(10,170)


(18,134)













Earnings (loss) before provision for income taxes

52,887


(12,813)


9,654


(108,442)













Income tax expense (benefit):









Current

33,998


-


33,998


-


Deferred

(51,151)


(171,163)


(100,160)


(198,789)






(17,153)


(171,163)


(66,162)


(198,789)

Net income

$    70,040


$  158,350


$     75,816


$     90,347













Earnings per common share:









Basic

$        0.04


$        0.08


$         0.04


$         0.05


Diluted

$        0.04


$        0.08


$         0.04


$         0.05













Weighted average common shares outstanding:









Basic

1,935,199


1,883,248


1,928,711


1,880,944


Diluted

1,945,893


1,942,514


1,946,420


1,945,702




In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Mexco Energy Corporation cautions that statements in this press release which are forward-looking and which provide other than historical information involve risks and uncertainties that may impact the Company's actual results of operations. These risks include, but are not limited to, production variance from expectations, volatility of oil and gas prices, the need to develop and replace reserves, exploration risks, uncertainties about estimates of reserves, competition, government regulation, and mechanical and other inherit risks associated with oil and gas production.  A discussion of these and other factors, including risks and uncertainties, is set forth in the Company's Form 10-K for the fiscal year ended March 31, 2010.  Mexco Energy Corporation disclaims any intention or obligation to revise any forward-looking statements.

For additional information, please contact:  Nicholas C. Taylor, President and Chief Executive Officer or Tammy L. McComic, Executive Vice President and Chief Financial Officer, both of Mexco Energy Corporation, (432) 682-1119.

SOURCE Mexco Energy Corporation



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