Mexco Energy Corporation Reports Profitable Third Quarter

Feb 17, 2011, 10:29 ET from Mexco Energy Corporation

MIDLAND, Texas, Feb. 17, 2011 /PRNewswire/ -- Mexco Energy Corporation (AMEX: MXC) today reported net income of $26,898 for the quarter ending December 31, 2010, the Company's third quarter of fiscal 2011, compared to net income of $167,145 for the same quarter of fiscal 2010.  

Operating revenues in the third quarter of fiscal 2011 were $756,576, a decrease of 13% from $865,169 for the third quarter of fiscal 2010.      

The average sales price for the quarter ending December 31, 2010 was $5.34 per Mcfe compared to $5.25 per Mcfe for the quarter ending December 31, 2009, an increase of 2%.  Oil production decreased 8% and gas production decreased 15% during the third quarter of fiscal 2011 as compared to the third quarter of fiscal 2010.  This decrease in oil and gas production is attributable to natural decline.  

For the nine months ended December 31, 2010, the Company reported net income of $102,714, compared to $257,492 for the same period of fiscal 2010.  Operating revenues increased 5% to $2,381,608 for the nine months ended December 31, 2010 from $2,269,640 for the same period of fiscal 2010.  

During the nine months ended December 31, 2010, the Company made two significant acquisitions.  On August 17, 2010, the Company purchased 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.  

And on September 30, 2010, 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.  

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

December 31,

March 31,

2010

2010

(Unaudited)

ASSETS

Current assets

Cash and cash equivalents

$      165,573

$      160,439

Accounts receivable:

Oil and gas sales

408,326

538,444

Trade

33,542

63,455

Related parties

-

55

Prepaid costs and expenses

83,688

17,161

Total current assets

691,129

779,554

Property and equipment, at cost

Oil and gas properties, using the full cost method

29,643,465

27,353,016

Other

78,520

76,161

29,721,985

27,429,177

Less accumulated depreciation, depletion and amortization

14,942,407

14,179,156

Property and equipment, net

14,779,578

13,250,021

$ 15,470,707

$ 14,029,575

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued expenses

$      181,204

$      301,160

Long-term debt

1,950,000

700,000

Asset retirement obligations

508,286

486,305

Deferred income tax liabilities

888,158

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;

2,010,116 and 2,003,866 shares issued;

1,950,949 and 1,919,866 shares outstanding as of

December 31, 2010 and March 31, 2010, respectively

1,005,058

1,001,933

Additional paid-in capital

5,981,814

5,907,899

Retained earnings

5,258,852

5,156,138

Treasury stock, at cost (59,167 and 84,000 shares as of

December 31, 2010 and March 31, 2010, respectively)

(302,665)

(426,617)

Total stockholders' equity

11,943,059

11,639,353

$ 15,470,707

$ 14,029,575

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended

Nine Months Ended

December 31

December 31

2010

2009

2010

2009

Operating revenue:

Oil and gas

$    752,778

$   857,035

$ 2,368,778

$2,248,789

Other

3,798

8,134

12,830

20,851

Total operating revenues

756,576

865,169

2,381,608

2,269,640

Operating expenses:

Production

200,785

269,154

822,150

779,379

Accretion of asset retirement obligation

8,489

7,963

25,463

23,570

Depreciation, depletion, and amortization

244,065

252,940

763,251

791,474

General and administrative

235,137

198,527

682,820

628,941

Total operating expenses

688,476

728,584

2,293,684

2,223,364

Operating profit

68,100

136,585

87,924

46,276

Other income (expenses):

Interest income

10

100

36

328

Interest expense

(15,151)

(8,516)

(25,347)

(26,877)

Net other expense

(15,141)

(8,416)

(25,311)

(26,549)

Earnings before provision for income taxes

52,959

128,169

62,613

19,727

Income tax expense (benefit):

Current

(59,500)

21,988

(25,502)

21,988

Deferred

85,561

(60,964)

(14,599)

(259,753)

26,061

(38,976)

(40,101)

(237,765)

Net income

$      26,898

$   167,145

$    102,714

$   257,492

Earnings per common share:

Basic

$          0.01

$         0.09

$          0.05

$         0.14

Diluted

$          0.01

$         0.09

$          0.05

$         0.13

Weighted average common shares outstanding:

Basic

1,947,370

1,891,866

1,934,953

1,884,598

Diluted

1,961,041

1,946,076

1,951,316

1,946,362

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.

SOURCE Mexco Energy Corporation



RELATED LINKS

http://www.mexcoenergy.com