Mexco Energy Corporation Reports Profitable Third Quarter

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

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