Mexco Energy Corp 10-Q for FY2025 Q3
Mexco Energy Corp (MXC)
About this 10-Q
Mexco Energy Corp filed this 10-Q on February 7, 2025, covering the quarter ended December 31, 2024 (FY2025 Q3).
Headline figures
Quarter ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.89M
- up 14.2% from $1.66M a year earlier
- Net income
- $469.13K
- up 35.7% from net income of $345.61K a year earlier
- Diluted EPS
- $0.22
- up 37.5% from $0.16 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from to
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification Number) |
| (Address of principal executive offices) | (Zip code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) 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 (2) has been subject to such filing requirements for the past 90 days. ☒ NO ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | |
| Smaller
reporting company |
||
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO
The number of shares outstanding of the registrant’s common stock, par value $ per share, as of February 7, 2025 was .
MEXCO ENERGY CORPORATION AND SUBSIDIARIES
Table of Contents
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| December 31, | March 31, | |||||||
| 2024 | 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable: | ||||||||
| Oil and natural gas sales | ||||||||
| Trade | ||||||||
| Prepaid costs and expenses | ||||||||
| Prepaid drilling | ||||||||
| Total current assets | ||||||||
| Property and equipment, at cost | ||||||||
| Oil and gas properties, using the full cost method | ||||||||
| Other | ||||||||
| Accumulated depreciation, depletion and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | ||||||||
| Investments – cost basis | ||||||||
| Operating lease, right-of-use asset | ||||||||
| Other noncurrent assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Income tax payable | ||||||||
| Operating lease liability, current | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Operating lease liability, long-term | ||||||||
| Asset retirement obligations | ||||||||
| Deferred income tax liabilities | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock - $ par value; shares authorized; outstanding |
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| Common stock - $ par value; shares authorized; and shares issued; and shares outstanding as of December 31, 2024 and March 31, 2024, respectively | |
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| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Treasury stock, at cost ( and shares, respectively) | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 3 |
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating revenue: | ||||||||||||||||
| Oil sales | $ | $ | $ | $ | ||||||||||||
| Natural gas sales | ||||||||||||||||
| Other | ||||||||||||||||
| Total operating revenues | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Production | ||||||||||||||||
| Accretion of asset retirement obligation | ||||||||||||||||
| Depreciation, depletion, and amortization | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net other income (expense) | ||||||||||||||||
| Income before provision for income taxes | ||||||||||||||||
| (Benefit from) provision for income taxes | ( | ) | ||||||||||||||
| Income tax expense (benefit): | ||||||||||||||||
| Current | ||||||||||||||||
| Deferred | ( | ) | ( | ) | ||||||||||||
| Total income tax (benefit) expense | ( | ) | ||||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Income per common share: | ||||||||||||||||
| Basic: | $ | $ | $ | $ | ||||||||||||
| Diluted: | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Diluted: | ||||||||||||||||
| Dividends declared per share | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
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Mexco Energy Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
| Common Stock Par Value | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||
| Balance at April 1, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Dividends paid | ( | ) | ( | ) | ||||||||||||||||
| Issuance of stock through options exercised | ||||||||||||||||||||
| Purchase of stock | ( | ) | ( | ) | ||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Purchase of stock | ( | ) | ( | ) | ||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Common Stock Par Value | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||
| Balance at April 1, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Dividends paid | ( | ) | ( | ) | ||||||||||||||||
| Issuance of stock through options exercised | ||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Prurchase of stock | ( | ) | ( | ) | ||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Net income | ||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||
| Purchase of stock | ( | ) | ( | ) | ||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Balance | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| SHARE ACTIVITY | ||||||||||||||||||||
| Common stock shares, issued: | ||||||||||||||||||||
| Balance at April 1, 2024 | ||||||||||||||||||||
| Issued | ||||||||||||||||||||
| Balance at December 31, 2024 | ||||||||||||||||||||
| Common stock shares, held in treasury: | ||||||||||||||||||||
| Balance at April 1, 2024 | ( | ) | ||||||||||||||||||
| Acquisitions | ( | ) | ||||||||||||||||||
| Balance at Dec. 31, 2024 | ( | ) | ||||||||||||||||||
| Common stock shares, outstanding at December 31, 2024 |
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The accompanying notes are an integral part of the consolidated financial statements.
| 5 |
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31,
(Unaudited)
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Deferred income tax (benefit) expense | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Depreciation, depletion and amortization | ||||||||
| Accretion of asset retirement obligations | ||||||||
| Amortization of debt issuance costs | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| (Increase) decrease in right-of-use asset | ( | ) | ||||||
| Decrease in prepaid expenses | ||||||||
| Increase in accounts payable and accrued expenses | ||||||||
| Settlement of asset retirement obligations | ( | ) | ( | ) | ||||
| Increase in income taxes payable | ||||||||
| Decrease (increase) in operating lease liability | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Additions to oil and gas properties | ( | ) | ( | ) | ||||
| Investment in limited liability companies at cost | ( | ) | ( | ) | ||||
| Proceeds from sale of oil and gas properties and equipment | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | ||||||||
| Debt issuance costs | ( | ) | ||||||
| Proceeds from long-term debt | ||||||||
| Reduction of long-term debt | ( | ) | ||||||
| Dividends paid | ( | ) | ( | ) | ||||
| Acquisition of treasury stock | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Accrued capital expenditures included in accounts payable | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Asset retirement obligations | $ | $ | ||||||
The accompanying notes are an integral part of the consolidated financial statements.
| 6 |
Mexco Energy Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Operations
Mexco Energy Corporation (a Colorado corporation) and its wholly owned subsidiaries, Forman Energy Corporation (a New York corporation), Southwest Texas Disposal Corporation (a Texas corporation) and TBO Oil & Gas, LLC (a Texas limited liability company) (collectively, the “Company”) are engaged in the acquisition, exploration, development and production of crude oil, natural gas, condensate and natural gas liquids (“NGLs”). Most of the Company’s oil and gas interests are centered in West Texas and Southeastern New Mexico; however, the Company owns producing properties and undeveloped acreage in fifteen states. All of the Company’s oil and gas interests are operated by others.
2. Basis of Presentation and Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements include the accounts of Mexco Energy Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions associated with the consolidated operations have been eliminated.
Estimates and Assumptions. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make informed judgments, estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and affect the reported amounts of revenues and expenses during the reporting period. In addition, significant estimates are used in determining proved oil and gas reserves. Although management believes its estimates and assumptions are reasonable, actual results may differ materially from those estimates. The estimate of the Company’s oil and natural gas reserves, which is used to compute depreciation, depletion, amortization and impairment of oil and gas properties, is the most significant of the estimates and assumptions that affect these reported results.
Interim Financial Statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position of the Company as of December 31, 2024, and the results of its operations and cash flows for the interim periods ended December 31, 2024 and 2023. The consolidated financial statements as of December 31, 2024 and for the three and nine month periods ended December 31, 2024 and 2023 are unaudited. The consolidated balance sheet as of March 31, 2024 was derived from the audited balance sheet filed in the Company’s 2024 annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The results of operations for the periods presented are not necessarily indicative of the results to be expected for a full year. The accounting policies followed by the Company are set forth in more detail in Note 2 of the “Notes to Consolidated Financial Statements” in the Form 10-K. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the SEC. However, the disclosures herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Form 10-K.
Oil and Natural Gas Properties. The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all costs (direct and indirect) associated with acquisition, exploration, and development of oil and natural gas properties are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. All of the Company’s capitalized costs are subject to amortization.
In addition, capitalized costs less accumulated depletion and related deferred income taxes are not allowed to exceed an amount (the full cost ceiling) equal to the sum of: 1)the present value of estimated future net revenues discounted at ten percent computed in compliance with SEC guidelines; 2)plus the cost of properties not being amortized; 3)plus the lower of cost or estimated fair value of unproven properties included in the costs being amortized; 4)less income tax effects related to differences between the book and tax basis of the properties.
No impairments on oil and natural gas properties as a result of the ceiling test were recorded for the three and nine months ended December 31, 2024 and 2023.
Investments.
Segments. Based on the Company’s organizational structure, the Company has one operating segment, which is crude oil and natural gas development, exploration and production. In addition, the Company has a single, company-wide management team that allocates capital resources to maximize profitability and measures financial performance as a single enterprise.
3. Asset Retirement Obligations
The Company’s asset retirement obligations (“ARO”) relate to the plugging of wells, the removal of facilities and equipment, and site restoration on oil and gas properties. The fair value of a liability for an ARO is recorded in the period in which it is incurred, discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period until the liability is settled or the well is sold, at which time the liability is removed. The related asset retirement cost is capitalized as part of the carrying amount of our oil and natural gas properties. The ARO is included in the consolidated balance sheets with the current portion being included in the accounts payable and other accrued expenses.
| 7 |
The following table provides a rollforward of the AROs for the first nine months of fiscal 2025:
Schedule of Rollforward of Asset Retirement Obligations
| Carrying amount of asset retirement obligations as of April 1, 2024 | $ | |||
| Liabilities incurred | ||||
| Liabilities settled | ( | ) | ||
| Accretion expense | ||||
| Carrying amount of asset retirement obligations as of December 31, 2024 | ||||
| Less: Current portion | ||||
| Non-Current asset retirement obligation | $ |
The Company recognized stock-based compensation expense of $ and $ in general and administrative expense in the Consolidated Statements of Operations for the three months ended December 31, 2024 and 2023, respectively. Stock-based compensation expense recognized for the nine months ended December 31, 2024 and 2023 was $ and $, respectively. The total cost related to non-vested awards not yet recognized at December 31, 2024 totals $ which is expected to be recognized over a weighted average of years.
During
the nine months ended December 31, 2024, stock options were granted. During the nine months ended December 31, 2023, the Compensation
Committee of the Board of Directors approved and the Company granted stock options exercisable at $
Schedule of Grant-date Fair Value of Stock Options Granted and Assumptions Used Binominal Models
| Nine Months Ended | ||||||||
| December 31 | ||||||||
| 2024 | 2023 | |||||||
| Grant-date fair value | $ | |||||||
| Volatility factor | % | |||||||
| Dividend yield | ||||||||
| Risk-free interest rate | % | |||||||
| Expected term (in years) | ||||||||
Summary of Activity of Stock Options
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contract Life in Years | Intrinsic Value | |||||||||||||
| Outstanding at April 1, 2024 | $ | $ | ||||||||||||||
| Granted | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Forfeited or Expired | ( | ) | ||||||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||||
| Vested at December 31, 2024 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2024 | $ | $ | ||||||||||||||
During
the nine months ended December 31, 2024, stock options covering shares were exercised with a total intrinsic value of $.
The Company received proceeds of $
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During the nine months ended December 31, 2024, unvested stock options and vested stock options were forfeited due to the resignation of an employee. There were stock options forfeited or expired during the nine months ended December 31, 2023. No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history of these types of awards.
Outstanding options at December 31, 2024 expire between September 2028 and April 2033 and have exercise prices ranging from $ to $.
5. Long Term Debt
On
December 28, 2018, the Company entered into a loan agreement (the “Agreement”) with West Texas National Bank (“WTNB”),
which originally provided for a credit facility of $
On
February 28, 2020, the Agreement was amended to increase the credit facility to $
Under
the Agreement, interest on the facility accrues at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half
of one percent (
No
principal payments are anticipated to be required through the maturity date of the credit facility,
Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties.
In addition, this Agreement prohibits the Company from paying cash dividends on its common stock without written permission of WTNB. The Company obtained written permission from WTNB prior to declaring the special dividend on April 30, 2024 as discussed in Note 10. The Agreement does not permit the Company to enter into hedge agreements covering crude oil and natural gas prices without prior WTNB approval.
There
was
6. Leases
The
Company leases approximately
The Company determines an arrangement is a lease at inception. Operating leases are recorded in operating lease right-of-use asset, operating lease liability, current, and operating lease liability, long-term on the consolidated balance sheets.
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Operating
lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent
its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement
date based on the present value of lease payments over the lease term. As the Company’s lease does not provide an implicit rate,
the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value
of lease payments. The incremental borrowing rate used at adoption was
The balance sheets classification of lease assets and liabilities was as follows:
Schedule of Operating Lease Assets and Liabilities
| December 31, 2024 | ||||
| Assets | ||||
| Operating lease right-of-use asset, beginning balance | $ | |||
| Current period amortization | ( | ) | ||
| Lease extension | ||||
| Total operating lease right-of-use asset | $ | |||
| Liabilities | ||||
| Operating lease liability, current | $ | |||
| Operating lease liability, long term | ||||
| Total lease liabilities | $ | |||
Future minimum lease payments as of December 31, 2024 under non-cancellable operating leases are as follows:
Schedule of Future Minimum Lease Payments
| Lease Obligation | ||||
| Fiscal Year Ended March 31, 2025 | $ | |||
| Fiscal Year Ended March 31, 2026 | ||||
| Fiscal Year Ended March 31, 2027 | ||||
| Fiscal Year Ended March 31, 2028 | ||||
| Total lease payments | $ | |||
| Less: imputed interest | ( | ) | ||
| Operating lease liability | ||||
| Less: operating lease liability, current | ( | ) | ||
| Operating lease liability, long term | $ | |||
Net
cash paid for our operating lease for the nine months ended December 31, 2024 and 2023 was $
7. Income Taxes
The income tax provision consists of the following for the nine months ended December 31, 2024 and 2023:
Schedule of Income Tax Provision
| 2024 | 2023 | |||||||
| Nine Months Ended | ||||||||
| December 31 | ||||||||
| 2024 | 2023 | |||||||
| Current income tax expense: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Total current income tax expense | ||||||||
| Deferred income tax (benefit) expense: | ||||||||
| Federal | ( | ) | ||||||
| State | ( | ) | ||||||
| Total deferred income tax (benefit) expense | ( | ) | ||||||
| Total income tax expense: | $ | $ | ||||||
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The following table summarizes our income tax expense and effective income tax rate for the nine months ended December 31 follows:
Schedule of Reconciliation of Provision for Income Taxes
| 2024 | 2023 | |||||||
| Income tax expense | $ | $ | ||||||
| Effective income tax rate (1) | % | % | ||||||
| (1) |
Total income tax expense from continuing operations for the nine months ended December 31, 2024 and 2023 differed from amounts computed by applying the U.S. federal statutory tax rate to pre-tax income primarily due to state income taxes net of federal benefit and the impact of permanent differences between book and taxable income.
8. Related Party Transactions
Related
party transactions for the Company primarily relate to shared office expenditures in addition to administrative and operating expenses
paid on behalf of the principal stockholder. The total billed to and reimbursed by the stockholder for the three months ended December
31, 2024 and 2023 was $
Schedule of Reconciliation of Basic and Diluted Net Income (loss) Per Share
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| December 31 | December 31 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net income | $ | $ | $ | $ | ||||||||||||
| Shares outstanding: | ||||||||||||||||
| Weighted avg. shares outstanding – basic | ||||||||||||||||
| Effect of assumed exercise of dilutive stock options | ||||||||||||||||
| Weighted avg. shares outstanding – dilutive | ||||||||||||||||
| Income per common share: | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
For
the three and nine months ended December 31, 2024, shares relating to stock options were excluded from the computation of diluted
net income because their inclusion would be anti-dilutive. Anti-dilutive stock options have a weighted average exercise price of $
10. Stockholders’ Equity
In
April 2024, the Board of Directors authorized the use of up to $
| 11 |
During
the nine months ended December 31, 2024, the Company repurchased shares for the treasury at an aggregate cost of $
On
Dividends declared by the Board and stock repurchased during the period are presented in the Company’s consolidated statements of changes in stockholders’ equity as dividends paid and purchases of treasury stock, respectively. Dividends paid and stock repurchased during the period are presented as cash used in financing activities in the Company’s consolidated statements of cash flows. Stock repurchases are included as treasury stock in the consolidated balance sheets.
11. Acquisitions
During
the nine months ended December 31, 2024, the Company incurred approximately $
During
the nine months ended December 31, 2023, the Company incurred approximately $
12. Subsequent Events
In
January 2025, the Company expended approximately $
The Company completed a review and analysis of all events that occurred after the consolidated balance sheet date to determine if any such events must be reported and has determined that there are no other subsequent events to be disclosed.
| 12 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless the context otherwise requires, references to the “Company”, “Mexco”, “we”, “us” or “our” mean Mexco Energy Corporation and its consolidated subsidiaries.
Cautionary Statements Regarding Forward-Looking Statements. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements regarding our plans, beliefs or current expectations and may be signified by the words “could”, “should”, “expect”, “project”, “estimate”, “believe”, “anticipate”, “intend”, “budget”, “plan”, “forecast”, “predict” and other similar expressions. Forward-looking statements appear throughout this Form 10-Q with respect to, among other things: profitability; planned capital expenditures; estimates of oil and gas production; future project dates; estimates of future oil and gas prices; estimates of oil and gas reserves; our future financial condition or results of operations; and our business strategy and other plans and objectives for future operations. Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement.
While we have made assumptions that we believe are reasonable, the assumptions that support our forward-looking statements are based upon information that is currently available and is subject to change. All forward-looking statements in the Form 10-Q are qualified in their entirety by the cautionary statement contained in this section. We do not undertake to update, revise or correct any of the forward-looking information. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Form 10-K.
Liquidity and Capital Resources. Historically, we have funded our operations, acquisitions, exploration and development expenditures from cash generated by operating activities, bank borrowings, sales of non-core properties and issuance of common stock. Our primary financial resource is our base of oil and gas reserves. We have pledged our producing oil and gas properties to secure our credit facility. We do not have any delivery commitments to provide a fixed and determinable quantity of its oil and gas under any existing contract or agreement.
Our long-term strategy is on increasing profit margins while concentrating on obtaining reserves with low cost operations by acquiring and developing oil and gas properties with potential for long-lived production. We focus our efforts on the acquisition of royalties and working interests in non-operated properties in areas with significant development potential.
At December 31, 2024, we had working capital of $1,469,195 compared to working capital of $3,259,200 at March 31, 2024, a decrease of $1,790,005 for the reasons set forth below.
Cash Flows
Changes in the net funds provided by or (used in) each of our operating, investing and financing activities are set forth in the table below:
| For the Nine Months Ended December 31, | ||||||||||||
| 2024 | 2023 | Change | ||||||||||
| Net cash provided by operating activities | $ | 2,941,115 | $ | 3,374,717 | $ | (433,602 | ) | |||||
| Net cash used in investing activities | $ | (3,670,019 | ) | $ | (1,365,030 | ) | $ | 2,304,989 | ||||
| Net cash used in financing activities | $ | (834,575 | ) | $ | (666,520 | ) | $ | 168,055 | ||||
Cash Flow Provided by Operating Activities. Cash flow from operating activities is primarily derived from the production of our crude oil and natural gas reserves and changes in the balances of non-cash accounts, receivables, payables or other non-energy property asset account balances. Cash flow provided by our operating activities for the nine months ended December 31, 2024 was $2,941,115 in comparison to $3,374,717 for the nine months ended December 31, 2023. This decrease of $433,602 in our cash flow operating activities consisted of an increase in our accounts receivable of $529,751; an increase of $106,391 of our accounts payable and accrued expenses and income tax payable; and, a decrease in our net income for the current nine months of $3,287. Variations in cash flow from operating activities may impact our level of exploration and development expenditures.
Our expenditures in operating activities consist primarily of drilling expenses, production expenses and engineering services. Our expenses also consist of employee compensation, accounting, insurance and other general and administrative expenses that we have incurred in order to address normal and necessary business activities of a public company in the crude oil and natural gas production industry.
Cash Flow Used in Investing Activities. Cash flow from investing activities is derived from changes in oil and gas property balances. For the nine months ended December 31, 2024, we had net cash of $3,670,019 used for additions to oil and gas properties compared to $1,365,030 for the nine months ended December 31, 2023.
Cash Flow Provided by Financing Activities. Cash flow from financing activities is derived from our changes in long-term debt and in equity account balances. Net cash flow used in our financing activities was $834,575 for the nine months ended December 31, 2024 compared to cash flow used in our financing activities of $666,520 for the nine months ended December 31, 2023. During the nine months ended December 31, 2024, we expended $209,000 to pay the regular annual dividend and $703,216 to purchase 57,766 shares of our stock for the treasury account and received $77,641 from the exercise of stock options.
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Accordingly, net cash decreased $1,563,479, leaving cash and cash equivalents on hand of $910,005 as of December 31, 2024.
Oil and Natural Gas Property Development
New Participations in Fiscal 2025. The Company currently plans to participate in the drilling and completion of 28 horizontal wells at an estimated cost of approximately $1,500,000 for the fiscal year ending March 31, 2025. Twenty-five of these wells are in the Delaware Basin located in the western portion of the Permian Basin in Lea and Eddy Counties, New Mexico. The remaining 3 wells are in Grady County, Oklahoma.
During the first nine months of fiscal 2025, Mexco expended approximately $207,000 to participate in the drilling of five horizontal wells in the Bone Spring formation of the Delaware Basin in Lea County, New Mexico. In November 2024, these wells were completed with initial average production rates of 1,106 barrels of oil, 2,583 barrels of water and 1,165,000 cubic feet of gas per day, or 1,300 BOE per day.
During the first nine months of fiscal 2025, Mexco expended approximately $293,000 to drill and complete four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. In November 2024, these wells were completed with initial average production rates of 1,089 barrels of oil, 4,716 barrels of water and 3,601,000 cubic feet of gas per day, or 1,689 BOE per day.
In October 2024, the Company expended approximately $74,000 for the drilling of two horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .5%. Subsequently, in January 2025, the Company expended approximately $43,000 to complete these wells.
In November 2024, the Company expended approximately $78,000 for the drilling of two horizontal wells in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico. Mexco’s average working interest in these wells is .5%.
In October 2022, the Company made an approximately 2% equity investment commitment in a limited liability company amounting to $2,000,000 of which $1,600,000 has been funded as of December 31, 2024. The limited liability company is capitalized at approximately $100 million to purchase mineral interests in the Utica and Marcellus areas in the state of Ohio. To date, this LLC has returned $182,767 or 11% of the total investment.
Completion of Wells Drilled in Fiscal 2024. The Company expended approximately $300,000 for the completion of 19 horizontal wells in which the Company participated during fiscal 2024.
The Company expended approximately $107,000 for the completion costs of two horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico that the Company participated in drilling during fiscal 2024. Mexco’s working interest in these wells is .53%. In July 2024, these wells were completed with initial average production rates of 1,402 barrels of oil, 2,009 barrels of water and 2,168,000 cubic feet of gas per day, or 1,763 BOE per day.
Five horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico in which the Company participated during fiscal 2024 were completed in April 2024 with initial average production rates of 732 barrels of oil, 1,481 barrels of water and 657,000 cubic feet of gas per day, or 842 of oil equivalent per day. Mexco’s working interest in these wells is approximately 1.16%.
A horizontal well in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico was completed in May 2024 with the initial production rate of 964 barrels of oil, 2,441 barrels of water and 626,000 cubic feet of gas per day, or 1,068 of oil equivalent per day. Mexco’s working interest in this well is .165%.
The Company expended approximately $207,000 for the completion costs of four horizontial wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico that the Company participated in drilling during fiscal 2024. Mexco’s working interest in these wells is .45%. In October 2024, these wells were completed with initial average production rates of 893 barrels of oil, 2,990 barrels of water and 1,161,000 cubic feet of gas per day, or 1,087 BOE per day.
Acquisitions. In April 2024, the Company acquired royalty interests in 21 producing wells operated by Anadarko Petroleum Corporation and Cimarex Energy Company and located in Reeves County, Texas for a purchase price of $158,000.
In August 2024, the Company acquired royalty interests in 6 producing wells operated by Marathon Oil and located in Karnes County, Texas for a purchase price of $50,000. This acquisition was effective August 1, 2024.
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In August 2024, the Company acquired royalty interests in 15 producing wells operated by Anadarko Petroleum Corporation and located in Weld County, Colorado for a purchase price of $118,000; and, royalty interests in approximately 250 producing wells operated by Samson Exploration, EOG Resources and others in Laramie County, Wyoming and Adams and Weld Counties, Colorado for a purchase price of $483,000. All of these acquisitions were effective September 1, 2024.
In September 2024, the Company acquired royalty interests in 20 producing wells operated by Marathon Oil and Murphy Exploration and located in Karnes County, Texas for a purchase price of $90,000 and effective August 1, 2024.
In October 2024, the Company acquired a .3% royalty interest in 15 producing wells operated by Civitas Resources, Inc. and located in Broomfield and Adams Counties, Colorado for a purchase price of $450,000. This acquisition was effective November 1, 2024.
In October 2024, the Company acquired a .5% royalty interest in 3 producing wells operated by Mewbourne Oil Company and located in Eddy County, New Mexico for a purchase price of $260,000. This acquisition was effective November 1, 2024 and includes acreage for further development.
In October 2024, the Company acquired royalty interests in 8 producing wells operated by Marathon Oil and located in Live Oak County, Texas for a purchase price of $20,000; royalty interests in 6 producing wells operated by SWN Production Company, LLC and located in DeSoto Parish, Louisiana for a purchase price of $25,000; royalty interests in 10 producing wells operated by Ovintiv, Inc. and located in Upton County, Texas for a purchase price of $65,000; and, royalty interests in 12 producing wells operated by Pioneer Natural Resources and located in Reagan and Upton Counties, Texas for a purchase price of $65,000. All of these acquisitions were effective November 1, 2024.
Also in October 2024 and effective November 1, 2024, the Company acquired various small royalty interests in over 300 producing wells operated by Petro-Hunt Corporation, Hess Bakken Investments II, LLC, Marathon Oil, WPX Energy and others in multiple counties throughout the states of Nebraska, North Dakota, South Dakota and Montana for a purchase price of $185,000.
Other Projects. We are participating in other projects and are reviewing projects in which we may participate. The cost of such projects would be funded, to the extent possible, from existing cash balances and cash flow from operations. The remainder may be funded through borrowings on the credit facility and, if appropriate, sales of non-core properties.
Sale of Properties. In November 2024, the Company conveyed its working and royalty interests in 13.5 net acres in Ward County, Texas. The Company received $15,000 per acre in the total amount of $202,500. The Company retained an overriding royalty interest equal to the positive difference between 25% and any existing burdens of record as of the effective date. The divestitures of this non-core oil and gas asset did not result in a significant alteration of the relationship between the Company’s capitalized costs and proved reserves and, accordingly, the Company recorded the proceeds as sales proceeds, a reduction of its full cost pool, with no gain or loss recognized on the sale.
Pricing. Crude oil and natural gas prices generally remained volatile during the last year. The volatility of the energy markets makes it extremely difficult to predict future oil and natural gas price movements with any certainty. For example, in the last twelve months, the NYMEX West Texas Intermediate (“WTI”) posted price for crude oil has ranged from a low of $61.73 per bbl in September 2024 to a high of $82.89 per bbl in April 2024. The Henry Hub Spot Market Price (“Henry Hub”) for natural gas has ranged from a low of $1.21 per MMBtu in November 2024 to a high of $3.40 per MMBtu in December 2024.
On December 31, 2024, the WTI posted price for crude oil was $67.70 and the Henry Hub spot price for natural gas was $3.40 per MMBtu. See Results of Operations below for realized prices. Pipeline capacity constraints and maintenance in the Permian Basin area has contributed to a wider difference between the WaHa Hub and the Henry Hub and at times prices were negative.
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Contractual Obligations. We have no off-balance sheet debt or unrecorded obligations and have not guaranteed the debt of any other party. The following table summarizes our future payments we are obligated to make based on agreements in place as of December 31, 2024:
| Payments due in: | ||||||||||||||||
| Total | less than 1 year | 1 - 3 years | over 3 years | |||||||||||||
| Contractual obligations: | ||||||||||||||||
| Leases (1) | $ | 155,827 | $ | 60,320 | $ | 95,507 | $ | - | ||||||||
| (1) | The lease amount represents the monthly rent amount for our principal office space in Midland, Texas under a 36-month lease agreement expiring July 31, 2027. Of this total obligation for the remainder of the lease, our majority shareholder will pay $10,175 less than 1 year and $16,110 1-3 years for his portion of the shared office space. |
Results of Operations – Three Months Ended December 31, 2024 and 2023. For the quarter ended December 31, 2024, there was net income of $469,133 compared to $345,610 for the quarter ended December 31, 2023 as a result of an increase in operating revenues due to a increase in oil and gas production volumes partially offset by a decrease in oil and gas prices and an increase in operating expenses that is further explained below.
Oil and gas sales. Revenue from oil and gas sales was $1,828,404 for the third quarter of fiscal 2025, a 14% increase from $1,610,595 for the same period of fiscal 2024. This resulted from an increase in oil and natural gas production volumes partially offset by a decrease in oil and natural gas prices. Natural gas prices have been negatively impacted by limited pipeline capacity in the Permian Basin.
| 2024 | 2023 | % Difference | ||||||||||
| Oil: | ||||||||||||
| Revenue | $ | 1,563,663 | $ | 1,387,008 | 12.7 | % | ||||||
| Volume (bbls) | 22,451 | 17,636 | 27.3 | % | ||||||||
| Average Price (per bbl) | $ | 69.65 | $ | 78.65 | (11.4) | % | ||||||
| Gas: | ||||||||||||
| Revenue | $ | 264,741 | $ | 223,587 | 18.4 | % | ||||||
| Volume (mcf) | 149,945 | 122,794 | 22.1 | % | ||||||||
| Average Price (per mcf) | $ | 1.77 | $ | 1.82 | (2.7) | % | ||||||
Other operating revenues. Other revenues increased to $62,861 for the three months ended December 31, 2024, from $45,848 for the three months ended December 31, 2023. This increase resulted from a settlement in a class action lawsuit from Contango Resources and an increase in income from one of our limited liability company investments.
Interest income. Interest income on corporate funds decreased to $7,315 for the three months ended December 31, 2024, from $36,936 for the three months ended December 31, 2023. This decrease resulted from using the corporate funds for property acquisitions.
Production and exploration. Production costs were $460,241 for the third quarter of fiscal 2025, a 15% increase from $401,035 for the same period of fiscal 2024. This is the result of an increase in production taxes due to an increase in oil revenues and an increase in marketing and other charges due to the current natural gas pricing environment from limited pipeline takeaway capacity in the Permian and an increase in lease operating expenses on new wells in which we own an interest.
Depreciation, depletion and amortization. Depreciation, depletion and amortization expense was $636,424 for the third quarter of fiscal 2025, a 59% increase from $400,337 for the same period of fiscal 2024, primarily due to an increase in the full cost amortization base, an increase in oil and gas production and a decrease in gas reserves partially offset by a increase in oil reserves.
General and administrative expenses. General and administrative expenses were $340,514 for the third quarter of fiscal 2025, a 2% increase from $335,152 for the same period of fiscal 2024. This was primarily due to an increase in contract services.
Income taxes. There was an income tax benefit of $18,305 for the three months ended December 31, 2024 compared to an expense of $202,945 for the three months ended December 31, 2023, primarily due to a decrease in state income taxes and a decrease in the deferred tax provision. The effective tax rate for state and federal taxes combined for the three months ended December 31, 2024 and 2023 was (4%) and 37%, respectively. The decrease in the effective tax rate is primarily the result of state income taxes net of federal benefit, primarily in New Mexico, and the impact of permanent differences between book and taxable income.
Results of Operations – Nine Months Ended December 31, 2024 and 2023. For the nine months ended December 31, 2024, there was a net income of $1,077,370 compared to net income of $1,080,657 for the nine months ended December 31, 2023. This was a result of an increase in operating revenues due to an increase in oil and gas production volumes partially offset by a decrease in oil and gas prices and an increase in operating expenses that is further explained below.
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Oil and gas sales. Revenue from oil and gas sales was $5,212,313 for the nine months ended December 31, 2024, an 11% increase from $4,706,395 for the same period of fiscal 2024. This resulted from a increase in oil and natural gas production partially offset by a decrease in oil and natural gas prices. Natural gas prices have been negatively impacted by pipeline capacity in the Permian Basin.
| 2024 | 2023 | % Difference | ||||||||||
| Oil: | ||||||||||||
| Revenue | $ | 4,595,585 | $ | 3,916,792 | 17.3 | % | ||||||
| Volume (bbls) | 61,685 | 50,826 | 21.4 | % | ||||||||
| Average Price (per bbl) | $ | 74.50 | $ | 77.06 | (3.3) | % | ||||||
| Gas: | ||||||||||||
| Revenue | $ | 616,728 | $ | 789,903 | (21.9) | % | ||||||
| Volume (mcf) | 420,236 | 372,459 | 12.8 | % | ||||||||
| Average Price (per mcf) | $ | 1.47 | $ | 2.12 | (30.7) | % | ||||||
Other operating revenues. Other revenues increased to $156,014 for the nine months ended December 31, 2024, from $105,077 for the nine months ended December 31, 2023. This increase resulted from a settlement in a class action lawsuit from Contango Resources and an increase in income from one of our limited liability company investments.
Interest income. Interest income on corporate funds decreased to $50,891 for the nine months ended December 31, 2024, from $86,995 for the nine months ended December 31, 2023. This decrease resulted from using the corporate funds for property acquisitions and purchase of treasury stock.
Production and exploration. Production costs were $1,311,066 for the nine months ended December 31, 2024, a 15% increase from $1,143,116 for the nine months ended December 31, 2023. This is the result of an increase in production taxes due to an increase in oil revenues and an increase in marketing and other charges due to the current natural gas pricing environment from limited pipeline takeaway capacity in the Permian and an increase in lease operating expenses on new wells in which we own an interest.
Depreciation, depletion and amortization. Depreciation, depletion and amortization expense was $1,760,409 for the nine months ended December 31, 2024, a 39% increase from $1,268,703 for the nine months ended December 31, 2023, primarily due to an increase in the full cost amortization base, an increase in oil and gas production and a decrease in gas reserves partially offset by an increase in oil reserves.
General and administrative expenses. General and administrative expenses were $1,042,084 for the nine months ended December 31, 2024, a 6% increase from $981,664 for the nine months ended December 31, 2023. This was primarily due to an increase in contract and engineering services partially offset by a decrease in salaries and stock option compensation.
Income taxes. Income taxes for the nine months ended December 31, 2024 was $200,034 compared to $398,971 for the nine months ended December 31, 2023, primarily due a decrease in state income taxes and a decrease in the deferred tax provision. The effective tax rate for state and federal taxes combined for the nine months ended December 31, 2024 and 2023 was 16% and 27%, respectively. The decrease in the effective tax rate is primarily the result of state income taxes net of federal benefit, primarily in New Mexico, and the impact of permanent differences between book and taxable income.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The primary sources of market risk for us include fluctuations in commodity prices and interest rates. All of our financial instruments are for purposes other than trading.
Credit Risk. Credit risk is the risk of loss as a result of nonperformance by other parties of their contractual obligations. Our primary credit risk is related to oil and gas production sold to various purchasers and the receivables are generally not collateralized. At December 31, 2024, our largest credit risk associated with any single purchaser was $520,794 or 50% of our total oil and gas receivables. We have not experienced any significant credit losses.
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Energy Price Risk. Our most significant market risk is the pricing applicable to our crude oil and natural gas production. Our financial condition, results of operations, and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil and natural gas. Prices for oil and natural gas production has been volatile and unpredictable for several years, and we expect this volatility to continue in the future.
Pipeline capacity constraints and maintenance in the Permian Basin area has contributed to a wider difference between the WaHa Hub and the Henry Hub and at times prices were negative.
Factors that can cause price fluctuations include the level of global demand for petroleum products, foreign and domestic supply of oil and gas, the establishment of and compliance with production quotas by oil-exporting countries, weather conditions, the price and availability of alternative fuels and overall political and economic conditions in oil producing and consuming countries.
For example, in the last twelve months, the NYMEX West Texas Intermediate (“WTI”) posted price for crude oil has ranged from a low of $61.73 per bbl in September 2024 to a high of $82.89 per bbl in April 2024. The Henry Hub Spot Market Price (“Henry Hub”) posted price for natural gas has ranged from a low of $1.21 per MMBtu in November 2024 to a high of $3.40 per MMBtu in December 2024. On December 31, 2024, the WTI posted price for crude oil was $67.70 and the Henry Hub posted price for natural gas was $3.40. See Results of Operations above for the Company’s realized prices during the three and nine months. Subsequently, on January 27, 2025, the WTI posted price for crude oil was $69.15 and the Henry Hub posted price for natural gas was $3.71.
Declines in oil and natural gas prices will materially adversely affect our financial condition, liquidity, ability to obtain financing and operating results. Changes in oil and gas prices impact both estimated future net revenue and the estimated quantity of proved reserves. Any reduction in reserves, including reductions due to price fluctuations, can reduce the borrowing base under our credit facility and adversely affect the amount of cash flow available for capital expenditures and our ability to obtain additional capital for our acquisition, exploration and development activities. In addition, a noncash write-down of our oil and gas properties could be required under full cost accounting rules if prices declined significantly, even if it is only for a short period of time. Lower prices may also reduce the amount of crude oil and natural gas that can be produced economically. Thus, we may experience material increases or decreases in reserve quantities solely as a result of price changes and not as a result of drilling or well performance.
Similarly, any improvements in oil and gas prices can have a favorable impact on our financial condition, results of operations and capital resources. If the average oil price had increased or decreased by ten dollars per barrel for the first nine months of fiscal 2025, our operating revenues would have increased or decreased $616,850. If the average gas price had increased or decreased by one dollar per mcf for the first nine months of fiscal 2025, our operating revenues would have increased or decreased $420,236.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures to ensure that the information we must disclose in our filings with the SEC is recorded, processed, summarized and reported on a timely basis. At the end of the period covered by this report, our principal executive officer and principal financial officer reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e). Based on such evaluation, such officers concluded that, as of December 31, 2024, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting. No changes in our internal control over financial reporting occurred during the nine months ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business. We are not aware of any legal or governmental proceedings against us, or contemplated to be brought against us, under various environmental protection statutes or other regulations to which we are subject.
Item 1A.Risk Factors
There have been no material changes to the information previously disclosed in Item 1A. “Risk Factors” in our 2024 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
c. Issuer Purchases of Equity Securities
The following table provides information related to repurchases of our common stock for the treasury account during the nine months ended December 31, 2024:
| Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program | |||||||||||||
| April 1-30, 2024 | 13,766 | $ | 13.70 | 13,766 | $ | 811,363 | ||||||||||
| May 1-31, 2024 | - | - | - | $ | 811,363 | |||||||||||
| June 1-30, 2024 | - | - | - | $ | 811,363 | |||||||||||
| July 1-31, 2024 | 4,557 | $ | 11.78 | 4,557 | $ | 757,679 | ||||||||||
| August 1-31, 2024 | 17,743 | $ | 11.95 | 17,743 | $ | 545,734 | ||||||||||
| September 1-30, 2024 | 21,700 | $ | 11.47 | 21,700 | $ | 296,784 | ||||||||||
| October 1-31, 2024 | - | - | - | $ | 296,784 | |||||||||||
| November 1-30, 2024 | - | - | - | $ | 296,784 | |||||||||||
| December 1-31, 2024 | - | - | - | $ | 296,784 | |||||||||||
Item 6. Exhibits
| 31.1 | Certification of the Chief Executive Officer of Mexco Energy Corporation | |
| 31.2 | Certification of the Chief Financial Officer of Mexco Energy Corporation | |
| 32.1 | Certification of the Chief Executive Officer and Chief Financial Officer of Mexco Energy Corporation pursuant to 18 U.S.C. §1350 | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extenstion Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| MEXCO ENERGY CORPORATION | ||
| (Registrant) | ||
| Dated: February 7, 2025 | /s/ Nicholas C. Taylor | |
| Nicholas C. Taylor | ||
| Chairman of the Board and Chief Executive Officer | ||
| Dated: February 7, 2025 | /s/ Tamala L. McComic | |
| Tamala L. McComic | ||
| President, Chief Financial Officer, Treasurer and Assistant Secretary |
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Exhibit 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION
CERTIFICATION
I, Nicholas C. Taylor, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Mexco Energy Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 7, 2025 | /s/ Nicholas C. Taylor | |
| Nicholas C. Taylor | ||
| Chairman of the Board and Chief Executive Officer |
Exhibit 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION
CERTIFICATION
I, Tamala L. McComic, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Mexco Energy Corporation; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: February 7, 2025 | /s/ Tamala L. McComic | |
| Tamala L. McComic | ||
| President and Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
OF MEXCO ENERGY CORPORATION
PURSUANT TO 18 U.S.C. §1350
In connection with the Quarterly Report of Mexco Energy Corporation on Form 10-Q for the quarterly period ended December 31, 2024, as filed with the Securities and Exchange Commission on February 7, 2025 (the “Report”), the undersigned, in the capacities and on the dates indicated below, each hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Mexco Energy Corporation as of the dates and for periods presented as required by such Report. |
| Date: February 7, 2025 | /s/ Nicholas C. Taylor | |
| Nicholas C. Taylor | ||
| Chairman of the Board and Chief Executive Officer | ||
| Date: February 7, 2025 | /s/ Tamala L. McComic | |
| Tamala L. McComic | ||
| President and Chief Financial Officer |