Published: February 17, 2011
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
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