Mexco Energy Corporation Reports Profitable First Quarter and Property Developments

News provided by

Mexco Energy Corporation

Aug 06, 2014, 04:41 ET

MIDLAND, Texas, Aug. 6, 2014 /PRNewswire/ -- Mexco Energy Corporation (NYSE MARKET: MXC) today reported net income of $19,054 for the quarter ending June 30, 2014, the Company's first quarter of fiscal 2014.  This is an 18% increase compared to net income $16,131 for the quarter ending June 30, 2013.    

Operating revenues in the first quarter of fiscal 2015 were $1,017,834, a 2% increase from $996,525 for the first quarter of fiscal 2014. 

The average sales price for the quarter ending June 30, 2014 was $7.83 per Mcfe compared to $7.23 per Mcfe for the quarter ending June 30, 2013, an increase of 8%.  Oil and gas production decreased .3% and 8%, respectively, during the first quarter of fiscal 2015 as compared to the first quarter of fiscal 2014.

Mexco also announced it has participated in the drilling, completion and installation of submersible pumps of three wells in Reagan County, Texas in the "B" bench of the Wolfcamp formation.  After the testing results of these wells become available, Mexco will make a further announcement.  These three wells are the first of seven wells to be drilled to a vertical depth of 8,000 feet and a horizontal distance of approximately 7,150 feet with a 50 stage zipper fracture treatment.  Mexco's interest in these wells is 1.45% working interest (1.25% net revenue interest).  Mexco has expended approximately $400,000 on these wells to date.

Mexco participated in the drilling of six horizontal wells in the Wolfcamp formation of the Lin field of Reagan County, Texas.  All six of these wells have been completed and are currently producing. The unit, operated by EOG Resources, Inc., contains approximately 500 acres.  Mexco's working interest in these wells is .8086% (.6064% net revenue interest).  Mexco's share of the costs to drill, complete and fracture these wells was approximately $350,000.  EOG has drilled and is in the process of completing a seventh well in this unit involving an approximately 8,000 foot vertical and 9,000 foot horizontal depth.

Mexco participated in a horizontal well located in Lea County, New Mexico flowing at the rate of 1,699 barrels of oil equivalent which is 1,255 barrels of oil and 2,543,000 of natural gas per day with flowing tubing pressure of 575 pounds per square inch on 64/64 inch choke.  This well is located in Draper Mills Field.  Mexco's working interest in this well is approximately .56% (.42% net revenue interest).  This is the first of six wells scheduled to be drilled and operated by Concho Resources Inc.

In the next twelve months Mexco currently is scheduled to participate as a non-operator owner of various working interests in the drilling and completion of 22 horizontal wells involving an aggregate expenditure of approximately $1.2 million.  Of these 22 horizontal wells, four are located in Reagan and two in Winkler Counties, Texas, and fifteen in Lea and one in Eddy Counties, New Mexico.  Approximately one half of such $1.2 million expenditure will be in Reagan County, Texas.

Mexco believes that these horizontal wells with multi stage fracturing will have material positive effect on its income, net profits and oil and gas reserves.

Mexco Energy Corporation, a Colorado corporation, is an independent oil and gas company located in Midland, Texas engaged in the acquisition, exploration and development of oil and gas properties.  For more information on Mexco Energy Corporation go to www.mexcoenergy.com.

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, 2014.  Mexco Energy Corporation disclaims any intention or obligation to revise any forward-looking statements.

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(Unaudited)













June 30,

March 31,





2014

2014

ASSETS





Current assets




Cash and cash equivalents

$      152,498

$      156,082


Accounts receivable:





Oil and gas sales

596,567

628,098



Trade                                                                   

12,921

18,144


Prepaid costs and expenses

61,016

28,804




Total current assets

823,002

831,128









Property and equipment, at cost




Oil and gas properties, using the full cost method

35,757,834

35,460,741


Other

94,356

94,356


Accumulated depreciation, depletion and amortization

(18,775,989)

(18,475,174)




Property and equipment, net

17,076,201

17,079,923









Other noncurrent assets

949

7,239




Total assets

$ 17,900,152

$  17,918,290








LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities




Accounts payable and accrued expenses

$      325,087

$      257,431


Income tax payable

-

6,500


Derivative instruments

59,121

44,981




Total current liabilities

384,208

308,912






Long-term debt

2,300,000

2,425,000

Asset retirement obligations

932,194

926,577

Deferred income tax liabilities

841,068

858,449




Total liabilities

4,457,470

4,518,938






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;





2,104,266 shares issued and 2,038,266 shares outstanding

as of June 30, 2014 and March 31, 2014

1,052,133

1,052,133


Additional paid-in capital

6,945,921

6,921,645


Retained earnings

5,785,620

5,766,566


Treasury stock, at cost (66,000 shares)

(340,992)

(340,992)

Total stockholders' equity

13,442,682

13,399,352




Total liabilities and stockholders' equity

$ 17,900,152

$ 17,918,290

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30,

(Unaudited)













2014

2013








Operating revenues:



Oil and gas

$      1,006,656

$      984,269

Other

11,178

12,256


Total operating revenues

1,017,834

996,525








Operating expenses:



Production

310,778

308,636

Accretion of asset retirement obligations

4,835

10,917

Depreciation, depletion and amortization

300,815

295,033

General and administrative

350,337

311,470


Total operating expenses

966,765

926,056








Operating income

51,069

70,469








Other income (expense):



Interest income

2

2

Interest expense

(15,770)

(20,130)

Loss on derivative instruments

(33,628)

(27,392)


Net other expense

(49,396)

(47,520)








Earnings before provision for income taxes

1,673

22,949








Income tax (benefit) expense:



Current 


-

-

Deferred

(17,381)

6,818





(17,381)

6,818









Net income

$       19,054

$     16,131

















Income per common share:




Basic

$               0.01

$          0.01


Diluted

$               0.01

$          0.01









Weighted average common shares outstanding:




Basic

2,038,266

2,036,866


Diluted

2,054,847

2,038,491








SOURCE Mexco Energy Corporation

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