<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For quarterly period ended September 30, 1996
--------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
----------------------- --------------------
For Quarter Ended September 30, 1996 Commission File No. 0-6994
-----------------------------
MEXCO ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
Colorado 84-0627918
- ------------------------------- -------------------------------
(State or other jurisdiction of IRS Employer Identification No.
incorporation or organization
214 W. Texas, Suite 1101, Midland, TX 79701
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (915) 682-1119
NONE
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(Former Name, Former Address & Former Fiscal Year if changed since
last report)
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
- ---------------------------- ------------------------------------
Common stock, $.50 per value 1,423,229
1
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MEXCO ENERGY CORPORATION
Index
Page
Part I. Financial information:
Condensed Balance Sheets as of
March 31, 1996 and September 30, 1996 3
Condensed Statements of Operations
for the three months ended
September 30, 1996 and 1995 4
Condensed Statements of Operations
for the six months ended
September 30, 1996 and 1995 5
Condensed Statements of Cash Flows
for the six months ended September 30,
1996 and 1995 6
Notes to condensed Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Part II. Other information: Not Applicable
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<PAGE>
MEXCO ENERGY CORPORATION
CONDENSED BALANCE SHEETS
September 30, 1996 and March 31, 1996
ASSETS
------
<TABLE>
<CAPTION>
Sept. 30, March 31,
1996 1996
----------- ----------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 280,134 $ 172,112
Accounts receivable 147,483 108,583
Prepaid assets 900 -
---------- ----------
Total current assets 428,517 280,695
PROPERTY AND EQUIPMENT
Oil and gas properties-accounted for
under the full cost method 5,213,736 4,900,230
Office furniture and fixtures 2,431 2,431
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5,216,167 4,902,661
Less accumulated depreciation,
depletion and amortization 2,732,976 2,571,317
---------- ----------
Net property and equipment 2,483,191 2,331,344
---------- ----------
TOTAL ASSETS $2,911,708 $2,612,039
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable-trade $ 88,395 $ 32,584
Income taxes payable 25,805 -
---------- ----------
Total current liabilities 114,200 32,584
DEFERRED INCOME TAXES 52,798 34,310
---------- ----------
Total liabilities 166,998 66,894
STOCKHOLDERS' EQUITY
Common Stock-$.50 par value, authorized
5,000,000, issued and outstanding-
1,423,229 711,614 711,614
Paid in capital 1,975,429 1,975,429
Retained earnings (Accumulated deficit) 57,667 ( 141,898)
---------- ----------
Total stockholders' equity 2,744,710 2,545,145
---------- ----------
TOTAL LIABILITIES & EQUITY $2,911,708 $2,612,039
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
MEXCO ENERGY CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
Three months ended September 30
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenues:
Gross revenues from oil and gas
production $333,873 $176,066
Production costs 74,475 74,384
-------- --------
Net revenues from oil and gas
production 259,398 101,682
Administrative service charges and
reimbursements 1,253 2,487
-------- --------
Total revenues 260,651 104,169
Costs and expenses:
Depreciation, depletion and amortization 91,414 66,402
General and administrative 20,566 20,517
Other income ( 599) ( 951)
Interest income ( 1,738) ( 4,484)
-------- --------
Total costs and expenses 109,643 81,484
-------- --------
Income before income tax expense 151,008 22,685
Income tax expense 21,243 l,632
-------- --------
NET INCOME $129,765 $ 21,053
======== ========
Net income per share $ .09 $ .02
======== ========
Weighted average common shares
outstanding 1,423,229 1,349,859
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
MEXCO ENERGY CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
Six months ended September 30
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenues:
Gross revenues from oil and gas
production $600,887 $347,790
Production costs 145,331 125,943
-------- --------
Net revenues from oil and gas
production 455,556 221,847
Administrative service charges and
reimbursements 2,505 4,973
-------- --------
Total revenues 458,061 226,820
Costs and expenses:
Depreciation, depletion and amortization 161,659 116,936
General and administrative 55,734 46,103
Other income ( 607) ( 951)
Interest income ( 3,909) ( 6,951)
-------- --------
Total costs and expenses 212,877 155,137
-------- --------
Income before income tax expense 245,184 71,683
Income tax expense 45,619 5,185
-------- --------
NET INCOME $199,565 $ 66,498
======== ========
Net income per share $ .14 $ .05
======== ========
Weighted average common shares
outstanding 1,423,229 1,262,027
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
MEXCO ENERGY CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
Six Months ended September 30
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
- ------------------------------------
Cash received from oil and gas operations $ 568,010 $ 360,362
Cash paid for oil and gas operating expenses ( 92,374) (136,585)
General and administrative expenses ( 52,273) ( 45,203)
Interest received 3,909 6,951
Other cash received 607 951
Income Taxes paid ( 6,351) ( 38,523)
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Net cash provided by operations 421,528 147,953
Cash flows from investing activities:
- ------------------------------------
Capital expenditures (313,506) (333,645)
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Net cash provided by (used in)
investing activities (313,506) (333,645)
--------- ---------
Cash flows from financing activities:
- ------------------------------------
Sale of common stock - 500,000
Net increase (decrease) in cash and cash
equivalents 108,022 314,308
Cash and cash equivalents at the beginning
of the period 172,112 220,974
--------- ---------
Cash and cash equivalents at the end
of the period $ 280,134 $ 535,282
========= =========
Reconciliation of net income to net
- -----------------------------------
cash provided by operating activities:
-------------------------------------
Net income $ 199,565 $ 66,498
--------- ---------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and amortization 161,659 116,936
(Increase) Decrease in accounts receivable ( 38,900) 8,134
Increase (Decrease) in accounts payable 56,475 ( 11,177)
Decrease (Increase) in prepaid expenses ( 900) 900
Increase (Decrease) in income taxes payable 43,629 ( 33,338)
--------- ---------
Total adjustments 221,963 81,455
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Net cash provided by operating activities $ 421,528 $ 147,953
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE>
MEXCO ENERGY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 1996 and 1995
NOTE A - BASIS OF PRESENTATION
In the opinion of the Registrant, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the financial
position of the Company as of September 30, 1996, the results of its operations
for the three-month and six-month periods ended September 30, 1996 and 1995, and
the cash flows for the six-month periods ended September 30, 1996 and 1995. All
adjustments are of a normal and recurring nature.
The results of operations for the three-month and six-month periods ended
September 30, 1996 are not necessarily indicative of the results to be expected
for the full year.
The condensed balance sheet as of March 31, 1996 has been prepared based upon
the Registrant's audited balance sheet as of that date.
NOTE B - ACQUISITION OF OIL AND GAS PROPERTIES
In June 1996, the Registrant purchased an additional 2.5% (net 1.875%) working
interest comprising approximately 520 acres, including eleven (11) wells located
on producing and non-producing oil and gas leases in the Lazy JL Field, Garza
County, Texas.
In July 1996, the Registrant purchased a 30% (net 22.5%) working interest in
approximately 1,000 acres of non-producing oil and gas leases adjacent to the
Lazy JL Field, Garza County, Texas.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE CONDENSED STATEMENTS OF OPERATIONS
Results of Operations - 3 Months Ended September 30, 1996
- ---------------------------------------------------------
Operating revenues increased $157,807 (90%) from the second quarter of fiscal
1995 due to increased oil and gas prices and production. Revenues from gas
increased $58,549 (91%) due to increased numbers of wells, acquisitions of
properties and higher gas prices. Oil revenues increased $99,258 (89%) due to
increased numbers of wells, acquisitions of properties and higher oil prices.
The average oil price for the second quarter of 1996 was $21.32 per barrel
compared to $15.82 per barrel in the second quarter of 1995. The average gas
price for second quarter of 1996 was $2.17 per MCF compared to $1.38 per MCF in
the second quarter of 1995.
Production costs were unchanged.
Depreciation, depletion and amortization increased $25,012 (38%) as compared to
the same quarter during the prior year due to additional costs of oil and gas
properties and increased production.
General and administrative costs were unchanged.
Interest income decreased $2,746 (61%) due to decreased funds invested in
money market accounts.
During the quarter, the Company participated in the drilling of one (1) well
(6.98% working interest, a 5.24% net revenue interest) in the Viejos (Devonian)
Field of Pecos County, Texas, such well having been successfully completed after
September 30, 1996.
Results of Operations - 6 Months Ended September 30, 1996
- ---------------------------------------------------------
Operating revenues increased $253,097 (73%) from the first six months of fiscal
1995 due to increased oil and gas prices and production. Revenues from gas
increased $109,287 (97%) due to increased numbers of wells, acquisitions of
properties and higher gas prices. Oil revenues increased $143,810 (61%) due to
increased numbers of wells, acquisitions of properties and higher oil prices.
The average oil price for the first six months of 1996 was $21.09 per barrel
compared to $17.02 per barrel in the first six months of 1995. The average gas
price for the first six months of 1996 was $2.15 per MCF compared to $1.31 per
MCF in the first six months of 1995.
Production costs increased $19,388 (15%) due to increased lease operating
expenses primarily as a result of addition of oil and gas properties.
Depreciation, depletion and amortization increased $44,723 (38%) as compared to
the same period during the prior year due to additional costs of oil and gas
properties and increased production.
General and administrative costs increased $9,631 (21%) due to increased
accounting and engineering costs.
Interest income decreased $3,042 (44%) due to decreased funds invested in
money market accounts.
During the six months, the Company participated in the drilling of two (2)
wells, one (37.5% working interest, a 28.125% net revenue interest) in the Lazy
JL (Lower Spraberry) Field of Garza County, Texas, and the other as described
above in "Results of Operations - 3 Months Ended September 30, 1996".
---------------------------------------------------------
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<PAGE>
Financial Condition
- -------------------
Working Capital increased by $66,206 as compared to March 31, 1996, primarily
due to increase in cash and cash equivalents reflecting increased revenues due
to acquisitions and drilling activity.
In August 1996, the Registrant entered into a loan agreement providing a
revolving line of credit of $500,000 collateralized by a deed of trust, covering
substantially all of the Registrant's properties. Such loan would be payable in
installments of $15,000 per month plus interest, and in full on April 15, 1997.
The proceeds of such loan would be used to acquire and develop producing oil and
gas properties. There has been no borrowing under this line as of September 30,
1996.
Management cannot specifically identify the effects of inflation and other price
changes on operations.
Signatures
- ----------
Pursuant to the requirements of the Securities 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
(A Colorado Corporation)
/s/ NICHOLAS C. TAYLOR
----------------------------------
Nicholas C. Taylor,
President and Treasurer
Date: November 1, 1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996
<PERIOD-START> APR-01-1996 APR-01-1995
<PERIOD-END> SEP-30-1996 MAR-31-1996
<CASH> 280,134 172,112
<SECURITIES> 0 0
<RECEIVABLES> 147,483 108,583
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 428,517 280,695
<PP&E> 5,216,167 4,902,661
<DEPRECIATION> 2,732,976 2,571,317
<TOTAL-ASSETS> 2,911,708 2,612,039
<CURRENT-LIABILITIES> 114,200 32,584
<BONDS> 0 0
0 0
0 0
<COMMON> 711,614 711,614
<OTHER-SE> 2,033,096 1,833,531
<TOTAL-LIABILITY-AND-EQUITY> 2,911,708 2,612,039
<SALES> 600,887 798,589
<TOTAL-REVENUES> 607,908 834,073
<CGS> 145,331 272,892
<TOTAL-COSTS> 306,990 535,284
<OTHER-EXPENSES> 55,734 86,484
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 245,184 212,305
<INCOME-TAX> 45,619 11,699
<INCOME-CONTINUING> 199,565 200,606
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 199,565 200,606
<EPS-PRIMARY> .14 .15
<EPS-DILUTED> .14 .15
</TABLE>
