Close

Form 10-Q MEXCO ENERGY CORP For: Jun 30

August 15, 2022 6:41 AM EDT

Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.
0000066418 false Q1 --03-31 Yes 0.5 0.1 0000066418 2022-04-01 2022-06-30 0000066418 2022-08-15 0000066418 2022-06-30 0000066418 2022-03-31 0000066418 2021-04-01 2021-06-30 0000066418 MXC:OilSalesMember 2022-04-01 2022-06-30 0000066418 MXC:OilSalesMember 2021-04-01 2021-06-30 0000066418 MXC:NaturalGasSalesMember 2022-04-01 2022-06-30 0000066418 MXC:NaturalGasSalesMember 2021-04-01 2021-06-30 0000066418 MXC:OtherMember 2022-04-01 2022-06-30 0000066418 MXC:OtherMember 2021-04-01 2021-06-30 0000066418 us-gaap:CommonStockMember 2022-03-31 0000066418 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0000066418 us-gaap:RetainedEarningsMember 2022-03-31 0000066418 us-gaap:TreasuryStockMember 2022-03-31 0000066418 us-gaap:CommonStockMember 2021-03-31 0000066418 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0000066418 us-gaap:RetainedEarningsMember 2021-03-31 0000066418 us-gaap:TreasuryStockMember 2021-03-31 0000066418 2021-03-31 0000066418 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0000066418 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0000066418 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0000066418 us-gaap:TreasuryStockMember 2022-04-01 2022-06-30 0000066418 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0000066418 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0000066418 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0000066418 us-gaap:TreasuryStockMember 2021-04-01 2021-06-30 0000066418 us-gaap:CommonStockMember 2022-06-30 0000066418 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0000066418 us-gaap:RetainedEarningsMember 2022-06-30 0000066418 us-gaap:TreasuryStockMember 2022-06-30 0000066418 us-gaap:CommonStockMember 2021-06-30 0000066418 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0000066418 us-gaap:RetainedEarningsMember 2021-06-30 0000066418 us-gaap:TreasuryStockMember 2021-06-30 0000066418 2021-06-30 0000066418 MXC:LoanAgreementMember MXC:WestTexasNationalBankMember 2018-12-28 0000066418 MXC:LoanAgreementMember MXC:WestTexasNationalBankMember 2018-12-27 2018-12-28 0000066418 MXC:LoanAgreementMember MXC:WestTexasNationalBankMember 2020-02-28 0000066418 MXC:LoanAgreementMember MXC:WestTexasNationalBankMember 2020-02-27 2020-02-28 0000066418 MXC:LoanAgreementMember MXC:WestTexasNationalBankMember 2022-06-30 0000066418 MXC:OriginalAgreementMember MXC:WestTexasNationalBankMember 2020-02-27 2020-02-28 0000066418 MXC:LoanAgreementMember 2022-04-01 2022-06-30 0000066418 us-gaap:GeneralAndAdministrativeExpenseMember 2022-04-01 2022-06-30 0000066418 us-gaap:GeneralAndAdministrativeExpenseMember 2021-04-01 2021-06-30 0000066418 srt:MinimumMember 2022-04-01 2022-06-30 0000066418 srt:MaximumMember 2022-04-01 2022-06-30 0000066418 us-gaap:EmployeeStockOptionMember 2022-03-31 0000066418 us-gaap:EmployeeStockOptionMember 2022-04-01 2022-06-30 0000066418 us-gaap:EmployeeStockOptionMember 2022-06-30 0000066418 MXC:ShareholderMember 2022-06-30 0000066418 2021-06-01 2021-06-30 0000066418 us-gaap:SubsequentEventMember MXC:FourHorizontalNewMexicoMember 2022-07-02 2022-07-31 0000066418 us-gaap:SubsequentEventMember MXC:ThreeHorizontalNewMexicoMember 2022-07-02 2022-07-31 0000066418 us-gaap:SubsequentEventMember MXC:ThreeHorizontalNewMexicoMember 2022-08-02 2022-08-31 0000066418 us-gaap:SubsequentEventMember MXC:HorizontalNewMexicoMember 2022-07-02 2022-07-31 0000066418 us-gaap:SubsequentEventMember MXC:HorizontalNewMexicoMember 2022-08-02 2022-08-31 0000066418 us-gaap:SubsequentEventMember MXC:TwoHorizontalNewMexicoMember 2022-08-02 2022-08-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares utr:sqft MXC:Wells xbrli:pure utr:Boe utr:acre utr:Mcf utr:MMBbls utr:bbl

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______ to _________

 

Commission File No. 1-31785

 

MEXCO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

 

Colorado   84-0627918

(State or other jurisdiction

of incorporation or organization)

 

(IRS Employer

Identification Number)

 

415 West Wall Street, Suite 475

Midland, Texas

  79701

(Address of principal executive offices)

  (Zip code)

 

(432) 682-1119

(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
Common Stock, par value $0.50 per share   MXC   NYSE American

 

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. YES ☒ NO ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

 

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 ☐
Non-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, $0.50 par value, as of August 15, 2022 was 2,149,416.

 

 

 

 

 

 

MEXCO ENERGY CORPORATION

 

    Table of Contents  
      Page
PART I. FINANCIAL INFORMATION  
   
  Item 1. Financial Statements 3
       
    Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and March 31, 2022 3
       
   

Consolidated Statements of Operations (Unaudited) for the three months ended June 30, 2022 and June 30, 2021

4
       
    Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) for the three months ended June 30, 2022 and June 30, 2021 5
       
   

Consolidated Statements of Cash Flows (Unaudited) for the three months ended June 30, 2022 and June 30, 2021

6
       
    Notes to Consolidated Financial Statements (Unaudited) 7
       
  Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11
       
  Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
       
  Item 4. Controls and Procedures 15
       
PART II. OTHER INFORMATION  
   
  Item 1. Legal Proceedings 16
       
  Item 1A. Risk Factors 16
       
  Item 6. Exhibits 16
       
SIGNATURES 17
   
CERTIFICATIONS  

 

Page 2

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

 

   June 30,   March 31, 
   2022   2022 
   (Unaudited)      
ASSETS          
Current assets          
Cash and cash equivalents  $537,001   $1,370,766 
Accounts receivable:          
Oil and natural gas sales   1,532,385    1,310,137 
Trade   -    - 
Prepaid costs and expenses   38,370    52,636 
Total current assets   2,107,756    2,733,539 
           
Property and equipment, at cost          
Oil and gas properties, using the full cost method   42,669,430    40,373,741 
Other   121,926    120,208 
Accumulated depreciation, depletion and amortization   (30,748,176)   (30,361,047)
Property and equipment, net   12,043,180    10,132,902 
Investment in limited liability company at cost   300,000    275,000 
Operating lease, right-of-use asset   116,540    129,923 
Other noncurrent assets   114,006    13,156 
Total assets  $14,681,482   $13,284,520 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities          
Accounts payable and accrued expenses  $283,941   $209,469 
Operating lease liability, current   54,806    54,294 
Total current liabilities   338,747    263,763 
Long-term liabilities          
Operating lease liability, long-term   61,734    75,629 
Asset retirement obligations   732,142    720,512 
Total long-term liabilities   793,876    796,141 
Total liabilities   1,132,623    1,059,904 
           
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; 2,216,416 shares issued and 2,149,416 shares outstanding
as of June 30, 2022 and March 31, 2022, respectively
   1,108,208    1,108,208 
Additional paid-in capital   8,159,553    8,133,982 
Retained earnings   4,627,099    3,328,427 
Treasury stock, at cost (67,000 shares)   (346,001)   (346,001)
Total stockholders’ equity   13,548,859    12,224,616 
Total liabilities and stockholders’ equity  $14,681,482   $13,284,520 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

Page 3

 

 

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30,

(Unaudited)

 

   2022   2021 
         
Operating revenues:          
Oil sales  $1,559,321   $987,103 
Natural gas sales   856,792    268,462 
Other   33,860    8,633 
Total operating revenues   2,449,973    1,264,198 
           
Operating expenses:          
Production   435,028    276,987 
Accretion of asset retirement obligations   7,519    7,058 
Depreciation, depletion and amortization   387,128    264,320 
General and administrative   318,530    308,167 
Total operating expenses   1,148,205    856,532 
           
Operating income   1,301,768    407,666 
           
Other income (expense):          
Interest income   35    59 
Interest expense   (3,131)   (12,719)
Net other expense   (3,096)   (12,660)
           
Income before provision for income taxes   1,298,672    395,006 
           
Income tax   -    - 
           
Net income  $1,298,672   $395,006 
           
Income per common share:          
Basic:  $0.60   $0.19 
Diluted:  $0.59   $0.19 
           
Weighted average common shares outstanding:          
Basic:   2,149,416    2,076,756 
Diluted:   2,216,742    2,119,955 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

Page 4

 

 

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, 2022  $1,108,208   $8,133,982   $3,328,427   $(346,001)  $12,224,616 
Net income   -    -    1,298,672    -    1,298,672 
Stock based compensation   -    25,571    -    -    25,571 
Balance at June 30, 2022  $1,108,208   $8,159,553   $4,627,099   $(346,001)  $13,548,859 

 

    Common Stock Par Value    Additional Paid-In Capital    Retained Earnings    Treasury Stock    Total Stockholders’ Equity 
                          
Balance at April 1, 2021  $1,071,833   $7,624,214   $473,361   $(346,001)  $8,823,407 
Net income   -    -    395,006    -    395,006 
Issuance of stock through
options exercised
   2,500    31,500    -    -    34,000 
Stock based compensation   -    13,865    -    -    13,865 
Balance at June 30, 2021  $1,074,333   $7,669,579   $868,367   $(346,001)  $9,266,278 

 

SHARE ACTIVITY    
     
Common stock shares, issued:     
Balance at April 1, 2022   2,216,416 
Issued   - 
Balance at June 30, 2022   2,216,416 
      
Common stock shares, held in treasury:     
Balance at April 1, 2022   (67,000)
Acquisitions   - 
Balance at June 30, 2022   (67,000)
     
Common stock shares, outstanding at June 30, 2022   2,149,416 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

Page 5

 

 


Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended June 30,

(Unaudited)

 

   2022   2021 
Cash flows from operating activities:          
Net income  $1,298,672   $395,006 
Adjustments to reconcile net income to net cash provided by operating activities:          
Stock-based compensation   25,571    13,865 
Depreciation, depletion and amortization   387,128    264,320 
Accretion of asset retirement obligations   7,519    7,058 
Amortization of debt issuance costs   3,131    3,131 
Changes in operating assets and liabilities          
Increase in accounts receivable   (222,248)   (68,135)
Decrease in prepaid expenses   14,266    10,530 
Decrease (increase) in right-of-use asset   13,384    (148,881)
(Decrease) increase in accounts payable and accrued expenses   (12,364)   40,918 
Settlement of asset retirement obligations   (6,077)   (291)
(Decrease) increase in operating lease liability   (13,384)   148,533 
Net cash provided by operating activities   1,495,598    666,054 
           
Cash flows from investing activities:          
Additions to oil and gas properties   (2,320,974)   (302,976)
Additions to other property and equipment   (1,718)    - 
Investment in limited liability company at cost   (25,000)   - 
Drilling refund   18,329    - 
Proceeds from sale of oil and gas properties and equipment   -   5,863 
Net cash used in investing activities   (2,329,363)   (297,113)
           
Cash flows from financing activities:          
Proceeds from exercise of stock options   -    34,000 
Reduction of long-term debt   -    (480,000)
Proceeds from long-term debt   -    100,000 
Net cash used in financing activities   -    (346,000)
           
Net (decrease) increase in cash and cash equivalents   (833,765)   22,941 
           
Cash and cash equivalents at beginning of period   1,370,766    57,813 
           
Cash and cash equivalents at end of period  $537,001   $80,754 
           
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $-   $10,040 
           
Non-cash investing and financing activities:          
Asset retirement obligations  $14,668   $3,329 
Operating lease – right of use asset and associated liabilities  $-   $165,007 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

Page 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 fourteen states. All of 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 June 30, 2022, and the results of its operations and cash flows for the interim periods ended June 30, 2022 and 2021. The consolidated financial statements as of June 30, 2022 and for the three-month periods ended June 30, 2022 and 2021 are unaudited. The consolidated balance sheet as of March 31, 2022 was derived from the audited balance sheet filed in the Company’s 2022 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 consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

 

Investments. The Company accounts for investments of less than 1% in limited liability companies at cost. The Company has no control of the limited liability companies. The cost of the investment is recorded as an asset on the consolidated balance sheets and when income from the investment is received, it is immediately recognized on the consolidated statements of operations.

 

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 on the consolidated balance sheets with the current portion being included in the accounts payable and other accrued expenses.

 

Page 7

 

 

The following table provides a rollforward of the AROs for the first three months of fiscal 2022:

 

Carrying amount of asset retirement obligations as of April 1, 2022  $735,512 
Liabilities incurred   14,668 
Liabilities settled   (10,557)
Accretion expense   7,519 
Carrying amount of asset retirement obligations as of June 30, 2022   747,142 
Less: Current portion   15,000 
Non-Current asset retirement obligation  $732,142 

 

4. 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 $1,000,000 with a maturity date of December 28, 2021. The Agreement has no monthly commitment reduction and a borrowing base to be evaluated annually.

 

On February 28, 2020, the Agreement was amended to increase the credit facility to $2,500,000, extend the maturity date to March 28, 2023 and increase the borrowing base to $1,500,000.

 

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 (0.5%) floating daily. Interest on the outstanding amount under the Agreement is payable monthly. In addition, the Company will pay an unused commitment fee in an amount equal to one-half of one percent (0.5%) times the daily average of the unadvanced amount of the commitment. The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter. As of June 30, 2022, there was $1,500,000 available on the facility.

 

No principal payments are anticipated to be required through the maturity date of the credit facility, March 28, 2023. Upon closing with WTNB on the original Agreement, the Company paid a .5% loan origination fee in the amount of $5,000 plus legal and recording expenses totaling $34,532, which were deferred over the life of the credit facility. Upon closing the amendment to the Agreement, the Company paid a .1% loan origination fee of $2,500 and an extension fee of $3,125 plus legal and recording expenses totaling $12,266, which were also deferred over the life 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.

 

The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires senior debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratios (Senior Debt/EBITDA) less than or equal to 4.00 to 1.00 measured with respect to the four trailing quarters and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter.

 

In addition, this Agreement prohibits the Company from paying cash dividends on its common stock without prior written permission of WTNB. 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 no balance outstanding on the credit facility as of June 30, 2022.

 

Page 8

 

 

5. Stock-based Compensation

 

The Company recognized compensation expense of $25,571 and $13,865 related to vesting stock options in general and administrative expense in the Consolidated Statements of Operations for the first quarter of fiscal 2023 and 2022, respectively. The total cost related to non-vested awards not yet recognized at June 30, 2022 totals $188,537, which is expected to be recognized over a weighted average of 2.14 years.

 

The following table is a summary of stock options activity for the three months ended June 30, 2022:

 

   Number of Shares   Weighted Average Exercise Price Per Share   Weighted Aggregate Average Remaining Contract Life
in Years
   Intrinsic Value 
Outstanding at April 1, 2022   114,250   $5.51   7.40   $1,221,670 
Granted   -    -           
Exercised   -    -           
Forfeited or Expired   -    -           
Outstanding at June 30, 2022   114,250   $5.51    7.15   $1,334,778 
                     
Vested at June 30, 2022   52,750   $4.68    5.99   $660,023 
Exercisable at June 30, 2022   52,750   $4.68    5.99   $660,023 

 

During the three months ended June 30, 2022 and 2021, no stock options were granted.

 

During the three months ended June 30, 2022, no stock options were exercised. During the three months ended June 30, 2021, stock options covering 5,000 shares were exercised with a total intrinsic value of $15,036. The Company received proceeds of $34,000 from these exercises.

 

No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history for these types of awards. During the three months ended June 30, 2022 and 2021, there were no stock options forfeited or expired.

 

Outstanding options at June 30, 2022 expire between August 2024 and July 2031 and have exercise prices ranging from $3.34 to $8.51.

 

6. Leases

 

The Company leases approximately 4,160 rentable square feet of office space from an unaffiliated third party for our corporate office located in Midland, Texas. This includes 1,112 square feet of office space shared with and reimbursed by our majority shareholder. The lease does not include an option to renew and is a 36-month lease that was to expire in May 2021. In June 2020, in exchange for a reduction in rent for the months of June and July 2020, the Company agreed to a 2-month extension to its current lease agreement at the regular monthly rate extending its current lease expiration date to July 2021. In June 2021, the Company agreed to extend its current lease at a flat (unescalated) rate for 36 months. The amended lease now expires on July 31, 2024.

 

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.

 

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 3.75%. Significant judgement is required when determining the incremental borrowing rate. Rent expense for lease payments is recognized on a straight-line basis over the lease term.

 

Page 9

 

 

The balance sheets classification of lease assets and liabilities was as follows:

 

   June 30, 2022 
Assets   
Operating lease right-of-use asset, beginning balance  $129,923 
Current period amortization   (13,383)
Total operating lease right-of-use asset  $116,540 
      
Liabilities     
Operating lease liability, current  $54,806 
Operating lease liability, long term   61,734 
Total lease liabilities  $116,540 

 

Future minimum lease payments as of June 30, 2022 under non-cancellable operating leases are as follows:

 

   Lease Obligation 
Fiscal Year Ended March 31, 2023   43,680 
Fiscal Year Ended March 31, 2024   58,240 
Fiscal Year Ended March 31, 2025   19,413 
Total lease payments  $121,333 
Less: imputed interest   (4,793)
Operating lease liability   116,540 
Less: operating lease liability, current   (54,806)
Operating lease liability, long term  $61,734 

 

Net cash paid for our operating lease for the three months ended June 30, 2022 and 2021 was $10,667 and $10,929, respectively. Rent expense, less sublease income of $3,893 and $5,200, respectively, is included in general and administrative expenses.

 

7. Income Taxes

 

A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, and we consider the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry.

 

Based on the material write-downs of the carrying value of our oil and natural gas properties during fiscal 2016, we are in a net deferred tax asset position as of June 30, 2022. Our deferred tax asset is $526,846 as of June 30, 2022 with a valuation amount of $526,846. We believe it is more likely than not that these deferred tax assets will not be realized. Management considers the likelihood that the Company’s net operating losses and other deferred tax attributes will be utilized prior to their expiration, if applicable. The determination to record a valuation allowance was based on management’s assessment of all available evidence, both positive and negative, supporting realizability of the Company deferred tax asset as required by applicable accounting standards. In light of those criteria for recognizing the tax benefit of deferred tax assets, the Company’s assessment resulted in application of a valuation allowance against the deferred tax asset as of June 30, 2022.

 

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 quarters ended June 30, 2022 and 2021 was $10,085 and $12,768, respectively. The principal stockholder pays for his share of the lease amount for the shared office space directly to the lessor. Amounts paid by the principal stockholder directly to the lessor less sublease income for the three months ending June 30, 2022 and 2021 were $3,893 and $4,045, respectively.

 

Page 10

 

 

9. Income Per Common Share

 

The following is a reconciliation of the number of shares used in the calculation of basic and diluted net income per share for the three-month periods ended June 30, 2022 and 2021.

 

   2022   2021 
Net income  $1,298,672   $395,006 
           
Shares outstanding:          
Weighted average common shares outstanding – basic   2,149,416    2,076,756 
Effect of the assumed exercise of dilutive stock options   67,326    43,199 
Weighted average common shares outstanding – dilutive   2,216,742    2,119,955 
Income per common share:          
Basic  $0.60   $0.19 
Diluted  $0.59   $0.19 

 

For the three months ended June 30, 2022 and 2021, no anti-dilutive shares relating to stock options were excluded from the computation of diluted net income.

 

10. Subsequent Events

 

In July 2022, Mexco expended approximately $300,000 for the remaining balance in the drilling and completion of four horizontal wells Eddy County, New Mexico.

 

In July and August 2022, Mexco expended approximately $768,000 to purchase additional working interests and to complete three horizontal wells in Reagan County, Texas.

 

In July and August 2022, Mexco expended approximately $377,000 to purchase additional working interests and to complete a horizontal well in Reagan County, Texas.

 

In August 2022, Mexco expended approximately $33,000 to participate in the drilling of two horizontal wells in Lea County, New Mexico.

 

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.

 

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 consolidated financial statements and notes thereto included in the Form 10-K.

 

Page 11

 

 

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 our 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 royalty and working interests and non-operated properties in areas with significant development potential.

 

At June 30, 2022, we had working capital of $1,769,009 compared to working capital of $2,469,776 at March 31, 2022, a decrease of $700,767 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 Three Months Ended
June 30,
     
   2022   2021   Change 
Net cash provided by operating activities  $1,495,598   $666,054   $829,544 
Net cash used in investing activities  $(2,329,363)  $(297,113)  $2,032,250 
Net cash used in financing activities  $-   $(346,000)  $(346,000)

 

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 three months ended June 30, 2022 was $1,495,598 in comparison to $666,054 for the three months ended June 30, 2021. This increase of $829,544 in our cash flow operating activities consisted of an increase in our non-cash expenses of $134,975; an increase in our accounts receivable of $154,113; a decrease of $53,282 in our accounts payable and accrued expenses; and, an increase in our net income for the current quarter of $903,666. 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 three months ended June 30, 2022, we had net cash of $2,329,363 used for additions to oil and gas properties compared to $297,113 for the three months ended June 30, 2021.

 

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. Cash flow used in our financing activities was $0 for the three months ended June 30, 2022 compared to cash flow provided by our financing activities of $346,000 for the three months ended June 30, 2021. During the three months ended June 30, 2021, we received advances of $100,000 from our credit facility, received proceeds of $34,000 for the exercise of director stock options and made payments of $480,000 on the credit facility.

 

Accordingly, net cash decreased $833,765, leaving cash and cash equivalents on hand of $537,001 as of June 30, 2022.

 

Page 12

 

 

Oil and Natural Gas Property Development

 

New Participations in Fiscal 2023. The Company currently plans to participate in the drilling and completion of 52 horizontal wells at an estimated aggregate cost of approximately $3,800,000 for the fiscal year ending March 31, 2023. All of these horizontal wells are in the Delaware Basin located in the western portion of the Permian Basin in Lea and Eddy Counties, New Mexico or in the Midland Basin located in the eastern portion of the Permian Basin in Reagan County, Texas.

 

In April 2022, Mexco expended approximately $140,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .52%.

 

Also in April 2022, Mexco expended approximately $427,000 to participate in the drilling of three horizontal wells in the Wolfcamp Sand formation of the Midland Basin located in the eastern portion of the Permian Basin in Reagan County, Texas. Subsequently, during the second quarter of fiscal 2023, Mexco expended approximately $768,000 to purchase additional working interests in these wells and to complete these wells. Mexco’s working interest in these wells is 3.2%.

 

In May 2022, Mexco expended approximately $97,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .52%.

 

Also in May 2022, Mexco expended approximately $230,000 to participate in the drilling of a horizontal well in the Wolfcamp Sand formation of the Midland Basin in Reagan County, Texas. Subsequently, during the second quarter of fiscal 2023, Mexco expended approximately $377,000 to purchase additional working interests in this well and to complete this well. Mexco’s working interest in this well is 5.1%.

 

In June 2022, Mexco expended approximately $300,000 to participate in the drilling and completion of four horizontal wells in the Bone Spring formation of the Delaware Basin in Eddy County, New Mexico. Mexco’s working interest in these wells is 2.1%. Subsequently, in July 2022, Mexco expended approximately $300,000 for the remaining balance in these wells

 

Also in June 2022, Mexco expended approximately $157,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .52%.

 

Completion of Wells Drilled in Fiscal 2022. The Company expended approximately $101,000 for the completion costs of 4 horizontal wells located in Lea County, New Mexico that the Company participated in drilling during fiscal 2022. These wells began producing in May 2022 with initial average production rates of 1,384 barrels of oil, 3,530 barrels of water and 2,172,000 cubic feet of gas per day, or, 1,804 barrels of oil equivalent per day.

 

Acquisitions. The Company acquired various royalty (mineral) interests in 22 wells and several additional potential locations for development operated by Chesapeake Energy Corporation and located in the Eagleford area of Dimmit County, Texas for a purchase price of $939,000 which was effective April 1, 2022.

 

Subsequent Participations. In August 2022, Mexco expended approximately $33,000 to participate in the drilling of two horizontal wells in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .22%.

 

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.

 

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 $58.30 per bbl in August 2021 to a high of $119.68 per bbl in March 2022. The Henry Hub Spot Market Price (“Henry Hub”) for natural gas has ranged from a low of $3.32 per MMBtu in December 2021 to a high of $9.44 per MMBtu in May 2022.

 

On June 30, 2022, the WTI posted price for crude oil was $101.74 and the Henry Hub spot price for natural gas was $5.75 per MMBtu. See Results of Operations below for realized prices.

 

Page 13

 

 

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 June 30, 2022:

 

   Payments due in:  
    Total    less than 1 year    1 - 3 years    over 3 years  
Contractual obligations:                    
Leases (1)  $121,333   $58,240   $63,093   $- 

 

(1)The lease amount represents the monthly rent amount for our principal office space in Midland, Texas under a 38 month lease agreement effective May 15, 2018 and extended another 36 months to July 31, 2024. Of this total obligation for the remainder of the lease, our majority shareholder will pay $15,572 less than 1 year and $16,870 1-3 years for his portion of the shared office space.

 

Results of Operations – Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021. For the quarter ended June 30, 2022, net income was $1,298,672 compared to net income of $395,006 for the quarter ended June 30, 2021. This was primarily the result of an increase in operating revenues due to an increase in oil and gas prices and an increase in gas production partially offset by an increase in operating expenses that is further explained below.

 

Oil and gas sales. Revenue from oil and gas sales was $2,416,113 for the quarter ended June 30, 2022, a 92% increase from $1,255,565 for the quarter ended June 30, 2021. This primarily resulted from an increase in oil and gas prices and an increase in gas production volumes partially offset by a decrease in oil production volumes. The following table sets forth our oil and natural gas revenues, production quantities and average prices received during the three months ended June 30:

 

   2022   2021   % Difference 
Oil:               
Revenue  $1,559,321   $987,103    58.0%
Volume (bbls)   14,224    15,438    (7.9%)
Average Price (per bbl)  $109.62   $63.94    71.4%
                
Gas:               
Revenue  $856,792   $268,462    219.1%
Volume (mcf)   129,706    90,063    44.0%
Average Price (per mcf)  $6.61   $2.98    121.8%

 

Production and exploration. Production costs were $435,028 for the three months ended June 30, 2022, a 57% increase from $276,987 for the three months ended June 30, 2021. This increase is primarily the result of an increase in production taxes and lease operating expenses as a result of the increase in oil and gas revenues.

 

Depreciation, depletion and amortization. Depreciation, depletion and amortization (“DD&A”) expense was $387,128 for the first quarter of fiscal 2023, a 46% increase from $264,320 for the first quarter of fiscal 2022, primarily due to an increase in production and an increase in the full cost pool amortization base partially offset by an increase in reserves.

 

General and administrative expenses. General and administrative expenses were $318,530 for the three months ended June 30, 2022, a 3% increase from $308,167 for the three months ended June 30, 2021. This was primarily due to an increase in accounting fees and insurance costs.

 

Interest expense. Interest expense was $3,131 for the first quarter of fiscal 2023, a decrease of 75% from $12,719 for the first quarter of fiscal 2022 due to a decrease in borrowings.

 

Income taxes. There was no income tax expense for the three months ended June 30, 2022 and 2021. The effective tax rate for the three months ended June 30, 2022 and 2021 was 0%. We are in a net deferred tax asset position and believe it is more likely than not that these deferred tax assets will not be realized.

 

Page 14

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

The primary source of market risk for us includes 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 June 30, 2022, our largest credit risk associated with any single purchaser was $851,059 or 56% of our total oil and gas receivables. We have not experienced any significant credit losses.

 

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.

 

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 $58.30 per bbl in August 2021 to a high of $119.68 per bbl in March 2022. The Henry Hub Spot Market Price (“Henry Hub”) posted price for natural gas has ranged from a low of $3.32 per MMBtu in December 2021 to a high of $9.44 per MMBtu in May 2022. On June 30, 2022, the WTI posted price for crude oil was $101.74 and the Henry Hub posted price for natural gas was $5.75. See Results of Operations above for the Company’s realized prices during the quarter.

 

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. Oil and natural gas prices do not necessarily fluctuate in direct relationship to each other. If the average oil price had increased or decreased by ten dollars per barrel for the quarter ended June 30, 2022, our oil sales would have changed by $142,240. If the average gas price had increased or decreased by one dollar per mcf for the quarter ended June 30, 2022, our natural gas sales would have increased or decreased by $129,706.

 

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 June 30, 2022, 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 quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Page 15

 

 

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 2022 Annual Report on Form 10-K.

 

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 Inline XBRL Instance Document
   
101.SCH Inline XBRL Taxonomy Extension Schema Document
   
101.CAL Inline XBRL Taxonomy Extenstion Calculation Linkbase Document
 
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
104 Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

 

Page 16

 

 

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: August 15, 2022 /s/ Nicholas C. Taylor
  Nicholas C. Taylor
  Chairman of the Board and Chief Executive Officer
   
Dated: August 15, 2022 /s/ Tamala L. McComic
  Tamala L. McComic
  President, Chief Financial Officer, Treasurer and Assistant Secretary

 

Page 17

 

 

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: August 15, 2022 /s/ Nicholas C. Taylor
  Nicholas C. Taylor
  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: August 15, 2022 /s/ Tamala L. McComic
  Tamala L. McComic
  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 June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (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: August 15, 2022 /s/ Nicholas C. Taylor
  Nicholas C. Taylor
  Chief Executive Officer
 
Date: August 15, 2022 /s/ Tamala L. McComic
  Tamala L. McComic
  Chief Financial Officer

 

 


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

SEC Filings