Mexco Energy Corporation (MXC) 2021年年度報告「AMEX」.pdf

《Mexco Energy Corporation (MXC) 2021年年度報告「AMEX」.pdf》由會員分享，可在線閱讀，更多相關《Mexco Energy Corporation (MXC) 2021年年度報告「AMEX」.pdf（70頁珍藏版）》請在三個皮匠報告上搜索。

1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K XANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31,2021 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934 Commissio

2、n File No.1-31785 MEXCO ENERGY CORPORATION(Exact name of registrant as specified in its charter)Colorado 84-0627918(State or other jurisdiction of(I.R.S.Employerincorporation or organization)Identification No.)415 W.Wall,Suite 475 79701Midland,Texas(Zip Code)(Address of principal executive offices)R

3、egistrants telephone number,including area code:(432)682-1119 Securities registered pursuant to Section 12(b)of the Act:None Securities registered pursuant to Section 12(g)of the Act:Common Stock,$0.50 par value per share Indicate by check mark if the registrant is a well-known seasoned issuer,as de

4、fined in Rule 405 of the Securities Act.Yes No X Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Indicate by check-mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securiti

5、esExchange Act of 1934 during the preceding twelve(12)months(or for such shorter period that the registrant was required to file suchreports)and(2)has been subject to such filing requirements for the past ninety(90)days.Yes X No Indicate by check mark whether the registrant has submitted electronica

6、lly and posted on its corporate Web site,if any,everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during thepreceding 12 months(or for such shorter period that the registrant was required to submit and post such files).Yes X

7、 No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reportingcompany,or and emerging growth company.See definitions of“large accelerated filer”,“accelerated filer”,“smaller reportingcompany”,and“emerging growth company

8、”in Rule 12b-2 of the Exchange Act:Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Smaller Reporting Company X Emerging GrowthCompany If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new

9、 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 X The aggregate market value of the voting stock held by non-affiliates of the Regist

10、rant as of September 30,2020(the last business dayof the Registrants most recently completed second quarter)was$4,724,764 based on Mexco Energy Corporations closing commonstock price of$4.77 per share on that date as reported by the NYSE American.There were 2,076,666 shares of the registrants common

11、 stock outstanding as of June 25,2021.DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrants Proxy Statement relating to the 2021 Annual Meeting of Shareholders to be held on September 9,2021,have been incorporated by reference in Part III of this Form 10-K.Such Proxy Statement will be file

12、d with the Commission not laterthan 120 days after March 31,2021,the end of the fiscal year covered by this report.TABLE OF CONTENTS PART I Item 1.Business3 Item 1A.Risk Factors9 Item 1B.Unresolved Staff Comments16 Item 2.Properties16 Item 3.Legal Proceedings20 Item 4.Mine Safety Disclosures20 PART

13、II Item 5.Market for the Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities20 Item 6.Selected Consolidated Financial Data21 Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations21 Item 7A.Quantitative and Qualitative D

14、isclosures About Market Risk28 Item 8.Financial Statements and Supplementary Data29 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures29 Item 9A.Controls and Procedures30 Item 9B.Other Information30 PART III Item 10.Directors,Executive Officers and Corporate

15、 Governance30 Item 11.Executive Compensation30 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters30 Item 13.Certain Relationships and Related Transactions,and Director Independence31 Item 14.Principal Accounting Fees and Services31 PART IV Item 15.

16、Exhibits and Financial Statement Schedules31 Signatures32 Glossary of Abbreviations and Terms33 2 As used in this document,“the Company”,“Mexco”,“we”,“us”and“our”refer to Mexco Energy Corporation and itsconsolidated subsidiaries.Abbreviations or definitions of certain terms commonly used in the oil

17、and gas industry and in this Form 10-K can be found inthe“Glossary of Abbreviations and Terms”.CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the SecuritiesAct of 1933,as amended,(the“Secur

18、ities Act”)and Section 21E of the Securities Exchange Act of 1934,as amended,(the“ExchangeAct”).These forward-looking statements are generally located in the material set forth under the headings“Risk Factors”,“Managements Discussion and Analysis of Financial Condition and Results of Operations”,“Bu

19、siness”,“Properties”but may befound in other locations as well,and are typically identified by the words“could”,“should”,“expect”,“project”,“estimate”,“believe”,“anticipate”,“intend”,“budget”,“plan”,“forecast”,“predict”and other similar expressions.Forward-looking statements generally relate to our

20、profitability;planned capital expenditures;estimates of oil and gasproduction;future project dates;estimates of future oil and gas prices;estimates of oil and gas reserves;our future financial conditionor results of operations;and our business strategy and other plans and objectives for future opera

21、tions and are based upon ourmanagements reasonable estimates of future results or trends.Actual results in future periods may differ materially from thoseexpressed or implied by such forward-looking statements because of a number of risks and uncertainties affecting our business,including those disc

22、ussed in“Risk Factors”.The factors that may affect our expectations regarding our operations include,amongothers,the following:our success in development,exploitation and exploration activities;our ability to make planned capitalexpenditures;declines in our production or prices of oil and gas;our ab

23、ility to raise equity capital or incur additional indebtedness;ourrestrictive debt covenants;our acquisition and divestiture activities;weather conditions and events;the proximity,capacity,cost andavailability of pipelines and other transportation facilities;increases in the cost of drilling,complet

24、ion and gas gathering or other costsof production and operations;and other factors discussed elsewhere in this document.We disclaim any intention or obligation to updateor revise any forward-looking statements as a result of new information,future events or otherwise.PART I ITEM 1.BUSINESS General M

25、exco Energy Corporation,a Colorado corporation,is an independent oil and gas company engaged in the acquisition,exploration,development and production of crude oil and natural gas properties located in the United States.Incorporated in April1972 under the name Miller Oil Company,the Company changed

26、its name to Mexco Energy Corporation effective April 30,1980.Atthat time,the shareholders of the Company also approved amendments to the Articles of Incorporation resulting in a one-for-fiftyreverse stock split of the Companys common stock.Our total estimated proved reserves at March 31,2021 were ap

27、proximately 1.504 million barrels of oil equivalent(“MMBOE”)of which 49%was oil and natural gas liquids and 51%was natural gas,and our estimated present value of provedreserves was approximately$14 million based on estimated future net revenues excluding taxes discounted at 10%per annum,pricingand o

28、ther assumptions set forth in“Item 2 Properties”below.Nicholas C.Taylor beneficially owns approximately 46%of the outstanding shares of our common stock.Mr.Taylor is alsoour Chairman of the Board and Chief Executive Officer.As a result,Mr.Taylor has significant influence in matters voted on by oursh

29、areholders,including the election of our Board members.Mr.Taylor participates in all facets of our business and has a significantimpact on both our business strategy and daily operations.3 Company Profile Since our inception,we have been engaged in acquiring and developing oil and gas properties and

30、 the exploration for andproduction of natural gas,crude oil,condensate and natural gas liquids(“NGLs”)within the United States.We especially seek toacquire proved reserves that fit well with existing operations or in areas where Mexco has established production.Acquisitionspreferably will contain mo

31、st of their value in producing wells,behind pipe reserves and high quality proved undeveloped locations.Competition for the purchase of proved reserves is intense.Sellers often utilize a bid process to sell properties.This process usuallyintensifies the competition and makes it extremely difficult t

32、o acquire reserves without assuming significant price and production risks.We actively search for opportunities to acquire proved oil and gas properties.However,because the competition is intense,we cannotgive any assurance that we will be successful in our efforts during fiscal 2022.While we own oi

33、l and gas properties in other states,the majority of our activities are centered in West Texas and SoutheasternNew Mexico.The Company also owns producing properties and undeveloped acreage in fourteen states.We acquire interests inproducing and non-producing oil and gas leases from landowners and le

34、aseholders in areas considered favorable for oil and gasexploration,development and production.In addition,we may acquire oil and gas interests by joining in oil and gas drilling prospectsgenerated by third parties.We may also employ a combination of the above methods of obtaining producing acreage

35、and prospects.Inrecent years,we have placed primary emphasis on the evaluation and purchase of producing oil and gas properties,including working,royalty and mineral interests,and prospects that could have a potentially meaningful impact on our reserves.All of the Companys oiland gas interests are o

36、perated by others.From 1983 to 2021,Mexco Energy Corporation made approximately 80 acquisitions of producing oil and gas propertiesincluding royalties,overriding royalties,minerals and working interests both operated and non-operated plus the following mostsignificant and recent acquisitions:1993-20

37、10 Tabbs Bay Oil Company and Thompson Brothers Lumber Company,respectively dissolved in 1957 and 1947.Purchasecovering thousands of acres located respectively in 19 counties of Texas,3 parishes of Louisiana and one county inArkansas and 8 counties of Texas,respectively consisting of various mineral,

38、royalty and overriding royalty interests.1997Forman Energy Corporation,purchase price of$1,591,000 consisting of primarily working interests in approximately 634wells located in 12 states.2010Southwest Texas Disposal Corporation,purchase price$478,000 consisting of royalty interests in over 300 well

39、s located in60 counties and parishes of 6 states.2012TBO Oil and Gas,LLC,purchase price of$1,150,000 consisting of working interests in approximately 280 wells located in16 counties of 3 states.2014Royalty interests,purchase price of$200,000 covering 43 wells in 12 counties of eight states,primarily

40、 in Texas.Royalty interests,purchase price$580,000 covering 580 wells in 87 counties of eight states.Approximately 90%of the netrevenue from these royalties is produced by 157 wells located in the Barnett Shale of the Fort Worth Basin of Texas.Alsoincluded are interests in 423 wells in 8 states.Non-

41、Operated working interests,purchase price$525,000 for 12.5%(approximately 10%net revenue interest).Thepurchase included eight wells producing oil on 20-acre spacing at approximately 3,600 foot depth on 190 acres in PecosCounty,TX.Royalty and mineral interests,purchase price$1,000,000 covering approx

42、imately 1,800 wells in 27 counties of Texas.Ofthese oil and gas reserves,approximately 80%is natural gas and 20%oil.Non-Operated working interests,purchase price$840,000 in 70 Natural gas producing wells located in 5 counties ofOklahoma.4 2019In April 2019,the Company made a less than 1%investment c

43、ommitment in a limited liability company amounting to$250,000 of which$200,000 has been funded through March 31,2021.This amount is classified as an investment at coston the Companys consolidated balance sheets.The limited liability company is capitalized at approximately$50 million topurchase royal

44、ty interests consisting of minerals located in the state of Ohio.As of March 31,2021 there are 225 grosswells(.85 net wells)of which 215 are Utica gas wells and 10 are Marcellus oil wells either producing,drilling or inprocess.Industry Environment and Outlook The outbreak of the novel coronavirus(“C

45、OVID-19”)in the first calendar quarter of 2020 and its continued spread across theglobe in the second,third and fourth calendar quarters of 2020 has resulted,and is likely to continue to result in,significant economicdisruption and has,and is likely to continue to,adversely affect the operations of

46、the Companys business,as the significantly reducedglobal and national economic activity has resulted in reduced demand for oil and natural gas.Federal,state and local governmentsmobilized to implement containment mechanisms to minimize impacts to their populations and economies.Various containmentme

47、asures,which include the quarantining of cities,regions and countries,while aiding in the prevention of further outbreak,haveresulted in a severe drop in general economic activity and a resulting decrease in energy demand.In addition,the global economy hasexperienced a significant disruption to glob

48、al supply chains.The direct impact to the Companys operations began to take effect at theclose of the fiscal year ended March 31,2020,and continued through the close of the Companys third quarter of this fiscal year.The challenging commodity price environment continued in fiscal 2021 and in May 2020

49、,commodity prices experiencedextreme volatility resulting in historic lows.In light of these challenges facing our industry and in response to the continuedchallenging environment,our primary business strategies for fiscal 2022 will continue to include:(1)optimizing cash flows throughoperating effic

50、iencies and cost reductions,(2)divesting of non-core assets,and(3)working to balance capital spending with cash flowsto minimize borrowings,reduce debt and maintain ample liquidity.During the Companys fourth quarter of fiscal 2021 and continuing through the first quarter of fiscal 2022,oil and natur

51、al gasprices recovered to pre-pandemic levels,due in part to the accessibility of vaccines,reopening of states after the lockdown andoptimism about the economic recovery.However,the continued spread of the virus,including vaccine-resistant strains,could onceagain reduce the demand for oil and gas an

52、d deteriorate the oil and natural prices.See Part II,Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations for discussion ofour fiscal 2021 operating results and potential impact on fiscal 2022 operating results due to commodity price changes.Oil and Gas Operati

53、ons As of March 31,2021,oil constituted approximately 73%of our oil and gas revenues and approximately 49%of our totalproved reserves for fiscal 2021.Revenues from oil and gas royalty interests accounted for approximately 22%of our oil and gasrevenues for fiscal 2021.There are two primary areas in w

54、hich the Company is focused,1)the Delaware Basin located in the Western portion of thePermian Basin including Lea and Eddy Counties,New Mexico and Loving County,Texas and 2)the Midland Basin located in theEastern portion of the Permian Basin including Reagan,Upton,Midland,Martin,Howard and Glasscock

55、 Counties,Texas.The PermianBasin in total accounts for 80%of our discounted future net cash flows from proved reserves and 86%of our gross revenues.The Delaware Basin properties,encompassing 31,224 gross acres,210 net acres,526 gross producing wells and 3 net wellsaccount for approximately 52%of our

56、 discounted future net cash flows from proved reserves as of March 31,2021.For fiscal 2021,these properties accounted for 66%of our gross revenues and 76%of our net revenues.Of these discounted future net cash flows fromproved reserves,approximately 11%are attributable to proven undeveloped reserves

57、 which will be developed through new drilling.The Midland Basin properties,encompassing 97,640 gross acres,263 net acres,981 gross producing wells and 3 net wellsaccount for approximately 14%of our discounted future net cash flows from proved reserves as of March 31,2021.For fiscal 2021,these proper

58、ties accounted for 14%of our gross revenues and 13%of our net revenues.Of these discounted future net cash flows fromproved reserves,approximately 9%are attributable to proven undeveloped reserves which will be developed through new drilling.5 Gomez Gas Field properties,encompassing 13,058 gross acr

59、es,72 net acres,27 gross wells and.13 net wells in Pecos County,Texas,account for approximately 13%of our discounted future net cash flows from proved reserves as of March 31,2021.For fiscal2021,these properties accounted for 3%of our gross revenues and 2%of our net revenues.All of these properties,

60、except for one,areroyalty interests.Of these discounted future net cash flows from proved reserves,approximately 10%are attributable to provenundeveloped reserves which will be developed through new drilling in the horizontal Wolfcamp.Mexco believes its most important properties for future developme

61、nt by horizontal drilling and hydraulic fracturing area arelocated in Lea and Eddy Counties,New Mexico of the Delaware Basin and the Midland Basin in Midland,Reagan and UptonCounties,Texas.For more on these and other operations in this area see“Item 7.Managements Discussion and Analysis of Financial

62、Condition and Results of Operations Liquidity and Capital Resources Commitments”.We own partial interests in approximately 6,400 producing wells all of which are located within the United States in the statesof Texas,New Mexico,Oklahoma,Louisiana,Alabama,Mississippi,Arkansas,Wyoming,Kansas,Colorado,

63、Montana,Virginia,NorthDakota,and Ohio.Additional information concerning these properties and our oil and gas reserves is provided below.The following table indicates our oil and gas production in each of the last five years:Year Oil(Bbls)Gas(Mcf)2021 50,327 324,205 2020 44,301 294,007 2019 35,359 29

64、5,133 2018 34,743 318,774 2017 34,689 356,268 Competition and Markets The oil and gas industry is a highly competitive business.Competition for oil and gas reserve acquisitions is significant.Wemay compete with major oil and gas companies,other independent oil and gas companies and individual produc

65、ers and operators,some of which have financial and personnel resources substantially in excess of those available to us.As a result,we may be placed ata competitive disadvantage.Competitive factors include price,contract terms and types and quality of service,including pipelinedistribution.The price

66、 for oil and gas is widely followed and is generally subject to worldwide market factors.Our ability to acquireand develop additional properties in the future will depend upon our ability to evaluate and select suitable properties and toconsummate transactions in this highly competitive environment

67、in a timely manner.In addition,the oil and gas industry as a whole also competes with other industries in supplying the energy and fuelrequirements of industrial,commercial and individual consumers.The price and availability of alternative energy sources couldadversely affect our revenue.Market fact

68、ors affect the quantities of oil and natural gas production and the price we can obtain for the production from ouroil and natural gas properties.Such factors include:the extent of domestic production;the level of imports of foreign oil and naturalgas;the general level of market demand on a regional

69、,national and worldwide basis;domestic and foreign economic conditions thatdetermine levels of industrial production;political events in foreign oil-producing regions like the crude oil price disputes betweenSaudi Arabia and Russia;and variations in governmental regulations including environmental,e

70、nergy conservation and tax laws or theimposition of new regulatory requirements upon the oil and natural gas industry.The market for our oil,gas and natural gas liquids production depends on factors beyond our control including:national andinternational pandemics like the COVID-19;domestic and forei

71、gn political conditions;the overall level of supply of and demand foroil,gas and natural gas liquids;the price of imports of oil and gas;weather conditions;the price and availability of alternative fuels;theproximity and capacity of gas pipelines and other transportation facilities;and overall econo

72、mic conditions.6 Major Customers We made sales that amounted to 10%or more of revenues as follows for the years ended March 31:2021 2020 Company A 66%52%Historically,the Company has not experienced significant credit losses on our oil and gas accounts and management is of theopinion that significant

73、 credit risk does not exist.Because a ready market exists for oil and gas production,we do not believe the lossof any individual customer would have a material adverse effect on our financial position or results of operations.Environmental Regulation The exploration and development of crude oil and

74、natural gas properties are subject to existing stringent and complex federal,state and local laws(including case law)and regulations governing health,safety,environmental quality and pollution control.Failureto comply with these laws,rules and regulations,however,may result in the assessment of admi

75、nistrative,civil or criminal penalties;the imposition of investigatory or remedial obligations;and the issuance of injunctions limiting or preventing some or all of theoperations on the properties in which the Company owns an interest.Under certain environmental laws and regulations,the operators of

76、 the Company properties could be subject to strict,joint andseveral liability for the removal or remediation of property contamination,whether at a drill site or a waste disposal facility,even whenthe operators did not cause the contamination or their activities were in compliance with all applicabl

77、e laws at the time the actions weretaken.The Comprehensive Environmental Response,Compensation and Liability Act(“CERCLA”),also known as the“superfund”law,for example,imposes liability,regardless of fault or the legality of the original conduct,on certain classes of persons for releasesinto the envi

78、ronment of a“hazardous substance.”Liable persons may include the current or previous owner and operator of a sitewhere a hazardous substance has been disposed and persons who arranged for the disposal of a hazardous substance at a site.UnderCERCLA and similar statutes,government authorities or priva

79、te parties may take actions in response to threats to the public health orthe environment or sue responsible persons for the associated costs.In the course of operations,the working interest owner and/or theoperator of the Company properties may have generated and may generate materials that could t

80、rigger cleanup liabilities.In addition,the Company properties have produced oil and/or natural gas for many years,and previous operators may have disposed or releasedhydrocarbons,wastes or hazardous substances at the Company properties.The operator of the Company properties or the workinginterest ow

81、ners may be responsible for all or part of the costs to clean up any such contamination.Although the Company is not theoperator of such properties,its ownership of the properties could cause it to be responsible for all or part of such costs to the extentCERCLA or any similar statute imposes respons

82、ibility on such parties as“owners.”Various state governments and regional organizations comprising state governments already have enacted legislation andpromulgated rules restricting greenhouse gases(“GHGs”)emissions or promoting the use of renewable energy,and additional suchmeasures are frequently

83、 under consideration.Although it is not possible at this time to estimate how potential future requirementsaddressing GHG emissions would impact operations on the Company properties and revenue,either directly or indirectly,any futurefederal,state or local laws or implementing regulations that may b

84、e adopted to address GHG emissions could require the operators ofour properties to incur new or increased costs to obtain permits,operate and maintain equipment and facilities,install new emissioncontrols,acquire allowances to authorize GHG emissions,pay taxes related to GHG emissions or administer

85、a GHG emissionsprogram.Regulation of GHGs could also result in a reduction in demand for and production of oil and natural gas.Additionally,to theextent that unfavorable weather conditions are exacerbated by global climate change or otherwise,the Company properties may beadversely affected to a grea

86、ter degree than previously experienced.We did not incur any material capital expenditures for remediation or pollution control activities for the year ended March 31,2021.Additionally,as of the date of this report,we are not aware of any environmental issues or claims that will require materialcapit

87、al expenditures during fiscal 2022.7 Title to Properties The leasehold properties we own are subject to royalty,overriding royalty and other outstanding interests customary in theindustry.The properties may be subject to burdens such as liens incident to operating agreements and current taxes,develo

88、pmentobligations under oil and gas leases and other encumbrances,easements and restrictions.We do not believe any of these burdens willmaterially interfere with the use of these properties.Prior to drilling of an oil and natural gas well,it is normal practice in our industry for the person or compan

89、y acting as theoperator of the well to obtain a preliminary title review to ensure there are no obvious defects in title to the well.Frequently,as a resultof such examinations,certain curative work must be done to correct defects in the marketability of the title,and such curative workentails expens

90、e.Our operators failure to cure any title defects may delay or prevent us from utilizing the associated mineral interest.We believe the title to our properties is good and defensible in accordance with standards generally acceptable in the oil and gasindustry subject to such exceptions that,in the o

91、pinion of counsel employed in the various areas in which we have activities,are not somaterial as to detract substantially from the use of such properties.Substantially all of our properties are currently mortgaged under a deed of trust to secure funding through a credit facility.Insurance Our opera

92、tions are subject to all the risks inherent in the exploration for and development and production of oil and gasincluding blowouts,fires and other casualties.We maintain insurance coverage customary for operations of a similar nature,but lossescould arise from uninsured risks or in amounts in excess

93、 of existing insurance coverage.Executive Officers The following table sets forth certain information concerning the executive officers of the Company as of March 31,2021.Name Age PositionNicholas C.Taylor 83 Chairman and Chief Executive OfficerTamala L.McComic 52 President,Chief Financial Officer,T

94、reasurer,and Assistant SecretaryDonna Gail Yanko 76 Vice President and Secretary Set forth below is a description of the principal occupations during at least the past five years of each executive officer of theCompany.Nicholas C.Taylor was elected Chairman of the Board and Chief Executive Officer o

95、f the Company in September 2011 andcontinues to serve in such capacity on a part time basis,as required.He served as Chief Executive Officer,President and Director of theCompany from 1983 to 2011.From July 1993 to the present,Mr.Taylor has been involved in the independent practice of law and otherbu

96、siness activities.In November 2005 he was appointed by the Speaker of the House to the Texas Ethics Commission and served untilFebruary 2010.Tamala L.McComic,a Certified Public Accountant and Chartered Global Management Accountant,became Controller for theCompany in July 2001 and was elected Preside

97、nt and Chief Financial Officer in September 2011.She served the Company asExecutive Vice President and Chief Financial Officer from 2009 to 2011 and Vice President and Chief Financial Officer from 2003 to2009.Prior thereto,Ms.McComic served as Treasurer and Assistant Secretary of the Company.Donna G

98、ail Yanko was appointed to the position of Vice President of the Company in 1990.She has also served as CorporateSecretary since 1992 and from 1986 to 1992 was Assistant Secretary.From 1986 to 2015,on a part-time basis,she assisted theChairman of the Board of the Company in his personal business act

99、ivities.Ms.Yanko also served as a director of the Company from1990 to 2008.8 Employees As of March 31,2021,we had two full-time and three part-time employees.We believe that relations with these employeesare generally satisfactory.From time to time,we utilize the services of independent geological,l

100、and and engineering consultants on alimited basis and expect to continue to do so in the future.Office Facilities Our principal offices are located at 415 W.Wall,Suite 475,Midland,Texas 79701 and our telephone number is(432)682-1119.We believe our facilities are adequate for our current operations a

101、nd future needs.Access to Company Reports Mexco Energy Corporation files annual,quarterly and current reports,proxy statements and other information with the SEC.The SEC maintains an internet website(www.sec.gov)that contains annual,quarterly and current reports,proxy statements and otherinformation

102、 that issuers,including Mexco,file electronically with the SEC.We also maintain an internet website at .In the Investor Relations section,our website contains ourAnnual Reports on Form 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,and other reports and amendments tothose reports as

103、 soon as reasonably practicable after such material is electronically filed with the SEC.Information on our website isnot incorporated by reference into this Form 10-K and should not be considered part of this report or any other filing that we make withthe SEC.Additionally,our Code of Business Cond

104、uct and Ethics and the charters of our Audit Committee,Compensation Committeeand Nominating Committee are posted on our website.Any of these corporate documents as well as any of the SEC filed reports areavailable in print free of charge to any stockholder who requests them.Requests should be direct

105、ed to our corporate Secretary by mailto P.O.Box 10502,Midland,Texas 79702 or by email to .ITEM 1A.RISK FACTORS There are many factors that affect our business and results of operations,some of which are beyond our control.The followingis a description of some of the important factors that could have

106、 a material adverse effect on our business,financial position,liquidityand results of operations.Some of the following risks relate principally to the industry in which we operate and to our business.Otherrisks relate principally to the securities markets and ownership of our common stock.RISKS RELA

107、TED TO OUR BUSINESS AND INDUSTRY Volatility of oil and gas prices significantly affects our results and profitability.Prices for oil and natural gas fluctuate widely.We cannot predict future oil and natural gas prices with any certainty.Historically,the markets for oil and gas have been volatile,and

108、 they are likely to continue to be volatile.Factors that can cause pricefluctuations include the level of global demand for petroleum products;foreign supply and pricing of oil and gas;the ability of theOrganization of Petroleum Exporting Countries(“OPEC”)to set and maintain oil price and production

109、 controls;nature and extent ofgovernmental regulation and taxation,including environmental regulations;level of domestic and international exploration,drillingand production activity;the cost of exploring for,producing and delivering oil and gas;speculative trading in crude oil and natural gasderiva

110、tive contracts;availability,proximity and capacity of oil and gas pipelines and other transportation facilities;weather conditions;the price and availability of alternative fuels;technological advances affecting energy consumption;national and internationalpandemics like the COVID-19;and,overall pol

111、itical and economic conditions in oil producing countries.Increases and decreases in prices also affect the amount of cash flow available for capital expenditures and our ability toborrow money or raise additional capital.The amount we can borrow from banks may be subject to redetermination based on

112、 changesin prices.In addition,we may have ceiling test writedowns when prices decline.Lower prices may also reduce the amount of crude oiland natural gas that can be produced economically.Thus,we may experience material increases or decreases in reserve quantitiessolely as a result of price changes

113、and not as a result of drilling or well performance.9 Changes in oil and gas prices impact both estimated future net revenue and the estimated quantity of proved reserves.Anyreduction in reserves,including reductions due to price fluctuations,can reduce the borrowing base under our credit facility a

114、ndadversely affect the amount of cash flow available for capital expenditures and our ability to obtain additional capital for ourexploration and development activities.Oil and natural gas prices do not necessarily fluctuate in direct relationship to each other.Lower prices or lack of storage mayhav

115、e an adverse affect on our financial condition due to reduction of our revenues,operating income and cash flows;curtailment orshut-in of our production due to lack of transportation or storage capacity;cause certain properties in our portfolio to becomeeconomically unviable;and,limit our financial c

116、ondition,liquidity,and/or ability to finance planned capital expenditures andoperations.Our results of operations may be negatively impacted by current global events such as the coronavirus outbreak.In December 2019,a novel strain of the coronavirus(“COVID-19”)surfaced and spread around the world,in

117、cluding to theUnited States.In March 2020,the World Health Organization declared COVID-19 a pandemic,and the President of the United Statesdeclared the COVID-19 outbreak a national emergency.The COVID-19 pandemic has significantly affected the global economy,disrupted global supply chains and create

118、d significant volatility and disruption in the financial and commodity markets.In addition,theCOVID-19 pandemic has resulted in travel restrictions,business closures and the institution of quarantining and other restrictions onmovement in many communities.As a result,there has been a significant red

119、uction in demand for and prices of oil and natural gas.Asof the first quarter of calendar year 2021,prices have recovered to pre-pandemic levels,due in part to the accessibility of vaccines,reopening of states after the lockdown,and optimism about the economic recovery.The continued spread of COVID-

120、19,includingvaccine-resistant strains,or repeated deterioration in oil and natural gas prices could result in additional adverse impacts on theCompanys results of operations,cash flows and financial position.The ability or willingness of OPEC and other oil exporting nations to set and maintain produ

121、ction levels has a significant impact on oiland natural gas commodity prices.OPEC is an intergovernmental organization that seeks to manage the price and supply of oil on the global energy market.OPEC and certain other oil exporting nations have previously agreed to take measures,including productio

122、n cuts,to support crude oilprices.A dispute between OPEC and Russia over production cuts resulted in a decision by Saudi Arabia and other Persian Gulfmembers of OPEC to increase production.In April 2020,OPEC and Russia agreed to certain production cuts.If these cuts are effected,however,they may not

123、 offset near-term demand loss attributable to the COVID-19 pandemic and the related economic slowdown.Inresponse to an oversupply of crude oil and corresponding low prices,there has been a significant decline in drilling by U.S.producersstarting in mid-March 2020,but domestic supply has continued to

124、 exceed demand,which has led to significant operational stress withrespect to capacity limitations associated with storage,pipeline and refining infrastructure.As storage capacity becomes fullysubscribed,operators may be forced to curtail some portion or all production.Therefore,the impact cannot be

125、 reasonably estimated atthis time.Volatility due to OPEC actions and other factors affecting the global supply and demand of oil and natural gas may continue.Governmental actions and political instability may negatively affect drilling and production levels.The production of oil and natural gas is s

126、ubject to regulation under a wide range of local,state and federal statutes,rules,orders and regulations.Federal,state and local statutes and regulations require permits for drilling operations,drilling bonds andreports concerning operations.The trend in oil and natural gas regulation has been to in

127、crease regulatory restrictions and limitations onsuch activities.Any changes in,or more stringent enforcement of,these laws and regulations may result in delays or restrictions inpermitting or development of projects or more stringent or costly construction,drilling,water management or completion ac

128、tivities orwaste handling,storage,transport,remediation,or disposal emission or discharge requirements which could have a material adverseeffect on the Company.For example,on January 20,2021,the Biden Administration placed a 60-day moratorium on new oil and gas leasing anddrilling permits on federal

129、 land,and on January 27,2021,the Department of Interior acting pursuant to a Presidential Executive Ordersuspended the federal oil and gas leasing program indefinitely.However,earlier this month,a federal judge issued an order temporarilyblocking the moratorium.10 The Biden Administration has also a

130、nnounced that it intends to review the Trump Administrations 2017 repeal of the 2015rule regulating hydraulic fracturing activities in federal land under the Presidential Executive Order on Protecting Public Health and theEnvironment and Restoring Science to Tackle the Climate Crisis.Lower oil and g

131、as prices and other factors may cause us to record ceiling test writedowns.Lower oil and gas prices increase the risk of ceiling limitation write-downs.We use the full cost method to account for oil andgas operations.Accordingly,we capitalize the cost to acquire,explore for and develop crude oil and

132、 natural gas properties.Under thefull cost accounting rules,the net capitalized cost of crude oil and natural gas properties may not exceed a“ceiling limit”which isbased upon the present value of estimated future net cash flows from proved reserves,discounted at 10%plus the lower of cost or fairmark

133、et value of unproved properties.If net capitalized costs of oil and natural gas properties exceed the ceiling limit,we must chargethe amount of the excess against earnings.This is called a“ceiling test writedown.”Under the accounting rules,we are required toperform a ceiling test each quarter.A ceil

134、ing test writedown does not impact cash flow from operating activities,but does reducestockholders equity and earnings.The risk that we will be required to write down the carrying value of oil and natural gas propertiesincreases when oil and natural gas prices are low.We incurred impairment charges

135、during fiscal 2016 and may incur additionalimpairment charges in the future,particularly if commodity prices decline,which could have a material adverse effect on our results ofoperations for the periods in which such charges are taken.There were no ceiling test impairments on our oil and gas proper

136、ties duringfiscal 2021 and 2020.We must replace reserves we produce.Our future success depends upon our ability to find,develop or acquire additional,economically recoverable oil and gasreserves.Our proved reserves will generally decline as reserves are depleted,except to the extent that we can find

137、,develop or acquirereplacement reserves.One offset to the obvious benefits afforded by higher product prices especially for small to mid-cap companies inthis industry,is that quality domestic oil and gas reserves are hard to find.Approximately 32%and 50%of our total estimated net proved reserves at

138、March 31,2021 and 2020,respectively,were undeveloped,and those reserves may not ultimately be developed.Recovery of undeveloped reserves requires significant capital expenditures and successful drilling.Our reserve data assumesthat we can and will make these expenditures and conduct these operations

139、 successfully.These assumptions,however,may not provecorrect.If we or the outside operators of our properties choose not to spend the capital to develop these reserves,or if we are not able tosuccessfully develop these reserves,we will be required to write-off these reserves.Any such write-offs of o

140、ur reserves could reduceour ability to borrow money and could reduce the value of our common stock.Information concerning our reserves and future net revenues estimates is inherently uncertain.Estimates of oil and gas reserves,by necessity,are projections based on engineering data,and there are unce

141、rtainties inherentin the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures.Reserve engineering is a subjective process of estimating underground accumulations of oil and gas that are difficult to measure.Estimates of econom

142、ically recoverable oil and gas reserves and of future net cash flows depend upon a number of variable factors andassumptions,such as future production,oil and gas prices,operating costs,development costs and remedial costs,all of which mayvary considerably from actual results.As a result,estimates o

143、f the economically recoverable quantities of oil and gas and of future netcash flows expected therefrom may vary substantially.As required by the SEC,the estimated discounted future net cash flows fromproved reserves are based on a twelve month un-weighted first-day-of-the-month average oil and gas

144、prices for the twelve months priorto the date of the report.Actual future prices and costs may be materially higher or lower.11 An increase in the differential between NYMEX and the reference or regional index price used to price our oil and gas would reduceour cash flow from operations.Our oil and

145、gas is priced in the local markets where it is produced based on local or regional supply and demand factors.Theprices we receive for our oil and gas are typically lower than the relevant benchmark prices,such as The New York MercantileExchange(“NYMEX”).The difference between the benchmark price and

146、 the price we receive is called a differential.Numerous factorsmay influence local pricing,such as refinery capacity,pipeline capacity and specifications,upsets in the midstream or downstreamsectors of the industry,trade restrictions and governmental regulations.Additionally,insufficient pipeline ca

147、pacity,lack of demand inany given operating area or other factors may cause the differential to increase in a particular area compared with other producingareas.During fiscal 2021,differentials averaged$0.93 per Bbl of oil and$0.13 per Mcf of gas.Increases in the differential between thebenchmark pr

148、ices for oil and gas and the wellhead price we receive could significantly reduce our revenues and our cash flow fromoperations.Drilling and operating activities are high risk activities that subject us to a variety of factors that we cannot control.These factors include availability of workover and

149、 drilling rigs,well blowouts,cratering,explosions,fires,formations withabnormal pressures,pollution,releases of toxic gases and other environmental hazards and risks.Any of these operating hazards couldresult in substantial losses to us.In addition,we incur the risk that no commercially productive r

150、eservoirs will be encountered,andthere is no assurance that we will recover all or any portion of our investment in wells drilled or re-entered.Acquisitions are subject to the risks and uncertainties of evaluating reserves and potential liabilities and may be disruptive and difficultto integrate int

151、o our business.We plan to continue growing our reserves through acquisitions.Acquired properties can be subject to significant unknownliabilities.Prior to completing an acquisition,it is generally not feasible to conduct a detailed review of each individual property to beacquired in an acquisition.E

152、ven a detailed review or inspection of each property may not reveal all existing or potential liabilitiesassociated with owning or operating the property.Moreover,some potential liabilities,such as environmental liabilities related togroundwater contamination,may not be discovered even when a review

153、 or inspection is performed.Our initial reserve estimates foracquired properties may be inaccurate.Downward adjustments to our estimated proved reserves,including reserves added throughacquisitions,could require us to write down the carrying value of our oil and gas properties,which would reduce our

154、 earnings and ourstockholders equity.In addition,we may have to assume cleanup or reclamation obligations or other unanticipated liabilities inconnection with these acquisitions.The scope and cost of these obligations may ultimately be materially greater than estimated at thetime of the acquisition.

155、We may not be able to fund the capital expenditures that will be required for us to increase reserves and production.We must make capital expenditures to develop our existing reserves and to discover new reserves.Historically,we have usedour cash flow from operations and borrowings under our credit

156、facility to fund our capital expenditures,however,lower oil and gasprices may prevent these options.Volatility in oil and gas prices,the timing of our drilling programs and drilling results will affect ourcash flow from operations.Lower prices and/or lower production will also decrease revenues and

157、cash flow,thus reducing the amountof financial resources available to meet our capital requirements,including reducing the amount available to pursue our drillingopportunities.The borrowing base under our credit facility will be determined from time to time by the lender.Reductions in estimates ofoi

158、l and gas reserves could result in a reduction in the borrowing base,which would reduce the amount of financial resources availableunder the credit facility to meet our capital requirements.Such a reduction could be the result of lower commodity prices and/orproduction,inability to drill or unfavora

159、ble drilling results,changes in oil and gas reserve engineering,the lenders inability to agree toan adequate borrowing base or adverse changes in the lenders practices regarding estimation of reserves.If cash flow from operations or our borrowing base decrease for any reason,our ability to undertake

160、 exploration anddevelopment activities could be adversely affected.As a result,our ability to replace production may be limited.Our identified drilling locations are scheduled out over several years,making them susceptible to uncertainties that could materiallyalter the occurrence or timing of their

161、 drilling.Our management and outside operators have specifically identified and scheduled drilling locations as an estimation of ourfuture multi-year drilling activities on our existing acreage.These drilling locations represent a significant part of our growth strategy.Our ability to drill and deve

162、lop these locations depends on a number of uncertainties,including crude oil and natural gas prices,theavailability of capital,costs,drilling results,regulatory approvals and other factors.If future drilling results in these projects do notestablish sufficient reserves to achieve an economic return,

163、we may curtail drilling in these projects.Because of these uncertainties,wedo not know if the numerous potential drilling locations we have identified will ever be drilled or if we will be able to produce crudeoil or natural gas from these or any other potential drilling locations.12 Our business de

164、pends on oil and natural gas transportation facilities which are owned by others.The marketability of our production depends in part on the availability,proximity and capacity of natural gas gatheringsystems,pipelines and processing facilities.Federal and state regulation of oil and gas production a

165、nd transportation,tax and energypolicies,changes in supply and demand and general economic conditions could all affect our ability to produce and market our oil andgas.We have limited control over activities on properties we do not operate,which could reduce our production and revenues.All of our bu

166、siness activities are conducted through joint operating or other agreements under which we own working androyalty interests in natural gas and oil properties in which we do not operate.As a result,we have a limited ability to exercise influenceover normal operating procedures,expenditures or future

167、development of underlying properties and their associated costs.The failureof an operator of our wells to adequately perform operations could reduce our revenues and production.The oil and gas industry is highly competitive.Competition for oil and gas reserve acquisitions is significant.We may compe

168、te with major oil and gas companies,otherindependent oil and gas companies and individual producers and operators,some of which have financial and personnel resourcessubstantially in excess of those available to us.As a result,we may be placed at a competitive disadvantage.Our ability to acquire and

169、develop additional properties in the future will depend upon our ability to select and acquire suitable producing properties andprospects for future development activities.In addition,the oil and gas industry as a whole also competes with other industries insupplying the energy and fuel requirements

170、 of industrial,commercial and individual consumers.The price and availability ofalternative energy sources could adversely affect our revenue.The market for our oil,gas and natural gas liquids production dependson factors beyond our control,including domestic and foreign political conditions,the ove

171、rall level of supply of and demand for oil,gas and natural gas liquids,the price of imports of oil and gas,weather conditions,the price and availability of alternative fuels,theproximity and capacity of gas pipelines and other transportation facilities and overall economic conditions.We may not be i

172、nsured against all of the operating hazards to which our business is exposed.Our operations are subject to all the risks inherent in the exploration for,and development and production of oil and gasincluding blowouts,fires and other casualties.We maintain insurance coverage customary for operations

173、of a similar nature,but lossescould arise from uninsured risks or in amounts in excess of existing insurance coverage.Certain U.S.federal income tax deductions currently available with respect to crude oil and natural gas exploration and developmentmay be eliminated as a result of proposed legislati

174、on.Legislation previously has been proposed that would,if enacted into law,make significant changes to U.S.federal income taxlaws,including the elimination of certain key U.S.federal income tax incentives currently available to crude oil and natural gasexploration and production companies.These chan

175、ges include,but are not limited to:(1)the repeal of the percentage depletionallowance for crude oil and natural gas properties,(2)the elimination of current deductions for intangible drilling and developmentcosts,(3)the elimination of the deduction for certain U.S.domestic production activities,and(

176、4)an extension of the amortizationperiod for certain geological and geophysical expenditures.It is unclear whether any such changes will be enacted and,if enacted,howsoon any such changes could become effective.The passage of this type of legislation or any other similar changes in U.S.federalincome

177、 tax laws could eliminate or postpone certain tax deductions that are currently available with respect to crude oil and natural gasexploration and development,and any such change could have an adverse effect on the value of an investment in our Common Stockas well as our financial position,results o

178、f operations and cash flows.13 In March 2020,the President of the United States signed the Coronavirus Aid,Relief,and Economic Security Act(“CARESAct”),to stabilize the economy during the coronavirus pandemic.The CARES Act temporarily suspends and modifies certain tax lawsestablished by the 2017 tax

179、 reform law known as the Tax Cuts and Jobs Act,including,but not limited to,modifications to netoperating loss limitations,business interest limitations and alternative minimum tax.The CARES Act did not have a material impacton the Companys current year provision and the Companys consolidated financ

180、ial statements.A terrorist or cyber-attack or armed conflict could harm our business by decreasing our revenues and increasing our costs.Terrorist activities,anti-terrorist efforts,cyber-attacks and other armed conflicts involving the United States may adverselyaffect the United States and global ec

181、onomies and could prevent us from meeting our financial and other obligations.If any of theseevents occur or escalate,the resulting political instability and societal disruption could reduce overall demand for oil and natural gas,potentially putting downward pressure on demand for our production and

182、 causing a reduction in our revenue.Oil and natural gasrelated facilities could be direct targets of terrorist attacks,and our operations could be adversely impacted if significant infrastructureor facilities used for the production,transportation,processing or marketing of oil and natural gas produ

183、ction are destroyed ordamaged.Our reliance on information technology,including those hosted by third parties,exposes us to cyber security risks that could affect ourbusiness,financial condition or reputation and increase compliance challenges.We rely on information technology systems,including inter

184、net sites,computer software,data hosting facilities and otherhardware and platforms,some of which are hosted by third parties,to assist in conducting our business.Our information technologysystems,as well as those of third parties we use in our operations,may be vulnerable to a variety of evolving c

185、ybersecurity risks,suchas those involving unauthorized access or control,denial-of-service attacks,malicious software,data privacy breaches by employees,insiders or others with authorized access,cyber or phishing-attacks,ransomware,malware,social engineering,physical breaches orother actions.These c

186、ybersecurity threat actors,whether internal or external to us,are becoming more sophisticated and coordinated intheir attempts to access the Companys information technology systems and data,including the information technology systems ofcloud providers and other third parties with whom the Company c

187、onducts business.Although we have implemented information technology controls and systems that are designed to protect information andmitigate the risk of data loss and other cybersecurity risks,such measures cannot entirely eliminate cybersecurity threats,and theenhanced controls we have installed

188、may be breached.If our information technology systems cease to function properly or ourcybersecurity is breached,we could suffer disruptions to our normal operations.A cyber-attack involving our information systems andrelated infrastructure,or that of our business associates,could negatively impact

189、our operations in a variety of ways,including,but notlimited to,the following:Unauthorized access to seismic data,reserves information,strategic information,or other sensitive or proprietaryinformation could have a negative impact on our ability to compete for oil and natural gas resources;A cyber-a

190、ttack on a vendor or service provider could result in supply chain disruptions which could delay or halt our majordevelopment projects;A cyber-attack on third-party gathering,pipeline,or rail transportation systems could delay or prevent our outside operatorsfrom transporting and marketing productio

191、n,resulting in a loss of revenues;A cyber-attack which halts activities at a power generation facility or refinery using natural gas as feed stock could have asignificant impact on the natural gas market,resulting in reduced demand for our production,lower natural gas prices,andreduced revenues;A de

192、liberate corruption of our financial or operating data could result in events of non-compliance which could then lead toregulatory fines or penalties;and 14 All of the above could negatively impact our operational and financial results.Additionally,certain cyber incidents,such assurveillance,may rem

193、ain undetected for an extended period.As cyber threats continue to evolve,we may be required to expendsignificant additional resources to continue to modify or enhance our protective measures or to investigate and remediate anyinformation security vulnerabilities.Additionally,the growth of cyber-att

194、acks has resulted in evolving legal and compliance matterswhich impose significant costs that are likely to increase over time.The loss of our chief executive officer or other key personnel could adversely impact our ability to execute our business strategy.We depend,and will continue to depend in t

195、he foreseeable future,upon the continued services of our Chief Executive Officer,Nicholas C.Taylor,our President and Chief Financial Officer,Tamala L.McComic,and other key personnel,who have extensiveexperience and expertise in evaluating and analyzing producing oil and gas properties and drilling p

196、rospects,maximizing productionfrom oil and gas properties and developing and executing acquisitions and financing.As of March 31,2021,we do not have key-maninsurance on the lives of Mr.Taylor and Ms.McComic.The unexpected loss of the services of one or more of these individuals could,therefore,signi

197、ficantly and adversely affect our operations.We may be affected by one substantial shareholder.Nicholas C.Taylor beneficially owns approximately 46%of the outstanding shares of our common stock.Mr.Taylor is alsoour Chairman of the Board and Chief Executive Officer.As a result,Mr.Taylor has significa

198、nt influence in matters voted on by ourshareholders,including the election of our Board members.Mr.Taylor participates in all facets of our business and has a significantimpact on both our business strategy and daily operations.The retirement,incapacity or death of Mr.Taylor,or any change in thepowe

199、r to vote shares beneficially owned by Mr.Taylor,could result in negative market or industry perception and could have anadverse effect on our business.RISKS RELATED TO OUR COMMON STOCK We may issue additional shares of common stock in the future,which could cause dilution to all shareholders.We may

200、 seek to raise additional equity capital in the future.Any issuance of additional shares of our common stock will dilutethe percentage ownership interest of all shareholders and may dilute the book value per share of our common stock.We have not and do not anticipate paying any cash dividends on our

201、 common stock in the foreseeable future.We have paid no cash dividends on our common stock to date and it is not anticipated that any will be paid to holders of ourcommon stock in the foreseeable future.The terms of our existing credit facility restricts the payment of dividends without the priorwri

202、tten consent of the lenders.We currently intend to retain all future earnings to fund the development and growth of our business.Any payment of future dividends will be at the discretion of our board of directors and will depend on,among other things,ourearnings,financial condition,capital requireme

203、nts,level of indebtedness,statutory and contractual restrictions applying to the paymentof dividends and other considerations that our board of directors deems relevant.Stockholders must rely on sales of their commonstock after price appreciation,which may never occur,as the only way to realize a re

204、turn on their investment.Control by our executive officers and directors may limit your ability to influence the outcome of matters requiring stockholderapproval and could discourage our potential acquisition by third parties.As of March 31,2021,our executive officers and directors beneficially owne

205、d approximately 51%of our common stock.These stockholders,if acting together,would be able to influence significantly all matters requiring approval by our stockholders,including the election of our board of directors and the approval of mergers or other business combination transactions.The price o

206、f our common stock has been volatile and could continue to fluctuate substantially.Mexco common stock is traded on the New York Stock Exchanges NYSE American.The market price of our common stockhas and could continue to experience volatility due to reasons unrelated to our operating performance.Thes

207、e reasons include:supplyand demand for oil and natural gas;political conditions in oil and natural gas producing regions;demand for our common stock andlimited trading volume;investor perception of our industry;fluctuations in commodity prices;variations in our results of operations;legislative or r

208、egulatory changes;general trends in the oil and natural gas industry;market conditions and analysts estimates;and,other events in the oil and gas industry.15 Many of these factors are beyond our control,and we cannot predict their potential effects on the price of our common stock.We cannot assure y

209、ou that the market price of our common stock will not fluctuate or decline significantly in the future.In addition,thestock markets in general can experience considerable price and volume fluctuations.Failure of the Companys internal control over financial reporting could harm its business and finan

210、cial results.The management of Mexco is responsible for establishing and maintaining effective internal control over financial reporting.Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting forexternal purposes in acc

211、ordance with accounting principles generally accepted in the United States.Internal control over financialreporting includes maintaining records that in reasonable detail accurately and fairly reflect Mexcos transactions;providing reasonableassurance that transactions are recorded as necessary for p

212、reparation of the financial statements;providing reasonable assurance thatreceipts and expenditures are made in accordance with management authorization;and providing reasonable assurance thatunauthorized acquisition,use or disposition of our assets that could have a material effect on the financial

213、 statements would beprevented or detected on a timely basis.ITEM 1B.UNRESOLVED STAFF COMMENTS None.ITEM 2.PROPERTIES Our properties consist primarily of oil and gas wells and our ownership in leasehold acreage,both developed andundeveloped.As of March 31,2021,we had interests in approximately 6,400

214、gross(20 net)oil and gas wells and owned leaseholdmineral,royalty and other interests in approximately 586,000 gross(3,169 net)acres.Oil and Natural Gas Reserves In accordance with current SEC rules,the average prices used in computing reserves at March 31,2021 were$37.42 per bblof oil compared to$5

215、3.23 in 2020,a decrease of 30%,and$2.29 per mcf of natural gas compared to$1.66 in 2020,an increase of 38%,such prices are based on the 12-month unweighted arithmetic average market prices for sales of oil and natural gas on the first calendarday of each month during fiscal 2021.The benchmark price

216、of$36.49 per bbl of oil at March 31,2021 versus$52.23 at March 31,2020,was adjusted by lease for gravity,transportation fees and regional price differentials and did not give effect to derivativetransactions.The benchmark price of$2.16 per mcf of natural gas at March 31,2021 versus$2.30 at March 31,

217、2020,was adjusted bylease for BTU content,transportation fees and regional price differentials.For information concerning our costs incurred for oil and gas operations,net revenues from oil and gas production,estimatedfuture net revenues attributable to our oil and gas reserves,present value of futu

218、re net revenues discounted at 10%and changes therein,see Notes to the Companys consolidated financial statements.Proved reserves are estimated reserves of crude oil(including condensate and natural gas liquids)and natural gas thatgeological and engineering data demonstrate with reasonable certainty

219、to be recoverable in future years from known reservoirs underexisting economic and operating conditions.Proved developed reserves are those expected to be recovered through existing wells,equipment and operating methods.Proved undeveloped reserves are proved reserves that are expected to be recovere

220、d from new wellsdrilled to known reservoirs on undrilled acreage for which the existence and recoverability of such reserves can be estimated withreasonable certainty,or from existing wells on which a relatively major expenditure is required to establish production.The engineering report with respec

221、t to Mexcos estimates of proved oil and gas reserves as of March 31,2021 and 2020 isbased on evaluations prepared by Russell K.Hall and Associates,Inc.Environmental Engineering Consultants,based in Midland,Texas(“Hall and Associates”),a summary of which is filed as Exhibit 99.1 to this annual report

222、.16 Management maintains internal controls designed to provide reasonable assurance that the estimates of proved reserves arecomputed and reported in accordance with rules and regulations provided by the SEC.As stated above,Mexco retained Hall andAssociates to prepare estimates of our oil and gas re

223、serves.Management works closely with this firm,and is responsible for providingaccurate operating and technical data to it.Our Chief Financial Officer who has over 25 years experience in the oil and gas industryreviews the final reserves estimate and consults with a degreed geological consultant wit

224、h extensive geological experience and ifnecessary,discusses the process used and findings with Alan Neal,the technical person at Hall and Associates responsible forevaluating the proved reserves covered by this report.Mr.Neal is a member of the Society of Petroleum Engineers and has over 35years of

225、experience in the oil and gas industry.Our Chairman and Chief Executive Officer who has over 45 years of experience in theoil and gas industry also reviews the final reserves estimate.Numerous uncertainties exist in estimating quantities of proved reserves.Reserve estimates are imprecise and subject

226、ive andmay change at any time as additional information becomes available.Furthermore,estimates of oil and gas reserves are projectionsbased on engineering data.There are uncertainties inherent in the interpretation of this data as well as the projection of future rates ofproduction.The accuracy of

227、any reserve estimate is a function of the quality of available data and of engineering and geologicalinterpretation.Actual future production,oil and gas prices,revenues,taxes,development expenditures,operating expenses andquantities of recoverable oil and gas reserves will most likely vary from the

228、assumptions and estimates.Any significant variance couldmaterially affect the estimated quantities and value of our oil and gas reserves,which in turn may adversely affect our cash flow,resultsof operations and the availability of capital resources.Per the current SEC rules,the prices used to calcul

229、ate our proved reserves and the present value of proved reserves set forthherein are made using the 12-month unweighted arithmetic average of the first-day-of-the-month price.All prices are held constantthroughout the life of the properties.Actual future prices and costs may be materially higher or

230、lower than those as of the date of theestimate.The timing of both the production and the expenses with respect to the development and production of oil and gas propertieswill affect the timing of future net cash flows from proved reserves and their present value.Except to the extent that we acquirea

231、dditional properties containing proved reserves or conduct successful exploration and development activities,or both,our provedreserves will decline as reserves are produced.Our estimated proved oil and gas reserves and present value of estimated future net revenues from proved oil and gas reservesi

232、n the periods ended March 31 are summarized below.PROVED RESERVES March 31,2021 2020 Oil(Bbls):Proved developed Producing 344,610 314,460 Proved developed Non-producing 68,440 43,770 Proved undeveloped 325,020 649,570 Total 738,070 1,007,800 Natural gas(Mcf):Proved developed Producing 3,172,130 2,97

233、0,280 Proved developed Non-producing 467,200 373,930 Proved undeveloped 956,050 1,506,160 Total 4,595,380 4,850,370 Total net proved reserves(BOE)(1)1,503,970 1,816,195 PV-10 Value(2)$13,758,300$21,636,700 Present value of future income tax discounted at 10%(995,300)(2,660,700)Standardized measure o

234、f discounted future net cash flows(3)$12,763,000$18,976,000 Prices used in Calculating Reserves:(4)Natural gas(per Mcf)$2.29$1.66 Oil(per Bbl)$37.42$53.23 (1)These reserve estimates do not include the Companys interest in the LLC referred to in Item 1.Business Company Profileon page 4 hereto.17 (2)T

235、he PV-10 Value represents the discounted future net cash flows attributable to our proved oil and gas reserves before incometax,discounted at 10%per annum,which is the most directly comparable GAAP financial measure.PV-10 is relevant anduseful to investors because it presents the discounted future n

236、et cash flows attributable to our estimated net proved reservesprior to taking into account future corporate income taxes.Further,investors may utilize the measure as a basis for comparisonof the relative size and value of our reserves to other companies.We use this measure when assessing the potent

237、ial return oninvestment related to our oil and natural gas properties.Our reconciliation of this non-GAAP financial measure is shown inthe table as the PV-10,less future income taxes,discounted at 10%per annum,resulting in the standardized measure ofdiscounted future net cash flows.The standardized

238、measure of discounted future net cash flows represents the present value offuture cash flows attributable to our proved oil and natural gas reserves after income tax,discounted at 10%.(3)In accordance with SEC requirement,the standardized measure of discounted future net cash flows was computed by a

239、pplying12-month first day of the month average prices for oil and gas during the fiscal year to the estimated future production ofproved oil and gas reserves,less estimated future expenditures(based on year-end costs)to be incurred in developing andproducing the proved reserves,less estimated future

240、 income tax expenses(based on year-end statutory tax rates,withconsideration of future tax rates already legislated)to be incurred on pretax net cash flows less tax basis of the properties andavailable credits,and assuming continuation of existing economic conditions.(4)These prices reflect adjustme

241、nt by lease for quality,transportation fees and regional price differentials and did not give effectto derivative transactions.During fiscal 2021,we added proved reserves of 139 thousand BOE(“MBOE”)through extensions and discoveries,subtracted 23 MBOE through sales of oil and gas properties and down

242、ward revisions of previous estimates of 324 MBOE.Suchdownward revisions are primarily the result of reserves written off due to the five-year limitation.They are primarily working interestsin a unit in the Wolfcamp B Zone in Upton and Reagan Counties,Texas which are on a lease held by production and

243、 still in place to bedeveloped in the future.During the fiscal year ending March 31,2021,we had a working or royalty interest in the development of 35 wells convertingreserves of approximately 83,200 BOE from proved undeveloped to proved developed producing with capital cost of approximately$947,000

244、.Oil and gas prices significantly impact the calculation of the PV-10 and the standardized measure of discounted future net cashflows.The present value of future net cash flows does not purport to be an estimate of the fair market value of the Companys provedreserves.An estimate of fair value would

245、also take into account,among other things,anticipated changes in future prices and costs,theexpected recovery of reserves in excess of proved reserves and a discount factor more representative of the time value of money andthe risks inherent in producing oil and gas.Future prices received for produc

246、tion and costs may vary,perhaps significantly,from theprices and costs assumed for purposes of these estimates.The 10%discount factor used to calculate present value,which is required byFinancial Accounting Standards Board(“FASB”)Accounting Standard Codification(“ASC”)932,“Extractive Activities Oil

247、andGas”,may not necessarily be the most appropriate discount rate.The present value,no matter what discount rate is used,is materiallyaffected by assumptions as to timing of future production,which may prove to be inaccurate.We have not filed any other oil or gas reserve estimates or included any su

248、ch estimates in reports to other federal or foreigngovernmental authority or agency during the year ended March 31,2021,and no major discovery is believed to have caused asignificant change in our estimates of proved reserves since that date.Drilling Activities The following table sets forth our dri

249、lling activity in wells in which we own a working interest for the years ended March 31:Year Ended March 31,2021 2020 Gross Net Gross Net Exploratory Wells Productive -Nonproductive-Total-Development Wells Productive-Horizontal 22 .12 50 .16 Productive-Vertical 3 .01 8 .02 Nonproductive-Vertical-Tot

250、al 25 .13 58 .18 18 The information contained in the foregoing table should not be considered indicative of future drilling performance,norshould it be assumed that there is any necessary correlation between the number of productive wells drilled and the amount of oil andgas that may ultimately be r

251、ecovered by us.The net numbers above represent Mexcos working interest in the gross wells.In addition to the working interests mentioned above,other operators drilled 57 gross wells(.13 net wells)on company-ownedminerals and royalties at no expense to the Company.Productive Wells and Acreage Product

252、ive wells consist of producing wells and wells capable of production,including gas wells awaiting pipelineconnections.Wells that are completed in more than one producing zone are counted as one well.As of March 31,2021,we held aninterest in approximately 6,400 gross(20 net)productive wells,including

253、 approximately 5,100 wells in which we held an overriding orroyalty interest and 1,100 wells in which we held a working interest.A gross acre is an acre in which an interest is owned.A net acre is deemed to exist when the sum of fractional ownershipinterests in gross acres equals one.The number of n

254、et acres is the sum of the fractional interests owned in gross acres.The followingtable sets forth the approximate developed acreage in which we held a leasehold mineral or other interest as of March 31,2021:Developed Acres Gross Net Texas 379,600 1,797 Oklahoma 85,300 1,039 New Mexico 31,600 196 Lo

255、uisiana 36,700 25 North Dakota 22,700 29 Kansas 9,700 41 Montana 5,000 1 Ohio 6,500 25 Wyoming 3,800 5 Arkansas 1,600 5 Mississippi 1,000 2 Alabama 1,000 2 Colorado 1,100 1 Virginia 100 1 Total 585,700 3,169 Net Production,Unit Prices and Costs The following table summarizes our net oil and natural

256、gas production,the average sales price per barrel(“bbl”)of oil and perthousand cubic feet(“mcf”)of natural gas produced and the average production(lifting)cost per unit of production for the years endedMarch 31:Years Ended March 31,2021 2020 Oil(a):Production(Bbls)50,327 44,301 Revenue$2,028,792$2,3

257、10,127 Average Bbls per day(d)137 121 Average sales price per Bbl$40.31$52.15 Gas(b):Production(Mcf)324,205 294,007 Revenue$744,987$410,226 Average Mcf per day(d)888 805 Average sales price per Mcf$2.30$1.40 Total BOE(c)104,361 93,302 Production costs:Production expenses:$643,541$700,739 Production

258、expenses per BOE$6.17$7.51 Production expenses per sales dollar$0.23$0.26 Production and ad valorem taxes:$228,422$213,910 Production and ad valorem taxes per BOE$2.19$2.29 Production and ad valorem taxes per sales dollar$0.08$0.08 Total oil and gas revenue$2,773,779$2,720,353 (a)Includes condensate

259、.(b)Includes natural gas products.(c)Natural gas production is converted to oil production using a ratio of six Mcf to one Bbl of oil.(d)Calculated on a 365 day year.19 ITEM 3.LEGAL PROCEEDINGS We may,from time to time,be involved in litigation and claims arising out of our operations in the normal

260、course of business.We are not aware of any legal or governmental proceedings against us,or contemplated to be brought against us,under variousenvironmental protection statutes or other regulations to which we are subject.ITEM 4.MINE SAFETY DISCLOSURES Not applicable.PART II ITEM 5.MARKET FOR REGISTR

261、ANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES Market Information In September 2003,our common stock began trading on the NYSE American,formerly the American Stock Exchange andmore recently the NYSE MKT,under the symbol“MXC”.Prior to September 2003,the Compan

262、ys common stock was traded on theover-the-counter bulletin board market under the symbol“MEXC”.The registrar and transfer agent is Issuer Direct Corporation,500Perimeter Park Drive,Suite D,Morrisville,North Carolina,27560(Tel:877-481-4014).The following table sets forth certaininformation as to the

263、high and low sales price quoted for Mexcos common stock on the NYSE American.High Low 2021:April-June 2020$5.24$2.00 July-September 2020 14.63 2.92 October-December 2020 8.79 4.60 January-March 2021 14.25 5.50 2020:April-June 2019$6.10$3.37 July-September 2019 5.70 3.70 October-December 2019 4.98 3.

264、60 January-March 2020 4.25 1.75 On June 14,2021,the closing sales price of our common stock on the NYSE American was$8.85 per share.Stockholders As of March 31,2021,we had 2,143,666 shares issued and 856 shareholders of record which does not include shareholdersfor whom shares are held in a“nominee”

265、or“street”name.20 Dividends We have never declared or paid any cash dividends on our common stock.We currently intend to retain future earnings andother cash resources,if any,for the operation and development of our business and do not anticipate paying any cash dividends on ourcommon stock in the f

266、oreseeable future.Payment of any future dividends will be at the discretion of our Board of Directors after takinginto account many factors,including our financial condition,operating results,current and anticipated cash needs and plans forexpansion.In addition,our current bank loan prohibits us fro

267、m paying cash dividends on our common stock without writtenpermission.Securities Authorized for Issuance Under Compensation Plans The following table includes certain information about our Employee Incentive Stock Plan as of March 31,2021,which hasbeen approved by our stockholders.Number ofSharesAut

268、horized forIssuance underPlan Number of Sharesto be Issued uponExercise ofOutstandingOptions WeightedAverageExercise Priceof OutstandingOptions Number of SharesRemainingAvailable forFuture Issuanceunder Plan 2009 Plan 200,000 115,000$5.38 -2019 Plan 200,000 41,000 3.34 159,000 Total 400,000 156,000$

269、5.28 159,000 Issuer Repurchases In September 2020,the Board of Directors authorized the use of up to$250,000 to repurchase shares of our common stock forthe treasury account.This program does not have an expiration date.Under the repurchase program,shares of common stock may bepurchased from time to

270、 time through open market purchases or other transactions.The amount and timing of repurchases will besubject to the availability of stock,prevailing market conditions,the trading price of the stock,our financial performance and otherconditions.Repurchases may also be made from time-to-time in conne

271、ction with the settlement of our share-based compensationawards.Repurchases will be funded from cash flow from operations.There were no shares of our common stock repurchased for the treasury account during the fiscal years ended March 31,2021and 2020.ITEM 6.SELECTED CONSOLIDATED FINANCIAL DATA Not

272、applicable.ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS The following discussion is intended to provide information relevant to an understanding of our financial condition,changesin our financial condition and our results of operations and cash flows and

273、 should be read in conjunction with our consolidatedfinancial statements and notes thereto included elsewhere in this Form 10-K.Liquidity and Capital Resources and Commitments Historically,we have funded our operations,acquisitions,exploration and development expenditures from cash generated byopera

274、ting activities,bank borrowings,sales of non-core properties and issuance of common stock.Our primary financial resource isour base of oil and gas reserves.We have pledged our producing oil and gas properties to secure our credit facilty.We do not have anydelivery commitments to provide a fixed and

275、determinable quantity of our oil and gas under any existing contract or agreement.21 Due to the current commodity price environment,we are applying financial discipline to all aspects of our business.In orderto meet obligations and to optimize allocation of resources,we may continue to sell non-core

276、 assets.Our long-term strategy is on increasing profit margins while concentrating on obtaining reserves with low-cost operations byacquiring and developing oil and gas properties with potential for long-lived production.We focus our efforts on the acquisition ofroyalties and working interests and n

277、on-operated properties in areas with significant development potential.Cash Flows Changes in the net funds provided by or(used in)each of our operating,investing and financing activities are set forth in thetable below:For the Years Ended March 31,2021 2020%Difference Net cash provided by operating

278、activities 710,047 864,960 (18)%Net cash used in investing activities (1,387,624)(1,741,565)(20)%Net cash provided by financing activities 701,009 782,734 (10)%Cash Flow Provided by Operating Activities.Cash flow from operating activities is primarily derived from the productionof our crude oil and

279、natural gas reserves and changes in the balances of non-cash accounts,receivables,payables or other non-energyproperty asset account balances.Cash flow provided by our operating activities for the year ended March 31,2021 was$710,047 incomparison to$864,960 for the year ended March 31,2020.Changes i

280、n our cash flow operating activities for the year ended March 31,2021 in comparison to the year ended March 31,2020 were($154,913)and consisted of an increase in our non-cash expenses of$4,979;an increase in our accounts receivable of$431,992;an increase of$48,052 in our accounts payable and accrued

281、 expenses;adecrease in other assets of$30.421;and,an increase in our net income for the current year compared to a net loss the prior year of$255,410.Variations in cash flow from operating activities may impact our level of exploration and development expenditures.Our expenditures in operating activ

282、ities 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 wehave incurred in order to address normal and necessary business activities of a publi

283、c company in the crude oil and natural gasproduction industry.Cash Flow Used in Investing Activities.Cash flow from investing activities is derived from changes in oil and gas propertybalances.For the year ended March 31,2021,we had net cash of$1,337,624 used for additions to oil and gas properties

284、and a$50,000investment in a limited liability company compared to$1,591,565 and$150,000,respectively,for the year ended March 31,2020.Cash Flow Provided by Financing Activities.Cash flow from financing activities is derived from our changes in long-termdebt and in equity account balances.Cash flow p

285、rovided by our financing activities was$701,009 for the year ended March 31,2021compared to$782,734 for the year ended March 31,2020.During the years ended March 31,2021 and 2020,we received advances of$935,000 and$1,285,000,respectively,from our credit facility.For the year ended March 31,2021 and

286、March 31,2020,we madepayments of$550,000 and$490,000,respectively,on the credit facility.For the year ended March 31,2021,we received proceeds of$247,435 for the exercise of employee and director stock options and$68,574 under the paycheck protection program(PPP).Accordingly,net cash increased$23,43

287、2,leaving cash and cash equivalents on hand of$57,813 as of March 31,2021.We had working capital of$618,960 as of March 31,2021 compared to working capital of$186,785 as of March 31,2020,anincrease of$409,849 for the reasons set forth below.22 Oil and Natural Gas Property Development The Company par

288、ticipated in the drilling and completion of 22 horizontal wells at a cost of approximately$1,030,000 for thefiscal year ending March 31,2021,of which 12 have not been completed.All of these horizontal wells are in the Delaware Basinlocated in the western portion of the Permian Basin in Lea and Eddy

289、Counties,New Mexico.In addition to the above working interests,there were 57 gross wells(.13 net wells)drilled by other operators on Mexcosroyalty interests,Participations in Fiscal 2021.Mexco participated in the drilling and completion of two horizontal wells in the Wolfcampformation of the Delawar

290、e Basin located in the western portion of the Permian Basin in Lea County,New Mexico with aggregate costsof approximately$233,000.These wells were completed in September 2020 with initial average production rates of 1,224 barrels ofoil,4,881 barrels of water and 3,422,000 cubic feet of gas per day,o

291、r 1,794 barrels of oil equivalent per day.Mexcos working interestin these wells is 1.2%.Mexco participated in the drilling and completion of four horizontal wells in the Wolfcamp formation of the Delaware Basinlocated in the western portion of the Permian Basin in Lea County,New Mexico with aggregat

292、e costs of approximately$370,000.Mexcos working interest in these wells is 1.2%.These wells were completed in March and April 2021 with initial average productionrates of 1,044 barrels of oil,4,686 barrels of water and 2,898,000 cubic feet of gas per day,or 1,527 barrels of oil equivalent per day.Me

293、xco expended$271,000 to participate in the drilling and completion of five horizontal wells in the Upper Avalon formationof the Delaware Basin located in the western portion of the Permian Basin in Lea County,New Mexico.Mexcos working interest inthese wells is.5%.These wells were completed in Februa

294、ry 2021 with initial average production rates of 1,126 barrels of oil,2,036barrels of water and 2,108,000 cubic feet of gas per day,or 1,477 barrels of oil equivalent per day.Mexco participated in the drilling of two horizontal wells in the Wolfcamp formation of the Delaware Basin located in thewest

295、ern portion of the Permian Basin in Lea County,New Mexico with aggregate costs of approximately$74,000.Mexcos workinginterest in these wells is 1.2%.Subsequently,in April 2021,Mexco expended another$108,000 to complete these wells.The Company expended$28,500 for its share to participate in the drill

296、ing and completion of two horizontal wells in the 3rdBone Spring Sand formation of the Delaware Basin located in the western portion of the Permian Basin in Lea County,New Mexico.Mexcos working interest in these wells is.1%.Subsequently,these wells were completed in April 2021 with initial average p

297、roductionrates of 1,225 barrels of oil,3,891 barrels of water and 2,905,000 cubic feet of gas per day,or 1,709 barrels of oil equivalent per day.Also in April 2021,the Company expended$11,400 to participate in the drilling of two additional wells on this acreage.Mexco invested approximately$49,000 i

298、n the drilling of four horizontal wells in the Upper and Middle Wolfcamp formationof the Delaware Basin located in the western portion of the Permian Basin in Lea County,New Mexico.Mexcos working interest inthese wells is.36%.These wells are planned to be drilled during fiscal 2022.Mexco participate

299、d in the drilling of four horizontal wells in the Wolfcamp formation of the Delaware Basin located in thewestern portion of the Permian Basin in Lea County,New Mexico with aggregate costs of approximately$67,000.Mexcos workinginterest in these wells is.56%.Subsequently,in May 2021,Mexco expended app

300、roximately$109,000 to complete these wells.The Company also participated in the drilling and completion of three vertical wells in Winkler County,Texas at an aggregatecost of$12,400.Mexcos working interest in these wells is.41%.These wells,operated by Blackbeard Operating,LLC are currentlyproducing.

301、Completion of Wells Drilled in Fiscal 2020.The Company expended approximately$270,000 which was the balance of thecompletion costs of 22 horizontal wells located in Lea and Eddy Counties,New Mexico which were drilled during fiscal 2020.As ofJanuary 2021,all of these wells have been completed and are

302、 currently producing.23 Sales of Properties.Effective July 1,2020,the Company sold its interest in the deep rights of a property in Martin County,Texas for a cash payment of$100,000.Participations Subsequent to Fiscal 2021.In May 2021,Mexco expended approximately$28,000 to participate in thedrilling

303、 of two horizontal wells in the Wolfcamp Sand formation of the Delaware Basin located in the western portion of the PermianBasin in Lea County,New Mexico.Mexcos working interest in these wells is.37%.In May 2021,Mexco expended approximately$70,000 to participate in the drilling of four horizontal we

304、lls in the LowerWolfcamp Shale of the Delaware Basin in Eddy County,New Mexico.Mexcos working interest in these wells is.44%.We are participating in other projects and are reviewing projects in which we may participate.The cost of such projects wouldbe funded,to the extent possible,from existing cas

305、h balances and cash flow from operations.The remainder may be funded throughborrowings on the credit facility and,if appropriate,sales of non-core properties.Markets.Crude oil and natural gas prices generally remained volatile during the last year.The volatility of the energymarkets makes it extreme

306、ly difficult to predict future oil and natural gas price movements with any certainty.For example,in the lasttwelve months,the NYMEX West Texas Intermediate(“WTI”)posted price for crude oil has ranged from a low of negative$41.25 perbbl in April 2020 to a high of$62.07 per bbl in March 2021.The Henr

307、y Hub Spot Market Price(“Henry Hub”)for natural gas hasranged from a low of$1.33 per MMBtu in September 2020 to a high of$23.86 per MMBtu in February 2021.On March 31,2021 the WTI posted price for crude oil was$55.14 per bbl and the Henry Hub spot price for natural gas was$2.52 per MMBtu.See Results

308、 of Operations below for realized prices.Results of Operations Fiscal 2021 Compared to Fiscal 2020 We had net income of$155,932 for the year ended March 31,2021 compared to a net loss of$99,478 for the year endedMarch 31,2020.This is primarily the result of an increase in natural gas sales and a dec

309、rease in operating expenses partially offset by adecrease in oil sales as further explained below.Oil and natural gas sales.Revenue from oil and natural gas sales was$2,773,779 for the year ended March 31,2021,a 2%increase from$2,720,353 for the year ended March 31,2020.This resulted from an increas

310、e in oil and natural gas production and anincrease in natural gas prices partially due to improved availability of pipeline capacities of natural gas.This increase was partiallyoffset by a decrease in oil prices.The following table sets forth our oil and natural gas revenues,production quantities an

311、d averageprices received during the fiscal years ended March 31:2021 2020%Difference Oil:Revenue$2,028,792$2,310,127 (12.1)%Volume(bbls)50,327 44,301 13.6%Average Price(per bbl)$40.31$52.15 (22.7)%Gas:Revenue$744,987$410,226 81.6%Volume(mcf)324,205 294,007 10.3%Average Price(per mcf)$2.30$1.40 64.3%

312、Production and exploration.Production costs were$871,963 in fiscal 2021,a 5%decrease from$914,649 in fiscal 2020.Thiswas primarily the result of a decrease in lease operating expenses due to numerous wells being shut-in during the month of May 2020as well as cost cutting measures being implemented b

313、y the operators because of the depressed oil prices.24 Depreciation,depletion and amortization.Depreciation,depletion and amortization(“DD&A”)expense was$906,361 infiscal 2021,a 6%increase from$853,801 in fiscal 2020.This was primarily due to an increase in oil and gas production and a decreasein oi

314、l and gas reserves partially offset by a decrease in the full cost pool amortization base.General and administrative expenses.General and administrative expenses were$833,431 for the year ended March 31,2021,a 17%decrease from$1,006,531 for the year ended March 31,2020.This was primarily due to a de

315、crease in salaries,contract services,engineering fees and accounting fees.Interest expense.Interest expense was$53,232 in fiscal 2021,a 41%increase from$37,656 in fiscal 2020,due to an increasein borrowings partially offset by a decrease in interest rate.PPP loan forgiveness.PPP loan forgiveness in

316、the amount of$68,957 for the fiscal year ended March 31,2021 was for theforgiveness of our PPP loan in the amount of$68,574 and$383 in accrued interest expense.The Company received the proceeds forthis loan in May 2020 and applied for and received loan forgiveness in November 2020.Income taxes.There

317、 was no federal income tax for fiscal 2021 or fiscal 2020.The effective tax rate for fiscal 2021 and fiscal2020 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 berealized.Contractual Obligations We have no off-balance

318、sheet debt or unrecorded obligations and have not guaranteed the debt of any other party.Thefollowing table summarizes future payments we are obligated to make based on agreements in place as of March 31,2021:Payments due in:Total less than 1year 1-3 years over 3 years Contractual obligations:Secure

319、d bank credit facility(1)$1,180,000$-$1,180,000$-Leases(2)$21,965$21,965$-$-(1)These amounts represent the balances outstanding under the bank credit facility.This repaymentassumes that interest will be paid on a monthly basis,no additional funds will be drawn and does notinclude estimated interest$

320、44,250 less than 1 year,and$44,250 1-3 years.(2)The lease amount represents the monthly rent amount for our principal office space in Midland,Texasunder one three-year lease agreement effective May 15,2018.Of this total obligation for the remainderof the lease,our majority shareholder will pay$5,393

321、 for his portion of the shared office space.Alternative Capital Resources Although we have primarily used cash from operating activities,the sales of assets and funding from the credit facility as ourprimary capital resources,we have in the past,and could in the future,use alternative capital resour

322、ces.These could include jointventures,carried working interests and issuances of our common stock through a private placement or public offering.Other Matters Critical Accounting Policies and Estimates In preparing financial statements,management makes informed judgments,estimates and assumptions th

323、at affect the reportedamounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expensesduring the reporting period.On an ongoing basis,management reviews its estimates,including those related to litigation,environmental liabilities,

324、income taxes,fair value and determination of proved reserves.Changes in facts and circumstances may resultin revised estimates and actual results may differ from these estimates.25 The following represents those policies that management believes are particularly important to the financial statements

325、 andthat require the use of estimates and assumptions to describe matters that are inherently uncertain.Full Cost Method of Accounting for Crude Oil and Natural Gas Activities.SEC Regulation S-X defines the financialaccounting and reporting standards for companies engaged in crude oil and natural ga

326、s activities.Two methods are prescribed:thesuccessful efforts method and the full cost method.We have chosen to follow the full cost method under which all costs associated withproperty acquisition,exploration and development are capitalized.We also capitalize internal costs that can be directly ide

327、ntified withacquisition,exploration and development activities and do not include any costs related to production,general corporate overhead orsimilar activities.The carrying amount of oil and gas properties also includes estimated asset retirement costs recorded based on thefair value of the asset

328、retirement obligation(“ARO”)when incurred.Gain or loss on the sale or other disposition of oil and gas properties is not recognized,unless the sale would significantly alterthe relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country.Under the succe

329、ssfulefforts method,geological and geophysical costs and costs of carrying and retaining undeveloped properties are charged to expense asincurred.Costs of drilling exploratory wells that do not result in proved reserves are charged to expense.Depreciation,depletion,amortization and impairment of cru

330、de oil and natural gas properties are generally calculated on a well by well or lease or field basisversus the“full cost”pool basis.Additionally,gain or loss is generally recognized on all sales of crude oil and natural gas propertiesunder the successful efforts method.As a result our financial stat

331、ements will differ from companies that apply the successful effortsmethod since we will generally reflect a higher level of capitalized costs as well as a higher DD&A rate on our crude oil and naturalgas properties.At the time it was adopted,management believed that the full cost method would be pre

332、ferable,as earnings tend to be lessvolatile than under the successful efforts method.However,the full cost method makes us more susceptible to significant non-cashcharges during times of volatile commodity prices because the full cost pool may be impaired when prices are low.These charges arenot rec

333、overable when prices return to higher levels.Our crude oil and natural gas reserves have a relatively long life.However,temporary drops in commodity prices can have a material impact on our business including impact from the full cost method ofaccounting.Ceiling Test.Companies that use the full cost method of accounting for oil and gas exploration and development activities arerequired to perform