1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31,2023 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 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 ofincorporation or organization)(I.R.S.EmployerIdentification No.)415 W.Wall,Suite 475(432)682-1119Midland,Texas 79701(Registrants telephone number,includin
3、g area code)(Address of principal executive offices,Zip Code)Securities registered pursuant to Section 12(b)of the Act:None Securities registered pursuant to Section 12(g)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registeredCommon Stock,par value$0.50 per share MX
4、C NYSE American Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No 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 r
5、egistrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding twelve(12)months(or for such shorter period that the registrant was required to file such reports)and(2)has been subject to such filing requirements for the past n
6、inety(90)days.Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to be submitted and postedpursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or
7、for such shorter period that the registrant was required to submit and post suchfiles).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or and emerging growth company.Seedefinitions of“large acc
8、elerated filer”,“accelerated filer”,“smaller reporting company”,and“emerging growth company”in Rule 12b-2 of the Exchange Act:Large Accelerated Filer Accelerated Filer Non-Accelerated Filer Smaller Reporting Company Emerging Growth Company If an emerging growth company,indicate by check mark if the
9、registrant has elected not to use the extended transition period for complying with any new or revised financial accountingstandards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment
10、 of the effectiveness of its internal control over financial reporting underSection 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mar
11、k whether the financial statements of the registrant included in the filing reflect the correction of anerror to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation rec
12、eived by any of the registrantsexecutive officers during the relevant recovery period pursuant to 240.1D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market value of the voting stock held by non-affiliates of
13、 the Registrant as of September 30,2022(the last business day of the Registrants most recently completed secondquarter)was$18,892,271 as computed by reference to the last reported sale.There were 2,136,500 shares of the registrants common stock outstanding as of June 26,2023.DOCUMENTS INCORPORATED B
14、Y REFERENCE Portions of the Registrants Proxy Statement relating to the 2023 Annual Meeting of Shareholders to be held on September 12,2023,have been incorporated by reference in Part III of thisForm 10-K.Such Proxy Statement will be filed with the Commission not later than 120 days after March 31,2
15、023,the end of the fiscal year covered by this report.TABLE OF CONTENTS Cautionary Note Regarding Forward-Looking Statements3 PART I Item 1.Business3Item 1A.Risk Factors10Item 1B.Unresolved Staff Comments15Item 2.Properties15Item 3.Legal Proceedings19Item 4.Mine Safety Disclosures19 PART II Item 5.M
16、arket for the Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities20Item 6.Reserved21Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations22Item 7A.Quantitative and Qualitative Disclosures About Market Risk29Item 8.Fina
17、ncial Statements and Supplementary Data29Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosures29Item 9A.Controls and Procedures30Item 9B.Other Information30Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspection30 PART III Item 10.Directors,E
18、xecutive Officers and Corporate Governance30Item 11.Executive Compensation30Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters31Item 13.Certain Relationships and Related Transactions,and Director Independence31Item 14.Principal Accounting Fees and
19、Services31 PART IV Item 15.Exhibits and Financial Statement Schedules31Item 16.Form 10-K Summary31 Signatures 32 Glossary of Abbreviations and Terms33 2 As used in this document,“the Company”,“Mexco”,“we”,“us”and“our”refer to Mexco Energy Corporation and its consolidated subsidiaries.Abbreviations o
20、r definitions of certain terms commonly used in the oil and gas industry and in this Form 10-K can be found in the“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 Secti
21、on 27A of the Securities Act of 1933,as amended,(the“Securities Act”)andSection 21E of the Securities Exchange Act of 1934,as amended,(the“Exchange Act”).These forward-looking statements are generally located in the material set forth under the headings“Risk Factors”,“Managements Discussion and Anal
22、ysis of Financial Condition and Results of Operations”,“Business”,“Properties”but may be found in other locations as well,and aretypically identified by the words“could”,“should”,“expect”,“project”,“estimate”,“believe”,“anticipate”,“intend”,“budget”,“plan”,“forecast”,“predict”and other similar expre
23、ssions.Forward-looking statements generally relate to our profitability;planned capital expenditures;estimates of oil and gas production;future project dates;estimates of future oil and gasprices;estimates of oil and gas reserves;our future financial condition or results of operations;and our busine
24、ss strategy and other plans and objectives for future operations and are basedupon our managements reasonable estimates of future results or trends.Actual results in future periods may differ materially from those expressed or implied by such forward-lookingstatements because of a number of risks an
25、d uncertainties affecting our business,including those discussed in“Risk Factors”.The factors that may affect our expectations regarding ouroperations include,among others,the following:our success in development,exploitation and exploration activities;our ability to make planned capital expenditure
26、s;declines in ourproduction or prices of oil and gas;our ability to raise equity capital or incur additional indebtedness;our restrictive debt covenants;our acquisition and divestiture activities;weatherconditions and events;the proximity,capacity,cost and availability of pipelines and other transpo
27、rtation facilities;increases in the cost of drilling,completion and gas gathering or othercosts of production and operations;and other factors discussed elsewhere in this document.We disclaim any intention or obligation to update or revise any forward-looking statements as aresult of new information
28、,future events or otherwise.PART I ITEM 1.BUSINESS General Mexco Energy Corporation,a Colorado corporation,is an independent oil and gas company engaged in the acquisition,exploration,development and production of crude oil andnatural gas properties located in the United States.Incorporated in April
29、 1972 under the name Miller Oil Company,the Company changed its name to Mexco Energy Corporation effectiveApril 30,1980.At that time,the shareholders of the Company also approved amendments to the Articles of Incorporation resulting in a one-for-fifty reverse stock split of the Companyscommon stock.
30、Our total estimated proved reserves at March 31,2023 were approximately 1.552 million barrels of oil equivalent(“MMBOE”)of which 47%was oil and natural gas liquids and53%was natural gas,and our estimated present value of proved reserves was approximately$39 million based on estimated future net reve
31、nues excluding taxes discounted at 10%perannum,pricing and other assumptions set forth in“Item 2 Properties”below.Nicholas C.Taylor beneficially owns approximately 44%of the outstanding shares of our common stock.Mr.Taylor is also our Chairman of the Board and Chief ExecutiveOfficer.As a result,Mr.T
32、aylor has significant influence in matters voted on by our shareholders,including the election of our Board members.Mr.Taylor participates in all facets of ourbusiness and has a significant impact on both our business strategy and daily operations.3 Company Profile Since our inception,we have been e
33、ngaged in acquiring and developing oil and gas properties and the exploration for and production of natural gas,crude oil,condensate andnatural gas liquids(“NGLs”)within the United States.We especially seek to acquire proved reserves that fit well with existing operations or in areas where Mexco has
34、 establishedproduction.Acquisitions preferably will contain most of their value in producing wells,behind pipe reserves and high quality proved undeveloped locations.Competition for the purchaseof proved reserves is intense.Sellers often utilize a bid process to sell properties.This process usually
35、intensifies the competition and makes it extremely difficult to acquire reserveswithout assuming significant price and production risks.We actively search for opportunities to acquire proved oil and gas properties.However,because the competition is intense,wecannot give any assurance that we will be
36、 successful in our efforts during fiscal 2024.While we own oil and gas properties in other states,the majority of our activities are centered in West Texas and Southeastern New Mexico.The Company also owns producingproperties and undeveloped acreage in fourteen states.We acquire interests in produci
37、ng and non-producing oil and gas leases from landowners and leaseholders in areas consideredfavorable for oil and gas exploration,development and production.In addition,we may acquire oil and gas interests by joining in oil and gas drilling prospects generated by third parties.We may also employ a c
38、ombination of the above methods of obtaining producing acreage and prospects.In recent years,we have placed primary emphasis on the evaluation and purchaseof producing oil and gas properties,including working,royalty and mineral interests,and prospects that could have a potentially meaningful impact
39、 on our reserves.All of the Companysoil and gas interests are operated by others.From 1983 to 2023,Mexco Energy Corporation made numerous acquisitions of royalties,overriding royalties,minerals and working interests in producing oil and gas propertiesincluding the following most significant acquisit
40、ions:1990-1994 Royalty interests,aggregate purchase price of approximately$501,000 covering multiple wells in the Gomez(Ellenberger)Field of Pecos County,Texas.1993-2014 Tabbs Bay Oil Company and Thompson Brothers Lumber Company,respectively dissolved in 1957 and 1947.Purchase covering thousands of
41、acres located respectively in19 counties of Texas,3 parishes of Louisiana and one county in Arkansas and 8 counties of Texas,respectively consisting of various mineral,royalty and overriding royaltyinterests.1997Forman Energy Corporation,purchase price of$1,591,000 consisting primarily of working in
42、terests in approximately 634 wells located in 12 states.2004Royalty interests,purchase price$304,000 covering 37 producing wells in the Cotton Valley formation in Limestone County,Texas and the Lower Cotton Valley formation inJackson Parish,Louisiana.This acreage contains 13 permitted or drilling we
43、lls and approximately 100 potential undrilled locations.Royalty interests,purchase price$500,000 covering 4 producing gas units in Freestone County,Texas containing 33 producing wells and 17 potential undeveloped locations in theCotton Valley formation.2005Royalty interests,purchase price$550,000 co
44、vering 75 producing wells,9 permitted and/or drilling wells,and 83 potential undeveloped locations in the Cotton Valley formationof Freestone and Limestone Counties,Texas.2007Non-operated working interests,purchase price$425,000 covering 2 properties in Lea County,New Mexico.Royalty(mineral)acreage,
45、purchase price$1,850,000 covering 122 mineral acres in the Newark East(Barnett Shale)Field of Tarrant County,Texas amounting to approximately21.45%royalty interest.2008Royalty(mineral)acreage,purchase price$429,000 covering 522 mineral acres in the Newark East(Barnett Shale)Field of Tarrant County,T
46、exas containing 6 producing naturalgas wells,5 proven undeveloped well locations,and 6 potential drill sites on this acreage.In March 2009,purchased additional interests,$49,000.4 2010Southwest Texas Disposal Corporation,purchase price$478,000 consisting of royalty interests in over 300 wells locate
47、d in 60 counties and parishes of 6 states.Overriding royalty interests,purchase price$1,650,000 covering 5,120 gross acres over 8 sections in the Haynesville trend area of DeSoto Parish,Louisiana containing 6horizontal producing wells,2 wells drilling wells,and 57 additional potential drill sites.Th
48、e Company paid$1.46 million in cash and the remainder was paid as 26,833 shares ofits common stock issued from treasury shares.2011Non-operating working interests,purchase price$670,000 covering 160 gross acres in the Fuhrman-Mascho Field of Andrews County,Texas containing 5 producing wells in theGr
49、ayburg and San Andres formations and additional 11 potential drill sites.In March 2012,purchased additional working interests,$275,000.2012TBO Oil and Gas,LLC,purchase price of$1,150,000 consisting of working interests in approximately 280 wells located in 16 counties of 3 states.2014Royalty interes
50、ts,purchase price$200,000 covering 43 wells in 12 counties of 8 states,primarily in Texas.Royalty interests,purchase price$580,000 covering 580 wells in 87 counties of 8 states.Approximately 90%of the net revenue from these royalties is produced by 157 wellslocated in the Barnett Shale of the Fort W
51、orth Basin of Texas.Also included are interests in 423 wells in 8 states.Royalty and mineral interests,purchase price$1,000,000 covering approximately 1,800 wells in 27 counties of Texas.Of these oil and gas reserves,approximately 80%is naturalgas and 20%oil.Non-Operated working interests,purchase p
52、rice$840,000 in 70 Natural gas producing wells located in 5 counties of Oklahoma.Non-Operated working interests,purchase price$200,000 covering 80 wells located in Hockley and Pecos Counties,Texas.Non-Operated working interests,purchase price$450,000 covering 43 wells in Webster Parish,Louisiana;Edd
53、y County,New Mexico;and,Nolan and Smith Counties,Texas.2019Royalty interest investment,$300,000 for a less than 1%investment commitment in a limited liability company,capitalized at approximately$50 million to purchase royaltyinterests consisting of minerals located in the Marcellus and Utica areas
54、of Ohio.This LLC has returned$226,725 and 76%of the total investment since inception in fiscal 2020.2022-2023Overriding royalty interests,purchase price of$567,000 covering 53 producing wells and several additional potential locations for development in Atascosa and Karnes Counties,Texas.Royalty int
55、erests,purchase price of$939,000 covering 22 producing wells and several additional potential locations for development in the Eagleford area of Dimmit County,Texas.Royalty interest investment,$2,000,000 for an approximate 2%investment commitment in a limited liability company,capitalized at approxi
56、mately$100 million to purchaseroyalty interests consisting of minerals located in the Marcellus and Utica areas of Ohio.As of the date of this report,$400,000 of the commitment has been expended.Royalty interests,purchase price of$117,200 covering 28 producing wells in 6 counties in the Haynesville
57、trend area of Louisiana and 5 counties in Texas.5 Industry Environment and Outlook The outbreak of the novel coronavirus(“COVID-19”)resulted in a severe worldwide economic downturn,significantly disrupting the demand for oil throughout the world,andcreated significant volatility,uncertainty and turm
58、oil in the oil and gas industry.The decrease in demand for oil,combined with excess supply of oil and related products,resulted in oilprices declining significantly in late February 2020.Since mid-2020,oil prices have improved,with demand steadily increasing despite the uncertainties surrounding the
59、 COVID-19variants,which have continued to inhibit a full global demand recovery.In addition,worldwide oil inventories,from a historical perspective,remain low and concerns exist with the abilityof Organization of Petroleum Exporting Countries(“OPEC”)and other oil producing nations to meet forecasted
60、 future oil demand growth in 2023 and 2024,with many OPEC countriesnot able to produce at their OPEC agreed upon quota levels due to their limited capital investments,and increases in cost over the last few years directed towards developing incrementaloil supplies.See Part II,Item 7.Managements Disc
61、ussion and Analysis of Financial Condition and Results of Operations for discussion of our fiscal 2023 operating results and potentialimpact on fiscal 2024 operating results due to commodity price changes.Oil and Gas Operations As of March 31,2023,oil constituted approximately 70%of our oil and gas
62、revenues and approximately 47%of our total proved reserves volumes for fiscal 2023.Revenues fromoil and gas royalty interests accounted for approximately 28%of our oil and gas revenues for fiscal 2023.There are two primary areas in which the Company is focused,1)the Delaware Basin located in the Wes
63、tern portion of the Permian Basin including Lea and Eddy Counties,NewMexico and Reeves and Loving Counties,Texas and 2)the Midland Basin located in the Eastern portion of the Permian Basin including Reagan,Upton,Midland,Martin,Howard andGlasscock Counties,Texas.The Permian Basin in total accounts fo
64、r 80%of our discounted future net cash flows from proved reserves and 79%of our gross revenues.The Permian Basin is one of the oldest and most prolific producing basins in North America which has been a significant source of oil production since the 1920s.The PermianBasin is known to have a number o
65、f zones of oil and natural gas bearing rock throughout.The Delaware Basin properties,encompassing 30,007 gross acres,195 net acres,610 gross producing wells and 4 net wells account for approximately 58%of our discountedfuture net cash flows from proved reserves as of March 31,2023.For fiscal 2023,th
66、ese properties accounted for 62%of our net revenues.Of these discounted future net cash flows fromproved reserves,approximately 15%are attributable to proven undeveloped reserves which would be developed through new drilling.The Midland Basin properties,encompassing 97,584 gross acres,256 net acres,
67、1,016 gross producing wells and 2 net wells account for approximately 18%of our discountedfuture net cash flows from proved reserves as of March 31,2023.For fiscal 2023,these properties accounted for 14%of our net revenues.Of these discounted future net cash flows fromproved reserves,approximately 8
68、%are attributable to proven undeveloped reserves which would be developed through new drilling.Mexco believes its most important properties for future development by horizontal drilling and hydraulic fracturing area are located in Lea and Eddy Counties,New Mexico of theDelaware Basin and the Midland
69、 Basin in Midland,Reagan and Upton Counties,Texas.For more on these and other operations in this area see“Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations Liquidity and CapitalResources Commitments”.We own partial interests in approximately 6,400 producing
70、wells all of which are located within the United States in the states of Texas,New Mexico,Oklahoma,Louisiana,Alabama,Mississippi,Arkansas,Wyoming,Kansas,Colorado,Montana,Virginia,North Dakota,and Ohio.Additional information concerning these properties and our oil and gas reservesis provided below.6
71、The following table indicates our oil and gas production in each of the last five years:Year Oil(Bbls)Gas(Mcf)2023 73,968 534,363 2022 61,689 393,841 2021 50,327 324,205 2020 44,301 294,007 2019 35,359 295,133 Competition and Markets The oil and gas industry is a highly competitive business.Competit
72、ion for oil and gas reserve acquisitions is significant.We may compete with major oil and gas companies,otherindependent oil and gas companies and individual producers and operators,some of which have financial and personnel resources substantially in excess of those available to us.As aresult,we ma
73、y be placed at a competitive disadvantage.Competitive factors include price,contract terms and types and quality of service,including pipeline distribution.The price for oiland gas is widely followed and is generally subject to worldwide market factors.Our ability to acquire and develop additional p
74、roperties in the future will depend upon our ability toevaluate and select suitable properties and to consummate transactions in this highly competitive environment in a timely manner.In addition,the oil and gas industry as a whole also competes with other industries in supplying the energy and fuel
75、 requirements of industrial,commercial and individualconsumers.The price and availability of alternative energy sources could adversely affect our revenue.Market factors affect the quantities of oil and natural gas production and the price we can obtain for the production from our oil and natural ga
76、s properties.Such factors include:the extent of domestic production;the level of imports of foreign oil and natural gas;the general level of market demand on a regional,national and worldwide basis;domestic and foreigneconomic conditions that determine levels of industrial production;political event
77、s in foreign oil-producing regions;and variations in governmental regulations including environmental,energy conservation and tax laws or the imposition of new regulatory requirements upon the oil and natural gas industry.The market for our oil,gas and natural gas liquids production depends on facto
78、rs beyond our control including:domestic and foreign political conditions;the overall level ofsupply 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;the proximity and capacityof gas pipelines and
79、 other transportation facilities;and overall economic conditions.Major Customers We made sales that amounted to 10%or more of oil and gas revenues as follows for the years ended March 31:2023 2022 Company A 53%68%Historically,the Company has not experienced significant credit losses on our oil and g
80、as accounts and management is of the opinion that significant credit risk does not exist.Because a ready market exists for oil and gas production,we do not believe the loss of any individual purchaser would have a material adverse effect on our financial position or results ofoperations.Environmenta
81、l Regulation The oil and gas industry is extensively regulated at the federal,state,and local levels.Regulations affecting elements of the energy sector are under constant review for amendmentor expansion and frequently more stringent requirements are imposed.Various federal and state agencies,inclu
82、ding the Texas Railroad Commission,the Bureau of Land Management(the“BLM”),an agency of the U.S Department of the Interior(“DOI”),the Federal Energy Regulatory Commission(“FERC”),the U.S.Environmental Protection Agency(the“EPA”),theDepartment of Transportation(“DOT”)and the U.S.Occupational Safety a
83、nd Health Administration(“OSHA”),have legal and regulatory authority and oversight over the operations onthe properties in which the Company owns an interest.7 Under certain environmental laws and regulations,the operators of the Company properties could be subject to strict,joint and several liabil
84、ity for the removal or remediation ofproperty contamination,whether at a drill site or a waste disposal facility,even when the operators did not cause the contamination or their activities were in compliance with all applicablelaws at the time the actions were taken.The Comprehensive Environmental R
85、esponse,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 releases into the environment of a“hazardous substance.”Liable persons mayinclude the current o
86、r previous owner and operator of a site where a hazardous substance has been disposed and persons who arranged for the disposal of a hazardous substance at a site.Under CERCLA and similar statutes,government authorities or private parties may take actions in response to threats to the public health
87、or the environment or sue responsible persons forthe associated costs.In the course of operations,the working interest owner and/or the operator of the Company properties may have generated and may generate materials that couldtrigger cleanup liabilities.In addition,the Company properties have produ
88、ced oil and/or natural gas for many years,and previous operators may have disposed or released hydrocarbons,wastes or hazardous substances at the Company properties.The operator of the Company properties or the working interest owners may be responsible for all or part of the costs to cleanup any su
89、ch contamination.Although the Company is not the operator of such properties,its ownership of the properties could cause it to be responsible for all or part of such costs to theextent CERCLA or any similar statute imposes responsibility on such parties as“owners.”Various state governments and regio
90、nal organizations comprising state governments already have enacted legislation and promulgated rules restricting greenhouse gases(“GHGs”)emissions or promoting the use of renewable energy,and additional such measures are frequently under consideration.Although it is not possible at this time to est
91、imate howpotential future requirements addressing GHG emissions would impact operations on the Company properties and revenue,either directly or indirectly,any future federal,state or locallaws or implementing regulations that may be adopted to address GHG emissions could require the operators of ou
92、r properties to incur new or increased costs to obtain permits,operateand maintain equipment and facilities,install new emission controls,acquire allowances to authorize GHG emissions,pay taxes related to GHG emissions or administer a GHG emissionsprogram.Regulation of GHGs could also result in a re
93、duction in demand for and production of oil and natural gas.Additionally,to the extent that unfavorable weather conditions areexacerbated by global climate change or otherwise,the Company properties may be adversely affected to a greater degree than previously experienced.We did not incur any materi
94、al capital expenditures for remediation or pollution control activities for the year ended March 31,2023.Additionally,as of the date of this report,weare not aware of any environmental issues or claims that will require material capital expenditures during fiscal 2024.Other Regulation Other agencies
95、 with certain authority over the Companys business include the Internal Revenue Service(the“IRS”),the SEC and NYSE.Ensuring compliance with the rules,regulations and orders promulgated by such entities requires extensive effort and incremental costs to comply,which affects the Companys profitability
96、.Because public policy changes arecommonplace,and existing laws and regulations are frequently amended,the Company is unable to predict the future cost or impact of compliance.However,the Company does notexpect that any of these laws and regulations will affect its operations materially differently
97、than they would affect other companies with similar operations,size and financial strength.Title to Properties The leasehold properties we own are subject to royalty,overriding royalty and other outstanding interests customary in the industry.The properties may be subject to burdens suchas liens inc
98、ident to operating agreements and current taxes,development obligations under oil and gas leases and other encumbrances,easements and restrictions.We do not believe any ofthese burdens will materially interfere with the use of these properties.8 Prior to drilling of an oil and natural gas well,it is
99、 normal practice in our industry for the person or company acting as the operator of the well to obtain a preliminary title reviewto ensure there are no obvious defects in title to the well.Frequently,as a result of such examinations,certain curative work must be done to correct defects in the marke
100、tability of the title,and such curative work entails expense.Our operators failure to cure any title defects may delay or prevent us from utilizing the associated mineral interest.We believe the title to ourproperties is good and defensible in accordance with standards generally acceptable in the oi
101、l and gas industry subject to such exceptions that,in the opinion of counsel employed in thevarious areas in which we have activities,are not so material as to detract substantially from the use of such properties.Substantially all of our properties are currently mortgaged under a deed of trust to s
102、ecure funding through a credit facility.Insurance Our operations are subject to all the risks inherent in the exploration for and development and production of oil and gas including blowouts,fires and other casualties.We maintaininsurance coverage customary for operations of a similar nature,but los
103、ses could arise from uninsured risks or in amounts in excess of existing insurance coverage.Executive Officers The following table sets forth certain information concerning the executive officers of the Company as of March 31,2023.Name Age PositionNicholas C.Taylor 85 Chairman and Chief Executive Of
104、ficerTamala L.McComic 54 President,Chief Financial Officer,Treasurer,and Assistant SecretaryDonna Gail Yanko 78 Vice PresidentStacy D.Hardin 58 Secretary and Assistant Treasurer Set forth below is a description of the principal occupations during at least the past five years of each executive office
105、r of the Company.Nicholas C.Taylor was elected Chairman of the Board and Chief Executive Officer of the Company in September 2011 and continues to serve in such capacity on a part timebasis,as required.He served as Chief Executive Officer,President and Director of the Company from 1983 to 2011.From
106、July 1993 to the present,Mr.Taylor has been involved in theindependent practice of law and other business activities.In November 2005 he was appointed by the Speaker of the House to the Texas Ethics Commission and served until February2010.Tamala L.McComic,a Certified Public Accountant and Chartered
107、 Global Management Accountant,became Controller for the Company in July 2001 and was elected Presidentand Chief Financial Officer in September 2011.She served the Company as Executive Vice President and Chief Financial Officer from 2009 to 2011 and Vice President and ChiefFinancial Officer from 2003
108、 to 2009.Prior thereto,Ms.McComic served as Treasurer and Assistant Secretary of the Company.Donna Gail Yanko was appointed to the position of Vice President of the Company in 1990.She also served as Corporate Secretary from 1992 to 2021 and from 1986 to 1992 wasAssistant Secretary.From 1986 to 2015
109、,on a part-time basis,she assisted the Chairman of the Board of the Company in his personal business activities.Ms.Yanko also served as a directorof the Company from 1990 to 2008.Stacy D.Hardin joined the Company in 2006 and was elected Corporate Secretary of the Company in September 2021.She has al
110、so served the Company as Assistant Treasurer ofthe Company since 2010 and from 2006 to 2021 was Assistant Secretary.Prior thereto,Ms.Hardin served as Assistant Controller.Employees As of March 31,2023,we had three full-time and three part-time employees.We believe that relations with these employees
111、 are generally satisfactory.From time to time,weutilize the services of independent geological,land and engineering consultants on a limited basis and expect to continue to do so in the future.9 Office Facilities Our principal offices are located at 415 W.Wall,Suite 475,Midland,Texas 79701 and our t
112、elephone number is(432)682-1119.We believe our facilities are adequate for ourcurrent operations and 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(ww
113、w.sec.gov)that contains annual,quarterly and current reports,proxy statements and other information that issuers,including Mexco,file electronically with the SEC.We also maintain an internet website at .In the Investor Relations section,our website contains our Annual Reports on Form 10-K,Quarterly
114、Reports onForm 10-Q,Current Reports on Form 8-K,and other reports and amendments to those reports as soon as reasonably practicable after such material is electronically filed with the SEC.Information on our website is not incorporated by reference into this Form 10-K and should not be considered pa
115、rt of this report or any other filing that we make with the SEC.Additionally,our Code of Business Conduct and Ethics and the charters of our Audit Committee,Compensation Committee and Nominating Committee are posted on our website.Any ofthese corporate documents as well as any of the SEC filed repor
116、ts are available in print free of charge to any stockholder who requests them.Requests should be directed to our corporateSecretary by mail to 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 whic
117、h are beyond our control.The following is a description of some of the important factorsthat could have a material adverse effect on our business,financial position,liquidity and results of operations.Some of the following risks relate principally to the industry in which weoperate and to our busine
118、ss.Other risks relate principally to the securities markets and ownership of our common stock.RISKS RELATED 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 a
119、nd natural gas prices with any certainty.Historically,the markets for oil and gas have been volatile,and they are likely to continue to be volatile.Factors that can cause price fluctuations include the level of global demand for petroleum products;foreign supply and pricing of oil and gas;the action
120、s of OPEC,its members and other state-controlled oil companies relating to oil price and production controls;nature and extent of governmental regulation and taxation,including environmental regulations;level of domestic and international exploration,drilling and production activity;the cost of expl
121、oring for,producing and delivering oil and gas;speculative trading in crude oil and natural gas derivative contracts;availability,proximity and capacity of oil and gas pipelines and other transportation facilities;weather conditions;theprice and availability of alternative fuels;technological advanc
122、es affecting energy consumption;national and international pandemics;and,overall political and economic conditions in oilproducing countries.Increases and decreases in prices also affect the amount of cash flow available for capital expenditures and our ability to borrow money or raise additional ca
123、pital.The amount wecan borrow from banks may be subject to redetermination based on changes in prices.In addition,we may have ceiling test writedowns when prices decline.Lower prices may also reducethe amount of crude oil and natural gas that can be produced economically.Thus,we may experience mater
124、ial increases or decreases in reserve quantities solely as a result of price changesand not as a result of drilling or well performance.Changes in oil and gas prices impact both estimated future net revenue and the estimated quantity of proved reserves.Any reduction in reserves,including reductions
125、due to pricefluctuations,can reduce the borrowing base under our credit facility and adversely affect the amount of cash flow available for capital expenditures and our ability to obtain additionalcapital for our exploration and development activities.10 Oil and natural gas prices do not necessarily
126、 fluctuate in direct relationship to each other.Lower prices or lack of storage may have an adverse affect on our financial conditiondue to reduction of our revenues,operating income and cash flows;curtailment or shut-in of our production due to lack of transportation or storage capacity;cause certa
127、in properties in ourportfolio to become economically unviable;and,limit our financial condition,liquidity,and/or ability to finance planned capital expenditures and operations.Our results of operations may be negatively impacted by current global events.The economies in the United States and certain
128、 countries in Europe and Asia have been growing,with resulting improvements in industrial demand and consumer confidence.However,other economies,such as those of certain South American nations,continue to face economic struggles or slowing economic growth.If these conditions worsen,combined with ade
129、cline in economic growth in other parts of the world,there could be a significant adverse effect on global financial markets and commodity prices.In addition,continued hostilities in theMiddle East and the occurrence or threat of terrorist attacks in the United States or other countries could advers
130、ely affect the global economy.Global or national health concerns mayadversely affect the Company by(i)reducing demand for its oil,NGLs and gas because of reduced global or national economic activity,(ii)impairing its supply chain(for example,bylimiting manufacturing of materials used in operations)a
131、nd(iii)affecting the health of its workforce,rendering employees unable to work or travel.If the economic climate in the UnitedStates or abroad were to deteriorate,due to inflation,rising interest rates or otherwise,demand for petroleum products could diminish or stagnate,which could depress the pri
132、ces at whichthe Company could sell its oil,NGLs and gas,affect the ability of the Companys vendors,suppliers and customers to continue operations and ultimately decrease the Companys cashflows and profitability.In addition,reduced worldwide demand for debt and equity securities issued by oil and gas
133、 companies may make it more difficult for the Company to raise capitalto fund its operations or refinance its debt obligations.Changes in environmental laws could increase our operators costs and adversely impact our business,financial condition and cash flows.President Biden has indicated that he i
134、s supportive of,and has issued executive orders promoting various programs and initiatives designed to,among other things,curtail climatechange,control the release of methane from new and existing oil and natural gas operations,and decarbonize electric generation and the transportation sector.In rec
135、ent years the U.S.Congress has considered legislation to reduce emissions of GHGs,including methane,a primary component of natural gas,and carbon dioxide,a byproduct of the burning of natural gas.For example,the Inflation Reduction Act of 2022(the“IRA”),which appropriates significant federal funding
136、 for renewable energy initiatives and,for the first time ever,imposes a fee onGHG emissions from certain facilities,was signed into law in August 2022.The emissions fee and funding provisions of the law could increase operating costs within the oil and gasindustry and accelerate the transition away
137、from fossil fuels,which could in turn adversely affect our business and results of operations.Governmental,scientific and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political risks in the United States,includingclimate change related pledge
138、s made by certain candidates elected to public office.President Biden has issued several executive orders focused on addressing climate change,includingitems that may impact costs to produce,or demand for,oil and gas.Lower oil and gas prices and other factors may cause us to record ceiling test writ
139、edowns.Lower oil and gas prices increase the risk of ceiling limitation write-downs.We use the full cost method to account for oil and gas operations.Accordingly,we capitalize the costto acquire,explore for and develop crude oil and natural gas properties including the cost of abandoned properties,d
140、ry holes,geophysical costs and annual lease rentals.Sales or otherdispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs,with no gain or loss recorded.Depletion of evaluated oil and natural gas properties iscomputed in the units of production method,wher
141、eby capitalized costs are amortized over total proved reserves.Under the full cost accounting rules,the net capitalized cost of crude oiland natural gas properties may not exceed a“ceiling limit”which is based upon the present value of estimated future net cash flows from proved reserves,discounted
142、at 10%plus thelower of cost or fair market value of unproved properties.If net capitalized costs of oil and natural gas properties exceed the ceiling limit,we must charge the amount of the excess againstearnings.This is called a“ceiling test writedown.”We use the unweighted arithmetic average first
143、day of the month price for oil and natural gas for the 12-month period preceding thecalculation date in estimating discounted future net reserves.Under the accounting rules,we are required to perform a ceiling test each quarter.A ceiling test writedown does not impactcash flow from operating activit
144、ies,but does reduce stockholders 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 during fiscal 2016 and may incur additional impairment charges in
145、the future,particularly if commodityprices decline,which could have a material adverse effect on our results of operations for the periods in which such charges are taken.There were no ceiling test impairments on our oiland gas properties during fiscal 2023 and 2022.11 We must replace reserves we pr
146、oduce.Our future success depends upon our ability to find,develop or acquire additional,economically recoverable oil and gas reserves.Our proved reserves will generally decline asreserves are depleted,except to the extent that we can find,develop or acquire replacement reserves.One offset to the obv
147、ious benefits afforded by higher product prices especially forsmall to mid-cap companies in this industry,is that quality domestic oil and gas reserves are hard to find.Approximately 26%and 37%of our total estimated net proved reserves at March 31,2023 and 2022,respectively,were undeveloped,and thos
148、e reserves may not ultimately be developed.Recovery of undeveloped reserves requires significant capital expenditures and successful drilling.Our reserve data assumes that we can and will make these expenditures andconduct these operations successfully.These assumptions,however,may not prove correct
149、.Delays in the development of our reserves,increases in costs to develop such reserves,ordecreases in commodity prices will reduce the future net revenues or our estimated proved undeveloped reserves and may result in some projects becoming uneconomical.In addition,ifwe or the outside operators of o
150、ur properties choose not to spend the capital to develop these reserves,or if we are not able to successfully develop these reserves,we will be required towrite-off these reserves.Any such write-offs of our reserves could reduce our ability to borrow money and could reduce the value of our common st
151、ock.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 uncertainties inherent in the interpretation of such data as well as theprojection of future rates
152、of production and the timing of development expenditures.Reserve engineering is a subjective process of estimating underground accumulations of oil and gasthat are difficult to measure.Estimates of economically recoverable oil and gas reserves and of future net cash flows depend upon a number of var
153、iable factors and assumptions,such asfuture production,oil and gas prices,operating costs,development costs and remedial costs,all of which may vary considerably from actual results.As a result,estimates of theeconomically recoverable quantities of oil and gas and of future net cash flows expected t
154、herefrom may vary substantially.As required by the SEC,the estimated discounted future net cashflows from proved reserves are based on a twelve month un-weighted first-day-of-the-month average oil and gas prices for the twelve months prior to the date of the report.Actual futureprices and costs may
155、be materially higher or lower.An increase in the differential between NYMEX and the reference or regional index price used to price our oil and gas would reduce our cash flow from operations.Our oil and gas is priced in the local markets where it is produced based on local or regional supply and dem
156、and factors.The prices we receive for our oil and gas are typicallylower than the relevant benchmark prices,such as The New York Mercantile Exchange(“NYMEX”).The difference between the benchmark price and the price we receive is called adifferential.Numerous factors may influence local pricing,such
157、as refinery capacity,pipeline capacity and specifications,upsets in the midstream or downstream sectors of the industry,trade restrictions and governmental regulations.Additionally,insufficient pipeline capacity,lack of demand in any given operating area or other factors may cause the differential t
158、oincrease in a particular area compared with other producing areas.During fiscal 2023,differentials averaged$4.57 per Bbl of oil and($0.28)per Mcf of gas.Increases in the differentialbetween the benchmark prices for oil and gas and the wellhead price we receive could significantly reduce our revenue
159、s and our cash flow from operations.12 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 drilling rigs,well blowouts,cratering,explosions,fires,formations with abnormal pressure
160、s,pollution,releases of toxic gasesand other environmental hazards and risks.Any of these operating hazards could result in substantial losses to us.In addition,we incur the risk that no commercially productive reservoirswill be encountered,and there is no assurance that we will recover all or any p
161、ortion of our investment in wells drilled or re-entered.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 acquire new reserves.Historically,we have used our ca
162、sh flow from operations and borrowings underour credit facility to fund our capital expenditures,however,lower oil and gas prices may prevent these options.Volatility in oil and gas prices,the timing of our drilling programs anddrilling results will affect our cash flow from operations.Lower prices
163、and/or lower production will also decrease revenues and cash flow,thus reducing the amount of financial resourcesavailable to meet our capital requirements,including reducing the amount available to pursue our drilling opportunities.The borrowing base under our credit facility will be determined fro
164、m time to time by the lender.Reductions in estimates of oil and gas reserves could result in a reduction in theborrowing base,which would reduce the amount of financial resources available under the credit facility to meet our capital requirements.Such a reduction could be the result of lowercommodi
165、ty prices and/or production,inability to drill or unfavorable drilling results,changes in oil and gas reserve engineering,the lenders inability to agree to an adequate borrowingbase or adverse changes in the lenders practices regarding estimation of reserves.If cash flow from operations or our borro
166、wing base decrease for any reason,our ability to undertakeexploration and development 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 th
167、at could materially alter the occurrence or timing of their drilling.Our management and outside operators have specifically identified and scheduled drilling locations as an estimation of our future multi-year drilling activities on our existingacreage.These drilling locations represent a significan
168、t part of our growth strategy.Our ability to drill and develop these locations depends on a number of uncertainties,including crudeoil and natural gas prices,the availability of capital,costs,drilling results,regulatory approvals and other factors.If future drilling results in these projects do not
169、establish sufficientreserves to achieve an economic return,we may curtail drilling in these projects.Because of these uncertainties,we do not know if the numerous potential drilling locations we haveidentified will ever be drilled or if we will be able to produce crude oil or natural gas from these
170、or any other potential drilling locations.Our business depends 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 gathering systems,pipelines and processing facilitie
171、s.Federal andstate regulation of oil and gas production and transportation,tax and energy policies,changes in supply and demand and general economic conditions could all affect our ability to produceand market our oil and gas.We have limited control over activities on properties we do not operate,wh
172、ich could reduce our production and revenues.All of our business activities are conducted through joint operating or other agreements under which we own working and royalty interests in natural gas and oil properties inwhich we do not operate.As a result,we have a limited ability to exercise influen
173、ce over normal operating procedures,expenditures or future development of underlying properties andtheir associated costs.The failure of an operator of our wells to adequately perform operations could reduce our revenues and production.13 Acquiring reserves in the oil and gas industry is highly comp
174、etitive.Competition for oil and gas reserve acquisitions is significant.We may compete with major oil and gas companies,other independent oil and gas companies and individualproducers and operators,some of which have financial and personnel resources substantially in excess of those available to us.
175、As a result,we may be placed at a competitive disadvantage.Our ability to acquire and develop additional properties in the future will depend upon our ability to select and acquire suitable producing properties and prospects for future developmentactivities.We may not be insured against all of the o
176、perating 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 gas including blowouts,fires and other casualties.Wemaintain insurance coverage customary for operations of a similar nature,but los
177、ses could 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 development may be eliminated as a result of proposed legislation.Legislation previously
178、 has been proposed that would,if enacted into law,make significant changes to U.S.federal income tax laws,including the elimination of certain key U.S.federal income tax incentives currently available to crude oil and natural gas exploration and production companies.These changes include,but are not
179、 limited to:(1)the repeal of thepercentage depletion allowance for crude oil and natural gas properties,(2)the elimination of current deductions for intangible drilling and development costs,(3)the elimination of thededuction for certain U.S.domestic production activities,and(4)an extension of the a
180、mortization period for certain geological and geophysical expenditures.It is unclear whether anysuch changes will be enacted and,if enacted,how soon any such changes could become effective.The passage of this type of legislation or any other similar changes in U.S.federalincome tax laws could elimin
181、ate or postpone certain tax deductions that are currently available with respect to crude oil and natural gas exploration and development,and any such changecould have an adverse effect on the value of an investment in our Common Stock as well as our financial position,results of operations and cash
182、 flows.Our reliance on information technology,including those hosted by third parties,exposes us to cyber security risks that could affect our business,financial condition or reputation.The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain expl
183、oration,development,production,and processing activities,including digital technologies to interpret seismic data,manage drilling rigs,production equipment and gathering systems,conduct reservoir modeling and reserves estimation,and processand record financial and operating data.At the same time,cyb
184、er incidents,including deliberate attacks or unintentional events,have increased.The U.S.government has issued publicwarnings that indicate energy assets might be specific targets of cyber security threats.Our and our operators technologies,systems,networks,and those of vendors,suppliers and otherbu
185、siness partners,may become the target of cyberattacks or information security breaches that could result in the unauthorized release,gathering,monitoring,misuse,loss or destruction ofproprietary and other information,or other disruption of business activities.In addition,certain cyber incidents,such
186、 as surveillance,may remain undetected for an extended period.Oursystems for protecting against cyber security risks may not be sufficient.As cyber incidents continue to evolve,we may be required to expend additional resources to continue to modify orenhance our protective measures or to investigate
187、 and remediate any vulnerability to cyber incidents.The loss of our chief executive officer or president could adversely impact our ability to execute our business strategy.We depend,and will continue to depend in the foreseeable future,upon the continued services of our Chief Executive Officer,Nich
188、olas C.Taylor and our President and ChiefFinancial Officer,Tamala L.McComic,who have extensive experience and expertise in evaluating and analyzing producing oil and gas properties and drilling prospects,maximizingproduction from oil and gas properties and developing and executing acquisitions and f
189、inancing.As of March 31,2023,we do not have key-man insurance on the lives of Mr.Taylor andMs.McComic.The unexpected loss of the services of one or more of these individuals could,therefore,significantly and adversely affect our operations.14 We may be affected by one substantial shareholder.Nichola
190、s C.Taylor beneficially owns approximately 44%of the outstanding shares of our common stock.Mr.Taylor is also our Chairman of the Board and Chief ExecutiveOfficer.As a result,Mr.Taylor has significant influence in matters voted on by our shareholders,including the election of our Board members.Mr.Ta
191、ylor participates in all facets of ourbusiness and has a significant impact on both our business strategy and daily operations.The retirement,incapacity or death of Mr.Taylor,or any change in the power to vote sharesbeneficially owned by Mr.Taylor,could result in negative market or industry percepti
192、on and could have an adverse 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 seek to raise additional equity capital in the future.Any issuance of additional shares of our comm
193、on stock will dilute the percentage ownership interest of allshareholders and may dilute the book value per share of our common stock.Control by our executive officers and directors may limit your ability to influence the outcome of matters requiring stockholder approval and could discourage our pot
194、ential acquisition bythird parties.As of March 31,2023,our executive officers and directors beneficially owned approximately 47%of our common stock.These stockholders,if acting together,would be able toinfluence significantly all matters requiring approval by our stockholders,including the election
195、of our board of directors and the approval of mergers or other business combinationtransactions.The price of 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 stoc
196、k has and could continue to experience volatility dueto reasons unrelated to our operating performance.These reasons include:supply and demand for oil and natural gas;political conditions in oil and natural gas producing regions;demandfor our common stock and limited trading volume;investor percepti
197、on of our industry;fluctuations in commodity prices;variations in our results of operations;legislative or regulatorychanges;general trends in the oil and natural gas industry;market conditions and analysts estimates;and,other events in the oil and gas industry.Many of these factors are beyond our c
198、ontrol,and we cannot predict their potential effects on the price of our common stock.We cannot assure you that the market price of ourcommon stock will not fluctuate or decline significantly in the future.In addition,the stock markets in general can experience considerable price and volume fluctuat
199、ions.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 and undeveloped.As of March 31,2023,we had interests inapproximately 6,400 gross(18.5 net)producing oil and gas wells and owned le
200、asehold mineral,royalty and other interests in approximately 544,000 gross(2,768 net)acres.15 Oil and Natural Gas Reserves In accordance with current SEC rules,the average prices used in computing reserves at March 31,2023 were$92.02 per bbl of oil compared to$74.52 in 2022,an increase of23%,and$5.6
201、8 per mcf of natural gas compared to$4.60 in 2022,an increase of 23%,such prices are based on the 12-month unweighted arithmetic average market prices for sales of oiland natural gas on the first calendar day of each month during fiscal 2023.The benchmark price of$87.45 per bbl of oil at March 31,20
202、23 versus$71.72 at March 31,2022,was adjustedby lease for gravity,transportation fees and market differentials and did not give effect to derivative transactions.The benchmark price of$5.96 per mcf of natural gas at March 31,2023versus$4.09 at March 31,2022,was adjusted by lease for BTU content,tran
203、sportation fees and market differentials.For information concerning our costs incurred for oil and gas operations,net revenues from oil and gas production,estimated future net revenues attributable to our oil and gasreserves,present value of future net revenues discounted at 10%and changes therein,s
204、ee Notes to the Companys consolidated financial statements.Proved reserves are estimated reserves of crude oil(including condensate and natural gas liquids)and natural gas that geological and engineering data demonstrate withreasonable certainty to be recoverable in future years from known reservoir
205、s under existing economic and operating conditions.Proved developed reserves are those expected to berecovered through existing wells,equipment and operating methods.Proved undeveloped reserves are proved reserves that are expected to be recovered from new wells drilled to knownreservoirs on undrill
206、ed acreage for which the existence and recoverability of such reserves can be estimated with reasonable certainty,or from existing wells on which a relatively majorexpenditure is required to establish production.The engineering report with respect to Mexcos estimates of proved oil and gas reserves a
207、s of March 31,2023 and 2022 is based on evaluations prepared by Russell K.Hall andAssociates,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.Management maintains internal controls designed to pr
208、ovide reasonable assurance that the estimates of proved reserves are computed and reported in accordance with rules andregulations provided by the SEC.As stated above,Mexco retained Hall and Associates to prepare estimates of our oil and gas reserves.Management works closely with this firm,and isres
209、ponsible for providing accurate operating and technical data to it.Our Chief Financial Officer who has over 25 years experience in the oil and gas industry reviews the final reservesestimate and consults with a degreed geological consultant with extensive geological experience and if necessary,discu
210、sses the process used and findings with Alan Neal,the technicalperson at Hall and Associates responsible for evaluating the proved reserves covered by this report.Mr.Neal is a member of the Society of Petroleum Engineers and has over 35 years ofexperience in the oil and gas industry.Our Chairman and
211、 Chief Executive Officer who has over 45 years of experience in the oil and gas industry also reviews the final reserves estimate.Numerous uncertainties exist in estimating quantities of proved reserves.Reserve estimates are imprecise and subjective and may change at any time as additional informati
212、onbecomes available.Furthermore,estimates of oil and gas reserves are projections based on engineering data.There are uncertainties inherent in the interpretation of this data as well as theprojection of future rates of production.The accuracy of any reserve estimate is a function of the quality of
213、available data and of engineering and geological interpretation.Actual futureproduction,oil and gas prices,revenues,taxes,development expenditures,operating expenses and quantities of recoverable oil and gas reserves will most likely vary from the assumptionsand estimates.Any significant variance co
214、uld materially affect the estimated quantities and value of our oil and gas reserves,which in turn may adversely affect our cash flow,results ofoperations and the availability of capital resources.Per the current SEC rules,the prices used to calculate our proved reserves and the present value of pro
215、ved reserves set forth herein are made using the 12-month unweightedarithmetic average of the first-day-of-the-month price.All prices are held constant throughout the life of the properties.Actual future prices and costs may be materially higher or lowerthan those as of the date of the estimate.The
216、timing of both the production and the expenses with respect to the development and production of oil and gas properties will affect the timingof future net cash flows from proved reserves and their present value.Except to the extent that we acquire additional properties containing proved reserves or
217、 conduct successfulexploration and development activities,or both,our proved reserves 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 reserves in the periods ended March 31 are summarizedbelow.
218、16 PROVED RESERVES March 31,2023 2022 Oil(Bbls):Proved developed Producing 451,000 391,060 Proved developed Non-producing 35,770 37,620 Proved undeveloped 240,060 380,550 Total 726,830 809,230 Natural gas(Mcf):Proved developed Producing 3,826,370 3,454,310 Proved developed Non-producing 145,000 129,
219、160 Proved undeveloped 978,010 1,258,220 Total 4,949,380 4,841,690 Total net proved reserves(BOE)(1)1,551,725 1,616,180 PV-10 Value(2)$39,473,000$30,777,000 Present value of future income tax discounted at 10%(6,658,000)(4,857,000)Standardized measure of discounted future net cash flows(3)$32,815,00
220、0$25,920,000 Prices used in Calculating Reserves:(4)Natural gas(per Mcf)$5.68$4.60 Oil(per Bbl)$92.02$74.52 (1)These reserve estimates do not include the Companys interest in two LLCs referred to in Item 1.Business Company Profile on page 4 hereto.The first LLC has returned$226,725 and 76%of the tot
221、al investment since inception in fiscal 2020.(2)The PV-10 Value represents the discounted future net cash flows attributable to our proved oil and gas reserves before income tax,discounted at 10%per annum,which is themost directly comparable GAAP financial measure.PV-10 is relevant and useful to inv
222、estors because it presents the discounted future net cash flows attributable to our estimatednet proved reserves prior to taking into account future corporate income taxes.Further,investors may utilize the measure as a basis for comparison of the relative size and value ofour reserves to other compa
223、nies.We use this measure when assessing the potential return on investment related to our oil and natural gas properties.Our reconciliation of this non-GAAP financial measure is shown in the table as the PV-10,less future income taxes,discounted at 10%per annum,resulting in the standardized measure
224、of discounted future netcash flows.The standardized measure of discounted future net cash flows represents the present value of future cash flows attributable to our proved oil and natural gas reservesafter income tax,discounted at 10%.(3)In accordance with SEC requirement,the standardized measure o
225、f discounted future net cash flows was computed by applying 12-month first day of the month average prices foroil and gas during the fiscal year to the estimated future production of proved oil and gas reserves,less estimated future expenditures(based on year-end costs)to be incurred indeveloping an
226、d producing the proved reserves,less estimated future income tax expenses(based on year-end statutory tax rates,with consideration of future tax rates alreadylegislated)to be incurred on pretax net cash flows less tax basis of the properties and available credits,and assuming continuation of existin
227、g economic conditions.(4)These prices reflect adjustment by lease for quality,transportation fees and market differentials.During fiscal 2023,we added proved reserves of 101 thousand BOE(“MBOE”)through extensions and discoveries,added 52 MBOE through acquisitions,subtracted 54 MBOEfor downward revis
228、ions of previous estimates.Such downward revisions are primarily the result of reserves written off due to the five-year limitation and the change in the timing of newdevelopment.They are primarily royalty interests on leases in Loving,Pecos and Ward Counties,Texas which are held by production and s
229、till in place to be developed in the future.During the fiscal year ending March 31,2023,we had a working or royalty interest in the development of 59 wells converting reserves of approximately 186,000 BOE fromproved undeveloped to proved developed producing with capital cost of approximately$3,612,0
230、00.17 Oil and gas prices significantly impact the calculation of the PV-10 and the standardized measure of discounted future net cash flows.The present value of future net cash flowsdoes not purport to be an estimate of the fair market value of the Companys proved reserves.An estimate of fair value
231、would also take into account,among other things,anticipatedchanges in future prices and costs,the expected recovery of reserves in excess of proved reserves and a discount factor more representative of the time value of money and the risksinherent in producing oil and gas.Future prices received for
232、production and costs may vary,perhaps significantly,from the prices and costs assumed for purposes of these estimates.The10%discount factor used to calculate present value,which is required by Financial Accounting Standards Board(“FASB”)Accounting Standard Codification(“ASC”)932,“ExtractiveActivitie
233、s Oil and Gas”,may not necessarily be the most appropriate discount rate.The present value,no matter what discount rate is used,is materially affected by assumptions as totiming of future production,which may prove to be inaccurate.We have not filed any other oil or gas reserve estimates or included
234、 any such estimates in reports to other federal or foreign governmental authority or agency during the yearended March 31,2023,and no major discovery is believed to have caused a significant change in our estimates of proved reserves since that date.Drilling Activities The following table sets forth
235、 our drilling activity in wells in which we own a working interest for the years ended March 31:Year Ended March 31,2023 2022 Gross Net Gross Net Exploratory Wells Beginning wells in progress -Wells spud -Successful wells -Ending wells in progress -Development Wells Beginning wells in progress 11 .0
236、4 12 .06 Wells spud 54 .36 44 .13 Successful wells (44)(.35)(45)(.15)Ending wells in progress 21 .05 11 .04 The information contained in the foregoing table should not be considered indicative of future drilling performance,nor should it be assumed that there is any necessarycorrelation between the
237、number of productive wells drilled and the amount of oil and gas that may ultimately be recovered by us.In addition to the working interests mentioned above,other operators drilled 85 gross wells(.04 net wells)on company-owned minerals and royalties at no expense to theCompany.We expect the producti
238、on of our mineral interests will increase as operators continue to drill,complete and develop our acreage.We expect to capitalize on this development,which requires no capital expenditure funding from us,and believe the anticipated aggregate royalty receipts will enable us to grow our cash flows.A n
239、umber of the horizontal wells inwhich the Company participates involve longer lateral which are more efficient and have greater estimated ultimate recovery.Productive Wells and Acreage Productive wells consist of producing wells and wells capable of production,including gas wells awaiting pipeline c
240、onnections.Wells that are completed in more than oneproducing zone are counted as one well.As of March 31,2023,we held an interest in approximately 6,400 gross(18.5 net)productive wells,including approximately 5,200 wells in whichwe held an overriding or royalty interest and 1,100 wells in which we
241、held a working interest.18 A gross acre is an acre in which an interest is owned.A net acre is deemed to exist when the sum of fractional ownership interests in gross acres equals one.The number of netacres is the sum of the fractional interests owned in gross acres.The following table sets forth th
242、e approximate developed acreage in which we held a leasehold mineral or other interest asof March 31,2023:Acreage Gross Net Texas 348,600 1,586 Oklahoma 70,900 884 Louisiana 35,300 25 New Mexico 30,600 185 North Dakota 22,600 29 Ohio 14,500 1 Kansas 8,500 41 Montana 5,000 1 Wyoming 3,800 5 Arkansas
243、1,600 5 Colorado 1,100 1 Alabama 1,000 2 Mississippi 700 2 Virginia 100 1 Total 544,300 2,768 Net Production,Unit Prices and Costs The following table summarizes our net oil and natural gas production,the average sales price per barrel(“bbl”)of oil and per thousand cubic feet(“mcf”)of natural gas pr
244、oducedand the average production(lifting)cost per unit of production for the years ended March 31:Years Ended March 31,2023 2022 Oil(a):Production(Bbls)73,968 61,689 Revenue$6,522,163$4,685,094 Average Bbls per day(d)203 169 Average sales price per Bbl$88.18$75.95 Gas(b):Production(Mcf)534,363 393,8
245、41 Revenue$2,858,460$1,840,170 Average Mcf per day(d)1,464 1,079 Average sales price per Mcf$5.35$4.67 Total BOE(c)163,029 127,329 Production costs:Production expenses:$1,039,893$778,308 Production expenses per BOE$6.38$6.11 Production expenses per sales dollar$0.11$0.12 Production and ad valorem ta
246、xes:$679,826$502,804 Production and ad valorem taxes per BOE$4.17$3.95 Production and ad valorem taxes per sales dollar$0.07$0.08 Total oil and gas revenue$9,380,623$6,525,264 (a)Includes condensate.(b)Includes natural gas products.(c)Natural gas production is converted to oil production using a rat
247、io of six Mcf to one Bbl of oil.(d)Calculated on a 365 day year.ITEM 3.LEGAL PROCEEDINGS We may,from time to time,be involved in litigation and claims arising out of our operations in the normal course of business.We are not aware of any legal or governmentalproceedings against us,or contemplated to
248、 be brought against us,under various environmental protection statutes or other regulations to which we are subject.ITEM 4.MINE SAFETY DISCLOSURES Not applicable.19 PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY,RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Inform
249、ation In September 2003,our common stock began trading on the NYSE American,formerly the American Stock Exchange and more recently the NYSE MKT,under the symbol“MXC”.Prior to September 2003,the Companys common stock was traded on the over-the-counter bulletin board market under the symbol“MEXC”.The
250、registrar and transfer agent isIssuer Direct Corporation,500 Perimeter Park Drive,Suite D,Morrisville,North Carolina,27560(Tel:877-481-4014).The following table sets forth certain information as to the high andlow sales price quoted for Mexcos common stock on the NYSE American.High Low 2023:April-Ju
251、ne 2022$24.18$13.79 July-September 2022 20.84 14.43 October-December 2022 18.25 12.40 January-March 2023 15.39 10.50 2022:April-June 2021$10.60$6.88 July-September 2021 11.80 7.80 October-December 2021 18.00 8.35 January-March 2022 43.00 9.00 On March 31,2023,the closing sales price of our common st
252、ock on the NYSE American was$11.38 per share.Stockholders As of March 31,2023,we had 2,221,416 shares issued and 849 shareholders of record which does not include shareholders for whom shares are held in a“nominee”or“street”name.Of these issued shares,85,416 are held in the treasury.Dividends As of
253、March 31,2023,the Company had never paid a cash dividend to the Companys shareholders.Payment of dividends are at the discretion of our Board of Directors aftertaking into account many factors,including our financial condition,operating results,current and anticipated cash needs and plans for expans
254、ion.In addition,our current bank loanprohibits us from paying cash dividends on our common stock without written permission.Subsequently,on April 10,2023,the Company announced that its Board of Directors declared a special dividend of$0.10 per common share to its shareholders of record at theclose o
255、f business on May 1,2023.The special dividend was paid on May 15,2023.The Company obtained written permission from WTNB prior to declaring the special dividend.The Company can provide no assurance that dividends will be authorized or declared in the future or as to the amount or type of any future d
256、ividends.Our board of directorsdetermination with respect to any such dividends,including the record date,the payment date and the actual amount of the dividend,will depend upon our profitability and financialcondition,contractual restrictions,restrictions imposed by applicable law and other factors
257、 that the board deems relevant at the time of such determination.20 Securities Authorized for Issuance Under Compensation Plans The following table includes certain information about our Employee Incentive Stock Plan as of March 31,2023,which has been approved by our stockholders.Number of Shares Au
258、thorizedfor Issuance under Plan Number of Shares to be Issuedupon Exercise of OutstandingOptions Weighted Average ExercisePrice of Outstanding Options Number of Shares RemainingAvailable for Future Issuanceunder Plan 2009 Plan 200,000 45,250$5.27 -2019 Plan 200,000 94,000 9.85 98,000 Total 400,000 1
259、39,250$8.36 98,000 Issuer Repurchases In September 2022,the board of directors authorized the use of up to$250,000 to repurchase shares of our common stock for the treasury account.This program does not have anexpiration date and may be modified,suspended or terminated at any time by the board of di
260、rectors.Under the repurchase program,shares of common stock may be purchased from timeto time through open market purchases or other transactions.The amount and timing of repurchases will be subject to the availability of stock,prevailing market conditions,the tradingprice of the stock,our financial
261、 performance and other conditions.Repurchases may also be made from time-to-time in connection with the settlement of our share-based compensationawards.Repurchases will be funded from cash flow from operations.The following table provides information related to repurchases of our common stock for t
262、he treasury account during the year ended March 31,2023:Total Number of SharesPurchased Average Price Paid per Share Total Number of SharesPurchased as Part of PubliclyAnnounced Program Approximate Dollar Value ofShares that May Yet bePurchased Under the Program November 1-30,2022 3,716$14.51 3,716$
263、196,072 December 1-31,2022 8,700$13.14 8,700$81,740 January 1-31,2023 1,300$12.58 1,300$65,381 February 1-28,2023 1,727$12.75 1,727$43,359 March 1-31,2023 2,973$12.73 2,973$5,506 During the year ended March 31,2023,the Company repurchased 18,416 shares for the treasury account at an aggregate cost o
264、f$244,494,an average price of$13.28 per share.There were no shares of our common stock repurchased for the treasury account during the fiscal year ended March 31,2022.Subsequently,in April 2023,the Companys Board of Directors authorized the use of up to$1,000,000 to repurchase shares of the Companys
265、 common stock,par value,$0.50,forthe treasury account.This authorization replaced the previously authorized$250,000 common stock repurchase program which had$5,506 remaining at the time it was replaced.On August 16,2022,President Biden signed into law the Inflation Reduction Act of 2022(“IRA 2022”).
266、The IRA 2022,among other tax provisions,establishes a 1%excise taxon stock repurchases made by publicly traded U.S.corporations,effective for stock repurchases after December 31,2022.The IRA 2022 does provide for certain exceptions forrepurchases of stock including an exception as long as the aggreg
267、ate value of the repurchases for the tax year does not exceed$1,000,000.ITEM 6.RESERVED 21 ITEM 7.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion is intended to provide information relevant to an understanding of our financial condition,c
268、hanges in our financial condition and our results ofoperations and cash flows and should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Form 10-K.Liquidity and Capital Resources and Commitments Historically,we have funded our operations
269、,acquisitions,exploration and development expenditures from cash generated by operating activities,bank borrowings,sales of non-core properties and issuance of common stock.Our primary financial resource is our base of oil and gas reserves.We have pledged our producing oil and gas properties to secu
270、re our creditfacility.We do not have any delivery commitments to provide a fixed and determinable quantity of our oil and gas under any existing contract or agreement.Our long-term strategy is on increasing profit margins while concentrating on obtaining reserves with low-cost operations by acquirin
271、g and developing oil and gas properties withpotential for long-lived production.We focus our efforts on the acquisition of royalties and working interests and non-operated properties in areas with significant development potential.Cash Flows Changes in the net funds provided by or(used in)each of ou
272、r operating,investing and financing activities are set forth in the table below:For the Years Ended March 31,2023 2022 Change Net cash provided by operating activities$6,515,895$3,744,407$2,771,488 Net cash used in investing activities$(5,441,075)$(1,710,024)$3,731,051 Net cash used in financing act
273、ivities$(209,815)$(721,430)$(511,615)Cash Flow Provided by Operating Activities.Cash flow from operating activities is primarily derived from the production of our crude oil and natural gas reserves and changesin the balances of non-cash accounts,receivables,payables or other non-energy property ass
274、et account balances.Cash flow provided by our operating activities for the year ended March31,2023 was$6,515,895 in comparison to$3,744,407 for the year ended March 31,2022.This increase of$2,771,488 in our cash flow operating activities consisted of an increase in ournon-cash expenses of$565,838;a
275、decrease in our accounts receivable of$594,673;a decrease of$128,615 in our accounts payable and accrued expenses;and,an increase in our netincome of$1,807,636.Variations in cash flow from operating activities may impact our level of exploration and development expenditures.Our expenditures in opera
276、ting activities consist primarily of production expenses and engineering services.Our expenses also consist of employee compensation,accounting,insurance and other general and administrative expenses that we have incurred in order to address normal and necessary business activities of a public compa
277、ny in the crude oil and naturalgas production industry.Cash Flow Used in Investing Activities.Cash flow from investing activities is derived from changes in oil and gas property balances.For the year ended March 31,2023,we hadnet cash of$5,014,357 used for additions to oil and gas properties and a$4
278、25,000 investment in two limited liability companies compared to$1,635,024 and$75,000,respectively,for theyear ended March 31,2022.Cash Flow Used in Financing Activities.Cash flow from financing activities is derived from our changes in long-term debt and in equity account balances.Net cash flow use
279、din our financing activities was$209,815 for the year ended March 31,2023 compared to net cash flow used in our financing activities of$721,430 for the year ended March 31,2022.During the year ended March 31,2023,we received advances and made payments of$675,000 on our credit facility,received proce
280、eds of$16,700 from the exercise of director stockoptions,received payment of$30,179 form a director for profits on purchase of stock within the six-month window of a previous stock sale,expended$244,494 for the purchase of 18,416shares of our stock for the treasury and,expended$12,200 for the renewa
281、l of our credit facility.During the year ended March 31,2022,we received advances of$275,000 and madepayments of$1,455,000 on our credit facility and received proceeds of$458,570 for the exercise of employee and director stock options.22 Accordingly,net cash increased$865,005,leaving cash and cash e
282、quivalents on hand of$2,235,771 as of March 31,2023.We had working capital of$3,475,776 as of March 31,2023 compared to working capital of$2,469,776 as of March 31,2022,an increase of$1,006,000 for the reasons set forthbelow.Oil and Natural Gas Property Development.New Participations in Fiscal 2023.
283、The Company participated in the drilling and completion of 50 horizontal wells at a cost of approximately$4,200,000,of which$3,750,000was expended during the fiscal year ending March 31,2023.Eighteen of these wells have not been completed.Thirty-nine of these horizontal wells are in the Delaware Bas
284、in located inthe western portion of the Permian Basin in Lea and Eddy Counties,New Mexico and twelve are in the Midland Basin located in the eastern portion of the Permian Basin in ReaganCounty,Texas.In addition to the above working interests,there were 85 gross wells(.04 net wells)drilled by other
285、operators on Mexcos royalty interests and 50 gross wells(.29 net wells)obtained through acquisitions.In April 2022,Mexco expended approximately$176,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in LeaCounty,New Mexico.Mexcos working
286、interest in these wells is.52%.Subsequently,in May 2023,Mexco expended approximately$211,000 to complete these wells.Mexco expended approximately$1,196,000 to participate in the drilling and completion of three horizontal wells in the Wolfcamp Sand formation of the Midland Basin located inthe easter
287、n portion of the Permian Basin in Reagan County,Texas.Mexcos working interest in these wells is 3.2%.These wells were completed in October 2022 with initial averageproduction rates of 507 barrels of oil,2,147 barrels of water and 2,147,000 cubic feet of gas per day,or,560 barrels of oil equivalent p
288、er day.Mexco expended approximately$681,000 to participate in the drilling and completion of eight horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in LeaCounty,New Mexico.Mexcos working interest in these wells is.52%.These wells were completed in February and March 2023 with in
289、itial average production rates of 1,011 barrels ofoil,4,581 barrels of water and 3,577,000 cubic feet of gas per day,or 1,607 barrels of oil equivalent per day.Mexco expended approximately$607,000 to participate in the drilling and completion of a horizontal well in the Wolfcamp Sand formation of th
290、e Midland Basin in ReaganCounty,Texas.Mexcos working interest in this well is 5.1%.This well was completed in October 2022 with initial average production rates of 295 barrels of oil,1,313 barrels of waterand 237,000 cubic feet of gas per day,or,335 barrels of oil equivalent per day.Mexco expended a
291、pproximately$649,000 to participate in the drilling and completion of four horizontal wells in the Bone Spring formation of the Delaware Basin in EddyCounty,New Mexico.Mexcos working interest in these wells is 2.1%.These wells began producing in October 2022 with initial average production rates of
292、1,154 barrels of oil,2,887barrels of water and 2,966,000 cubic feet of gas per day,or,1,648 barrels of oil equivalent per day.Mexco expended approximately$84,000 to participate in the drilling and completion of two horizontal wells in the Penn Shale formation of the Delaware Basin in Lea County,New
293、Mexico.Mexcos working interest in these wells is.22%.These wells began producing in January 2023 with initial average production rates of 1,367 barrels of oil,3,900 barrels ofwater and 1,786,000 cubic feet of gas per day,or,1,665 barrels of oil equivalent per day.Mexco expended approximately$30,000
294、to participate in the drilling and completion of two horizontal wells in the Bone Spring formation of the Delaware Basin in Lea County,New Mexico.Mexcos working interest in these wells is.1%.These wells began producing in February 2023 with initial average production rates of 622 barrels of oil,1,99
295、1 barrels ofwater and 262,000 cubic feet of gas per day,or,666 barrels of oil equivalent per day.23 Mexco expended approximately$93,000 to participate in the drilling and completion of eight horizontal wells in the Spraberry trend of the Midland Basin in Reagan County,Texas.Mexcos working interest i
296、n these wells is approximately.11%.These wells began producing in December 2022.Mexco expended$16,000 to participate in the drilling and completion of three horizontal wells in the Bone Spring formation of the Delaware Basin in Eddy County,New Mexico.Mexcos working interest in these wells is.05%.The
297、se wells were subsequently completed in May 2023 with initial average production rates of 437 barrels of oil,983 barrels of water and603,000 cubic feet of gas per day,or,538 barrels of oil equivalent per day.In February 2023,Mexco expended approximately$31,000 to participate in the drilling and comp
298、letion of seven horizontal wells in the Bone Spring formation of the DelawareBasin in Lea County,New Mexico.Mexcos working interest in these wells is approximately.03%.These wells are currently being completed.In January 2023,Mexco expended$180,000 to participate in the drilling of four horizontal w
299、ells in the Wolfcamp Sand formation of the Delaware Basin in Lea County,NewMexico.Mexcos working interest in these wells is approximately.52%.These wells are currently awaiting completion operations.In March 2023,Mexco expended approximately$60,000 to participate in the drilling of two horizontal we
300、lls in the Penn Shale formation of the Delaware Basin in Lea County,New Mexico.Mexcos working interest in these wells is approximately.285%.These wells began drilling in April 2023.In October 2022,the Company made an approximately 2%equity investment commitment in a limited liability company amounti
301、ng to$2,000,000 of which$400,000 has beenfunded to date.The limited liability company is capitalized at approximately$100 million to purchase mineral interests in the Utica and Marcellus areas in the state of Ohio.Completion of Wells Drilled in Fiscal 2023.The Company expended approximately$329,000
302、for the completion costs of 8 horizontal wells located in Lea County,New Mexicothat the Company participated in drilling during fiscal 2022.The first 4 of these wells began producing in May 2022 and the remaining 4 were completed in November 2022 with initialaverage production rates of 1,168 barrels
303、 of oil,3,797 barrels of water and 2,621,000 cubic feet of gas per day,or,1,605 barrels of oil equivalent per day.Acquisitions in Fiscal 2023.The Company acquired various royalty(mineral)interests in 22 wells and several additional potential locations for development operated byChesapeake Energy Cor
304、poration and located in the Eagleford area of Dimmit County,Texas for a purchase price of$939,000 which was effective April 1,2022.The Company also acquired,for a purchase price of$117,200,royalty interests covering 28 producing wells in 6 counties in the Haynesville trend area of Louisiana and 5cou
305、nties in Texas.Subsequent Participations.In May 2023,Mexco expended approximately$133,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of theDelaware Basin in Lea County,New Mexico.Mexco expended approximately$68,000 to participate in the drilling of two hor
306、izontal wells in the Penn Shale formation of the Delaware Basin in Lea County,New Mexico.We are participating in other projects and are reviewing projects in which we may participate.The cost of such projects would be funded,to the extent possible,from existing cashbalances and cash flow from operat
307、ions.The remainder may be funded through borrowings 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 energy markets makes it extremely difficult to predict future oil
308、and natural gas price movements with any certainty.For example,in the last twelve months,the NYMEX West Texas Intermediate(“WTI”)posted price for crude oil has ranged from alow of$62.72 per bbl in March 2023 to a high of$118.09 per bbl in June 2022.The Henry Hub Spot Market Price(“Henry Hub”)for nat
309、ural gas has ranged from a low of$1.93 perMMBtu in March 2023 to a high of$9.85 per MMBtu in August 2022.On March 31,2023 the WTI posted price for crude oil was$71.65 per bbl and the Henry Hub spot price for natural gas was$2.10 per MMBtu.See Results of Operations belowfor realized prices.24 Results
310、 of Operations Fiscal 2023 Compared to Fiscal 2022 We had net income of$4,662,702 for the year ended March 31,2023 compared to$2,855,066 for the year ended March 31,2022,a 63%increase as a result of an increase inoperating revenues due to an increase in oil and natural gas prices and production part
311、ially offset by an increase in operating expenses that is further explained below.Oil and natural gas sales.Revenue from oil and natural gas sales was$9,380,623 for the year ended March 31,2023,a 44%increase from$6,525,264 for the year ended March31,2022.This resulted from an increase in oil and nat
312、ural gas production volumes and an increase in oil and natural gas prices.The following table sets forth our oil and natural gasrevenues,production quantities and average prices received during the fiscal years ended March 31:2023 2022%Difference Oil:Revenue$6,522,163$4,685,094 39.2%Volume(bbls)73,9
313、68 61,689 19.9%Average Price(per bbl)$88.18$75.95 16.1%Gas:Revenue$2,858,460$1,840,170 55.3%Volume(mcf)534,363 393,841 35.7%Average Price(per mcf)$5.35$4.67 14.6%Production and exploration.Production costs were$1,719,719 in fiscal 2023,a 34%increase from$1,281,112 in fiscal 2022.This was primarily t
314、he result of an increase inproduction taxes and marketing charges as a result of the increase in oil and gas revenues.Depreciation,depletion and amortization.Depreciation,depletion and amortization(“DD&A”)expense was$1,854,047 in fiscal 2023,a 38%increase from$1,345,435 in fiscal2022.This was primar
315、ily due to an increase in oil and gas production and an increase in the full cost pool amortization and a decrease in the oil and gas reserves.General and administrative expenses.General and administrative expenses were$1,120,691 for the year ended March 31,2023,an 18%increase from$949,079 for the y
316、earended March 31,2022.This was primarily due to an increase in employee stock option compensation,salaries and contract services,legal and accounting fees.Interest expense.Interest expense was$13,097 in fiscal 2023,a 51%decrease from$26,512 in fiscal 2022,due to a decrease in borrowings.Income taxe
317、s.There was no federal income tax for fiscal 2023 or fiscal 2022.We are in a net deferred tax asset position and believe it is more likely than not that these deferredtax assets will not be realized.State income tax was$164,510 in fiscal 2023,a 61%increase from$102,356 in fiscal 2022,due to the incr
318、ease in oil and natural gas sales.The effective taxrate for fiscal 2023 and fiscal 2022 was 3.4%and 3.5%,respectively.Contractual Obligations We have no off-balance sheet debt or unrecorded obligations and have not guaranteed the debt of any other party.The following table summarizes future payments
319、 we areobligated to make based on agreements in place as of March 31,2023:Payments due in:Total less than 1 year 1-3 years over 3 years Contractual obligations:Leases(1)$77,653$58,240$19,413$-(1)The lease amount represents the monthly rent amount for our principal office space in Midland,Texas under
320、 a 38-month lease agreement effective May 15,2018 andextended another 36 months to July 31,2024.Of this total obligation for the remainder of the lease,our majority shareholder will pay$15,572 less than 1 year and$5,191 1-3 years for his portion of the shared office space.25 Alternative Capital Reso
321、urces Although we have primarily used cash from operating activities,the sales of assets and funding from the credit facility as our primary capital resources,we have in the past,andcould in the future,use alternative capital resources.These could include joint ventures,carried working interests and
322、 issuances of our common stock through a private placement or publicoffering.Other Matters Critical Accounting Policies and Estimates In preparing financial statements,management makes informed judgments,estimates and assumptions that affect the reported amounts of assets and liabilities as of the d
323、ate of thefinancial statements and affect the reported amounts of revenues and expenses during the reporting period.On an ongoing basis,management reviews its estimates,including those relatedto litigation,environmental liabilities,income taxes,fair value and determination of proved reserves.Changes
324、 in facts and circumstances may result in revised estimates and actual resultsmay differ from these estimates.The following represents those policies that management believes are particularly important to the financial statements and that require the use of estimates and assumptions todescribe matte
325、rs that are inherently uncertain.Full Cost Method of Accounting for Crude Oil and Natural Gas Activities.SEC Regulation S-X defines the financial accounting and reporting standards for companiesengaged in crude oil and natural gas activities.Two methods are prescribed:the successful efforts method a
326、nd the full cost method.We have chosen to follow the full cost method underwhich all costs associated with property acquisition,exploration and development are capitalized.We also capitalize internal costs that can be directly identified with acquisition,exploration and development activities and do
327、 not include any costs related to production,general corporate overhead or similar activities.The carrying amount of oil and gas propertiesalso includes estimated asset retirement costs recorded based on the fair value of the asset retirement obligation(“ARO”)when incurred.Gain or loss on the sale o
328、r other disposition of oil and gas properties is not recognized,unless the sale would significantly alter the relationship between capitalized costs andproved reserves of oil and natural gas attributable to a country.Under the successful efforts method,geological and geophysical costs and costs of c
329、arrying and retaining undevelopedproperties are charged to expense as incurred.Costs of drilling exploratory wells that do not result in proved reserves are charged to expense.Depreciation,depletion,amortization andimpairment of crude oil and natural gas properties are generally calculated on a well
330、 by well or lease or field basis versus the“full cost”pool basis.Additionally,gain or loss is generallyrecognized on all sales of crude oil and natural gas properties under the successful efforts method.As a result our financial statements will differ from companies that apply the successfulefforts
331、method since we will generally reflect a higher level of capitalized costs as well as a higher DD&A rate on our crude oil and natural gas properties.At the time it was adopted,management believed that the full cost method would be preferable,as earnings tend to be less volatile than under the succes
332、sful efforts method.However,the full cost method makes us more susceptible to significant non-cash charges during times of volatile commodity prices because the full cost pool may be impaired when pricesare low.These charges are not recoverable when prices return to higher levels.Our crude oil and n
333、atural gas reserves have a relatively long life.However,temporary drops in commodityprices can have a material impact on our business including impact from the full cost method of accounting.26 Ceiling Test.Companies that use the full cost method of accounting for oil and gas exploration and development activities are required to perform a ceiling test each quarter.Thefull cost ceiling test is an
0731-84720580
sgpjbg002
工作日 9:30 - 18:00
研報
新質生產力
DeepSeek?
低空經濟
大模型
AI Agent
AI Infra
具身智能
自動駕駛
寵物
銀發經濟
人形機器人
企業出海
算力
微短劇
薪酬
白皮書
創新藥
人工智能
AI產業
信息科技
互聯網
消費經濟
汽車交通
電商零售
傳媒娛樂
醫藥健康
投資金融
能源環境
地產建筑
傳統產業
英文報告
其它
最新報告
中英對照
全文搜索
報告精選
PDF上傳翻譯
多格式文檔互轉
入駐&報告售賣
會員權益
機構報告
券商研報
財報庫
專題合集
英文報告
數據圖表
會議報告
其他資源
行業聚焦
芯片產業
熱點概念
全球咨詢智庫
人工智能
500強
新質生產力
會議峰會
新能源汽車
企業年報
互聯網
公司研究
行業綜觀
消費教育
科技通信
醫藥健康
人力資源
投資金融
汽車產業
物流地產
電子商務
傳統產業
傳媒營銷
其它
2025低空經濟/低空產業報告合集（共49套打包）
2025年智算中心/AIDC/AI數據中心研究報告合集（共37套打包）
AI、科技與通信
廣告、傳媒與營銷
消費、零售與支付
HR、文化與旅游
金融、保險與投資
能源、環境與工業
醫療制藥與大健康
物流、地產與建筑
其他行業
AI ? 科技 ? 通信
數字化
金融財經
智能制造
電商傳媒
地產建筑
醫療醫學
能源化工
其他行業
收藏
下載
2025-05-20
AI查數
行業數據
政策法規
商業模式
產業鏈
競爭格局
市場規模
產業概述
其它
2025年
AI讀財報
年報
一季報
半年報
三季報
IPO招股書
社會責任報告
A股
IPO申報
港股
美股&全球
新三板
掃碼登錄
手機快捷登錄
賬號登錄
