Business Context and Reporting Period
Company: Mexco Energy Corp.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and six months ended September 30, 1995.
Business Overview: The company is engaged in oil and gas production, accounting for properties under the full cost method. Operations are primarily located in Texas.
Key Financial Metrics
| Metric (Six Months Ended Sept 30, 1995) | Value |
|---|---|
| Gross Revenues (Oil & Gas) | $347,790 |
| Net Income | $66,498 |
| Net Income Per Share | $0.05 |
| Net Cash Provided by Operations | $147,953 |
| Cash and Cash Equivalents (Sept 30, 1995) | $535,282 |
| Total Assets | $2,474,255 |
| Total Liabilities | $63,218 |
| Working Capital | $582,785 |
Note: The filing text does not provide explicit margin percentages; however, net income represents approximately 29% of total revenues for the six-month period.
Material Changes vs. Prior Period
- Revenue Growth: Gross revenues from oil and gas production increased 43% ($105,073) for the six months ended September 30, 1995, compared to the prior year period. This was driven by increased production from new wells.
- Profitability: Net income for the six-month period rose to $66,498 from $41,028 in the prior year. Income before taxes increased significantly from $19,273 to $71,683.
- Cost Increases: Production costs increased 25% ($25,156) due to higher lease operating expenses. Depreciation, depletion, and amortization (DD&A) increased 25% ($23,539) due to property additions.
- Liquidity: Working capital increased 156% to $582,785, primarily due to a $314,308 increase in cash balances.
Outlook, Commentary, and Risks
- Capital Raise: On July 28, 1995, the company completed a private placement of 250,000 shares of common stock for total proceeds of $500,000. This transaction significantly improved liquidity.
- Operational Activity: The company participated in converting a temporarily abandoned well in Pecos County, Texas, to a saltwater disposal well.
- Management Commentary: Management notes that results for the three and six-month periods are not necessarily indicative of full-year results. They state they cannot specifically identify the effects of inflation on operations.
- Risks/Contingencies: The filing does not explicitly detail specific legal contingencies or litigation risks beyond standard operational disclosures. The company relies on the full cost method for accounting, which can be sensitive to price fluctuations and reserve valuations.
Investor Verification Checklist
- Verify the status and production rates of the "new wells" cited as the primary driver of the 43% revenue increase.
- Confirm the terms and restrictions of the 250,000 shares issued in the July 1995 private placement.
- Review the specific lease operating expenses that caused the 25% increase in production costs to ensure they are sustainable.
- Assess the impact of the one-time "farmout" income in the prior year (1994) which skewed the comparison for "Other Income."
- Validate the company's cash burn rate relative to its capital expenditure program ($333,645 for the six months).