EXHIBIT 99.1
August 14, 2008
FOR IMMEDIATE RELEASE
Mexco Energy Corporation Reports Another Quarter of Record Earnings
MIDLAND, TX - 8/14/08 -- Mexco Energy Corporation (AMEX: MXC) today reported net income of $538,789, or .29 per diluted share, for the quarter ending June 30, 2008, the Company’s first quarter of fiscal 2009, compared to net income of $34,806, or .02 per diluted share, for the same quarter of fiscal 2008, an increase of 1,448%.
Operating revenues in the first quarter of fiscal 2009 increased $829,003 or 97% to $1,679,320 from $850,317 for the first quarter of fiscal 2008. This was another record high quarter of revenues for the Company, breaking the last record set in the fourth quarter of fiscal 2008.
This is partially the result of revenues generated from oil and gas royalty interests which include the $1,850,000 royalty interest acquisition in the Barnett Shale gas field on December 31, 2007, the largest acquisition of a property in the Company’s history, as well as the additional Barnett Shale royalties purchased on June 6, 2008 for $429,000. For the three month period ending June 30, 2008, revenues from oil and gas royalty interests accounted for approximately 37% of the Company’s revenues, compared to approximately 24% for the same period ending June 30, 2007. These first quarter results do not reflect any income from Mexico's Steelhead #1 well in Loving County. The Company is currently in the process of acquiring a right-of-way and preparing to build a pipeline to enable production and sales of natural gas from this well.
Nicholas C. Taylor, President and CEO of Mexco Energy Corporation, said, "We are very pleased with the over fifteen times increase in net income due in large part to the significant increase in revenues from natural gas royalties.”
Thomas Graham, Jr., Chairman of the Board of Directors of the Company added, “A nearly fifteen fold increase in the Company’s earnings is remarkable but it is indicative of the Company’s ongoing and expanding asset acquisition program. We look for more of this in the future.”
The average sales price for the quarter ending June 30, 2008 was $11.38 per Mcfe compared to $7.46 per Mcfe for the quarter ending June 30, 2007, an increase of 52%. Oil production decreased 6% and gas production increased 40% during the first quarter of fiscal 2009 as compared to the first quarter of fiscal 2008.
The Company owns oil and gas properties in ten states, with the majority of its activity centered in West Texas. The Company plans to continue to focus its efforts to increase oil and natural gas reserves, through exploration and development as well as acquisition of royalties with significant development potential.
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| | | June 30, | | March 31, | |
| | | 2008 | | 2008 | |
| | | (Unaudited) | | | |
ASSETS | | | | | |
| Current assets | | | | | |
| Cash and cash equivalents | | $ | 220,713 | | $ | 303,617 | |
| Accounts receivable: | | | | | | | |
| Oil and gas sales | | | 1,271,406 | | | 758,459 | |
| Trade | | | 255,286 | | | 102,403 | |
| Related parties | | | 1,834 | | | 12,659 | |
| Prepaid costs and expenses | | | 48,846 | | | 22,062 | |
| Total current assets | | �� | 1,798,085 | | | 1,199,200 | |
| Investment in GazTex, LLC | | | - | | | 20,509 | |
| Property and equipment, at cost | | | | | | | |
| Oil and gas properties, using the full cost method | | | 24,578,655 | | | 23,941,483 | |
| Other | | | 61,362 | | | 61,362 | |
| | | | | | | 24,002,845 | |
| Less accumulated depreciation, depletion and amortization | | | 12,258,740 | | | 12,019,895 | |
| Property and equipment, net | | | 12,381,277 | | | 11,982,950 | |
| | | $ | 14,179,362 | | $ | 13,202,659 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
| Current liabilities | | | | | | | |
| Accounts payable and accrued expenses | | | 416,254 | | | 571,526 | |
| Long-term debt | | | 2,275,000 | | | 2,600,000 | |
| Asset retirement obligation | | | 381,901 | | | 374,789 | |
| Deferred income tax liability | | | 1,227,413 | | | 1,196,280 | |
| Stockholders’ equity | | | | | | | |
Preferred stock - $1.00 par value;10,000,000 shares authorized; none outstanding | | | - | | | - | |
| Common stock - $0.50 par value; 40,000,000 shares authorized; | | | | | | | |
| 1,948,866 and 1,841,366 shares issued; | | | | | | | |
| 1,864,866 and 1,757,366 shares outstanding as of | | | | | | | |
| June 30, 2008 and March 31, 2008, respectively | | | 974,433 | | | 920,683 | |
| Additional paid-in capital | | | 5,207,460 | | | 4,381,269 | |
| Retained earnings | | | 4,123,518 | | | 3,584,729 | |
| Treasury stock, at cost (84,000 shares) | | | (426,617 | ) | | (426,617 | ) |
| Total stockholders’ equity | | | 9,878,794 | | | 8,460,064 | |
| | | $ | 14,179,362 | | $ | 13,202,659 | |
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended June 30,
(Unaudited)
| | | 2008 | | 2007 | |
| | | | | | |
| Operating revenues: | | | | | |
| Oil and gas | | $ | 1,672,587 | | $ | 850,144 | |
| Other | | | 6,733 | | | 173 | |
| Total operating revenues | | | 1,679,320 | | | 850,317 | |
| | | | | | | | |
| Operating expenses: | | | | | | | |
| Production | | | 334,988 | | | 333,050 | |
| Accretion of asset retirement obligation | | | 6,938 | | | 6,611 | |
| Depreciation, depletion and amortization | | | 238,844 | | | 172,884 | |
| General and administrative | | | 281,661 | | | 269,624 | |
| Total operating expenses | | | 862,431 | | | 782,169 | |
| | | | | | | | |
| Income from operations | | | 816,889 | | | 68,148 | |
| | | | | | | | |
| Other income (expense): | | | | | | | |
| Interest income | | | 336 | | | 338 | |
| Interest expense | | | (33,735 | ) | | (15,348 | ) |
| Net other expense | | | (33,399 | ) | | (15,010 | ) |
| | | | | | | | |
| Income before income taxes | | | 783,490 | | | 53,138 | |
| | | | | | | | |
| Income tax expense: | | | | | | | |
| Current | | | 213,568 | | | - | |
| Deferred | | | 31,133 | | | 18,332 | |
| | | | 244,701 | | | 18,332 | |
| | | | | | | | |
| Net income | | $ | 538,789 | | $ | 34,806 | |
| | | | | | | | |
| Earnings per common share: | | | | | | | |
| Basic | | $ | 0.31 | | $ | 0.02 | |
| Diluted | | $ | 0.29 | | | 0.02 | |
In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Mexco Energy Corporation cautions that statements in this press release which are forward-looking and which provide other than historical information involve risks and uncertainties that may impact the Company's actual results of operations. These risks include, but are not limited to, production variance from expectations, volatility of oil and gas prices, the need to develop and replace reserves, exploration risks, uncertainties about estimates of reserves, competition, government regulation, and mechanical and other inherit risks associated with oil and gas production. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company's Form 10-K for the fiscal year ended March 31, 2008. Mexco Energy Corporation disclaims any intention or obligation to revise any forward-looking statements.
For additional information, please contact: Nicholas C. Taylor, President and Chief Executive Officer or Tammy L. McComic, Vice-President and Chief Financial Officer, both of Mexco Energy Corporation, (432) 682-1119.
