EXHIBIT 99.1
November 17, 2008
FOR IMMEDIATE RELEASE
Mexco Energy Corporation Reports Profitable Earnings
MIDLAND, TX – 11/17/08 -- Mexco Energy Corporation (AMEX: MXC) today reported net income of $511,115, or $0.26 per diluted share, for the quarter ending September 30, 2008, the Company’s second quarter of fiscal 2009, compared to a net loss of $8,756 for the same quarter of fiscal 2008. Operating revenues in the second quarter of fiscal 2009 increased $760,698 or 90% to $1,601,806 from $841,108 for the second quarter of fiscal 2008.
The average sales price for the second quarter of fiscal 2009 was $10.74 per Mcfe compared to $7.31 per Mcfe for the second quarter of fiscal 2008, an increase of 47%. Oil production increased 4% and gas production increased 37% during the second quarter of fiscal 2009 as compared to the same period of fiscal 2008.
For the six months ended September 30, 2008, the Company reported net income of $1,049,904, or $0.55 per diluted share, as compared to $26,049, or $0.01 per diluted share, for the same period of fiscal 2008, a 3,930% increase. Operating revenues increased $1,589,701, or 94%, to $3,281,127 for the six month period from $1,691,426 for the same period of fiscal 2008.
This is partially the result of revenues generated from the recent purchases of Barnett Shale oil and gas royalty interests. For the three month period ending September 30, 2008, revenues from oil and gas royalty interests accounted for approximately 36% of the Company’s revenues, compared to approximately 23% for the same period ending September 30, 2007.
These six-month period results do not reflect any income from Mexco’s Steelhead #1 well in Loving County. The Company has acquired rights-of-way and is 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, "In addition to the projected contribution to earnings from the Steelhead discovery, we expect recently acquired royalty interests in Johnson County, Texas to add significantly to the Company’s earnings.”
Thomas Graham, Jr., Chairman of the Board of Directors of the Company added, “This latest report showing a significant earnings advance is more evidence of progress and the bright future ahead for the Company.”
Mexco Energy Corporation owns oil and gas properties in ten states, with the majority of its activity centered in West Texas. The Company continues to focus its efforts on increasing 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
| | September 30, 2008 | | | March 31, 2008 | |
| | (Unaudited) | | | | |
| | | | | | |
ASSETS | | | | | | |
Current assets | | | | | | |
Cash and cash equivalents | | $ | 220,239 | | | $ | 303,617 | |
Accounts receivable: | | | | | | | | |
Oil and gas sales | | | 867,441 | | | | 758,459 | |
Trade | | | 474,449 | | | | 102,403 | |
Related parties | | | 42,446 | | | | 12,659 | |
Prepaid costs and expenses | | | 51,304 | | | | 22,062 | |
Total current assets | | | 1,655,879 | | | | 1,199,200 | |
| | | | | | | | |
Investment in GazTex, LLC | | | -- | | | | 20,509 | |
| | | | | | | | |
Property and equipment, at cost | | | | | | | | |
Oil and gas properties, using the full cost method | | | 24,805,130 | | | | 23,941,483 | |
Other | | | 61,362 | | | | 61,362 | |
| | | 24,866,492 | | | | 24,002,845 | |
Less accumulated depreciation, depletion and amortization | | | 12,499,702 | | | | 12,019,895 | |
Property and equipment, net | | | 12,366,790 | | | | 11,982,950 | |
| | $ | 14,022,669 | | | $ | 13,202,659 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current Liabilities | | | | | | | | |
Accounts payable and accrued expenses | | $ | 726,505 | | | $ | 571,526 | |
Long-term debt | | | 950,000 | | | | 2,600,000 | |
Asset retirement obligation | | | 409,552 | | | | 374,789 | |
Deferred income tax liability | | | 1,236,139 | | | | 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; | | | | | | | | |
1,958,866 and 1,841,366 shares issued; | | | | | | | | |
1,874,866 and 1,757,366 shares outstanding as of | | | | | | | | |
September 30 and March 31, 2008, respectively | | | 979,433 | | | | 920,683 | |
Additional paid-in capital | | | 5,513,024 | | | | 4,381,269 | |
Retained earnings | | | 4,634,633 | | | | 3,584,729 | |
Treasury stock, at cost (84,000 shares) | | | (426,617 | ) | | | (426,617 | ) |
Total stockholders’ equity | | | 10,700,473 | | | | 8,460,064 | |
| | $ | 14,022,669 | | | $ | 13,202,659 | |
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended | | | Six Months Ended | |
| | September 30 | | | September 30 | |
| | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Operating revenue: | | | | | | | | | | | | |
Oil and gas sales | | $ | 1,595,209 | | | $ | 839,947 | | | $ | 3,267,797 | | | $ | 1,690,092 | |
Other | | | 6,597 | | | | 1,161 | | | | 13,330 | | | | 1,334 | |
Total operating revenues | | | 1,601,806 | | | | 841,108 | | | | 3,281,127 | | | | 1,691,426 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Production | | | 357,753 | | | | 467,336 | | | | 692,741 | | | | 800,386 | |
Accretion of asset retirement obligation | | | 7,266 | | | | 6,713 | | | | 14,204 | | | | 13,324 | |
Depreciation, depletion, and amortization | | | 240,962 | | | | 183,797 | | | | 479,807 | | | | 356,681 | |
General and administrative | | | 199,239 | | | | 178,918 | | | | 480,900 | | | | 448,543 | |
Total operating expenses | | | 805,220 | | | | 836,764 | | | | 1,667,652 | | | | 1,618,934 | |
| | | | | | | | | | | | | | | | |
Income from operations | | | 796,586 | | | | 4,344 | | | | 1,613,475 | | | | 72,492 | |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Interest income | | | 671 | | | | 1,747 | | | | 1,007 | | | | 2,085 | |
Interest expense | | | (19,854 | ) | | | (20,345 | ) | | | (53,589 | ) | | | (35,694 | ) |
| | | | | | | | | | | | | | | | |
Net other expense | | | (19,183 | ) | | | (18,598 | ) | | | (52,582 | ) | | | (33,609 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 777,403 | | | | (14,254 | ) | | | 1,560,893 | | | | 38,883 | |
| | | | | | | | | | | | | | | | |
Income tax expense (benefit): | | | | | | | | | | | | | | | | |
Current | | | 257,562 | | | | -- | | | | 471,130 | | | | -- | |
Deferred | | | 8,726 | | | | (5,498 | ) | | | 39,859 | | | | 12,834 | |
| | | 266,288 | | | | (5,498 | ) | | | 510,989 | | | | 12,834 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 511,115 | | | $ | (8,756 | ) | | $ | 1,049,904 | | | $ | 26,049 | |
| | | | | | | | | | | | | | | | |
Earnings per common share: | | | | | | | | | | | | | | | | |
Basic: | | $ | 0.27 | | | $ | -- | | | $ | 0.58 | | | $ | 0.01 | |
Diluted: | | $ | 0.26 | | | $ | -- | | | $ | 0.55 | | | $ | 0.01 | |
| | | | | | | | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
Basic: | | | 1,873,127 | | | | 1,772,268 | | | | 1,817,962 | | | | 1,774,526 | |
Diluted: | | | 1,975,453 | | | | 1,772,268 | | | | 1,922,568 | | | | 1,786,397 | |
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.