Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2016 | Feb. 09, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | MEXCO ENERGY CORP | |
Entity Central Index Key | 66,418 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 2,037,266 | |
Trading Symbol | MXC | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Dec. 31, 2016 | Mar. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 60,858 | $ 34,013 |
Accounts receivable: | ||
Oil and gas sales | 331,809 | 248,145 |
Trade | 12,017 | 29,880 |
Prepaid costs and expenses | 9,635 | 43,284 |
Total current assets | 414,319 | 355,322 |
Property and equipment, at cost | ||
Oil and gas properties, using the full cost method | 37,651,673 | 40,365,197 |
Other | 107,484 | 107,484 |
Accumulated depreciation, depletion and amortization | (25,274,821) | (24,395,184) |
Property and equipment, net | 12,484,336 | 16,077,497 |
Other noncurrent assets | 29,614 | 34,441 |
Total assets | 12,928,269 | 16,467,260 |
Current liabilities | ||
Accounts payable and accrued expenses | 202,408 | 332,172 |
Long-term debt | 3,070,000 | 5,580,000 |
Asset retirement obligations | 960,525 | 1,211,077 |
Total liabilities | 4,232,933 | 7,123,249 |
Commitments and contingencies | ||
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; 2,104,266 issued and 2,037,266 shares outstanding as of December 31, 2016 and March 31, 2016 | 1,052,133 | 1,052,133 |
Additional paid-in capital | 7,234,408 | 7,191,984 |
Retained earnings | 754,796 | 1,445,895 |
Treasury stock, at cost - (67,000 shares) | (346,001) | (346,001) |
Total stockholders' equity | 8,695,336 | 9,344,011 |
Total liabilities and stockholders' equity | $ 12,928,269 | $ 16,467,260 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Dec. 31, 2016 | Mar. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $ 1 | $ 1 |
Preferred stock shares authorized | 10,000,000 | 10,000,000 |
Preferred stock shares issued | ||
Preferred stock shares outstanding | ||
Common stock par value | $ 0.50 | $ 0.50 |
Common stock shares authorized | 40,000,000 | 40,000,000 |
Common stock shares issued | 2,104,266 | 2,104,266 |
Common stock shares outstanding | 2,037,266 | 2,037,266 |
Treasury stock, shares | 67,000 | 67,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating revenue: | ||||
Oil and gas | $ 580,419 | $ 537,771 | $ 1,662,985 | $ 1,951,228 |
Other | 9,715 | 7,099 | 178,174 | 25,080 |
Total operating revenues | 590,134 | 544,870 | 1,841,159 | 1,976,308 |
Operating expenses: | ||||
Production | 234,372 | 286,519 | 721,864 | 869,091 |
Accretion of asset retirement obligation | 9,248 | 8,797 | 26,939 | 26,394 |
Impairment of long-lived asset | 2,150,621 | 2,984,410 | ||
Depreciation, depletion, and amortization | 273,885 | 375,987 | 879,637 | 1,244,617 |
General and administrative | 199,995 | 272,936 | 780,608 | 931,545 |
Total operating expenses | 717,500 | 3,094,860 | 2,409,048 | 6,056,057 |
Operating loss | (127,366) | (2,549,990) | (567,889) | (4,079,749) |
Other income (expenses): | ||||
Interest income | 3 | 328 | 175 | 363 |
Interest expense | (32,378) | (43,413) | (123,385) | (127,693) |
Net other expense | (32,375) | (43,085) | (123,210) | (127,330) |
Loss before provision for income taxes | (159,741) | (2,593,075) | (691,099) | (4,207,079) |
Income tax benefit: | ||||
Deferred | (147,539) | (660,870) | ||
Net loss | $ (159,741) | $ (2,445,536) | $ (691,099) | $ (3,546,209) |
Loss per common share: | ||||
Basic and diluted | $ (0.08) | $ (1.20) | $ (0.34) | $ (1.74) |
Weighted average common shares outstanding: | ||||
Basic and diluted | 2,037,266 | 2,037,266 | 2,037,266 | 2,037,266 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - 9 months ended Dec. 31, 2016 - USD ($) | Common Stock Par Value [Member] | Treasury Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Total |
Balance at Mar. 31, 2016 | $ 1,052,133 | $ (346,001) | $ 7,191,984 | $ 1,445,895 | $ 9,344,011 |
Balance, shares at Mar. 31, 2016 | 2,104,266 | (67,000) | |||
Net loss | (691,099) | (691,099) | |||
Stock based compensation | $ 42,424 | $ 42,424 | |||
Common stock share issued, shares | |||||
Common stock shares, held in treasury, acquisitions | |||||
Balance at Dec. 31, 2016 | $ 1,052,133 | $ (346,001) | $ 7,234,408 | $ 754,796 | $ 8,695,336 |
Balance, shares at Dec. 31, 2016 | 2,104,266 | (67,000) | |||
Common stock share outstanding, shares at Dec. 31, 2016 | 2,037,266 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (691,099) | $ (3,546,209) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Deferred income tax benefit | (660,870) | |
Stock-based compensation | 42,424 | 95,770 |
Depreciation, depletion and amortization | 879,637 | 1,244,617 |
Accretion of asset retirement obligations | 26,939 | 26,394 |
Impairment of oil and gas properties | 2,984,410 | |
Changes in assets and liabilities: | ||
(Increase) decrease in accounts receivable | (65,801) | 162,467 |
Decrease in prepaid expenses | 33,649 | 30,745 |
Increase in non-current assets | (25,219) | |
(Decrease) increase in accounts payable and accrued expenses | (103,500) | 27,855 |
Net cash provided by operating activities | 97,030 | 365,179 |
Cash flows from investing activities: | ||
Additions to oil and gas properties | (517,454) | (1,083,698) |
Additions to other property and equipment | (693) | |
Settlement of asset retirement obligations | (93,630) | (23,812) |
Drilling refunds | 75,808 | |
Proceeds from sale of oil and gas properties and equipment | 2,975,091 | 782,363 |
Net cash provided by (used in) investing activities | 2,439,815 | (325,840) |
Cash flows from financing activities: | ||
Reduction of long-term debt | (2,510,000) | (500,000) |
Proceeds from long-term debt | 400,000 | |
Net cash used in financing activities | (2,510,000) | (100,000) |
Net increase (decrease) in cash and cash equivalents | 26,845 | (60,661) |
Cash and cash equivalents at beginning of period | 34,013 | 96,084 |
Cash and cash equivalents at end of period | 60,858 | 35,423 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 126,593 | 126,555 |
Non-cash investing and financing activities: | ||
Asset retirement obligations | $ 5,247 | $ 5,097 |
Nature of Operations
Nature of Operations | 9 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Mexco Energy Corporation (a Colorado corporation) and its wholly owned subsidiaries, Forman Energy Corporation (a New York corporation), Southwest Texas Disposal Corporation (a Texas corporation) and TBO Oil & Gas, LLC (a Texas limited liability company) (collectively, the “Company”) are engaged in the exploration, development and production of natural gas, crude oil, condensate and natural gas liquids (“NGLs”). Most of the Company’s oil and gas interests are centered in West Texas; however, the Company owns producing properties and undeveloped acreage in thirteen states. Although predominately all of the Company’s oil and gas interests are operated by others, the Company operates five wells in which it owns an interest. |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | 2. Basis of Presentation and Significant Accounting Policies Principles of Consolidation Estimates and Assumptions Interim Financial Statements. Recent Accounting Pronouncements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The amendment is to simplify several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in ASU No. 2016-09 are effective for interim and annual reporting periods beginning after December 15, 2016. The Company is currently assessing the impact of ASU No. 2016-09 on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Topic 842 Leases, which requires companies to recognize a right of use asset and related liability on the balance sheet for the rights and obligations arising from leases with durations greater than 12 months. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods thereafter. Early adoption is permitted. We are currently evaluating the effect the new guidance will have on our consolidated financial statements. In January 2016, the FASB issued authoritative guidance that amends existing requirements on the classification and measurement of financial instruments. The standard principally affects accounting for equity investments and financial liabilities where the fair value option has been elected. The guidance is effective for fiscal periods after December 15, 2017, and interim periods thereafter. Early adoption of certain provisions is permitted. We are currently evaluating the effect the new guidance will have on our financial statements. In November 2015, the FASB issued ASU No. 2015-17, Topic 740 Income Taxes: Balance Sheet Classification of Deferred Taxes which requires all deferred income tax liabilities and assets to be presented as noncurrent in a classified balance sheet. Currently, entities are required to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified balance sheet. The new standard will become effective for Mexco beginning on April 1, 2017, with the option to early adopt, and can be applied either prospectively or retrospectively. The adoption of this guidance will have no impact on our results of operations or cash flows. The reclassification of amounts from current to noncurrent could affect the presentation of our balance sheet. In May 2014, the FASB issued ASU No. 2014-09, Topic 606: Revenue from Contracts with Customers. This ASU provides guidance concerning the recognition and measurement of revenue from contracts with customers. The effective date for ASU 2014-09 was delayed through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual and interim periods beginning after December 15, 2017 and is required to be adopted using either the retrospective or cumulative effect transition method, with early adoption permitted in 2017. Additionally, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus agent considerations (reporting revenue gross versus net), which clarifies the implementation guidance on principal versus agent considerations on such matters. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying performance obligations and licensing, which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-scope improvements and practical expedients, which addresses narrow-scope improvements to the guidance on collectibility, non-cash consideration, and completed contracts at transition. In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. These amendments intended to improve and clarify the implementation guidance of Topic 606. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. Management is evaluating the effect, if any, this pronouncement will have on our consolidated financial statements. |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Dec. 31, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | 3. Asset Retirement Obligations The Company’s asset retirement obligations (“ARO”) relate to the plugging of wells, the removal of facilities and equipment, and site restoration on oil and gas properties. The fair value of a liability for an ARO is recorded in the period in which it is incurred, discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period, and the capitalized cost is depreciated over the useful life of the related asset. The ARO is included in the Consolidated Balance Sheets with the current portion being included in the accounts payable and other accrued expenses. The following table provides a rollforward of the AROs for the first nine months of fiscal 2017: Carrying amount of asset retirement obligations as of April 1, 2016 $ 1,221,077 Liabilities incurred 5,247 Liabilities settled (282,738 ) Accretion expense 26,939 Carrying amount of asset retirement obligations as of December 31, 2016 970,525 Less: Current portion 10,000 Non-Current asset retirement obligation $ 960,525 |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based Compensation | 4. Stock-based Compensation The Company recognized stock-based compensation expense of $10,738 and $23,873 in general and administrative expense in the Consolidated Statements of Operations for the three months ended December 31, 2016 and 2015, respectively. Compensation expense recognized for the nine months ended December 31, 2016 and 2015 was $42,424 and $95,770, respectively. The total cost related to non-vested awards not yet recognized at December 31, 2016 totals $35,860 which is expected to be recognized over a weighted average of 1.29 years. The following table is a summary of activity of stock options for the nine months ended December 31, 2016: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Life in Years Aggregate Intrinsic Value Outstanding at April 1, 2016 153,600 $ 6.52 6.36 $ - Granted - - Exercised - - Forfeited or Expired 4,000 5.98 Outstanding at December 31, 2016 149,600 $ 6.54 5.59 $ - Vested at December 31, 2016 121,850 $ 6.50 5.21 $ - Exercisable at December 31, 2016 121,850 $ 6.50 5.21 $ - There were no options granted during the nine months ended December 31, 2016 and 2015. During the nine months ended December 31, 2016, 3,000 vested and 1,000 unvested stock options were forfeited due to the resignation of an employee. Outstanding options at December 31, 2016 expire between August 2020 and August 2024 and have exercise prices ranging from $5.98 to $7.00. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 5. Fair Value of Financial Instruments Fair value as defined by authoritative literature is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories: Level 1 – Quoted prices in active markets for identical assets and liabilities. Level 2 – Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 – Significant inputs to the valuation model are unobservable. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The carrying amount reported in the accompanying consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. The fair value amount reported in the accompanying consolidated balance sheets for long term debt approximates fair value because the actual interest rates do not significantly differ from current rates offered for instruments with similar characteristics and is deemed to use Level 2 inputs. See the Company’s Note 6 on Credit Facility for further discussion. |
Credit Facility
Credit Facility | 9 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Credit Facility | 6. Credit Facility The Company has a loan agreement with Bank of America, N.A. (the “Agreement”), which provided for a credit facility of $5,570,000 with no monthly commitment reductions and a borrowing base to be evaluated on July 30 and January 1 of each year or at any additional time in the Bank’s discretion. The borrowing base is reset to the extent the Company’s sells or otherwise disposes of any of its oil and gas properties. The Company is required to pay 100% of such net proceeds to the lender resulting in a permanent reduction of the borrowing base. Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties. The Agreement was renewed ten times with the tenth amendment effective as of March 31, 2016 with a maturity date of November 30, 2020. On January 30, 2017, the borrowing base was reevaluated and set at $3,120,000. Under such renewal agreement, interest on the facility accrues at an annual rate equal to the British Bankers Association London Interbank Offered Rate (“BBA LIBOR”) daily floating rate, plus 3.0 percentage points, which was 3.76% on December 31, 2016. Interest on the outstanding amount under the credit agreement is payable monthly. There was no availability of this line of credit at December 31, 2016. No principal payments are anticipated to be required through November 30, 2020. The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires minimum earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $300,000 for the three fiscal quarters ending December 31, 2016, $500,000 for the four fiscal quarters ending March 31, 2017 and $650,000 for each trailing fiscal quarter period thereafter and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter thereafter. The Company is in compliance with all covenants as of December 31, 2016. In addition, this Agreement prohibits the Company from paying cash dividends on its common stock. The Agreement does grant the Company permission to enter into hedge agreements however, it is under no obligation to do so. The Agreement allows for up to $500,000 of the facility to be used for outstanding letters of credit. As of December 31, 2016, one letter of credit for $50,000, in lieu of plugging bond with the Texas Railroad Commission (“TRRC”) covering the properties the Company operates is outstanding under the facility. This letter of credit renews annually. The Company will pay a fee in an amount equal to 1 percent (1.0%) per annum of the outstanding undrawn amount of each standby letter of credit, payable monthly in arrears, on the basis of the face amount outstanding on the day the fee is calculated. The balance outstanding on the line of credit as of December 31, 2016 was $3,070,000. The following table is a summary of activity on the Bank of America, N.A. line of credit for the nine months ended December 31, 2016: Principal Balance at April 1, 2016: $ 5,580,000 Borrowings - Repayments 2,510,000 Balance at December 31, 2016: $ 3,070,000 |
Income Taxes
Income Taxes | 9 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, and we consider the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry. Based on the material write-downs of the carrying value of our oil and natural gas properties during fiscal 2016, we project being in a net deferred tax asset position at March 31, 2017. Our deferred tax asset is $1,094,421 as of December 31, 2016 with a valuation amount of $1,094,421. We believe it is more likely than not that these deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as future expected growth. The income tax provision consists of the following for the three and nine months ended December 31, 2016 and 2015: Three Months Ended Nine Months Ended December 31 December 31 2016 2015 2016 2015 Current income tax $ - $ - $ - $ - Deferred income tax benefit - (147,539 ) - (660,870 ) Total income tax provision: $ - $ (147,539 ) $ - $ (660,870 ) Effective tax rate 0 % (6 %) 0 % (16 %) |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. Related Party Transactions Related party transactions for the Company relate to shared office expenditures in addition to administrative and operating expenses paid on behalf of the majority stockholder. The total billed to and reimbursed by the stockholder for the three months ended December 31, 2016 and 2015 was $9,565 and $31,711, respectively. The total billed to and reimbursed by the stockholder for the nine months ended December 31, 2016 and 2015 was $22,061 and $81,412, respectively. |
Loss Per Common Share
Loss Per Common Share | 9 Months Ended |
Dec. 31, 2016 | |
Loss per common share: | |
Loss Per Common Share | 9. Loss Per Common Share The Company’s basic net loss per share has been computed based on the weighted average number of common shares outstanding during the period. Diluted net loss per share assumes the exercise of all stock options having exercise prices less than the average market price of the common stock during the period using the treasury stock method. In periods where losses are reported, the weighted-average number of common shares outstanding excludes potential common shares, because their inclusion would be anti-dilutive. The following is a reconciliation of the number of shares used in the calculation of basic net loss per share and diluted loss per share for the three and nine month periods ended December 31, 2016 and 2015: Three Months Ended Nine Months Ended December 31 December 31 2016 2015 2016 2015 Net loss $ (159,741 ) $ (2,445,536 ) $ (691,099 ) $ (3,546,209 ) Shares outstanding: Weighted avg. common shares outstanding – basic 2,037,266 2,037,266 2,037,266 2,037,266 Effect of the assumed exercise of dilutive stock options - - - - Weighted avg. common shares outstanding – dilutive 2,037,266 2,037,266 2,037,266 2,037,266 Loss per common share: Basic and diluted $ (0.08 ) $ (1.20 ) $ (0.34 ) $ (1.74 ) Due to a net loss for the three and nine months ended December 31, 2016 and 2015, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. |
Impairments of Oil and Natural
Impairments of Oil and Natural Gas Properties | 9 Months Ended |
Dec. 31, 2016 | |
Extractive Industries [Abstract] | |
Impairments of Oil and Natural Gas Properties | 10. Impairments of Oil and Natural Gas Properties Our oil and natural gas properties are subject to quarterly full cost ceiling tests. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. Estimated future net revenues for the quarterly ceiling limit are calculated using the average of commodity prices on the first day of the month over the trailing 12-month period. In the three and nine months ended December 31, 2015, capitalized costs of oil and natural gas properties exceeded the ceiling, resulting in an impairment in the carrying value of our oil and natural gas properties of approximately $2,150,621 and $2,984,410, respectively. We did not have an impairment in the carrying amount of our oil and natural gas properties for the nine months ended December 31, 2016. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events In February 2017, the Company sold its fractional interest in two wells, a salt water disposal system and undeveloped acreage in Williams County, North Dakota for sales price of approximately $42,000 which was applied to the Company’s outstanding bank indebtedness. |
Basis of Presentation and Sig18
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation |
Estimates and Assumptions | Estimates and Assumptions |
Interim Financial Statements | Interim Financial Statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The amendment is to simplify several aspects of the accounting for share-based payment transactions including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in ASU No. 2016-09 are effective for interim and annual reporting periods beginning after December 15, 2016. The Company is currently assessing the impact of ASU No. 2016-09 on the consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Topic 842 Leases, which requires companies to recognize a right of use asset and related liability on the balance sheet for the rights and obligations arising from leases with durations greater than 12 months. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods thereafter. Early adoption is permitted. We are currently evaluating the effect the new guidance will have on our consolidated financial statements. In January 2016, the FASB issued authoritative guidance that amends existing requirements on the classification and measurement of financial instruments. The standard principally affects accounting for equity investments and financial liabilities where the fair value option has been elected. The guidance is effective for fiscal periods after December 15, 2017, and interim periods thereafter. Early adoption of certain provisions is permitted. We are currently evaluating the effect the new guidance will have on our financial statements. In November 2015, the FASB issued ASU No. 2015-17, Topic 740 Income Taxes: Balance Sheet Classification of Deferred Taxes which requires all deferred income tax liabilities and assets to be presented as noncurrent in a classified balance sheet. Currently, entities are required to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified balance sheet. The new standard will become effective for Mexco beginning on April 1, 2017, with the option to early adopt, and can be applied either prospectively or retrospectively. The adoption of this guidance will have no impact on our results of operations or cash flows. The reclassification of amounts from current to noncurrent could affect the presentation of our balance sheet. In May 2014, the FASB issued ASU No. 2014-09, Topic 606: Revenue from Contracts with Customers. This ASU provides guidance concerning the recognition and measurement of revenue from contracts with customers. The effective date for ASU 2014-09 was delayed through the issuance of ASU 2015-14, Revenue from Contracts with Customers – Deferral of the Effective Date, to annual and interim periods beginning after December 15, 2017 and is required to be adopted using either the retrospective or cumulative effect transition method, with early adoption permitted in 2017. Additionally, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus agent considerations (reporting revenue gross versus net), which clarifies the implementation guidance on principal versus agent considerations on such matters. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying performance obligations and licensing, which clarifies guidance related to identifying performance obligations and licensing implementation guidance contained in the new revenue recognition standard. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-scope improvements and practical expedients, which addresses narrow-scope improvements to the guidance on collectibility, non-cash consideration, and completed contracts at transition. In December 2016, the FASB issued ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. These amendments intended to improve and clarify the implementation guidance of Topic 606. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. Management is evaluating the effect, if any, this pronouncement will have on our consolidated financial statements. |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Rollforward of Asset Retirement Obligations | The following table provides a rollforward of the AROs for the first nine months of fiscal 2017: Carrying amount of asset retirement obligations as of April 1, 2016 $ 1,221,077 Liabilities incurred 5,247 Liabilities settled (282,738 ) Accretion expense 26,939 Carrying amount of asset retirement obligations as of December 31, 2016 970,525 Less: Current portion 10,000 Non-Current asset retirement obligation $ 960,525 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Options Activity | The following table is a summary of activity of stock options for the nine months ended December 31, 2016: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contract Life in Years Aggregate Intrinsic Value Outstanding at April 1, 2016 153,600 $ 6.52 6.36 $ - Granted - - Exercised - - Forfeited or Expired 4,000 5.98 Outstanding at December 31, 2016 149,600 $ 6.54 5.59 $ - Vested at December 31, 2016 121,850 $ 6.50 5.21 $ - Exercisable at December 31, 2016 121,850 $ 6.50 5.21 $ - |
Credit Facility (Tables)
Credit Facility (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Summary of Line of Credit Activity | The balance outstanding on the line of credit as of December 31, 2016 was $3,070,000. The following table is a summary of activity on the Bank of America, N.A. line of credit for the nine months ended December 31, 2016: Principal Balance at April 1, 2016: $ 5,580,000 Borrowings - Repayments 2,510,000 Balance at December 31, 2016: $ 3,070,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision | The income tax provision consists of the following for the three and nine months ended December 31, 2016 and 2015: Three Months Ended Nine Months Ended December 31 December 31 2016 2015 2016 2015 Current income tax $ - $ - $ - $ - Deferred income tax benefit - (147,539 ) - (660,870 ) Total income tax provision: $ - $ (147,539 ) $ - $ (660,870 ) Effective tax rate 0 % (6 %) 0 % (16 %) |
Loss Per Common Share (Tables)
Loss Per Common Share (Tables) | 9 Months Ended |
Dec. 31, 2016 | |
Loss per common share: | |
Schedule of Reconciliation of Basic Net Loss Per Share and Diluted Loss Per Share | The following is a reconciliation of the number of shares used in the calculation of basic net loss per share and diluted loss per share for the three and nine month periods ended December 31, 2016 and 2015: Three Months Ended Nine Months Ended December 31 December 31 2016 2015 2016 2015 Net loss $ (159,741 ) $ (2,445,536 ) $ (691,099 ) $ (3,546,209 ) Shares outstanding: Weighted avg. common shares outstanding – basic 2,037,266 2,037,266 2,037,266 2,037,266 Effect of the assumed exercise of dilutive stock options - - - - Weighted avg. common shares outstanding – dilutive 2,037,266 2,037,266 2,037,266 2,037,266 Loss per common share: Basic and diluted $ (0.08 ) $ (1.20 ) $ (0.34 ) $ (1.74 ) |
Assets Retirement Obligations -
Assets Retirement Obligations - Schedule of Rollforward of Asset Retirement Obligations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |||||
Carrying amount of asset retirement obligations as of April 1, 2016 | $ 1,221,077 | ||||
Liabilities incurred | 5,247 | ||||
Liabilities settled | (282,738) | ||||
Accretion expense | $ 9,248 | $ 8,797 | 26,939 | $ 26,394 | |
Carrying amount of asset retirement obligations as of December 31, 2016 | 970,525 | 970,525 | |||
Less: Current portion | 10,000 | 10,000 | |||
Non-Current asset retirement obligation | $ 960,525 | $ 960,525 | $ 1,211,077 |
Stock-based Compensation (Detai
Stock-based Compensation (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Recognized compensation expense | $ 42,424 | $ 95,770 | ||
Total cost related to non-vested awards | 35,860 | 35,860 | ||
Non vested awards not yet recognized over weighted average | 1 year 3 months 15 days | |||
Number of option granted during period | ||||
Outstanding options expiration date description | Outstanding options at December 31, 2016 expire between August 2020 and August 2024 | |||
Options exercise prices range per share, minimum | $ 5.98 | |||
Options exercise prices range per share, maximum | $ 7 | |||
Vested Stock Option [Member] | ||||
Number of shares forfeited due to the resignation of an employee | 3,000 | |||
Unvested Stock Options [Member] | ||||
Number of shares forfeited due to the resignation of an employee | 1,000 | |||
General and Administrative Expense [Member] | ||||
Recognized compensation expense | $ 10,738 | $ 23,873 |
Stock-based Compensation - Sche
Stock-based Compensation - Schedule of Stock Options Activity (Details) - USD ($) | 9 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of Shares Outstanding, Beginning Balance | 153,600 | |
Number of Shares Outstanding, Granted | ||
Number of Shares Outstanding, Exercised | ||
Number of Shares Outstanding, Forfeited or Expired | 4,000 | |
Number of Shares Outstanding, Ending Balance | 149,600 | |
Number of Shares Outstanding, Vested | 121,850 | |
Number of Shares Outstanding, Exercisable | 121,850 | |
Weighted Average Exercise Price, Beginning Balance | $ 6.52 | |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | ||
Weighted Average Exercise Price, Forfeited or Expired | 5.98 | |
Weighted Average Exercise Price, Ending Balance | 6.54 | |
Weighted Average Exercise Price, Vested | 6.50 | |
Weighted Average Exercise Price, Exercisable | $ 6.50 | |
Weighted Average Remaining Contract Life in Years, Beginning Balance | 6 years 4 months 10 days | |
Weighted Average Remaining Contract Life in Years, Ending Balance | 5 years 7 months 2 days | |
Weighted Average Remaining Contract Life in Years, Vested | 5 years 2 months 16 days | |
Weighted Average Remaining Contract Life in Years, Exercisable | 5 years 2 months 16 days | |
Aggregate Intrinsic Value, Beginning Balance | ||
Aggregate Intrinsic Value, Ending Balance | ||
Aggregate Intrinsic Value, Vested | ||
Aggregate Intrinsic Value, Exercisable |
Credit Facility (Details Narrat
Credit Facility (Details Narrative) - USD ($) | Jun. 20, 2016 | Dec. 31, 2016 | Mar. 31, 2016 |
Amendment replaces the tangible net worth | $ 300,000 | ||
Debt instrument covenant description | for each trailing fiscal quarter period thereafter and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter thereafter. The Company is in compliance with all covenants as of December 31, 2016. | ||
Line of credit | $ 3,070,000 | $ 5,580,000 | |
March 31, 2017 [Member] | |||
Amendment replaces the tangible net worth | 500,000 | ||
Each Trailing Fiscal Quarter [Member] | |||
Amendment replaces the tangible net worth | $ 650,000 | ||
Revolving Credit Agreement [Member] | |||
Line of credit unused commitment fee percentage | 1.00% | ||
Maximum line of credit amount used for letter of credit | $ 500,000 | ||
Letter of credit | 50,000 | ||
Revolving Credit Agreement [Member] | Bank of America, N.A [Member] | |||
Credit facility face amount | $ 5,570,000 | ||
Percentage of amount require to pay lender | 100.00% | ||
Disposes of oil and gas properties | $ 3,120,000 | ||
Original and Renewed Agreements [Member] | |||
Line of credit maturity date | Nov. 30, 2020 | ||
Accrued interest rate | 3.76% | ||
Line of credit commitment fee description | Under such renewal agreement, interest on the facility accrues at an annual rate equal to the British Bankers Association London Interbank Offered Rate (“BBA LIBOR”) daily floating rate, plus 3.0 percentage points, which was 3.76% on December 31, 2016. Interest on the outstanding amount under the credit agreement is payable monthly. | ||
Original and Renewed Agreements [Member] | BBA LIBOR [Member] | Maximum [Member] | |||
Accrues variable interest rate | 3.00% |
Credit Facility - Summary of Li
Credit Facility - Summary of Line of Credit Activity (Details) | 9 Months Ended |
Dec. 31, 2016USD ($) | |
Debt Disclosure [Abstract] | |
Balance at April 1, 2016: | $ 5,580,000 |
Borrowings | |
Repayments | 2,510,000 |
Balance at December 31, 2016: | $ 3,070,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | Dec. 31, 2016USD ($) |
Income Tax Disclosure [Abstract] | |
Deferred tax asset | $ 1,094,421 |
Valuation allowance | $ 1,094,421 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Provision (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Current income tax | ||||
Deferred income tax benefit | (147,539) | (660,870) | ||
Total income tax provision | $ (147,539) | $ (660,870) | ||
Effective tax rate | 0.00% | (6.00%) | 0.00% | (16.00%) |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transactions [Abstract] | ||||
Shared office expenditures in addition to administrative and operating expenses paid on behalf of the majority stockholder | $ 9,565 | $ 31,711 | $ 22,061 | $ 81,412 |
Loss Per Common Share - Schedul
Loss Per Common Share - Schedule of Reconciliation of Basic Net Loss Per Share and Diluted Loss Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Loss per common share: | ||||
Net loss | $ (159,741) | $ (2,445,536) | $ (691,099) | $ (3,546,209) |
Weighted avg. common shares outstanding - basic | 2,037,266 | 2,037,266 | 2,037,266 | 2,037,266 |
Effect of the assumed exercise of dilutive stock options | ||||
Weighted avg. common shares outstanding - dilutive | 2,037,266 | 2,037,266 | 2,037,266 | 2,037,266 |
Loss per common share: Basic and diluted | $ (0.08) | $ (1.20) | $ (0.34) | $ (1.74) |
Impairments of Oil and Natura33
Impairments of Oil and Natural Gas Properties (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | |
Extractive Industries [Abstract] | ||||
Impairment of oil and natural gas properties | $ 2,150,621 | $ 2,984,410 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - Subsequent Event [Member] - North Dakota [Member] | 1 Months Ended |
Feb. 28, 2017USD ($)Wells | |
Number of oil and gas wells | Wells | 2 |
Payments for bank debt | $ | $ 42,000 |