SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 5, 2002
MEXCO ENERGY CORPORATION
------------------------
(Exact name of registrant as specified in charter)
Colorado 0-6694 84-0627918
- ------------------------------- ---------------- -------------------
(State or other jurisdiction of (Commission No.) (IRS Employer
of incorporation) Identification No.)
214 W. Texas, Suite 1101, Midland, Texas 79701
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
MEXCO ENERGY CORPORATION
Index
ITEM 5. OTHER EVENTS........................................................ 3
2
ITEM 5. OTHER EVENTS
(a) On December 5, 2002, the Registrant entered into an Exploration
Agreement with Falcon Bay Operating, LLC. Pursuant to such agreement, Mexco
Energy Corporation has obtained the option to purchase and inventory seismic
data and acreage in the shallow water areas of Texas and Louisiana. These
prospects would be offered to other third party investors involving a carried
interest which would be split equally between Falcon Bay and the Registrant. In
consideration for the option to obtain four such purchase options, Registrant
has issued warrants to purchase 107,500 shares of common stock at an exercise
price of $5.00 per share. Such warrants are exercisable for a period of two
years from date of grant. Additional warrants, exercisable at the same exercise
price and exercisable for two years, would be issued covering 322,500 shares
upon exercise of the Registrant's right to participate in a total of four
prospects. Registrant will have an obligation to pay its share of expenses upon
completion of carried interest and would bear the risk of loss in the event that
any of these prospects are not sold.
These prospects will involve high risk and reserve potential in the 50 to
500 billion cubic feet of natural gas at depths of 4,500 to 20,000 feet. These
prospects will be subject to the right of first refusal of two larger oil and
gas companies which generally seek larger reserves at deeper depths.
Registrant estimates that such transactions may involve the commitment of
up to approximately $1.5 to 2.5 million, which would entail borrowing and be
dependent upon Registrant's ability to re-sell the prospects and repeat the
process within its lending limits or subject to obtaining other financing
arrangements.
Registrant has exercised its option to purchase at an aggregate cash price
of $597,301 the acreage and seismic data on the first prospect located in the
Galveston Bay transition zone with a well expected to be drilled to a depth of
12,500 feet. Falcon Bay is negotiating to sell this prospect on the basis of a
carried interest in the first well and Registrant being responsible for the cost
of its share in any subsequent wells. At casing point Registrant has the option
to purchase Falcon Bay's interest in each prospect, in consideration for
issuance of Registrant's stock .
The coastal transition zone includes shallow state-owned waters, coastal
wetlands and onshore property. It is where the US Gulf of Mexico "transitions"
into the Texas and Louisiana onshore area.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEXCO ENERGY CORPORATION
By: /s/ Nicholas C. Taylor
----------------------------
Nicholas C. Taylor, President
Date: December 5, 2002
3