FOR IMMEDIATE RELEASE:
Mexco Energy Corporation Reports Profitable Fiscal 2006
MIDLAND, TX - 06/29/06 - Mexco Energy Corporation (AMEX: MXC) reported an
increase in profitability on its Annual Report on Form-10K for the fiscal year
ended March 31, 2006.
The Company reported net income of $788,805, or $.43 per diluted share, for
fiscal year 2006 as compared to $577,527, or $.32 per diluted share, for fiscal
2005, a 37% increase.
Operating revenues in fiscal 2006 were $3,719,643, an increase of 25% over 2005
operating revenues of $2,969,826. The average sales price received of $7.86 per
Mcfe was up 35% from the $5.83 per Mcfe received in fiscal 2005. Oil production
decreased 1% and gas production decreased 8% during fiscal 2006 due to normal
decline in production.
Total operating expenses were $2,604,677, an increase of 27% from 2005 operating
expenses of $2,045,596. Included in the operating expenses was a 24% increase in
general and administrative expense partially attributable to costs associated
with the contract and consulting services that were directly related to Russian
projects. Also included was a writedown of our long-term investment in GazTex,
LLC as a result of the impairment of our potential Russian project.
For fiscal 2006, gas reserves constituted approximately 86% of the Company's
total proved reserves and approximately 75% of the Company's revenues. Revenues
from oil and gas royalty interests accounted for approximately 26% of the
Company's revenues for fiscal 2006, compared to approximately 22% for fiscal
2005.
The Company owns oil and gas properties in ten states, with the majority of its
activity centered in West Texas. The Company will continue to focus its efforts
to increase oil and natural gas reserves, through exploration and development as
well as acquisition of royalties.
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, 2006. Mexco Energy
Corporation disclaims any intention or obligation to revise any forward-looking
statements
For additional information, please contact:
Nicholas C. Taylor, CEO
Tammy L. McComic, CFO
432-682-1119
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended March 31,
2006 2005 2004
------------ ------------ ------------
Operating revenues:
Oil and gas $ 3,716,564 $ 2,963,889 $ 2,909,953
Other 3,079 5,937 5,402
------------ ------------ ------------
Total operating revenues 3,719,643 2,969,826 2,915,355
Operating expenses:
Production 843,927 780,233 942,093
Accretion of asset retirement obligation 23,436 24,735 24,246
Depreciation, depletion, and amortization 658,365 582,268 633,443
General and administrative 817,332 658,360 529,834
Impairment of long-term asset 261,617 -- --
------------ ------------ ------------
Total operating expenses 2,604,677 2,045,596 2,129,616
------------ ------------ ------------
Operating profit 1,114,966 924,230 785,739
Other income (expense):
Interest income 2,837 746 764
Interest expense (98,657) (89,154) (83,530)
------------ ------------ ------------
Net other expense (95,820) (88,408) (82,766)
Minority interest in loss of subsidiary 41,799 14,314 --
------------ ------------ ------------
Earnings before income taxes and
cumulative effect of accounting change 1,060,945 850,136 702,973
Income tax expense (benefit):
Current (19,312) 76,597 33,371
Deferred 291,452 196,012 137,489
------------ ------------ ------------
272,140 272,609 170,860
------------ ------------ ------------
Income before cumulative effect of accounting change 788,805 577,527 532,113
Cumulative effect of accounting change, net of tax -- -- (102,267)
------------ ------------ ------------
Net income $ 788,805 $ 577,527 $ 429,846
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Net income per common share:
Basic:
Income before cumulative effect
of accounting change $ 0.45 $ 0.33 $ 0.31
Cumulative effect, net of tax $ -- $ -- $ (0.06)
------------ ------------ ------------
Net income $ 0.45 $ 0.33 $ 0.25
Diluted:
Income before cumulative effect
of accounting change $ 0.43 $ 0.32 $ 0.30
Cumulative effect, net of tax $ -- $ -- $ (0.06)
------------ ------------ ------------
Net income $ 0.43 $ 0.32 $ 0.24
Pro forma amounts assuming, the new method of
accounting for asset retirement obligations
is applied retroactively:
Net income $ 532,113
Basic net income per share $ 0.31
Diluted net income per share $ 0.30
Mexco Energy Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
As of March 31,
2006 2005
------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 52,768 $ 85,209
Accounts receivable:
Oil and gas sales 429,133 418,348
Trade 336 23,258
Related parties 73 2,103
Prepaid costs and expenses 75,576 7,362
------------ ------------
Total current assets 557,886 536,280
Investment in GazTex, LLC 20,509 282,126
Property and equipment, at cost
Oil and gas properties, using the full cost
method ($121,418 and $921,719 excluded
from amortization in 2006 and 2005, respectively) 18,947,532 18,376,974
Other 39,848 36,855
------------ ------------
18,987,380 18,413,829
Less accumulated depreciation,
depletion, and amortization 10,587,451 9,929,086
------------ ------------
Property and equipment, net 8,399,929 8,484,743
------------ ------------
$ 8,978,324 $ 9,303,149
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable - trade and accrued expenses $ 118,125 $ 111,675
Income tax payable -- 48,127
------------ ------------
Total current liabilities 118,125 159,802
Long-term debt 600,000 1,990,000
Asset retirement obligation 352,416 374,506
Deferred income tax liability 1,006,736 715,284
Minority interest 2,051 25,362
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;
1,776,566 and 1,766,566 shares issued in 2006
and 2005, respectively 888,283 883,283
Additional paid-in capital 3,893,588 3,826,592
Retained earnings 2,262,700 1,473,895
Treasury stock, at cost (145,575) (145,575)
------------ ------------
Total stockholders' equity 6,898,996 6,038,195
------------ ------------
$ 8,978,324 $ 9,303,149
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