Mexco Energy (MXC) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The unaudited consolidated financial statements for the three months ended June 30, 2019, detail the company's financial position, operational results, equity changes, and cash flows Consolidated Balance Sheets Total assets increased to $9.71 million while total liabilities rose to $1.33 million, driven by new long-term debt and operating lease liabilities Consolidated Balance Sheet Highlights (in USD) | Account | June 30, 2019 (Unaudited) | March 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $560,245 | $562,008 | | Property and Equipment, net | $8,896,936 | $8,765,269 | | Total Assets | $9,713,029 | $9,449,684 | | Total Current Liabilities | $217,897 | $166,113 | | Total Long-term Liabilities | $1,111,656 | $854,034 | | Total Liabilities | $1,329,553 | $1,020,147 | | Total Stockholders' Equity | $8,383,476 | $8,429,537 | Consolidated Statements of Operations The company reported a net loss of $54,186 for the quarter, a significant downturn from a net income of $14,420 in the prior-year period due to lower revenues and higher expenses Quarterly Statement of Operations (in USD) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | | :--- | :--- | :--- | | Total Operating Revenues | $699,591 | $749,011 | | Oil Sales | $588,436 | $570,063 | | Natural Gas Sales | $103,258 | $165,290 | | Total Operating Expenses | $747,441 | $727,683 | | Operating (Loss) Income | ($47,850) | $21,328 | | Net (Loss) Income | ($54,186) | $14,420 | | Basic (Loss) Income per Share | ($0.03) | $0.01 | Consolidated Statement of Changes in Stockholders' Equity Total stockholders' equity decreased to $8.38 million from $8.43 million, primarily due to the quarterly net loss Changes in Stockholders' Equity (Q1 FY2020) | Description | Amount (in USD) | | :--- | :--- | | Balance at April 1, 2019 | $8,429,537 | | Net loss | ($54,186) | | Stock based compensation | $8,125 | | Balance at June 30, 2019 | $8,383,476 | Consolidated Statements of Cash Flows The company generated $185,956 in operating cash flow, which was offset by investing activities, resulting in a net cash increase of $22,109 Quarterly Cash Flow Summary (in USD) | Cash Flow Activity | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $185,956 | $154,501 | | Net Cash used in Investing Activities | ($388,847) | ($12,019) | | Net Cash from (used in) Financing Activities | $225,000 | ($200,000) | | Net Increase (Decrease) in Cash | $22,109 | ($57,518) | | Cash at End of Period | $150,361 | $435,092 | Notes to Consolidated Financial Statements Key disclosures include the adoption of a new lease accounting standard, details of a $1 million credit facility, and the company's focus on oil and gas production in West Texas - The company is engaged in the exploration, development, and production of natural gas and crude oil, with interests centered in West Texas and Southeastern New Mexico[19] - On April 1, 2019, the company adopted the new lease accounting standard, Topic 842, resulting in the recognition of a right-of-use asset and lease liability of $141,385 on the balance sheet[24] - The company has a $1,000,000 credit facility with West Texas National Bank, with $225,000 outstanding as of June 30, 2019, maturing on December 28, 2021[27][33] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the quarterly net loss to lower gas prices and higher expenses, while outlining plans to drill 50 horizontal wells for approximately $1.4 million - The company plans to participate in the drilling and completion of approximately 50 horizontal wells at an estimated aggregate cost of approximately $1,400,000 for the fiscal year ending March 31, 2020[58] - In April 2019, the company committed to a $250,000 investment in a limited liability company purchasing mineral interests in the Utica and Marcellus areas of Ohio, with $75,000 funded as of June 30, 2019[61] Q1 FY2020 vs Q1 FY2019 Performance | Metric | Q1 FY2020 | Q1 FY2019 | % Change | | :--- | :--- | :--- | :--- | | Oil & Gas Sales | $691,694 | $735,353 | -6% | | Average Oil Price (per bbl) | $55.47 | $60.73 | -8.7% | | Average Gas Price (per mcf) | $1.44 | $2.25 | -36.0% | | Production Costs | $219,395 | $258,935 | -15% | | G&A Expenses | $311,061 | $249,038 | +25% | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks include commodity price volatility, interest rate fluctuations, and significant credit concentration with a single purchaser - The most significant market risk is energy price volatility, where a $10/bbl change in oil price would impact quarterly pretax income by $106,090, and a $1/mcf change in gas price would impact it by $71,847[78] - As of June 30, 2019, the company's largest credit risk was with a single purchaser representing $159,321, or 43% of total oil and gas receivables[74] - The company has interest rate risk on its $225,000 outstanding loan balance, where a one percentage point change in the interest rate would alter annual pretax income by $2,250[72] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal controls during the quarter - The principal executive officer and principal financial officer concluded that as of June 30, 2019, the company's disclosure controls and procedures were effective[79] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2019[80] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not aware of any material legal or governmental proceedings - The company is not aware of any significant legal proceedings arising out of its operations[81] Item 1A. Risk Factors No material changes were reported to the risk factors disclosed in the 2019 Annual Report on Form 10-K - No material changes have occurred to the risk factors disclosed in the 2019 Annual Report on Form 10-K[82] Other Items (Items 2, 3, 4, 5, 6) The company reports no unregistered equity sales, senior security defaults, or mine safety issues, and lists required CEO and CFO certifications as exhibits - The company reported no unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, or other information during the quarter[83][84] - The report includes CEO and CFO certifications as exhibits (31.1, 31.2, 32.1)[84]