Mexco Energy (MXC) - 2021 Q1 - Quarterly Report

Financial Performance - For the first three months of fiscal 2021, cash flow from operations was $66,472, a decrease of 64% compared to the same period in fiscal 2020, primarily due to a 56% decrease in crude oil price and a 29% decrease in natural gas price [73]. - Revenue from oil and gas sales was $364,179 for the quarter ended June 30, 2020, a 47% decrease from $691,694 for the quarter ended June 30, 2019, primarily due to a decrease in oil and gas prices [86]. - The company reported a net loss of $299,670 for the quarter ended June 30, 2020, compared to a net loss of $54,186 for the same quarter in 2019 [85]. - General and administrative expenses were $248,878 for the three months ended June 30, 2020, a 20% decrease from $311,061 for the same period in 2019 [89]. - Working capital decreased to $102,065 as of June 30, 2020, from $186,785 at March 31, 2020, a decrease of $84,720 [74]. Oil and Gas Prices - The average price per barrel of oil decreased by 55.9% to $24.48 in 2020 from $55.47 in 2019, while the average price per MMBtu of natural gas decreased by 28.5% to $1.03 from $1.44 [87]. - As of June 30, 2020, the WTI posted price for crude oil was $35.25 per bbl, with average prices of $14.68, $24.67, and $34.35 per bbl for April, May, and June 2020 respectively [99]. - The Henry Hub posted price for natural gas on June 30, 2020 was $1.67 per MMBtu, with average prices of $1.74, $1.75, and $1.63 per MMBtu for April, May, and June 2020 respectively [99]. - A $10 increase or decrease in average oil price per barrel for the quarter ended June 30, 2020 would result in a pretax income change of $115,340 [101]. - A $1 increase or decrease in average gas price per mcf for the quarter ended June 30, 2020 would result in a pretax income change of $79,516 [101]. Operational Plans and Constraints - The company plans to participate in the drilling and completion of approximately 20 horizontal wells at an estimated aggregate cost of $950,000 for the fiscal year ending March 31, 2021 [75]. - The company is unable to predict the duration of temporary pipeline capacity constraints in the Permian Basin affecting natural gas prices [98]. Impact of Price Changes - Declines in oil and natural gas prices can materially adversely affect the company's financial condition, liquidity, and operating results [100]. - Improvements in oil and gas prices can have a favorable impact on the company's financial condition and capital resources [101]. - Changes in oil and gas prices impact estimated future net revenue and the estimated quantity of proved reserves [100]. - A noncash write-down of oil and gas properties may be required under full cost accounting rules if prices decline significantly [100]. - Lower prices may reduce the amount of crude oil and natural gas that can be produced economically, affecting reserve quantities [100]. Production and Financial Support - The company received approximately $68,574 from the Paycheck Protection Program to maintain payroll and cover overhead costs [82]. - The company has an outstanding loan balance of $930,000 under its credit agreement, which bears interest at a floating rate [93]. - The company’s working interest in completed wells currently producing is 0.48% for 4 wells and 0.006% for 3 wells, with production rates of 4,324 and 2,905 barrels of oil equivalent per day respectively [76].