Mexco Energy (MXC) - 2022 Q1 - Quarterly Report

Financial Performance - For the quarter ended June 30, 2021, net income was $395,006 compared to a net loss of $299,670 for the same quarter in 2020, primarily due to increased operating revenues from higher oil and gas prices and production [75]. - Revenue from oil and gas sales was $1,255,565 for the quarter ended June 30, 2021, a 245% increase from $364,179 for the same quarter in 2020 [76]. - Cash flow provided by operating activities was $666,054 for the three months ended June 30, 2021, a 902% increase from $66,472 for the same period in 2020 [59]. Oil and Gas Revenue - Oil revenue was $987,103 for the quarter ended June 30, 2021, a 249.6% increase from $282,370 in the same quarter of 2020, with an average price per barrel of $63.94, up 161.2% from $24.48 [76]. - Gas revenue was $268,462 for the quarter ended June 30, 2021, a 228.2% increase from $81,809 in the same quarter of 2020, with an average price per mcf of $2.98, up 189.3% from $1.03 [76]. Costs and Expenses - Production costs were $276,987 for the three months ended June 30, 2021, a 61% increase from $171,666 for the same period in 2020 [76]. - General and administrative expenses were $308,167 for the three months ended June 30, 2021, a 24% increase from $248,878 for the same period in 2020 [78]. Working Capital and Debt - As of June 30, 2021, the company had working capital of $626,850, an increase of $7,890 from $618,960 at March 31, 2021 [57]. - The company has no off-balance sheet debt or unrecorded obligations as of June 30, 2021 [74]. - As of June 30, 2021, the outstanding loan balance under the credit agreement was $800,000, with a potential annual pretax income change of $8,000 for each 1% change in interest rates [81]. Credit Risk - The largest credit risk associated with a single purchaser was $495,512, representing 74% of total oil and gas receivables, with no significant credit losses reported [82]. - The company has not experienced significant credit losses despite the high concentration of credit risk [82]. Market Conditions - The NYMEX West Texas Intermediate (WTI) crude oil price ranged from $31.75 per barrel in October 2020 to $70.03 per barrel in June 2021, while the Henry Hub natural gas price ranged from $1.33 per MMBtu to $23.86 per MMBtu during the same period [86]. - On June 30, 2021, the WTI crude oil price was $69.45 per barrel, and the Henry Hub natural gas price was $3.79 per MMBtu [86]. - A $10 increase or decrease in average oil price for the quarter ended June 30, 2021, would have resulted in a $154,380 change in pretax income [88]. - A $1 increase or decrease in average gas price for the same quarter would have led to a $90,063 change in pretax income [88]. - Declines in oil and natural gas prices could materially adversely affect the company's financial condition, liquidity, and ability to obtain financing [87]. - Improvements in oil and gas prices can positively impact the company's financial condition and capital resources [88]. - The volatility in oil and natural gas prices is expected to continue, influenced by global demand, supply levels, and geopolitical factors [85]. Future Plans - The company plans to participate in the drilling and completion of 36 horizontal wells at an estimated aggregate cost of approximately $1,250,000 for the fiscal year ending March 31, 2022 [64].