-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OMQGl2uMdF8srZLEG9IG5J23wf6eftXC/nLFrZwmFbi00NU7YjI17rzfmv9M2ZCU vipln4L0i/ASrDUc0Zn1wA== 0001144204-04-019070.txt : 20041115 0001144204-04-019070.hdr.sgml : 20041115 20041115165500 ACCESSION NUMBER: 0001144204-04-019070 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041115 DATE AS OF CHANGE: 20041115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEXCO ENERGY CORP CENTRAL INDEX KEY: 0000066418 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 840627918 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-31785 FILM NUMBER: 041146278 BUSINESS ADDRESS: STREET 1: 214 W TEXAS AVENUE STREET 2: SUITE 1101 CITY: MIDLAND STATE: TX ZIP: 79701 BUSINESS PHONE: 9156821119 MAIL ADDRESS: STREET 1: 214 W TEXAS AVENUE STREET 2: SUITE 1101 CITY: MIDLAND STATE: TX ZIP: 79701 FORMER COMPANY: FORMER CONFORMED NAME: MILLER OIL CO DATE OF NAME CHANGE: 19800702 10-Q 1 v08581_10q.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004 Or Transition Report Pursuant to Section 13 or 15(d) Of the Securities Exchange Act of 1934 For the transition period from to Commission File No. 0-6994 MEXCO ENERGY CORPORATION (Exact name of registrant as specified in its charter) Colorado 84-0627918 (State or other jurisdiction (IRS Employer of incorporation) Identification Number) 214 West Texas Avenue, Suite 1101, Midland, Texas 79701 (Address of principal executive offices) (432) 682-1119 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). YES [ ] NO [X] APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common Stock, $0.50 par value: 1,733,041 shares outstanding at November 5, 2004 MEXCO ENERGY CORPORATION Table of Contents ----------------- Page ---- PART I. FINANCIAL INFORMATION - ------------------------------ Item 1. Consolidated Balance Sheets as of September 30, 2004 (Unaudited) and March 31, 2004 3 Consolidated Statements of Operations (Unaudited) for the three and six months ended September 30, 2004 and September 30, 2003 4 Consolidated Statements of Cash Flows (Unaudited) for the six months ended September 30, 2004 and September 30, 2003 5 Notes to Unaudited Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 13 Item 4. Controls and Procedures 13 PART II. OTHER INFORMATION 14 Item 1. Legal Proceedings Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 6. Exhibits and Reports on Form 8-K SIGNATURES 15 CERTIFICATIONS 21 Page 2 MEXCO ENERGY CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
September 30, March 31, 2004 2004 ------------ ------------ (Unaudited) ASSETS - ------ Current assets: Cash and cash equivalents $ 84,350 $ 92,795 Accounts receivable: Oil and gas sales 369,337 396,902 Trade 25,008 3,101 Related parties 4,131 -- Prepaid costs and expenses 31,754 32,382 ------------ ------------ Total current assets 514,580 525,180 Investment in GazTex, LLC 20,509 -- Property and equipment, at cost: Oil and gas properties, using the full cost method, ($1,066,670 and $858,602 excluded from amortization as of September 30, 2004 and March 31, 2004, respectively) 17,754,015 16,959,560 Other 36,063 34,542 ------------ ------------ 17,790,078 16,994,102 Less accumulated depreciation, depletion and amortization 9,619,870 9,346,818 ------------ ------------ Property and equipment, net 8,170,208 7,647,284 ------------ ------------ $ 8,705,297 $ 8,172,464 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable - trade $ 119,141 $ 97,308 Income tax payable 97,230 -- Current portion of long-term debt -- 443,378 ------------ ------------ Total current liabilities 216,371 540,686 Long-term debt 1,875,000 1,256,622 Asset retirement obligation 397,792 420,665 Deferred income tax liability 532,817 519,272 Commitments and contingencies -- -- Minority Interest 2,051 -- Stockholders' equity Preferred stock - $1 par value; 10,000,000 shares authorized; none outstanding -- -- Common stock - $0.50 par value; 40,000,000 shares authorized; 1,766,566 shares issued 883,283 883,283 Additional paid in capital 3,808,779 3,784,493 Retained earnings 1,118,129 896,368 Treasury stock, at cost (30,525 shares) (128,925) (128,925) ------------ ------------ Total stockholders' equity 5,681,266 5,435,219 ------------ ------------ $ 8,705,297 $ 8,172,464 ============ ============
The accompanying note is an integral part of the consolidated financial statements. Page 3 MEXCO ENERGY CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Six Months ended September 30, 2004 and 2003 (Unaudited)
Three Months Ended Six Months Ended September 30 September 30 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Operating revenue: Oil and gas sales $ 722,452 $ 768,852 $ 1,397,447 $ 1,535,912 Other 3,174 1,859 5,182 3,125 ------------ ------------ ------------ ------------ Total operating revenue 725,626 770,711 1,402,629 1,539,037 Operating costs and expenses: Oil and gas production 206,226 241,168 397,964 509,860 Accretion expense 6,432 5,912 13,253 11,736 Depreciation, depletion and amortization 120,280 170,695 273,052 336,914 General and administrative 167,528 156,644 331,947 272,622 ------------ ------------ ------------ ------------ Total operating costs and expenses 500,466 574,419 1,016,216 1,131,132 ------------ ------------ ------------ ------------ 225,160 196,292 386,413 407,905 Other income and (expenses): Interest income 77 55 130 117 Interest expense (20,963) (20,860) (37,806) (45,140) ------------ ------------ ------------ ------------ Net other income and expenses (20,886) (20,805) (37,676) (45,023) ------------ ------------ ------------ ------------ Income before income taxes 204,274 175,487 348,737 362,882 Income tax expense: Current 70,006 -- 113,431 -- Deferred 15,208 57,017 13,545 92,652 ------------ ------------ ------------ ------------ 85,214 57,017 126,976 92,652 ------------ ------------ ------------ ------------ Income before cumulative effect of accounting change 119,060 118,470 221,761 270,230 Cumulative effect of accounting change, net of tax -- -- -- (102,267) ------------ ------------ ------------ ------------ Net income $ 119,060 $ 118,470 $ 221,761 $ 167,963 ============ ============ ============ ============ Net income (loss) per common share: Basic: Income before cumulative effect of accounting change $ 0.07 $ 0.07 $ 0.13 $ 0.16 Cumulative effect, net of tax $ -- $ -- $ -- $ (0.06) Net income $ 0.07 $ 0.07 $ 0.13 $ 0.10 Diluted: Income before cumulative effect of accounting change $ 0.07 $ 0.06 $ 0.12 $ 0.15 Cumulative effect, net of tax $ -- $ -- $ -- $ (0.06) Net income $ 0.07 $ 0.06 $ 0.12 $ 0.09 Pro forma amounts assuming, the new method of accounting for asset retirement obligations is applied retroactively: Net Income $ 119,060 $ 118,470 $ 221,761 $ 270,230 Basic earnings per share $ 0.07 $ 0.07 $ 0.13 $ 0.16 Diluted earnings per share $ 0.07 $ 0.06 $ 0.12 $ 0.15
The accompanying note is an integral part of the consolidated financial statements. Page 4 MEXCO ENERGY CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months ended September 30, 2004 and 2003 (Unaudited) 2004 2003 ---------- ---------- Cash flows from operating activities: Net income $ 221,761 $ 167,963 Cumulative effect of accounting change, net of tax -- 102,267 Adjustments to reconcile net income to net cash provided by operating activities: Increase in deferred income taxes 13,545 92,651 Stock-based compensation 24,286 20,991 Depreciation, depletion and amortization 273,052 336,914 Accretion of asset retirement obligations 13,253 11,736 Decrease in accounts receivable 1,527 152,572 (Increase)decrease in prepaid expenses 628 (27,204) Increase in accounts payable and accrued expenses 13,910 20,253 Increase in income tax payable 97,230 -- ---------- ---------- Net cash provided by operating activities 659,192 878,143 Cash flows from investing activities: Additions to property and equipment (824,179) (430,209) ---------- ---------- Net cash used in investing activities (824,179) (430,209) Cash flows from financing activities: Acquisition of treasury stock -- (1,385) Investment in subsidiary (GazTex, LLC) (18,458) -- Payments of capital lease obligations -- (42,668) Long-term borrowings 425,000 -- Principal payments on long-term debt (250,000) (400,000) ---------- ---------- Net cash (used in) provided by financing activities 156,542 (444,053) ---------- ---------- Net increase (decrease) in cash (8,445) 3,881 Cash, beginning of the period 92,795 68,547 ---------- ---------- Cash, end of period $ 84,350 $ 72,428 ========== ========== Interest paid $ 36,040 $ 47,138 Income taxes paid $ -- $ -- The accompanying note is an integral part of the consolidated financial statements. Page 5 MEXCO ENERGY CORPORATION AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------- Organization and Basis of Presentation - -------------------------------------- Mexco Energy Corporation, a Colorado corporation, was organized in 1972 and maintains its principal office in Midland, Texas. The Company and its wholly owned subsidiary, Forman Energy Corporation, a New York corporation, (collectively the "Company") are engaged in the acquisition, exploration, development and production of oil and gas. While the Company owns producing properties and undeveloped acreage in eleven states, the majority of its activities are centered in the Permian Basin of West Texas. Although most of the Company's oil and gas interests are operated by others, the Company operates a number of properties in which it owns an interest. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position of the Company and its wholly owned subsidiary as of September 30, 2004, and the results of its operations and cash flows for the interim periods ended September 30, 2004 and 2003. The results of operations for the periods presented are not necessarily indicative of the results to be expected for a full year. The accounting policies followed by the Company are set forth in more detail in Note A of the "Notes to Consolidated Financial Statements" in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. However, the disclosures herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Form 10-K. Principles of Consolidation - --------------------------- The accompanying consolidated balance sheets include the accounts of the Company and its wholly owned subsidiary. Mexco Energy Corporation owns a 90% interest in OBTX, LLC which is consolidated herein. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates - ---------------- In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the amounts reported in these financial statements. Although management believes its estimates and assumptions are reasonable, actual results may differ materially from those estimates. Significant estimates affecting these financial statements include the estimated quantities of proved oil and gas reserves and the related present value of estimated future net cash flows. Stock-Based Compensation - ------------------------ The Company accounts for employee stock option grants in accordance with Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25"), as amended by Financial Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting for Certain Transactions involving Stock Compensation," an interpretation of APB Opinion No. 25. The Company applies the intrinsic value method in accounting for its employee stock options and records no compensation costs for its stock option Page 6 awards to employees. The Company recognizes compensation cost related to stock options awarded to independent consultants based on fair value of the options at date of grant. For the six months ending September 30, 2004, the Company recognized $24,286 related to these stock options for independent consultants. The following pro forma information, as required by Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123"), as amended by Statement of Financial Accounting Standards No. 148 ("SFAS 148"), presents net income and earnings per share information as if expense relating to stock options issued had been determined based on the fair value at the grant dates for all employee awards under the plan:
Three Months Ended Six Months Ended September 30, September 30, 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Net income, as reported $ 119,060 $ 118,470 $ 221,761 $ 167,963 Stock-based employee compensation expense determined under fair value based method (SFAS 123), net of tax $ (21,693) $ (25,667) $ (44,034) $ (40,066) ---------- ---------- ---------- ---------- Net income, pro forma $ 97,367 $ 92,803 $ 177,727 $ 127,897 ========== ========== ========== ========== Basic earnings per share: As reported $ 0.07 $ 0.07 $ 0.13 $ 0.10 Pro forma $ 0.06 $ 0.05 $ 0.10 $ 0.07 Diluted earnings per share: As reported $ 0.07 $ 0.06 $ 0.12 $ 0.09 Pro forma $ 0.06 $ 0.05 $ 0.10 $ 0.07
Long Term Assets - ---------------- The Company's long term assets consist of an investment in GazTex, LLC, a Russian Company owned 50% by OBTX, LLC. OBTX, LLC is a Delaware limited liability company in which Mexco owns 90% of the interest, with the remaining 10% divided equally among three individuals, one of which is Arden Grover, a director of Mexco Energy Corporation. Asset Retirement Obligations - ---------------------------- The Company's asset retirement obligations relate to the plugging and abandonment of oil and gas properties. The Company adopted SFAS No. 143 on April 1, 2003. SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The related cumulative adjustment to 2004 net income was a decrease of $102,267 net of tax, or ($0.06) per share. Additionally, in 2004, the Company recorded an initial asset retirement obligation liability of $358,419 and an increase to net properties and equipment and other assets of $210,206. The asset retirement obligations are recorded at fair value and accretion expense, recognized over the life of the property, increases the liability to its expected settlement value. If the fair value of the estimated asset retirement obligation changes, an adjustment is recorded for both the asset retirement obligation and the asset retirement cost. Page 7 The following table provides a rollforward of the asset retirement obligations for the current period: Carrying amount of asset retirement obligations as of April 1, 2004 $ 420,665 Liabilities incurred 1,469 Liabilities settled (25,815) Accretion expense 13,253 --------- Carrying amount of asset retirement obligations as of September 30, 2004 $ 409,572 ========= The current portion of the asset retirement obligation as of September 30, 2004 is $11,780 and is included in accounts payable and other accrued expenses. Oil and Gas Costs - ----------------- The cost of certain oil and gas leases that the Company has acquired, but not evaluated has been excluded in computing amortization of the full cost pool. The Company will begin to amortize these properties when the projects are evaluated, which is currently estimated to be within this fiscal year. Costs excluded from amortization at September 30, 2004 total $874,978 for U.S. properties and $191,692 for Russian properties. The Russian costs in fiscal 2004 and fiscal 2005 were for the feasibility study referred to in Note H to the Company's financial statements in its Annual Report to the SEC on Form 10K. Earnings Per Share - ------------------ Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares and dilutive potential common shares (stock options and warrants) outstanding during the period. The following is a reconciliation of the number of shares used in the calculation of basic earnings per share and diluted earnings per share for the three and six month periods ended September 30, 2004 and 2003.
Three Months Ended Six Months Ended September 30 September 30 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Weighted average number of common shares outstanding 1,736,041 1,736,041 1,736,041 1,736,054 Incremental shares from the assumed exercise of dilutive stock options 95,291 98,006 108,114 67,102 ---------- ---------- ---------- ---------- Dilutive potential common shares 1,831,332 1,834,047 1,844,155 1,803,156 ========== ========== ========== ==========
Options and warrants to purchase 110,000 shares at an average exercise price of $7.24 and 70,000 shares at an average exercise price of $7.61 outstanding at September 30, 2004 and September 30, 2003, respectively, were not included in the computation of diluted net income per share because the exercise price of the options and warrants was greater than the average market price of the common stock of the Company and, therefore, the effect would be antidilutive. Income Taxes - ------------ Current income tax expense for the three and six months ended September 30, 2004 is $70,006 and $113,431, respectively. There is no current income tax expense for the three or six months ended September 30, 2003 due to a tax loss carryforward of approximately $139,000 from the year ending March 31, 2003. Page 8 Long Term Liabilities - --------------------- Long term debt consists of a revolving credit agreement with Bank of America, N.A. ("Bank"), which provides for a credit facility of $5,000,000, subject to a borrowing base determination. On July 29, 2004, the borrowing base was redetermined and set at $2,500,000. As of September 30, 2004, the balance outstanding under this agreement was $1,875,000. No principal payments are required for fiscal 2005 based on the revised borrowing base. Amounts borrowed under this agreement are collateralized by the common stock of the Company's wholly owned subsidiary and all oil and gas properties. The asset retirement obligation as of September 30, 2004 represents the present value of the Company's estimated asset retirement obligations under SFAS 143. Accounting Pronouncements - ------------------------- In September, 2004 the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 106. This pronouncement will require companies that use the full cost method for accounting for their oil and gas producing activities to include an estimate of future asset retirement costs to be incurred as a result of future development activities on proved reserves in their calculation of depreciation, depletion and amortization. This pronouncement will also require these companies to exclude any future cash outflows associated with settling asset retirement liabilities from their full cost ceiling test calculation. This standard will also require these companies to disclose the impact of their asset retirement obligations on their oil and gas producing activities, ceiling test calculations and depreciation, depletion and amortization calculations. The Company will adopt the provisions of this pronouncement in the third quarter of fiscal 2005 and is currently evaluating the impact, if any, on the Company's consolidated financial statements. MEXCO ENERGY CORPORATION AND SUBSIDIARY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cautionary Statements Regarding Forward-Looking Statements - ---------------------------------------------------------- Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements can be identified with words and phrases such as "believes," "expects," "anticipates," "should," "estimates," "foresees" or other words and phrases of similar meaning. Forward-looking statements appear throughout this Form 10-Q and include statements regarding Company plans, beliefs or current expectations with respect to, among other things: profitability, planned capital expenditures; estimates of oil and gas production, estimates of future oil and gas prices; estimates of oil and gas reserves; future financial condition or results of operations; and business strategy and other plans and objectives for future operations. Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement. While the Company has made assumptions that it believes are reasonable, the assumptions that support its forward-looking statements are based upon information that is currently available and is subject to change. All forward-looking statements in the Form 10-Q are qualified in their entirety by the cautionary statement contained in this section. The Company does not undertake to update, revise or correct any of the forward-looking information. Liquidity and Capital Resources - ------------------------------- Historically, the Company's sources of funding have been from operating activities, bank financing and the issuance of common stock. Page 9 The Company's focus is on increasing profit margins while concentrating on obtaining gas reserves with low cost operations by acquiring and developing primarily gas properties with potential for long-lived production. For the first six months of fiscal 2005, cash flow from operations was $659,192 compared to $878,143 for the first six months of fiscal 2004. The cash flow from operations for the first six months of fiscal 2005 included the effects of a decrease in accounts receivable and prepaid expenses and an increase in accounts payable and accrued expenses. Long-term borrowings provided $175,000, net of repayments on the line of credit. Cash of $824,179 was used for additions to property and equipment. Accordingly, net cash decreased $8,445. In August 2004, the Company purchased partially developed royalty interests in Freestone County, Texas for $500,000. These properties, operated by XTO and Anadarko Energy, Inc., contain 31 producing wells and an additional seven permitted and/or drilling wells in the Cotton Valley formation. This acreage contains approximately 19 potential undrilled locations on 40 acre spacing. In March 2004 the Company purchased partially developed royalty interests in Jackson Parish, Louisiana and interests in Limestone County, Texas for approximately $224,000. The properties in Limestone County, operated by XTO Energy, Inc., are in the Cotton Valley formation and contain 23 producing wells and an additional 6 permitted and/or drilling wells. This acreage contains approximately 100 potential undrilled locations on 40 acre spacing. The property in Louisiana, operated by Anadarko and producing from the Lower Cotton Valley formation, contains 3 producing wells and an additional 5 permitted and/or drilling wells. These royalty purchases advanced the Company's primary goal of acquiring natural gas reserves. In March 2004, the Company signed an agreement in Moscow, Russia to begin a preliminary feasibility study for exploration and development of oil and natural gas reserves in Russia. A team of U.S. and Russia experts commenced a feasibility study of a number of partially developed oil and natural gas fields located in Russia. Mexco Energy Corporation has formed OBTX, LLC, a Delaware limited liability company, in which Mexco owns a 90% interest with the remaining 10% interest split equally among three individuals, one of which is Arden Grover, a director of Mexco Energy Corporation. OBTX, LLC, plans to participate in any Russian ventures entered into and own a 50% interest subject to obtaining financing and owns a 50% interest in a recently formed Russian Company, GazTex LLC. The Company has acquired and also is reviewing several projects in the United States for future participation. The cost of such projects would be funded, to the extent possible, with existing cash balances and cash flow from operations. The remainder may be funded through borrowings on the bank credit facility discussed below. At September 30, 2004, the Company had working capital of approximately $298,209 compared to a working capital deficit of approximately $15,506 at March 31, 2004, an increase of $313,715 due primarily to the reclassification of the current portion of long-term debt as a result of the borrowing base redetermination. The Company has a revolving credit agreement with Bank of America, N.A. ("Bank"), which provides for a credit facility of $5,000,000, subject to a borrowing base redetermination. On December 15, 2003 the credit agreement was amended with a maturity date of August 15, 2005, which was later extended to October 1, 2005. The borrowing base was redetermined on this date and set at $1,938,372 with monthly commitment reductions of $45,450 beginning on January 5, 2004. On July 29, 2004, the borrowing base was redetermined and increased to $2,500,000, with no monthly commitment reductions. As of September 30, 2004, the balance outstanding under this agreement was $1,875,000. No principal payments are anticipated to be required for fiscal 2005 based on the revised borrowing base. A letter of credit for $50,000, in lieu of a plugging bond with the Texas Railroad Commission covering the properties the Company operates, is also outstanding under the facility. Amounts borrowed under this agreement are collateralized by the common stock of Forman and the Company's oil and gas properties. Interest under this agreement is payable monthly at prime rate (4.75% and 4.00% at September 30, 2004 and 2003, respectively). The agreement generally restricts the Company's ability to transfer assets or control of the Company, incur debt, extend credit, change the nature of the Company's business, substantially change management personnel, or pay cash dividends. The balance outstanding on the line of credit as of November 1, 2004 was $1,850,000. Page 10 The prices of natural gas and crude oil have fluctuated significantly in recent years as well as in recent months. Fluctuations in price have a significant impact on the Company's financial condition and liquidity. However, management is of the opinion that cash flow from operations and funds available from financing will be sufficient to provide for its working capital requirements and capital expenditures for the current fiscal year. Results of Operations - Three Months Ended September 30, 2004 and 2003 - ---------------------------------------------------------------------- Net income increased from a net profit of $118,470 for the quarter ended September 30, 2003 to a net profit of $119,060 for the quarter ended September 30, 2004. Individual categories of income and expense are discussed below. Oil and gas sales decreased from $768,852 for the second quarter of fiscal 2004 to $722,452 for the same period of fiscal 2005. This decrease of 6% or $46,400 resulted primarily from a decrease in both oil and gas production, offset partially by higher oil and gas prices. Average gas prices increased 21%, from $4.73 per mcf for the second quarter of fiscal 2004 to $5.71 per mcf for the same period of fiscal 2005, while average oil prices increased 42%, from $28.66 per bbl for the second quarter of fiscal 2004 to $40.72 for the same period of fiscal 2005. Oil and gas production quantities were 5,627 barrels ("bbls") and 128,560 thousand cubic feet ("mcf") for the second quarter of fiscal 2004 and 4,137 bbls and 96,981 mcf for the same period of fiscal 2005, a decrease of 26% in oil production and a decrease of 25% in gas production. Production costs decreased 14% from $241,168 for the second quarter of fiscal 2004 to $206,226 for the same period of fiscal 2005. This was primarily due to the decrease in production taxes and other charges as a result of a decrease in sales for the quarter combined with a decrease in repairs and maintenance to operated wells during the quarter. General and administrative expenses increased 7% from $156,644 for the second quarter of fiscal 2004 to $167,528 for the same period of fiscal 2005. This is primarily the result of an increase in consulting services, travel and organization costs related to participating in the formation of a Russian company. Depreciation, depletion and amortization based on production and other methods decreased 30%, from $170,695 for the second quarter of fiscal 2004 to $120,280 for the same period of fiscal 2005 primarily due to decreased production combined with an increase in company reserves from the royalties purchased in August 2004. Interest expense increased less than 1% from $20,860 for the second quarter of fiscal 2004 to $20,963 for the same period of fiscal 2005 primarily as a result of the increase in interest rates during the second quarter of fiscal 2005. Results of Operations - Six Months Ended September 30, 2004 and September 30, - -------------------------------------------------------------------------------- 2003 - ---- Net income before the cumulative effect of an accounting change decreased 18%, from a net profit of $270,230 for the six months ended September 30, 2003 to a net profit of $221,761 for the six months ended September 30, 2004. Individual categories of income and expense are discussed below. Page 11 Oil and gas sales decreased 9% from $1,535,912 for the six months ended September 30, 2004 to $1,397,447 for the same period of fiscal 2005. This decrease of 9% or $138,465 resulted primarily from a decrease in both oil and gas production, offset partially by higher oil and gas prices. Average gas prices increased 12%, from $4.82 per mcf for the first six months of fiscal 2004 to $5.38 per mcf for fiscal 2005, and average oil prices increased 39%, from $27.79 per bbl for the first six months of fiscal 2004 to $38.54 for fiscal 2005. Oil and gas production quantities were 11,146 bbls and 254,209 mcf for the first six months of fiscal 2004 and 8,004 bbls and 202,328 mcf for fiscal 2005, a decrease of 28% and 20%, respectively. Production costs decreased 22% from $509,860 for the six months ended September 30, 2004 to $397,964 for the same period of fiscal 2005. This was primarily due to the decrease in production taxes and other charges as a result of a decrease in sales combined with a decrease in repairs and maintenance to operated wells during the first and second quarters of fiscal 2005. Depreciation, depletion and amortization based on production and other methods decreased 19%, from $336,914 for the first six months of fiscal 2004 to $273,052 for the same period of fiscal 2005 primarily due to decreased production combined with an increase in company reserves from the royalties purchased in August 2004. Interest expense decreased 16% from $45,140 for the first six months of fiscal 2004 to $37,806 for the same period of fiscal 2005 primarily as a result of lesser borrowings. General and administrative expenses increased 22% from $272,622 for the first six months of fiscal 2004 to $331,947 for the same period of fiscal 2005. This is primarily the result of an increase in consulting services, travel and organization costs related to participating in the formation of a Russian company. These expenses were approximately $59,065 for the six-month period. Asset Retirement Obligations - ---------------------------- The Company's asset retirement obligations relate to the plugging and abandonment of oil and gas properties. The Company adopted SFAS No. 143 on April 1, 2003. SFAS No. 143 requires the fair value of a liability for an asset retirement obligation to be recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The related cumulative adjustment to 2004 net income was a decrease of $102,267 net of tax, or ($0.06) per share. Additionally, in 2004, the Company recorded an initial asset retirement obligation liability of $358,419 and an increase to net properties and equipment and other assets of $210,206. The asset retirement obligations are recorded at fair value and accretion expense, recognized over the life of the property, increases the liability to its expected settlement value. If the fair value of the estimated asset retirement obligation changes, an adjustment is recorded for both the asset retirement obligation and the asset retirement cost. The following table provides a rollforward of the asset retirement obligations for the current period: Carrying amount of asset retirement obligations as of April 1, 2004 $ 420,665 Liabilities incurred 1,469 Liabilities settled (25,815) Accretion expense 13,253 ---------- Carrying amount of asset retirement obligations as of September 30, 2004 $ 409,572 ========== Page 12 The current portion of the asset retirement obligation as of September 30, 2004 is $11,780 and is included in accounts payable and other accrued expenses. New Accounting Pronouncements - ----------------------------- In September, 2004 the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 106. This pronouncement will require companies that use the full cost method for accounting for their oil and gas producing activities to include an estimate of future asset retirement costs to be incurred as a result of future development activities on proved reserves in their calculation of depreciation, depletion and amortization. This pronouncement will also require these companies to exclude any future cash outflows associated with settling asset retirement liabilities from their full cost ceiling test calculation. This standard will also require these companies to disclose the impact of their asset retirement obligations on their oil and gas producing activities, ceiling test calculations and depreciation, depletion and amortization calculations. The Company will adopt the provisions of this pronouncement in the third quarter of fiscal 2005 and is currently evaluating the impact, if any, on our consolidated financial statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The primary sources of market risk for the Company include fluctuations in commodity prices and interest rate fluctuations. At September 30, 2004, the Company had not entered into any hedge arrangements, commodity swap agreements, commodity futures, options or other similar agreements relating to crude oil and natural gas. At September 30, 2004, the Company had an outstanding loan balance of $1,875,000 under its $5.0 million revolving credit agreement, which bears interest at the prime rate, which varies from time to time. If the interest rate on the Company's bank debt increases or decreases by one percentage point, the Company's annual pretax income would change by $18,750, based on the outstanding balance at September 30, 2004. Credit Risk. Credit risk is the risk of loss as a result of nonperformance by other parties of their contractual obligations. The Company's primary credit risk is related to oil and gas production sold to various purchasers and the receivables generally are uncollateralized. At September 30, 2004, the Company's largest credit risk associated with any single purchaser was $98,498. The Company has not experienced any significant credit losses. Volatility of Oil and Gas Prices. The Company's revenues, operating results and future rate of growth are highly dependent upon the prevailing market prices of, and demand for, oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond Company control. These factors include the level of global demand for petroleum products, foreign supply of oil and gas, the establishment of and compliance with production quotas by oil exporting countries, weather conditions, the price and availability of alternative fuels, and overall economic conditions, both foreign and domestic. The Company cannot predict future oil and gas prices with any degree of certainty. Sustained weakness in oil and gas prices may adversely affect the Company's ability to obtain capital for the Company's exploration and development activities and may require a reduction in the carrying value of the Company's oil and gas properties. Similarly, an improvement in oil and gas prices can have a favorable impact on the Company's financial condition, results of operations and capital resources. ITEM 4. CONTROLS AND PROCEDURES DISCLOSURE CONTROLS AND PROCEDURES Mexco's Chief Executive Officer and Chief Financial Officer performed an evaluation of the Company's disclosure controls and procedures. Page 13 Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act is accumulated and communicated to the issuer's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective as of September 30, 2004. In addition, there has been no significant change in the Company's internal control over financial reporting during the quarter ended September 30, 2004 that has materially affected, or is reasonably likely to materially affect the Company's internal control over financial reporting. PART II - OTHER INFORMATION Item 1. Legal proceedings ----------------- None. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ----------------------------------------------------------- None. Item 6. Exhibits and Reports on Form 8-K -------------------------------- EXHIBITS 14. Code of Business Conduct and Ethics 31.1 Certification of the Chief Executive Officer of Mexco Energy Corporation 31.2 Certification of the Chief Financial Officer of Mexco Energy Corporation 32.1 Certification by the Chief Executive Officer of Mexco Energy Corporation pursuant to 18 U.S.C. ss.1350 32.2 Certification by the Chief Financial Officer of Mexco Energy Corporation pursuant to 18 U.S.C. ss.1350 REPORTS ON FORM 8-K Form 8-K filed October 27, 2004 pursuant to Item 8.01, announcing stock purchase for the treasury account. Page 14 SIGNATURES 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 thereunto duly authorized. MEXCO ENERGY CORPORATION (Registrant) Dated: November 9, 2004 /s/ Nicholas C. Taylor -------------------------------------- Nicholas C. Taylor President Dated: November 9, 2004 /s/ Tamala L. McComic -------------------------------------- Tamala L. McComic Vice President, Treasurer and Assistant Secretary Page 15 EX-14 2 v08581_exhibit14.txt EXHIBIT 14 MEXCO ENERGY CORPORATION CODE OF BUSINESS CONDUCT AND ETHICS I. INTRODUCTION II. COMPLIANCE WITH LAWS, RULES AND REGULATIONS III. CONFLICTS OF INTEREST IV. INSIDER TRADING V. RECORD-KEEPING AND QUESTIONABLE ACCOUNTING OR AUDITING MATTERS VI. CORPORATE OPPORTUNITIES VII. CONFIDENTIALITY VIII. COMPETITION AND FAIR DEALING IX. PROTECTION AND PROPER USE OF COMPANY ASSETS X. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR XI. NO RETALIATION XII. DISCIPLINE XIII. WAIVERS OR CHANGES OF THE CODE OF BUSINESS CONDUCT AND ETHICS XIV. ADMINISTRATION APPENDIX: CERTIFICATION I. INTRODUCTION This Code of Business Conduct and Ethics ("Code") of Mexco Energy Corporation ("Company") covers a wide range of business practices and procedures. The Code represents both the code of ethics for the principal executive officer, principal financial officer, and principal accounting officer under Securities and Exchange Commission ("SEC") rules and the code of business conduct and ethics for directors, officers and employees under National Association of Securities Dealers Automated Quotation ("NASDAQ") listing standards. The Code applies to ALL directors, officers, and employees. It does not cover every issue that may arise, but it sets out guidelines as no set of rules can cover every business situation. Every employee, officer and director of the Company must conduct himself or herself according to this Code and seek to avoid even the appearance of improper behavior. If a law conflicts with a policy in this Code, you will obey the law; however, if a local custom or policy conflicts with this Code, you will comply with this Code. If you have any questions, concerns, or are unsure about how to interpret this Code, you should ask your supervisor or the Compliance Representative for their advice on how to handle the situation. II. COMPLIANCE WITH LAWS, RULES AND REGULATIONS Directors, officers, and employees will obey the applicable laws, rules and regulations of the United States and those states, counties, cities and jurisdictions in which the Company conducts its business and to which the Company, director, officer or employee are subject. The Code does not summarize all such laws, rules and regulations, but rather you should seek advice from your supervisor, the Company's Compliance Representative, or other appropriate personnel. Page 16 III. CONFLICTS OF INTEREST Directors, officers, and employees must avoid situations that involve, or could appear to involve, "conflicts of interest" with regard to the Company's interest. Exceptions may only be made after review of fully disclosed information and approval of specific or general categories by senior management (in the case of employees) or the Board (in the case of officers or directors). A "conflict of interest" exists when a person's private interest interferes in any way with the interests of the Company. Conflicts of interest generally interfere with the person's effective and objective performance of their duties or responsibilities to the Company. Although there are many examples of conflicts of interest, some of the more common ones are discussed. Conflicts of interest occur when a director, officer or employee of members of their immediate family, receive improper personal benefits because of their position with the Company. Loans to, or guarantees of obligations of directors, officers, employees or their immediate family members also create conflicts of interest. Another common conflict of interest occurs when the director, officer, employee or their immediate family members use Company property or confidential information. Since conflicts of interest are not always clear-cut, or if you have questions or concerns, you may consult with the Compliance Representative. If you become aware of a conflict or potential conflict of interest, bring it to the attention of your supervisor or other appropriate personnel and follow the policies in Section X. Reporting any Illegal or Unethical Behavior. IV. INSIDER TRADING Directors, officers, and employees with knowledge of material non-public information about the Company are prohibited from buying, selling or otherwise trading the Company's securities, whether or not they are using or relying on the non-public information. Directors, officers, and employees may not share or provide "tips" to others by providing such information about the Company. If you are uncertain about whether you have material non-public information about the Company, you should consult the Company's General Counsel or the Compliance Representative before trading in the Company's securities. V. RECORD-KEEPING AND QUESTIONABLE ACCOUNTING OR AUDITING MATTERS The Company needs honest and accurate recording and reporting of information in order to make reasonable business decisions. Financial information should be recorded promptly and accurately to ensure timely and accurate reporting of financial information. The Company seeks to have every business record accurate, complete and reliable. Directors, officers, and employees are responsible to report to the Company any concerns regarding questionable accounting or auditing matters that come to their attention. Senior accounting personnel and, where applicable, all other directors, officers and employees should take such actions as are necessary to ensure that in all material respects the Company's books and records contain no false or misleading entries, the Company's business transactions are properly authorized and recorded completely and accurately in accordance with generally accepted accounting principles (GAAP), the documents the Company files with the SEC or makes available to the public contain full, fair, accurate, timely and understandable disclosures relating to the Company. False, misleading, inaccurate or incomplete information may be illegal in some cases, but it hampers the Company's ability to make reasonable business decisions. Page 17 VI. CORPORATE OPPORTUNITIES Directors, officers, and employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. They are expected to not take for themselves personally opportunities that are discovered through the use of Company property, information or position. They are also prohibited from using Company property, information or position for improper personal gain. VII. CONFIDENTIALITY Directors, officers, and employees are expected to maintain the confidentiality of information entrusted to them by the Company, its suppliers, or customers, except when disclosure is either expressly authorized by the Company or required by law. Confidential information includes, but is not limited to, non-public information that might be of use to competitors of the Company or be harmful to the Company, its suppliers or customers, if disclosed. Confidential information may consist of financial information, forecasts, analyses, offers and proposals for acquisitions, dispositions, leases, other transactions and the related appraisals, studies and documents. If you have questions or concerns regarding whether the information is considered confidential information, you should contact or consult with the General Counsel of the Company. Directors, officers and employees retain the duty to keep Company information confidential after termination of employment or other relationship with the Company. The Company will pursue all legal remedies available at law or in equity to prevent any former employee, officer or director from using Company confidential information. VIII. COMPETITION AND FAIR DEALING The Company will compete fairly and honestly and gain competitive advantages through superior performance, not unethical or illegal business practices. Directors, officers, and employees should respect the rights of and deal fairly with the Company's customers, suppliers, competitors, and employees. Directors, officers, and employees are expected to avoid taking unfair advantage of anyone through manipulation, concealment, abuse of privileged or confidential information, misrepresentation of material facts or other unfair practices. IX. PROTECTION AND PROPER USE OF COMPANY ASSETS Directors, officers, and employees are expected to protect the Company's assets and ensure their efficient use. Company assets should be used for legitimate business purposes only, however incidental personal use may be permitted. Theft, fraud, waste and misuse of Company assets have a direct impact on the Company's profits. Suspected instances of fraud or theft should be reported immediately for investigation. The duty to safeguard Company assets extends to the Company's proprietary information. Proprietary information includes intellectual property such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate this Code, could be illegal, and may result in civil liability and/or criminal prosecution. Page 18 X. REPORTING ANY ILLEGAL OR UNETHICAL BEHAVIOR If you believe that actions that violate this Code have taken place, are currently taking place, or are about to take place, you must bring the matter to the attention of the Company. You are encouraged to communicate with supervisors or other appropriate personnel about observed illegal or unethical behavior. Any supervisor who receives a report of a past, current or pending violation must report it immediately to the General Counsel. In reporting the violation, the Company prefers you identify yourself to facilitate the investigation, however, you may remain anonymous. The Company will use all reasonable efforts to preserve such anonymity or confidentiality of the person who reports the potential misconduct. The Company will also use all reasonable efforts to preserve the anonymity of the person about or against whom an allegation is brought, unless and until it is determined that a violation has occurred. Any person involved in any investigation in any capacity will not discuss or disclose any information to anyone outside the investigation unless required by law or when seeking their own legal counsel. If required by law, the person will cooperate fully. Any use of these reporting procedures in bad faith or in a false or frivolous manner will be considered a violation of this Code. XI. NO RETALIATION Any retaliation, for reports of misconduct by others, made in good faith by a director, officer, or employee will not be tolerated. Any director, officer, or employee who engages in retaliation is subject to discipline, up to and including discharge from the Company and where appropriate, civil liability and/or criminal prosecution. XII. DISCIPLINE The Company expects directors, officers and employees to adhere to this Code in carrying out their duties or responsibilities for the Company. Those who violate the policies in this Code will be subject to disciplinary action, up to and including a discharge from the Company, and where appropriate, civil liability and/or criminal prosecution. If you are in a situation that you believe may violate the Code, you should follow the policies in Section X. Reporting any Illegal or Unethical Behavior. XIII. WAIVERS OR CHANGES OF THE CODE OF BUSINESS CONDUCT AND ETHICS Only the Board or a Board committee may make waivers of this Code after full disclosure of relevant information by the parties involved. Should a waiver occur for an officer or director, it will be promptly disclosed as required by law or regulation. Any changes to this Code will also be promptly disclosed as required by law or regulation. Page 19 XIV. ADMINISTRATION The Board will help ensure this Code is properly administered. The Board or a Board committee will be responsible for the annual review of the procedures in place to implement this Code. Any changes to this Code requires Board approval and will be promptly disclosed as required by law or regulation. All officers and supervisors are responsible for reviewing this Code with their employees and ensuring that they have signed the attached certification. Officers also have a duty to help ensure compliance with this Code through the review of practices and procedures in place to facilitate compliance with this Code. Page 20 EX-31.1 3 v08581_exhibit31.txt EXHIBIT 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER MEXCO ENERGY CORPORATION CERTIFICATION I, Nicholas C. Taylor, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Mexco Energy Corporation 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 9, 2004 /s/ Nicholas C. Taylor ------------------------ Nicholas C. Taylor Chief Executive Officer Page 21 EX-31.2 4 v08581exht31_2.txt EXHIBIT 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER MEXCO ENERGY CORPORATION CERTIFICATION I, Tamala L. McComic, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Mexco Energy Corporation 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 9, 2004 /s/ Tamala L. McComic --------------------- Tamala L. McComic Chief Financial Officer Page 22 EX-32.1 5 v08581exht32_1.txt EXHIBIT 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF MEXCO ENERGY CORPORATION PURSUANT TO 18 U.S.C. ss.1350 In connection with the accompanying report on Form 10-Q for the period ended September 30, 2004 and filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Nicholas C. Taylor, Chief Executive Officer of Mexco Energy Corporation (the "Company"), hereby certify that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Nicholas C. Taylor ----------------------- Nicholas C. Taylor Chief Executive Officer November 9, 2004 This certification is made solely pursuant to 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 will be retained by Mexco Energy Corporation and furnished to the Securities and Exchange Commission or its staff upon request. Page 23 EX-32.2 6 v08581exht32_2.txt Exhibit 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER OF MEXCO ENERGY CORPORATION PURSUANT TO 18 U.S.C. ss.1350 In connection with the accompanying report on Form 10-Q for the period ended September 30, 2004 and filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Tamala L. McComic, Chief Financial Officer of Mexco Energy Corporation (the "Company"), hereby certify that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Tamala L. McComic ------------------------ Tamala L. McComic Chief Financial Officer November 9, 2004 This certification is made solely pursuant to 18 U.S.C. Section 1350, and not for any other purpose. A signed original of this written statement required by Section 906 will be retained by Mexco Energy Corporation and furnished to the Securities and Exchange Commission or its staff upon request. Page 24 -----END PRIVACY-ENHANCED MESSAGE-----