Mexco Energy's Q3 Net Income Dips Amid Shifting Revenue Mix

TL;DR

**MXC's net income dipped, but a cash surge and lower capex make it a stable, albeit less growth-focused, play in a volatile energy market.**

AI Summary

MEXCO ENERGY CORP reported a slight decrease in total operating revenues for the six months ended September 30, 2025, to $3,548,919 from $3,477,062 in the prior year, primarily due to a drop in oil sales from $3,031,922 to $2,698,042, partially offset by a significant increase in natural gas sales from $351,987 to $681,258. Net income for the six-month period decreased by 7.03% to $565,457 from $608,237 in the same period last year. The company's cash and cash equivalents increased substantially to $2,746,692 as of September 30, 2025, up from $1,753,955 at March 31, 2025. Capital expenditures for oil and gas properties decreased significantly to $676,601 for the six months ended September 30, 2025, compared to $1,667,027 in the prior year. The company also increased its investments in limited liability companies by $200,000 during the period. Despite a decrease in net income, the company maintained a strong cash position and reduced its long-term liabilities from $1,084,968 to $935,796.

Why It Matters

For investors, MXC's slight dip in net income and revenue, coupled with a significant increase in natural gas sales offsetting oil revenue declines, signals a potential shift in commodity exposure. The substantial increase in cash and cash equivalents to $2.75 million, alongside reduced capital expenditures, suggests a more conservative capital allocation strategy, which could be attractive to risk-averse investors. Employees might see stability given the strong cash position, while customers could benefit from the company's continued production. In a competitive energy market, MXC's ability to adapt its revenue streams and maintain financial health is crucial for long-term viability.

Risk Assessment

Risk Level: medium — The risk level is medium due to the inherent volatility of commodity prices, as evidenced by the decrease in oil sales from $3,031,922 to $2,698,042 and the increase in natural gas sales from $351,987 to $681,258. While the company has a strong cash position of $2,746,692, its reliance on fluctuating oil and gas prices for revenue generation presents ongoing market risk.

Analyst Insight

Investors should monitor MXC's future commodity price exposure and production mix, especially given the shift from oil to natural gas revenue. The strong cash position and reduced capital expenditures suggest financial prudence, but growth-oriented investors might seek clearer catalysts for expansion beyond current investment levels.

Financial Highlights

debt To Equity

N/A

revenue

$3,548,919

operating Margin

N/A

total Assets

N/A

total Debt

$935,796

net Income

$565,457

eps

$0.28

gross Margin

N/A

cash Position

$2,746,692

revenue Growth

1.95%

Revenue Breakdown

Key Numbers

• $3.55M — Total Operating Revenues (Decreased slightly from $3.48M in prior year for six months ended Sep 30, 2025)
• $565K — Net Income (Decreased by 7.03% from $608K in prior year for six months ended Sep 30, 2025)
• $2.75M — Cash and Cash Equivalents (Increased significantly from $1.75M at March 31, 2025)
• $2.70M — Oil Sales (Decreased from $3.03M in prior year for six months ended Sep 30, 2025)
• $681K — Natural Gas Sales (Increased significantly from $352K in prior year for six months ended Sep 30, 2025)
• $677K — Additions to Oil and Gas Properties (Decreased from $1.67M in prior year for six months ended Sep 30, 2025)
• $200K — Investments in LLCs (Increased during the six months ended Sep 30, 2025)
• $0.28 — Basic Income per Common Share (Decreased from $0.29 in prior year for six months ended Sep 30, 2025)
• $94K — Stock-based Compensation (Decreased from $104K in prior year for six months ended Sep 30, 2025)
• $1.50M — Available Credit Facility (Reaffirmed by WTNB as of September 17, 2025)

Key Players & Entities

• MEXCO ENERGY CORP (company) — registrant
• Forman Energy Corporation (company) — wholly owned subsidiary
• Southwest Texas Disposal Corporation (company) — wholly owned subsidiary
• TBO Oil & Gas, LLC (company) — wholly owned subsidiary
• West Texas National Bank (company) — lender
• $3,548,919 (dollar_amount) — total operating revenues for six months ended September 30, 2025
• $565,457 (dollar_amount) — net income for six months ended September 30, 2025
• $2,746,692 (dollar_amount) — cash and cash equivalents as of September 30, 2025
• $676,601 (dollar_amount) — additions to oil and gas properties for six months ended September 30, 2025
• $1,500,000 (dollar_amount) — available borrowing on credit facility as of September 30, 2025

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: The company's revenues are heavily dependent on the fluctuating prices of oil and natural gas. A significant drop in oil sales revenue from $3,031,922 to $2,698,042 in the six months ended September 30, 2025, highlights this sensitivity. Continued price volatility could negatively impact profitability and cash flows.
• Capital Expenditure Reduction [medium — operational]: Capital expenditures for oil and gas properties decreased substantially to $676,601 from $1,667,027 year-over-year. While this may improve short-term cash flow, a sustained reduction in investment could impact future production levels and reserve replacement.
• Decreasing Net Income [medium — financial]: Net income decreased by 7.03% to $565,457 for the six months ended September 30, 2025, compared to $608,237 in the prior year. This decline, despite increased natural gas sales, suggests rising costs or other operational inefficiencies impacting the bottom line.
• Reliance on Debt Financing [low — financial]: While long-term liabilities decreased from $1,084,968 to $935,796, the company still carries debt. Changes in interest rates or the company's ability to service its debt could pose financial risks.
• Environmental Regulations [medium — regulatory]: The oil and gas industry is subject to stringent environmental regulations. Changes in these regulations, or the cost of compliance, could materially affect the company's operations and financial performance.

Industry Context

The oil and gas industry is characterized by significant price volatility for its primary commodities, oil and natural gas. Companies in this sector face ongoing challenges related to exploration, production costs, and increasingly stringent environmental regulations. The shift in revenue mix observed in MEXCO ENERGY CORP, with a decline in oil sales offset by a surge in natural gas sales, reflects broader market dynamics and potential shifts in energy demand or supply.

Regulatory Implications

MEXCO ENERGY CORP operates within a heavily regulated industry. Compliance with environmental standards, production reporting, and tax regulations (including specific provisions like statutory depletion) are critical. Changes in federal or state environmental policies or tax laws could impact operational costs and profitability.

What Investors Should Do

1. Monitor commodity price trends
2. Analyze capital expenditure strategy
3. Evaluate the sustainability of natural gas sales growth
4. Review cost structure and operating efficiencies

Key Dates

• 2025-09-30: End of Six-Month Period — Reporting period for the 10-Q, showing financial performance and position.
• 2025-03-31: End of Prior Fiscal Year — Baseline for comparison of cash and cash equivalents, showing significant increase.
• 2025-09-17: Credit Facility Reaffirmed — Indicates continued access to a $1.50M credit facility, providing liquidity assurance.

Glossary

Statutory depletion carryforward

A tax deduction related to the extraction of natural resources that can be carried forward to future tax periods. (This item reduced the company's tax expense by $49,319 for the six months ended September 30, 2025, impacting the effective tax rate.)

Deferred income tax (benefit) expense

Taxes that are recognized in financial statements but are not paid or received in the current period, often due to timing differences in accounting and tax rules. (The company recorded a deferred tax benefit of $123,016 for the six months ended September 30, 2025, reducing its total income tax expense.)

Effective income tax rate

The actual percentage of pre-tax income that a company pays in income taxes. (The effective tax rate decreased from 26.4% to 22.2% for the six months ended September 30, 2025, due to factors like statutory depletion carryforward.)

Capital expenditures for oil and gas properties

Investments made by an oil and gas company to acquire, explore, develop, and produce oil and natural gas reserves. (A significant decrease in these expenditures from $1,667,027 to $676,601 indicates a shift in investment strategy or reduced development activity.)

Year-Over-Year Comparison

For the six months ended September 30, 2025, MEXCO ENERGY CORP reported total operating revenues of $3,548,919, a slight increase from $3,477,062 in the prior year, driven by a substantial rise in natural gas sales that more than offset a decline in oil sales. However, net income saw a decrease of 7.03% to $565,457 from $608,237, indicating potential pressure on margins or increased operating expenses. Capital expenditures were significantly reduced, while the company strengthened its cash position and reduced long-term liabilities.

Key Financial Figures

• $0.50 — ch registered Common Stock, par value $0.50 per share MXC NYSE American Indic

Filing Documents

• form10-q.htm (10-Q) — 784KB
• ex31-1.htm (EX-31.1) — 18KB
• ex31-2.htm (EX-31.2) — 17KB
• ex32-1.htm (EX-32.1) — 8KB
• 0001493152-25-021976.txt ( ) — 3970KB
• mxc-20250930.xsd (EX-101.SCH) — 27KB
• mxc-20250930_cal.xml (EX-101.CAL) — 54KB
• mxc-20250930_def.xml (EX-101.DEF) — 101KB
• mxc-20250930_lab.xml (EX-101.LAB) — 265KB
• mxc-20250930_pre.xml (EX-101.PRE) — 203KB
• form10-q_htm.xml (XML) — 478KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and March 31, 2025 3 Consolidated Statements of Operations (Unaudited) for the three months and six months ended September 30, 2025 and September 30, 2024 4 Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the three and six months ended September 30, 2025 and September 30, 2024 5 Consolidated Statements of Cash Flows (Unaudited) for the six months ended September 30, 2025 and September 30, 2024 6

Notes to Consolidated Financial Statements (Unaudited)

Notes to Consolidated Financial Statements (Unaudited) 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 17 Item 4.

Controls and Procedures

Controls and Procedures 18

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 19 Item 1A.

Risk Factors

Risk Factors 19 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19 Item 6. Exhibits 19

SIGNATURES

SIGNATURES 20 CERTIFICATIONS 21 Page 2 PART I – FINANCIAL INFORMATION Item 1. Financial Statements Mexco Energy Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS September 30, March 31, 2025 2025 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 2,746,692 $ 1,753,955 Accounts receivable: Oil and natural gas sales 876,373 1,113,588 Trade 48,731 67,951 Prepaid costs and expenses 50,959 60,981 Prepaid drilling 13,756 24,381 Total current assets 3,736,511 3,020,856 Property and equipment, at cost Oil and gas properties, using the full cost method 52,270,022 51,611,782 Other 121,926 121,926 Accumulated depreciation, depletion and amortization ( 37,975,448 ) ( 36,637,530 ) Property and equipment, net 14,416,500 15,096,178 Investments – cost basis 2,300,000 2,100,000 Operating lease, right-of-use asset 101,595 126,525 Other noncurrent assets 2,149 4,298 Total assets $ 20,556,755 $ 20,347,857 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 253,744 $ 307,387 Income tax payable 147,079 192,802 Operating lease liability, current 53,341 51,003 Total current liabilities 454,164 551,192 Long-term liabilities Operating lease liability, long-term 48,254 75,522 Asset retirement obligations 689,954 688,842 Deferred income tax liabilities 197,588 320,604 Total long-term liabilities 935,796 1,084,968 Total liabilities 1,389,960 1,636,160 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; 2,239,283 shares issued; and, 2,046,000 shares outstanding as of September 30, 2025 and March 31, 2025, respectively 1,119,641 1,119,641 Additional paid-in capital 8,939,194 8,844,953 Retained earnings 10,986,706 10,625,849 Trea

financial statements

financial statements. Page 10 The income tax provision consists of the following for the six months ended September 30, 2025 and 2024: Schedule of Income Tax Provision 2025 2024 Six Months Ended September 30 2025 2024 Current income tax expense: Federal $ 232,079 $ 51,692 46,986 Total current income tax expense 284,482 98,678 Deferred income tax (benefit) expense: Federal ( 123,298 ) 119,661 - Total deferred income tax (benefit) expense ( 123,016 ) 119,661 Total income tax expense: $ 161,466 $ 218,339 A reconciliation of the provision for income taxes to income taxes computed using the federal statutory rate for the six months ended September 30 follows: Schedule of Reconciliation of Provision for Income Taxes 2025 2024 Tax expense at federal statutory rate (1) $ 152,654 $ 173,581 Statutory depletion carryforward ( 49,319 ) - Change in valuation allowance - - Permanent differences 16,450 7,639 41,621 37,119 Other 60 - Total income tax 161,466 218,339 Effective income tax rate 22.2 % 26.4 % (1) The federal statutory rate was 21 % for six month

View Full Filing

View this 10-Q filing on SEC EDGAR