10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

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. 1-31785

MEXCO ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Colorado	84-0627918
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

415 West Wall Street, Suite 475 Midland, Texas	79701
(Address of principal executive offices)	(Zip code)

(432) 682-1119

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.50 per share	MXC	NYSE American

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 and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☐	Smaller reporting company ☒
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

The number of shares outstanding of the registrant’s common stock, $0.50 par value, as of August 15, 2022 was 2,149,416.

MEXCO ENERGY CORPORATION

		Table of Contents
			Page
PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and March 31, 2022	3
		Consolidated Statements of Operations (Unaudited) for the three months ended June 30, 2022 and June 30, 2021	4
		Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) for the three months ended June 30, 2022 and June 30, 2021	5
		Consolidated Statements of Cash Flows (Unaudited) for the three months ended June 30, 2022 and June 30, 2021	6
		Notes to Consolidated Financial Statements (Unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
	Item 4.	Controls and Procedures	15
PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	16
	Item 1A.	Risk Factors	16
	Item 6.	Exhibits	16
SIGNATURES			17
CERTIFICATIONS

Page 2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED BALANCE SHEETS

	June 30,			March 31,
	2022			2022
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	537,001		$	1,370,766
Accounts receivable:
Oil and natural gas sales		1,532,385			1,310,137
Trade		-			-
Prepaid costs and expenses		38,370			52,636
Total current assets		2,107,756			2,733,539
Property and equipment, at cost
Oil and gas properties, using the full cost method		42,669,430			40,373,741
Other		121,926			120,208
Accumulated depreciation, depletion and amortization		(30,748,176	)		(30,361,047	)
Property and equipment, net		12,043,180			10,132,902
Investment in limited liability company at cost		300,000			275,000
Operating lease, right-of-use asset		116,540			129,923
Other noncurrent assets		114,006			13,156
Total assets	$	14,681,482		$	13,284,520
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	283,941		$	209,469
Operating lease liability, current		54,806			54,294
Total current liabilities		338,747			263,763
Long-term liabilities
Operating lease liability, long-term		61,734			75,629
Asset retirement obligations		732,142			720,512
Total long-term liabilities		793,876			796,141
Total liabilities		1,132,623			1,059,904
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; 2,216,416 shares issued and 2,149,416 shares outstanding as of June 30, 2022 and March 31, 2022, respectively		1,108,208			1,108,208
Additional paid-in capital		8,159,553			8,133,982
Retained earnings		4,627,099			3,328,427
Treasury stock, at cost (67,000 shares)		(346,001	)		(346,001	)
Total stockholders’ equity		13,548,859			12,224,616
Total liabilities and stockholders’ equity	$	14,681,482		$	13,284,520

The accompanying notes are an integral part of the consolidated financial statements.

Page 3

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended June 30,

(Unaudited)

	2022			2021
Operating revenues:
Oil sales	$	1,559,321		$	987,103
Natural gas sales		856,792			268,462
Other		33,860			8,633
Total operating revenues		2,449,973			1,264,198
Operating expenses:
Production		435,028			276,987
Accretion of asset retirement obligations		7,519			7,058
Depreciation, depletion and amortization		387,128			264,320
General and administrative		318,530			308,167
Total operating expenses		1,148,205			856,532
Operating income		1,301,768			407,666
Other income (expense):
Interest income		35			59
Interest expense		(3,131	)		(12,719	)
Net other expense		(3,096	)		(12,660	)
Income before provision for income taxes		1,298,672			395,006
Income tax		-			-
Net income	$	1,298,672		$	395,006
Income per common share:
Basic:	$	0.60		$	0.19
Diluted:	$	0.59		$	0.19
Weighted average common shares outstanding:
Basic:		2,149,416			2,076,756
Diluted:		2,216,742			2,119,955

The accompanying notes are an integral part of the consolidated financial statements.

Page 4

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common Stock Par Value		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Total Stockholders’ Equity
Balance at April 1, 2022	$	1,108,208	$	8,133,982	$	3,328,427	$	(346,001	)	$	12,224,616
Net income		-		-		1,298,672		-			1,298,672
Stock based compensation		-		25,571		-		-			25,571
Balance at June 30, 2022	$	1,108,208	$	8,159,553	$	4,627,099	$	(346,001	)	$	13,548,859

		Common Stock Par Value		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Total Stockholders’ Equity
Balance at April 1, 2021	$	1,071,833	$	7,624,214	$	473,361	$	(346,001	)	$	8,823,407
Net income		-		-		395,006		-			395,006
Issuance of stock through options exercised		2,500		31,500		-		-			34,000
Stock based compensation		-		13,865		-		-			13,865
Balance at June 30, 2021	$	1,074,333	$	7,669,579	$	868,367	$	(346,001	)	$	9,266,278

SHARE ACTIVITY
Common stock shares, issued:
Balance at April 1, 2022	2,216,416
Issued	-
Balance at June 30, 2022	2,216,416
Common stock shares, held in treasury:
Balance at April 1, 2022	(67,000	)
Acquisitions	-
Balance at June 30, 2022	(67,000	)
Common stock shares, outstanding at June 30, 2022	2,149,416

The accompanying notes are an integral part of the consolidated financial statements.

Page 5

Mexco Energy Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended June 30,

(Unaudited)

	2022			2021
Cash flows from operating activities:
Net income	$	1,298,672		$	395,006
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		25,571			13,865
Depreciation, depletion and amortization		387,128			264,320
Accretion of asset retirement obligations		7,519			7,058
Amortization of debt issuance costs		3,131			3,131
Changes in operating assets and liabilities
Increase in accounts receivable		(222,248	)		(68,135	)
Decrease in prepaid expenses		14,266			10,530
Decrease (increase) in right-of-use asset		13,384			(148,881	)
(Decrease) increase in accounts payable and accrued expenses		(12,364	)		40,918
Settlement of asset retirement obligations		(6,077	)		(291	)
(Decrease) increase in operating lease liability		(13,384	)		148,533
Net cash provided by operating activities		1,495,598			666,054
Cash flows from investing activities:
Additions to oil and gas properties		(2,320,974	)		(302,976	)
Additions to other property and equipment		(1,718	)		-
Investment in limited liability company at cost		(25,000	)		-
Drilling refund		18,329			-
Proceeds from sale of oil and gas properties and equipment		-			5,863
Net cash used in investing activities		(2,329,363	)		(297,113	)
Cash flows from financing activities:
Proceeds from exercise of stock options		-			34,000
Reduction of long-term debt		-			(480,000	)
Proceeds from long-term debt		-			100,000
Net cash used in financing activities		-			(346,000	)
Net (decrease) increase in cash and cash equivalents		(833,765	)		22,941
Cash and cash equivalents at beginning of period		1,370,766			57,813
Cash and cash equivalents at end of period	$	537,001		$	80,754
Supplemental disclosure of cash flow information:
Cash paid for interest	$	-		$	10,040
Non-cash investing and financing activities:
Asset retirement obligations	$	14,668		$	3,329
Operating lease – right of use asset and associated liabilities	$	-		$	165,007

The accompanying notes are an integral part of the consolidated financial statements.

Page 6

Mexco Energy Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Nature of Operations

Mexco Energy Corporation (a Colorado corporation) and its wholly owned subsidiaries, Forman Energy Corporation (a New York corporation), Southwest Texas Disposal Corporation (a Texas corporation) and TBO Oil & Gas, LLC (a Texas limited liability company) (collectively, the “Company”) are engaged in the acquisition, exploration, development and production of crude oil, natural gas, condensate and natural gas liquids (“NGLs”). Most of the Company’s oil and gas interests are centered in West Texas and Southeastern New Mexico; however, the Company owns producing properties and undeveloped acreage in fourteen states. All of Company’s oil and gas interests are operated by others.

2. Basis of Presentation and Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of Mexco Energy Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions associated with the consolidated operations have been eliminated.

Estimates and Assumptions. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make informed judgments, estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and affect the reported amounts of revenues and expenses during the reporting period. In addition, significant estimates are used in determining proved oil and gas reserves. Although management believes its estimates and assumptions are reasonable, actual results may differ materially from those estimates. The estimate of the Company’s oil and natural gas reserves, which is used to compute depreciation, depletion, amortization and impairment of oil and gas properties, is the most significant of the estimates and assumptions that affect these reported results.

Interim Financial Statements. 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 as of June 30, 2022, and the results of its operations and cash flows for the interim periods ended June 30, 2022 and 2021. The consolidated financial statements as of June 30, 2022 and for the three-month periods ended June 30, 2022 and 2021 are unaudited. The consolidated balance sheet as of March 31, 2022 was derived from the audited balance sheet filed in the Company’s 2022 annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). 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 2 of the “Notes to Consolidated Financial Statements” in the Form 10-K. 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 SEC. However, the disclosures herein are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

Investments. The Company accounts for investments of less than 1% in limited liability companies at cost. The Company has no control of the limited liability companies. The cost of the investment is recorded as an asset on the consolidated balance sheets and when income from the investment is received, it is immediately recognized on the consolidated statements of operations.

3. Asset Retirement Obligations

The Company’s asset retirement obligations (“ARO”) relate to the plugging of wells, the removal of facilities and equipment, and site restoration on oil and gas properties. The fair value of a liability for an ARO is recorded in the period in which it is incurred, discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period until the liability is settled or the well is sold, at which time the liability is removed. The related asset retirement cost is capitalized as part of the carrying amount of our oil and natural gas properties. The ARO is included on the consolidated balance sheets with the current portion being included in the accounts payable and other accrued expenses.

Page 7

The following table provides a rollforward of the AROs for the first three months of fiscal 2022:

Carrying amount of asset retirement obligations as of April 1, 2022	$	735,512
Liabilities incurred		14,668
Liabilities settled		(10,557	)
Accretion expense		7,519
Carrying amount of asset retirement obligations as of June 30, 2022		747,142
Less: Current portion		15,000
Non-Current asset retirement obligation	$	732,142

4. Long Term Debt

On December 28, 2018, the Company entered into a loan agreement (the “Agreement”) with West Texas National Bank (“WTNB”), which originally provided for a credit facility of $1,000,000 with a maturity date of December 28, 2021. The Agreement has no monthly commitment reduction and a borrowing base to be evaluated annually.

On February 28, 2020, the Agreement was amended to increase the credit facility to $2,500,000, extend the maturity date to March 28, 2023 and increase the borrowing base to $1,500,000.

Under the Agreement, interest on the facility accrues at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half of one percent (0.5%) floating daily. Interest on the outstanding amount under the Agreement is payable monthly. In addition, the Company will pay an unused commitment fee in an amount equal to one-half of one percent (0.5%) times the daily average of the unadvanced amount of the commitment. The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter. As of June 30, 2022, there was $1,500,000 available on the facility.

No principal payments are anticipated to be required through the maturity date of the credit facility, March 28, 2023. Upon closing with WTNB on the original Agreement, the Company paid a .5% loan origination fee in the amount of $5,000 plus legal and recording expenses totaling $34,532, which were deferred over the life of the credit facility. Upon closing the amendment to the Agreement, the Company paid a .1% loan origination fee of $2,500 and an extension fee of $3,125 plus legal and recording expenses totaling $12,266, which were also deferred over the life of the credit facility.

Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties.

The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires senior debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratios (Senior Debt/EBITDA) less than or equal to 4.00 to 1.00 measured with respect to the four trailing quarters and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter.

In addition, this Agreement prohibits the Company from paying cash dividends on its common stock without prior written permission of WTNB. The Agreement does not permit the Company to enter into hedge agreements covering crude oil and natural gas prices without prior WTNB approval.

There was no balance outstanding on the credit facility as of June 30, 2022.

Page 8

5. Stock-based Compensation

The Company recognized compensation expense of $25,571 and $13,865 related to vesting stock options in general and administrative expense in the Consolidated Statements of Operations for the first quarter of fiscal 2023 and 2022, respectively. The total cost related to non-vested awards not yet recognized at June 30, 2022 totals $188,537, which is expected to be recognized over a weighted average of 2.14 years.

The following table is a summary of stock options activity for the three months ended June 30, 2022:

	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Aggregate Average Remaining Contract Life in Years		Intrinsic Value
Outstanding at April 1, 2022		114,250	$	5.51		7.40	$	1,221,670
Granted		-		-
Exercised		-		-
Forfeited or Expired		-		-
Outstanding at June 30, 2022		114,250	$	5.51		7.15	$	1,334,778
Vested at June 30, 2022		52,750	$	4.68		5.99	$	660,023
Exercisable at June 30, 2022		52,750	$	4.68		5.99	$	660,023

During the three months ended June 30, 2022 and 2021, no stock options were granted.

During the three months ended June 30, 2022, no stock options were exercised. During the three months ended June 30, 2021, stock options covering 5,000 shares were exercised with a total intrinsic value of $15,036. The Company received proceeds of $34,000 from these exercises.

No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history for these types of awards. During the three months ended June 30, 2022 and 2021, there were no stock options forfeited or expired.

Outstanding options at June 30, 2022 expire between August 2024 and July 2031 and have exercise prices ranging from $3.34 to $8.51.

6. Leases

The Company leases approximately 4,160 rentable square feet of office space from an unaffiliated third party for our corporate office located in Midland, Texas. This includes 1,112 square feet of office space shared with and reimbursed by our majority shareholder. The lease does not include an option to renew and is a 36-month lease that was to expire in May 2021. In June 2020, in exchange for a reduction in rent for the months of June and July 2020, the Company agreed to a 2-month extension to its current lease agreement at the regular monthly rate extending its current lease expiration date to July 2021. In June 2021, the Company agreed to extend its current lease at a flat (unescalated) rate for 36 months. The amended lease now expires on July 31, 2024.

The Company determines an arrangement is a lease at inception. Operating leases are recorded in operating lease right-of-use asset, operating lease liability, current, and operating lease liability, long-term on the consolidated balance sheets.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate used at adoption was 3.75%. Significant judgement is required when determining the incremental borrowing rate. Rent expense for lease payments is recognized on a straight-line basis over the lease term.

Page 9

The balance sheets classification of lease assets and liabilities was as follows:

	June 30, 2022
Assets
Operating lease right-of-use asset, beginning balance	$	129,923
Current period amortization		(13,383	)
Total operating lease right-of-use asset	$	116,540
Liabilities
Operating lease liability, current	$	54,806
Operating lease liability, long term		61,734
Total lease liabilities	$	116,540

Future minimum lease payments as of June 30, 2022 under non-cancellable operating leases are as follows:

	Lease Obligation
Fiscal Year Ended March 31, 2023		43,680
Fiscal Year Ended March 31, 2024		58,240
Fiscal Year Ended March 31, 2025		19,413
Total lease payments	$	121,333
Less: imputed interest		(4,793	)
Operating lease liability		116,540
Less: operating lease liability, current		(54,806	)
Operating lease liability, long term	$	61,734

Net cash paid for our operating lease for the three months ended June 30, 2022 and 2021 was $10,667 and $10,929, respectively. Rent expense, less sublease income of $3,893 and $5,200, respectively, is included in general and administrative expenses.

7. Income Taxes

A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, and we consider the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry.

Based on the material write-downs of the carrying value of our oil and natural gas properties during fiscal 2016, we are in a net deferred tax asset position as of June 30, 2022. Our deferred tax asset is $526,846 as of June 30, 2022 with a valuation amount of $526,846. We believe it is more likely than not that these deferred tax assets will not be realized. Management considers the likelihood that the Company’s net operating losses and other deferred tax attributes will be utilized prior to their expiration, if applicable. The determination to record a valuation allowance was based on management’s assessment of all available evidence, both positive and negative, supporting realizability of the Company deferred tax asset as required by applicable accounting standards. In light of those criteria for recognizing the tax benefit of deferred tax assets, the Company’s assessment resulted in application of a valuation allowance against the deferred tax asset as of June 30, 2022.

8. Related Party Transactions

Related party transactions for the Company primarily relate to shared office expenditures in addition to administrative and operating expenses paid on behalf of the principal stockholder. The total billed to and reimbursed by the stockholder for the quarters ended June 30, 2022 and 2021 was $10,085 and $12,768, respectively. The principal stockholder pays for his share of the lease amount for the shared office space directly to the lessor. Amounts paid by the principal stockholder directly to the lessor less sublease income for the three months ending June 30, 2022 and 2021 were $3,893 and $4,045, respectively.

Page 10

9. Income Per Common Share

The following is a reconciliation of the number of shares used in the calculation of basic and diluted net income per share for the three-month periods ended June 30, 2022 and 2021.

	2022		2021
Net income	$	1,298,672	$	395,006
Shares outstanding:
Weighted average common shares outstanding – basic		2,149,416		2,076,756
Effect of the assumed exercise of dilutive stock options		67,326		43,199
Weighted average common shares outstanding – dilutive		2,216,742		2,119,955
Income per common share:
Basic	$	0.60	$	0.19
Diluted	$	0.59	$	0.19

For the three months ended June 30, 2022 and 2021, no anti-dilutive shares relating to stock options were excluded from the computation of diluted net income.

10. Subsequent Events

In July 2022, Mexco expended approximately $300,000 for the remaining balance in the drilling and completion of four horizontal wells Eddy County, New Mexico.

In July and August 2022, Mexco expended approximately $768,000 to purchase additional working interests and to complete three horizontal wells in Reagan County, Texas.

In July and August 2022, Mexco expended approximately $377,000 to purchase additional working interests and to complete a horizontal well in Reagan County, Texas.

In August 2022, Mexco expended approximately $33,000 to participate in the drilling of two horizontal wells in Lea County, New Mexico.

The Company completed a review and analysis of all events that occurred after the consolidated balance sheet date to determine if any such events must be reported and has determined that there are no other subsequent events to be disclosed.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, references to the “Company”, “Mexco”, “we”, “us” or “our” mean Mexco Energy Corporation and its consolidated subsidiaries.

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 include statements regarding our plans, beliefs or current expectations and may be signified by the words “could”, “should”, “expect”, “project”, “estimate”, “believe”, “anticipate”, “intend”, “budget”, “plan”, “forecast”, “predict” and other similar expressions. Forward-looking statements appear throughout this Form 10-Q with respect to, among other things: profitability; planned capital expenditures; estimates of oil and gas production; future project dates; estimates of future oil and gas prices; estimates of oil and gas reserves; our future financial condition or results of operations; and our 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 we have made assumptions that we believe are reasonable, the assumptions that support our 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. We do not undertake to update, revise or correct any of the forward-looking information. It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

Page 11

Liquidity and Capital Resources. Historically, we have funded our operations, acquisitions, exploration and development expenditures from cash generated by operating activities, bank borrowings, sales of non-core properties and issuance of common stock. Our primary financial resource is our base of oil and gas reserves. We have pledged our producing oil and gas properties to secure our credit facility. We do not have any delivery commitments to provide a fixed and determinable quantity of our oil and gas under any existing contract or agreement.

Our long-term strategy is on increasing profit margins while concentrating on obtaining reserves with low-cost operations by acquiring and developing oil and gas properties with potential for long-lived production. We focus our efforts on the acquisition of royalty and working interests and non-operated properties in areas with significant development potential.

At June 30, 2022, we had working capital of $1,769,009 compared to working capital of $2,469,776 at March 31, 2022, a decrease of $700,767 for the reasons set forth below.

Cash Flows

Changes in the net funds provided by or (used in) each of our operating, investing and financing activities are set forth in the table below:

	For the Three Months Ended June 30,
	2022			2021			Change
Net cash provided by operating activities	$	1,495,598		$	666,054		$	829,544
Net cash used in investing activities	$	(2,329,363	)	$	(297,113	)	$	2,032,250
Net cash used in financing activities	$	-		$	(346,000	)	$	(346,000	)

Cash Flow Provided by Operating Activities. Cash flow from operating activities is primarily derived from the production of our crude oil and natural gas reserves and changes in the balances of non-cash accounts, receivables, payables or other non-energy property asset account balances. Cash flow provided by our operating activities for the three months ended June 30, 2022 was $1,495,598 in comparison to $666,054 for the three months ended June 30, 2021. This increase of $829,544 in our cash flow operating activities consisted of an increase in our non-cash expenses of $134,975; an increase in our accounts receivable of $154,113; a decrease of $53,282 in our accounts payable and accrued expenses; and, an increase in our net income for the current quarter of $903,666. Variations in cash flow from operating activities may impact our level of exploration and development expenditures.

Our expenditures in operating activities consist primarily of drilling expenses, production expenses and engineering services. Our expenses also consist of employee compensation, accounting, insurance and other general and administrative expenses that we have incurred in order to address normal and necessary business activities of a public company in the crude oil and natural gas production industry.

Cash Flow Used in Investing Activities. Cash flow from investing activities is derived from changes in oil and gas property balances. For the three months ended June 30, 2022, we had net cash of $2,329,363 used for additions to oil and gas properties compared to $297,113 for the three months ended June 30, 2021.

Cash Flow Provided by Financing Activities. Cash flow from financing activities is derived from our changes in long-term debt and in equity account balances. Cash flow used in our financing activities was $0 for the three months ended June 30, 2022 compared to cash flow provided by our financing activities of $346,000 for the three months ended June 30, 2021. During the three months ended June 30, 2021, we received advances of $100,000 from our credit facility, received proceeds of $34,000 for the exercise of director stock options and made payments of $480,000 on the credit facility.

Accordingly, net cash decreased $833,765, leaving cash and cash equivalents on hand of $537,001 as of June 30, 2022.

Page 12

Oil and Natural Gas Property Development

New Participations in Fiscal 2023. The Company currently plans to participate in the drilling and completion of 52 horizontal wells at an estimated aggregate cost of approximately $3,800,000 for the fiscal year ending March 31, 2023. All of these horizontal wells are in the Delaware Basin located in the western portion of the Permian Basin in Lea and Eddy Counties, New Mexico or in the Midland Basin located in the eastern portion of the Permian Basin in Reagan County, Texas.

In April 2022, Mexco expended approximately $140,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .52%.

Also in April 2022, Mexco expended approximately $427,000 to participate in the drilling of three horizontal wells in the Wolfcamp Sand formation of the Midland Basin located in the eastern portion of the Permian Basin in Reagan County, Texas. Subsequently, during the second quarter of fiscal 2023, Mexco expended approximately $768,000 to purchase additional working interests in these wells and to complete these wells. Mexco’s working interest in these wells is 3.2%.

In May 2022, Mexco expended approximately $97,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .52%.

Also in May 2022, Mexco expended approximately $230,000 to participate in the drilling of a horizontal well in the Wolfcamp Sand formation of the Midland Basin in Reagan County, Texas. Subsequently, during the second quarter of fiscal 2023, Mexco expended approximately $377,000 to purchase additional working interests in this well and to complete this well. Mexco’s working interest in this well is 5.1%.

In June 2022, Mexco expended approximately $300,000 to participate in the drilling and completion of four horizontal wells in the Bone Spring formation of the Delaware Basin in Eddy County, New Mexico. Mexco’s working interest in these wells is 2.1%. Subsequently, in July 2022, Mexco expended approximately $300,000 for the remaining balance in these wells

Also in June 2022, Mexco expended approximately $157,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .52%.

Completion of Wells Drilled in Fiscal 2022. The Company expended approximately $101,000 for the completion costs of 4 horizontal wells located in Lea County, New Mexico that the Company participated in drilling during fiscal 2022. These wells began producing in May 2022 with initial average production rates of 1,384 barrels of oil, 3,530 barrels of water and 2,172,000 cubic feet of gas per day, or, 1,804 barrels of oil equivalent per day.

Acquisitions. The Company acquired various royalty (mineral) interests in 22 wells and several additional potential locations for development operated by Chesapeake Energy Corporation and located in the Eagleford area of Dimmit County, Texas for a purchase price of $939,000 which was effective April 1, 2022.

Subsequent Participations. In August 2022, Mexco expended approximately $33,000 to participate in the drilling of two horizontal wells in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .22%.

We are participating in other projects and are reviewing projects in which we may participate. The cost of such projects would be funded, to the extent possible, from existing cash balances and cash flow from operations. The remainder may be funded through borrowings on the credit facility and, if appropriate, sales of non-core properties.

Crude oil and natural gas prices generally remained volatile during the last year. The volatility of the energy markets makes it extremely difficult to predict future oil and natural gas price movements with any certainty. For example, in the last twelve months, the NYMEX West Texas Intermediate (“WTI”) posted price for crude oil has ranged from a low of $58.30 per bbl in August 2021 to a high of $119.68 per bbl in March 2022. The Henry Hub Spot Market Price (“Henry Hub”) for natural gas has ranged from a low of $3.32 per MMBtu in December 2021 to a high of $9.44 per MMBtu in May 2022.

On June 30, 2022, the WTI posted price for crude oil was $101.74 and the Henry Hub spot price for natural gas was $5.75 per MMBtu. See Results of Operations below for realized prices.

Page 13

Contractual Obligations. We have no off-balance sheet debt or unrecorded obligations and have not guaranteed the debt of any other party. The following table summarizes our future payments we are obligated to make based on agreements in place as of June 30, 2022:

	Payments due in:
		Total		less than 1 year		1 - 3 years		over 3 years
Contractual obligations:
Leases (1)	$	121,333	$	58,240	$	63,093	$	-

(1) The lease amount represents the monthly rent amount for our principal office space in Midland, Texas under a 38 month lease agreement effective May 15, 2018 and extended another 36 months to July 31, 2024. Of this total obligation for the remainder of the lease, our majority shareholder will pay $15,572 less than 1 year and $16,870 1-3 years for his portion of the shared office space.

Results of Operations – Three Months Ended June 30, 2022 Compared to Three Months Ended June 30, 2021. For the quarter ended June 30, 2022, net income was $1,298,672 compared to net income of $395,006 for the quarter ended June 30, 2021. This was primarily the result of an increase in operating revenues due to an increase in oil and gas prices and an increase in gas production partially offset by an increase in operating expenses that is further explained below.

Oil and gas sales. Revenue from oil and gas sales was $2,416,113 for the quarter ended June 30, 2022, a 92% increase from $1,255,565 for the quarter ended June 30, 2021. This primarily resulted from an increase in oil and gas prices and an increase in gas production volumes partially offset by a decrease in oil production volumes. The following table sets forth our oil and natural gas revenues, production quantities and average prices received during the three months ended June 30:

	2022		2021		% Difference
Oil:
Revenue	$	1,559,321	$	987,103		58.0	%
Volume (bbls)		14,224		15,438		(7.9	%)
Average Price (per bbl)	$	109.62	$	63.94		71.4	%
Gas:
Revenue	$	856,792	$	268,462		219.1	%
Volume (mcf)		129,706		90,063		44.0	%
Average Price (per mcf)	$	6.61	$	2.98		121.8	%

Production and exploration. Production costs were $435,028 for the three months ended June 30, 2022, a 57% increase from $276,987 for the three months ended June 30, 2021. This increase is primarily the result of an increase in production taxes and lease operating expenses as a result of the increase in oil and gas revenues.

Depreciation, depletion and amortization. Depreciation, depletion and amortization (“DD&A”) expense was $387,128 for the first quarter of fiscal 2023, a 46% increase from $264,320 for the first quarter of fiscal 2022, primarily due to an increase in production and an increase in the full cost pool amortization base partially offset by an increase in reserves.

General and administrative expenses. General and administrative expenses were $318,530 for the three months ended June 30, 2022, a 3% increase from $308,167 for the three months ended June 30, 2021. This was primarily due to an increase in accounting fees and insurance costs.

Interest expense. Interest expense was $3,131 for the first quarter of fiscal 2023, a decrease of 75% from $12,719 for the first quarter of fiscal 2022 due to a decrease in borrowings.

Income taxes. There was no income tax expense for the three months ended June 30, 2022 and 2021. The effective tax rate for the three months ended June 30, 2022 and 2021 was 0%. We are in a net deferred tax asset position and believe it is more likely than not that these deferred tax assets will not be realized.

Page 14

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The primary source of market risk for us includes fluctuations in commodity prices and interest rates. All of our financial instruments are for purposes other than trading.

Credit Risk. Credit risk is the risk of loss as a result of nonperformance by other parties of their contractual obligations. Our primary credit risk is related to oil and gas production sold to various purchasers and the receivables are generally not collateralized. At June 30, 2022, our largest credit risk associated with any single purchaser was $851,059 or 56% of our total oil and gas receivables. We have not experienced any significant credit losses.

Energy Price Risk. Our most significant market risk is the pricing applicable to our crude oil and natural gas production. Our financial condition, results of operations, and capital resources are highly dependent upon the prevailing market prices of, and demand for, oil and natural gas. Prices for oil and natural gas production has been volatile and unpredictable for several years, and we expect this volatility to continue in the future.

Factors that can cause price fluctuations include the level of global demand for petroleum products, foreign and domestic 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 political and economic conditions in oil producing and consuming countries.

For example, in the last twelve months, the NYMEX West Texas Intermediate (“WTI”) posted price for crude oil has ranged from a low of $58.30 per bbl in August 2021 to a high of $119.68 per bbl in March 2022. The Henry Hub Spot Market Price (“Henry Hub”) posted price for natural gas has ranged from a low of $3.32 per MMBtu in December 2021 to a high of $9.44 per MMBtu in May 2022. On June 30, 2022, the WTI posted price for crude oil was $101.74 and the Henry Hub posted price for natural gas was $5.75. See Results of Operations above for the Company’s realized prices during the quarter.

Declines in oil and natural gas prices will materially adversely affect our financial condition, liquidity, ability to obtain financing and operating results. Changes in oil and gas prices impact both estimated future net revenue and the estimated quantity of proved reserves. Any reduction in reserves, including reductions due to price fluctuations, can reduce the borrowing base under our credit facility and adversely affect the amount of cash flow available for capital expenditures and our ability to obtain additional capital for our acquisition, exploration and development activities. In addition, a noncash write-down of our oil and gas properties could be required under full cost accounting rules if prices declined significantly, even if it is only for a short period of time. Lower prices may also reduce the amount of crude oil and natural gas that can be produced economically. Thus, we may experience material increases or decreases in reserve quantities solely as a result of price changes and not as a result of drilling or well performance.

Similarly, any improvements in oil and gas prices can have a favorable impact on our financial condition, results of operations and capital resources. Oil and natural gas prices do not necessarily fluctuate in direct relationship to each other. If the average oil price had increased or decreased by ten dollars per barrel for the quarter ended June 30, 2022, our oil sales would have changed by $142,240. If the average gas price had increased or decreased by one dollar per mcf for the quarter ended June 30, 2022, our natural gas sales would have increased or decreased by $129,706.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures to ensure that the information we must disclose in our filings with the SEC is recorded, processed, summarized and reported on a timely basis. At the end of the period covered by this report, our principal executive officer and principal financial officer reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e). Based on such evaluation, such officers concluded that, as of June 30, 2022, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. No changes in our internal control over financial reporting occurred during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Page 15

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business. We are not aware of any legal or governmental proceedings against us, or contemplated to be brought against us, under various environmental protection statutes or other regulations to which we are subject.

Item 1A. Risk Factors

There have been no material changes to the information previously disclosed in Item 1A. “Risk Factors” in our 2022 Annual Report on Form 10-K.

Item 6. Exhibits

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 of the Chief Executive Officer and Chief Financial Officer of Mexco Energy Corporation pursuant to 18 U.S.C. §1350

101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extenstion Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

Page 16

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: August 15, 2022	/s/ Nicholas C. Taylor
	Nicholas C. Taylor
	Chairman of the Board and Chief Executive Officer
Dated: August 15, 2022	/s/ Tamala L. McComic
	Tamala L. McComic
	President, Chief Financial Officer, Treasurer and Assistant Secretary

Page 17

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) 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)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	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
d)	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: August 15, 2022	/s/ Nicholas C. Taylor
	Nicholas C. Taylor
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) 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)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	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
d)	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: August 15, 2022	/s/ Tamala L. McComic
	Tamala L. McComic
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

OF MEXCO ENERGY CORPORATION

PURSUANT TO 18 U.S.C. §1350

In connection with the Quarterly Report of Mexco Energy Corporation on Form 10-Q for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the dates indicated below, each hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Mexco Energy Corporation as of the dates and for periods presented as required by such Report.

Date: August 15, 2022	/s/ Nicholas C. Taylor
	Nicholas C. Taylor
	Chief Executive Officer
Date: August 15, 2022	/s/ Tamala L. McComic
	Tamala L. McComic
	Chief Financial Officer

XML

Cover - shares	3 Months Ended
	Jun. 30, 2022	Aug. 15, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--03-31
Entity File Number	1-31785
Entity Registrant Name	MEXCO ENERGY CORPORATION
Entity Central Index Key	0000066418
Entity Tax Identification Number	84-0627918
Entity Incorporation, State or Country Code	CO
Entity Address, Address Line One	415 West Wall Street
Entity Address, Address Line Two	Suite 475
Entity Address, City or Town	Midland
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	79701
City Area Code	(432)
Local Phone Number	682-1119
Title of 12(b) Security	Common Stock, par value $0.50 per share
Trading Symbol	MXC
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		2,149,416

XML

Consolidated Balance Sheets - USD ($)	Jun. 30, 2022	Mar. 31, 2022
Current assets
Cash and cash equivalents	$ 537,001	$ 1,370,766
Accounts receivable:
Oil and natural gas sales	1,532,385	1,310,137
Trade
Prepaid costs and expenses	38,370	52,636
Total current assets	2,107,756	2,733,539
Property and equipment, at cost
Oil and gas properties, using the full cost method	42,669,430	40,373,741
Other	121,926	120,208
Accumulated depreciation, depletion and amortization	(30,748,176)	(30,361,047)
Property and equipment, net	12,043,180	10,132,902
Investment in limited liability company at cost	300,000	275,000
Operating lease, right-of-use asset	116,540	129,923
Other noncurrent assets	114,006	13,156
Total assets	14,681,482	13,284,520
Current liabilities
Accounts payable and accrued expenses	283,941	209,469
Operating lease liability, current	54,806	54,294
Total current liabilities	338,747	263,763
Long-term liabilities
Operating lease liability, long-term	61,734	75,629
Asset retirement obligations	732,142	720,512
Total long-term liabilities	793,876	796,141
Total liabilities	1,132,623	1,059,904
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; 2,216,416 shares issued and 2,149,416 shares outstanding as of June 30, 2022 and March 31, 2022, respectively	1,108,208	1,108,208
Additional paid-in capital	8,159,553	8,133,982
Retained earnings	4,627,099	3,328,427
Treasury stock, at cost (67,000 shares)	(346,001)	(346,001)
Total stockholders’ equity	13,548,859	12,224,616
Total liabilities and stockholders’ equity	$ 14,681,482	$ 13,284,520

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2022	Mar. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	2,216,416	2,216,416
Common stock, shares outstanding	2,149,416	2,149,416
Treasury stock, shares	67,000	67,000

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Operating revenues:
Total operating revenues	$ 2,449,973	$ 1,264,198
Operating expenses:
Production	435,028	276,987
Accretion of asset retirement obligations	7,519	7,058
Depreciation, depletion and amortization	387,128	264,320
General and administrative	318,530	308,167
Total operating expenses	1,148,205	856,532
Operating income	1,301,768	407,666
Other income (expense):
Interest income	35	59
Interest expense	(3,131)	(12,719)
Net other expense	(3,096)	(12,660)
Income before provision for income taxes	1,298,672	395,006
Income tax
Net income	$ 1,298,672	$ 395,006
Income per common share:
Basic:	$ 0.60	$ 0.19
Diluted:	$ 0.59	$ 0.19
Weighted average common shares outstanding:
Basic:	2,149,416	2,076,756
Diluted:	2,216,742	2,119,955
Oil Sales [Member]
Operating revenues:
Total operating revenues	$ 1,559,321	$ 987,103
Natural Gas Sales [Member]
Operating revenues:
Total operating revenues	856,792	268,462
Other [Member]
Operating revenues:
Total operating revenues	$ 33,860	$ 8,633

XML

Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Total
Beginning balance, value at Mar. 31, 2021	$ 1,071,833	$ 7,624,214	$ 473,361	$ (346,001)	$ 8,823,407
Net income			395,006		395,006
Stock based compensation		13,865			13,865
Issuance of stock through options exercised	2,500	31,500			34,000
Ending balance, value at Jun. 30, 2021	1,074,333	7,669,579	868,367	(346,001)	9,266,278
Beginning balance, value at Mar. 31, 2022	1,108,208	8,133,982	3,328,427	(346,001)	$ 12,224,616
Beginning balance, shares at Mar. 31, 2022					2,216,416
Beginning balance, held in treasury, shares at Mar. 31, 2022					(67,000)
Net income			1,298,672		$ 1,298,672
Stock based compensation		25,571			$ 25,571
Common stock shares, issued
Common stock shares, held in treasury, Acquisitions, shares
Ending balance, value at Jun. 30, 2022	$ 1,108,208	$ 8,159,553	$ 4,627,099	$ (346,001)	$ 13,548,859
Ending balance, shares at Jun. 30, 2022					2,216,416
Ending balance, held in treasury, shares at Jun. 30, 2022					(67,000)
Common stock shares, outstanding at Jun. 30, 2022					2,149,416

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net income	$ 1,298,672	$ 395,006
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	25,571	13,865
Depreciation, depletion and amortization	387,128	264,320
Accretion of asset retirement obligations	7,519	7,058
Amortization of debt issuance costs	3,131	3,131
Changes in operating assets and liabilities
Increase in accounts receivable	(222,248)	(68,135)
Decrease in prepaid expenses	14,266	10,530
Decrease (increase) in right-of-use asset	13,384	(148,881)
(Decrease) increase in accounts payable and accrued expenses	(12,364)	40,918
Settlement of asset retirement obligations	(6,077)	(291)
(Decrease) increase in operating lease liability	(13,384)	148,533
Net cash provided by operating activities	1,495,598	666,054
Cash flows from investing activities:
Additions to oil and gas properties	(2,320,974)	(302,976)
Additions to other property and equipment	(1,718)
Investment in limited liability company at cost	(25,000)
Drilling refund	18,329
Proceeds from sale of oil and gas properties and equipment		5,863
Net cash used in investing activities	(2,329,363)	(297,113)
Cash flows from financing activities:
Proceeds from exercise of stock options		34,000
Reduction of long-term debt		(480,000)
Proceeds from long-term debt		100,000
Net cash used in financing activities		(346,000)
Net (decrease) increase in cash and cash equivalents	(833,765)	22,941
Cash and cash equivalents at beginning of period	1,370,766	57,813
Cash and cash equivalents at end of period	537,001	80,754
Supplemental disclosure of cash flow information:
Cash paid for interest		10,040
Non-cash investing and financing activities:
Asset retirement obligations	14,668	3,329
Operating lease – right of use asset and associated liabilities		$ 165,007

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Nature of Operations

3 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations

1. Nature of Operations

Mexco Energy Corporation (a Colorado corporation) and its wholly owned subsidiaries, Forman Energy Corporation (a New York corporation), Southwest Texas Disposal Corporation (a Texas corporation) and TBO Oil & Gas, LLC (a Texas limited liability company) (collectively, the “Company”) are engaged in the acquisition, exploration, development and production of crude oil, natural gas, condensate and natural gas liquids (“NGLs”). Most of the Company’s oil and gas interests are centered in West Texas and Southeastern New Mexico; however, the Company owns producing properties and undeveloped acreage in fourteen states. All of Company’s oil and gas interests are operated by others.

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Basis of Presentation and Significant Accounting Policies

3 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

2. Basis of Presentation and Significant Accounting Policies

Principles of Consolidation. The consolidated financial statements include the accounts of Mexco Energy Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions associated with the consolidated operations have been eliminated.

Estimates and Assumptions. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make informed judgments, estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and affect the reported amounts of revenues and expenses during the reporting period. In addition, significant estimates are used in determining proved oil and gas reserves. Although management believes its estimates and assumptions are reasonable, actual results may differ materially from those estimates. The estimate of the Company’s oil and natural gas reserves, which is used to compute depreciation, depletion, amortization and impairment of oil and gas properties, is the most significant of the estimates and assumptions that affect these reported results.

Interim Financial Statements. 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 as of June 30, 2022, and the results of its operations and cash flows for the interim periods ended June 30, 2022 and 2021. The consolidated financial statements as of June 30, 2022 and for the three-month periods ended June 30, 2022 and 2021 are unaudited. The consolidated balance sheet as of March 31, 2022 was derived from the audited balance sheet filed in the Company’s 2022 annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). 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 2 of the “Notes to Consolidated Financial Statements” in the Form 10-K. 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 SEC. However, the disclosures herein are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

Investments. The Company accounts for investments of less than 1% in limited liability companies at cost. The Company has no control of the limited liability companies. The cost of the investment is recorded as an asset on the consolidated balance sheets and when income from the investment is received, it is immediately recognized on the consolidated statements of operations.

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Asset Retirement Obligations

3 Months Ended

Jun. 30, 2022

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

3. Asset Retirement Obligations

The Company’s asset retirement obligations (“ARO”) relate to the plugging of wells, the removal of facilities and equipment, and site restoration on oil and gas properties. The fair value of a liability for an ARO is recorded in the period in which it is incurred, discounted to its present value using the credit adjusted risk-free interest rate, and a corresponding amount capitalized by increasing the carrying amount of the related long-lived asset. The liability is accreted each period until the liability is settled or the well is sold, at which time the liability is removed. The related asset retirement cost is capitalized as part of the carrying amount of our oil and natural gas properties. The ARO is included on the consolidated balance sheets with the current portion being included in the accounts payable and other accrued expenses.

The following table provides a rollforward of the AROs for the first three months of fiscal 2022:

Carrying amount of asset retirement obligations as of April 1, 2022	$	735,512
Liabilities incurred		14,668
Liabilities settled		(10,557	)
Accretion expense		7,519
Carrying amount of asset retirement obligations as of June 30, 2022		747,142
Less: Current portion		15,000
Non-Current asset retirement obligation	$	732,142

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Long Term Debt

3 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Long Term Debt

4. Long Term Debt

On December 28, 2018, the Company entered into a loan agreement (the “Agreement”) with West Texas National Bank (“WTNB”), which originally provided for a credit facility of $1,000,000 with a maturity date of December 28, 2021. The Agreement has no monthly commitment reduction and a borrowing base to be evaluated annually.

On February 28, 2020, the Agreement was amended to increase the credit facility to $2,500,000, extend the maturity date to March 28, 2023 and increase the borrowing base to $1,500,000.

Under the Agreement, interest on the facility accrues at a rate equal to the prime rate as quoted in the Wall Street Journal plus one-half of one percent (0.5%) floating daily. Interest on the outstanding amount under the Agreement is payable monthly. In addition, the Company will pay an unused commitment fee in an amount equal to one-half of one percent (0.5%) times the daily average of the unadvanced amount of the commitment. The unused commitment fee is payable quarterly in arrears on the last day of each calendar quarter. As of June 30, 2022, there was $1,500,000 available on the facility.

No principal payments are anticipated to be required through the maturity date of the credit facility, March 28, 2023. Upon closing with WTNB on the original Agreement, the Company paid a .5% loan origination fee in the amount of $5,000 plus legal and recording expenses totaling $34,532, which were deferred over the life of the credit facility. Upon closing the amendment to the Agreement, the Company paid a .1% loan origination fee of $2,500 and an extension fee of $3,125 plus legal and recording expenses totaling $12,266, which were also deferred over the life of the credit facility.

Amounts borrowed under the Agreement are collateralized by the common stock of the Company’s wholly owned subsidiaries and substantially all of the Company’s oil and gas properties.

The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires senior debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratios (Senior Debt/EBITDA) less than or equal to 4.00 to 1.00 measured with respect to the four trailing quarters and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter.

In addition, this Agreement prohibits the Company from paying cash dividends on its common stock without prior written permission of WTNB. The Agreement does not permit the Company to enter into hedge agreements covering crude oil and natural gas prices without prior WTNB approval.

There was no balance outstanding on the credit facility as of June 30, 2022.

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Stock-based Compensation

3 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-based Compensation

5. Stock-based Compensation

The Company recognized compensation expense of $25,571 and $13,865 related to vesting stock options in general and administrative expense in the Consolidated Statements of Operations for the first quarter of fiscal 2023 and 2022, respectively. The total cost related to non-vested awards not yet recognized at June 30, 2022 totals $188,537, which is expected to be recognized over a weighted average of 2.14 years.

The following table is a summary of stock options activity for the three months ended June 30, 2022:

	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Aggregate Average Remaining Contract Life in Years		Intrinsic Value
Outstanding at April 1, 2022		114,250	$	5.51		7.40	$	1,221,670
Granted		-		-
Exercised		-		-
Forfeited or Expired		-		-
Outstanding at June 30, 2022		114,250	$	5.51		7.15	$	1,334,778
Vested at June 30, 2022		52,750	$	4.68		5.99	$	660,023
Exercisable at June 30, 2022		52,750	$	4.68		5.99	$	660,023

During the three months ended June 30, 2022 and 2021, no stock options were granted.

During the three months ended June 30, 2022, no stock options were exercised. During the three months ended June 30, 2021, stock options covering 5,000 shares were exercised with a total intrinsic value of $15,036. The Company received proceeds of $34,000 from these exercises.

No forfeiture rate is assumed for stock options granted to directors or employees due to the forfeiture rate history for these types of awards. During the three months ended June 30, 2022 and 2021, there were no stock options forfeited or expired.

Outstanding options at June 30, 2022 expire between August 2024 and July 2031 and have exercise prices ranging from $3.34 to $8.51.

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Leases

3 Months Ended

Jun. 30, 2022

Leases

Leases

6. Leases

The Company leases approximately 4,160 rentable square feet of office space from an unaffiliated third party for our corporate office located in Midland, Texas. This includes 1,112 square feet of office space shared with and reimbursed by our majority shareholder. The lease does not include an option to renew and is a 36-month lease that was to expire in May 2021. In June 2020, in exchange for a reduction in rent for the months of June and July 2020, the Company agreed to a 2-month extension to its current lease agreement at the regular monthly rate extending its current lease expiration date to July 2021. In June 2021, the Company agreed to extend its current lease at a flat (unescalated) rate for 36 months. The amended lease now expires on July 31, 2024.

The Company determines an arrangement is a lease at inception. Operating leases are recorded in operating lease right-of-use asset, operating lease liability, current, and operating lease liability, long-term on the consolidated balance sheets.

Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s lease does not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate used at adoption was 3.75%. Significant judgement is required when determining the incremental borrowing rate. Rent expense for lease payments is recognized on a straight-line basis over the lease term.

The balance sheets classification of lease assets and liabilities was as follows:

	June 30, 2022
Assets
Operating lease right-of-use asset, beginning balance	$	129,923
Current period amortization		(13,383	)
Total operating lease right-of-use asset	$	116,540
Liabilities
Operating lease liability, current	$	54,806
Operating lease liability, long term		61,734
Total lease liabilities	$	116,540

Future minimum lease payments as of June 30, 2022 under non-cancellable operating leases are as follows:

	Lease Obligation
Fiscal Year Ended March 31, 2023		43,680
Fiscal Year Ended March 31, 2024		58,240
Fiscal Year Ended March 31, 2025		19,413
Total lease payments	$	121,333
Less: imputed interest		(4,793	)
Operating lease liability		116,540
Less: operating lease liability, current		(54,806	)
Operating lease liability, long term	$	61,734

Net cash paid for our operating lease for the three months ended June 30, 2022 and 2021 was $10,667 and $10,929, respectively. Rent expense, less sublease income of $3,893 and $5,200, respectively, is included in general and administrative expenses.

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Income Taxes

3 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, and we consider the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry.

Based on the material write-downs of the carrying value of our oil and natural gas properties during fiscal 2016, we are in a net deferred tax asset position as of June 30, 2022. Our deferred tax asset is $526,846 as of June 30, 2022 with a valuation amount of $526,846. We believe it is more likely than not that these deferred tax assets will not be realized. Management considers the likelihood that the Company’s net operating losses and other deferred tax attributes will be utilized prior to their expiration, if applicable. The determination to record a valuation allowance was based on management’s assessment of all available evidence, both positive and negative, supporting realizability of the Company deferred tax asset as required by applicable accounting standards. In light of those criteria for recognizing the tax benefit of deferred tax assets, the Company’s assessment resulted in application of a valuation allowance against the deferred tax asset as of June 30, 2022.

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Related Party Transactions

3 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

8. Related Party Transactions

Related party transactions for the Company primarily relate to shared office expenditures in addition to administrative and operating expenses paid on behalf of the principal stockholder. The total billed to and reimbursed by the stockholder for the quarters ended June 30, 2022 and 2021 was $10,085 and $12,768, respectively. The principal stockholder pays for his share of the lease amount for the shared office space directly to the lessor. Amounts paid by the principal stockholder directly to the lessor less sublease income for the three months ending June 30, 2022 and 2021 were $3,893 and $4,045, respectively.

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Income Per Common Share

3 Months Ended

Jun. 30, 2022

Income per common share:

Income Per Common Share

9. Income Per Common Share

The following is a reconciliation of the number of shares used in the calculation of basic and diluted net income per share for the three-month periods ended June 30, 2022 and 2021.

	2022		2021
Net income	$	1,298,672	$	395,006
Shares outstanding:
Weighted average common shares outstanding – basic		2,149,416		2,076,756
Effect of the assumed exercise of dilutive stock options		67,326		43,199
Weighted average common shares outstanding – dilutive		2,216,742		2,119,955
Income per common share:
Basic	$	0.60	$	0.19
Diluted	$	0.59	$	0.19

For the three months ended June 30, 2022 and 2021, no anti-dilutive shares relating to stock options were excluded from the computation of diluted net income.

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Subsequent Events

3 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

10. Subsequent Events

In July 2022, Mexco expended approximately $300,000 for the remaining balance in the drilling and completion of four horizontal wells Eddy County, New Mexico.

In July and August 2022, Mexco expended approximately $768,000 to purchase additional working interests and to complete three horizontal wells in Reagan County, Texas.

In July and August 2022, Mexco expended approximately $377,000 to purchase additional working interests and to complete a horizontal well in Reagan County, Texas.

In August 2022, Mexco expended approximately $33,000 to participate in the drilling of two horizontal wells in Lea County, New Mexico.

The Company completed a review and analysis of all events that occurred after the consolidated balance sheet date to determine if any such events must be reported and has determined that there are no other subsequent events to be disclosed.

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Basis of Presentation and Significant Accounting Policies (Policies)

3 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation. The consolidated financial statements include the accounts of Mexco Energy Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions associated with the consolidated operations have been eliminated.

Estimates and Assumptions

Estimates and Assumptions. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”), management is required to make informed judgments, estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and affect the reported amounts of revenues and expenses during the reporting period. In addition, significant estimates are used in determining proved oil and gas reserves. Although management believes its estimates and assumptions are reasonable, actual results may differ materially from those estimates. The estimate of the Company’s oil and natural gas reserves, which is used to compute depreciation, depletion, amortization and impairment of oil and gas properties, is the most significant of the estimates and assumptions that affect these reported results.

Interim Financial Statements

Interim Financial Statements. 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 as of June 30, 2022, and the results of its operations and cash flows for the interim periods ended June 30, 2022 and 2021. The consolidated financial statements as of June 30, 2022 and for the three-month periods ended June 30, 2022 and 2021 are unaudited. The consolidated balance sheet as of March 31, 2022 was derived from the audited balance sheet filed in the Company’s 2022 annual report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). 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 2 of the “Notes to Consolidated Financial Statements” in the Form 10-K. 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 SEC. However, the disclosures herein are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Form 10-K.

Investments

Investments. The Company accounts for investments of less than 1% in limited liability companies at cost. The Company has no control of the limited liability companies. The cost of the investment is recorded as an asset on the consolidated balance sheets and when income from the investment is received, it is immediately recognized on the consolidated statements of operations.

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Asset Retirement Obligations (Tables)

3 Months Ended

Jun. 30, 2022

Asset Retirement Obligation Disclosure [Abstract]

Schedule of Rollforward of Asset Retirement Obligations

The following table provides a rollforward of the AROs for the first three months of fiscal 2022:

Carrying amount of asset retirement obligations as of April 1, 2022	$	735,512
Liabilities incurred		14,668
Liabilities settled		(10,557	)
Accretion expense		7,519
Carrying amount of asset retirement obligations as of June 30, 2022		747,142
Less: Current portion		15,000
Non-Current asset retirement obligation	$	732,142

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Stock-based Compensation (Tables)

3 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Summary of Activity of Stock Options

The following table is a summary of stock options activity for the three months ended June 30, 2022:

	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Aggregate Average Remaining Contract Life in Years		Intrinsic Value
Outstanding at April 1, 2022		114,250	$	5.51		7.40	$	1,221,670
Granted		-		-
Exercised		-		-
Forfeited or Expired		-		-
Outstanding at June 30, 2022		114,250	$	5.51		7.15	$	1,334,778
Vested at June 30, 2022		52,750	$	4.68		5.99	$	660,023
Exercisable at June 30, 2022		52,750	$	4.68		5.99	$	660,023

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Leases (Tables)

3 Months Ended

Jun. 30, 2022

Leases

Schedule of Operating Lease Assets and Liabilities

The balance sheets classification of lease assets and liabilities was as follows:

	June 30, 2022
Assets
Operating lease right-of-use asset, beginning balance	$	129,923
Current period amortization		(13,383	)
Total operating lease right-of-use asset	$	116,540
Liabilities
Operating lease liability, current	$	54,806
Operating lease liability, long term		61,734
Total lease liabilities	$	116,540

Schedule of Future Minimum Lease Payments

Future minimum lease payments as of June 30, 2022 under non-cancellable operating leases are as follows:

	Lease Obligation
Fiscal Year Ended March 31, 2023		43,680
Fiscal Year Ended March 31, 2024		58,240
Fiscal Year Ended March 31, 2025		19,413
Total lease payments	$	121,333
Less: imputed interest		(4,793	)
Operating lease liability		116,540
Less: operating lease liability, current		(54,806	)
Operating lease liability, long term	$	61,734

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Income Per Common Share (Tables)

3 Months Ended

Jun. 30, 2022

Income per common share:

Schedule of Reconciliation of Basic and Diluted Net Income (loss) Per Share

The following is a reconciliation of the number of shares used in the calculation of basic and diluted net income per share for the three-month periods ended June 30, 2022 and 2021.

	2022		2021
Net income	$	1,298,672	$	395,006
Shares outstanding:
Weighted average common shares outstanding – basic		2,149,416		2,076,756
Effect of the assumed exercise of dilutive stock options		67,326		43,199
Weighted average common shares outstanding – dilutive		2,216,742		2,119,955
Income per common share:
Basic	$	0.60	$	0.19
Diluted	$	0.59	$	0.19

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Basis of Presentation and Significant Accounting Policies (Details Narrative)	3 Months Ended
	Jun. 30, 2022
Accounting Policies [Abstract]
Cost method investments, percentage description	The Company accounts for investments of less than 1% in limited liability companies at cost.

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Schedule of Rollforward of Asset Retirement Obligations (Details) - USD ($)	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Mar. 31, 2022
Asset Retirement Obligation Disclosure [Abstract]
Asset Retirement Obligation, Beginning Balance	$ 735,512
Asset Retirement Obligation, Liabilities Incurred	14,668
Asset Retirement Obligation, Liabilities Settled	(10,557)
Asset Retirement Obligation, Accretion Expense	7,519	$ 7,058
Asset Retirement Obligation, Ending Balance	747,142
Asset Retirement Obligation, Current	15,000
Asset Retirement Obligations, Noncurrent	$ 732,142		$ 720,512

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Long Term Debt (Details Narrative) - USD ($)			3 Months Ended
	Feb. 28, 2020	Dec. 28, 2018	Jun. 30, 2022
Loan Agreement [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Debt instrument covenant description			The Agreement contains customary covenants for credit facilities of this type including limitations on change in control, disposition of assets, mergers and reorganizations. The Company is also obligated to meet certain financial covenants under the Agreement and requires senior debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratios (Senior Debt/EBITDA) less than or equal to 4.00 to 1.00 measured with respect to the four trailing quarters and minimum interest coverage ratios (EBITDA/Interest Expense) of 2.00 to 1.00 for each quarter.
Loan Agreement [Member] | West Texas National Bank [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Line of credit facility	$ 2,500,000	$ 1,000,000
Line of credit facility, maturity date	Mar. 28, 2023	Dec. 28, 2021
Line of credit, increase in borrowing base amount	$ 1,500,000
Debt instrument rate	0.50%
Commitment fee description	the Company will pay an unused commitment fee in an amount equal to one-half of one percent (0.5%) times the daily average of the unadvanced amount of the commitment.
Line of credit available for borrowing			$ 1,500,000
Loan origination fee percentage	0.10%
Loan origination fee	$ 2,500
Legal and recording expenses	12,266
Extension fees	$ 3,125
Original Agreement [Member] | West Texas National Bank [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Loan origination fee percentage	0.50%
Loan origination fee	$ 5,000
Legal and recording expenses	$ 34,532

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Summary of Activity of Stock Options (Details) - USD ($)	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Shares, Granted	0	0
Number of Shares, Exercised	0	(5,000)
Number of Shares, Forfeited or Expired	0	0
Share-Based Payment Arrangement, Option [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of Shares, Beginning Balance	114,250
Weighted Average Exercise Price Per Share, Beginning Balance	$ 5.51
Weighted Average Remaining Contract Life in Years, Beginning Balance	7 years 4 months 24 days
Intrinsic Value, Beginning Balance	$ 1,221,670
Number of Shares, Granted
Weighted Average Exercise Price Per Share, Granted
Number of Shares, Exercised
Weighted Average Exercise Price Per Share, Exercised
Number of Shares, Forfeited or Expired
Weighted Average Exercise Price Per Share, Forfeited or Expired
Number of Shares, Ending Balance	114,250
Weighted Average Exercise Price Per Share, Ending Balance	$ 5.51
Weighted Average Remaining Contract Life in Years, Ending Balance	7 years 1 month 24 days
Intrinsic Value, Ending Balance	$ 1,334,778
Number of Shares, Vested	52,750
Weighted Average Exercise Price Per Share, Vested	$ 4.68
Weighted Aggregate Average Remaining Contract Life in Years, Vested	5 years 11 months 26 days
Intrinsic Value, Vested	$ 660,023
Number of Shares, Exercisable	52,750
Weighted Average Exercise Price Per Share, Exercisable	$ 4.68
Weighted Aggregate Average Remaining Contract Life in Years, Exercisable	5 years 11 months 26 days
Intrinsic Value, Exercisable	$ 660,023

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Stock-based Compensation (Details Narrative) - USD ($)	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total cost related to non-vested awards	$ 188,537
Non-vested awards, weighted average period of recognition	2 years 1 month 20 days
Stock option granted	0	0
Stock option shares exercised	0	5,000
Intrinsic value		$ 15,036
Proceeds from stock-based ompensation including option exercise		$ 34,000
Number of shares, forfeited or expired	0	0
Outstanding options exercise price, lower range	$ 3.34
Outstanding options exercise price, upper range	$ 8.51
Minimum [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Outstanding options expiration month and year	2024-08
Maximum [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Outstanding options expiration month and year	2031-07
General and Administrative Expense [Member]
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock based compensation expense	$ 25,571	$ 13,865

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Schedule of Operating Lease Assets and Liabilities (Details) - USD ($)	Jun. 30, 2022	Mar. 31, 2022
Leases
Operating lease right-of-use asset, beginning balance	$ 129,923
Current period amortization	(13,383)
Total operating lease right-of-use asset	116,540	$ 129,923
Operating lease liability, current	54,806	54,294
Operating lease liability, long term	61,734	$ 75,629
Total lease liabilities	$ 116,540

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Schedule of Future Minimum Lease Payments (Details) - USD ($)	Jun. 30, 2022	Mar. 31, 2022
Leases
Fiscal Year Ended March 31, 2023	$ 43,680
Fiscal Year Ended March 31, 2024	58,240
Fiscal Year Ended March 31, 2025	19,413
Total lease payments	121,333
Less: imputed interest	(4,793)
Operating lease liability	116,540
Less: operating lease liability, current	(54,806)	$ (54,294)
Operating lease liability, long term	$ 61,734	$ 75,629

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Leases (Details Narrative)	1 Months Ended	3 Months Ended
	Jun. 30, 2021	Jun. 30, 2022 USD ($) ft²	Jun. 30, 2021 USD ($)
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Area of lease | ft²		4,160
Lease term		36 months
Lease term extension, description	In June 2021, the Company agreed to extend its current lease at a flat (unescalated) rate for 36 months.	In June 2020, in exchange for a reduction in rent for the months of June and July 2020, the Company agreed to a 2-month extension to its current lease agreement at the regular monthly rate extending its current lease expiration date to July 2021.
Lease Expiration Date	Jul. 31, 2024
Incremental borrowing rate		3.75%
Net cash paid for operating lease | $		$ 10,667	$ 10,929
Sublease income | $		$ 3,893	$ 5,200
Shareholder [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items]
Area of lease | ft²		1,112

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Income Taxes (Details Narrative)	Jun. 30, 2022 USD ($)
Income Tax Disclosure [Abstract]
Deferred tax asset, net	$ 526,846
Deferred tax assets, valuation allowance	$ 526,846

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Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Related Party Transactions [Abstract]
Total billed to and reimbursed expenses	$ 10,085	$ 12,768
Due to related party	$ 3,893	$ 4,045

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Schedule of Reconciliation of Basic and Diluted Net Income (loss) Per Share (Details) - USD ($)	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Income per common share:
Net income	$ 1,298,672	$ 395,006
Weighted average common shares outstanding – basic	2,149,416	2,076,756
Effect of the assumed exercise of dilutive stock options	$ 67,326	$ 43,199
Weighted average common shares outstanding – dilutive	2,216,742	2,119,955
Basic	$ 0.60	$ 0.19
Diluted	$ 0.59	$ 0.19

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Income Per Common Share (Details Narrative) - shares	3 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Income per common share:
Antidilutive securities excluded from computation of earnings per share	0	0

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Subsequent Events (Details Narrative) - Subsequent Event [Member] - USD ($)	1 Months Ended
	Aug. 31, 2022	Jul. 31, 2022
Four Horizontal New Mexico [Member]
Subsequent Event [Line Items]
Remaining balance drilling and completion		$ 300,000
Three Horizontal New Mexico [Member]
Subsequent Event [Line Items]
Purchase additional working interests	$ 768,000	768,000
Horizontal New Mexico [Member]
Subsequent Event [Line Items]
Purchase additional working interests	377,000	$ 377,000
Two Horizontal New Mexico [Member]
Subsequent Event [Line Items]
Remaining balance drilling and completion	$ 33,000