MEXCO ENERGY CORP
For the period ended Mar 31, 2025. Filed Jun 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Jun 27, 2025
MXC$8.92+1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-03-31; filed 2024-06-27.
0001493152-24-025472
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-03-31; filed 2025-06-27.
0001641172-25-016966
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 80 previous paragraphs and 82 current paragraphs.
30 unchanged; 32 reworded; 19 added; 18 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (19)
Current report
Mexco expended approximately $207,000 to participate in the drilling of five horizontal wells in the Bone Spring formation of the Delaware Basin in Lea County, New Mexico. In November 2024, these wells were completed with initial average production rates of 1,106 barrels of oil, 2,583 barrels of water and 1,165,000 cubic feet of gas per day, or 1,300 BOE per day.
Current report
Mexco expended approximately $293,000 to drill and complete four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico. In November 2024, these wells were completed with initial average production rates of 1,089 barrels of oil, 4,716 barrels of water and 3,601,000 cubic feet of gas per day, or 1,689 BOE per day.
Current report
Mexco expended approximately $117,000 for the drilling and completion of two horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .5%. In March 2025, these wells were completed with initial average production rates of 1,734 barrels of oil, 3,171 barrels of water and 3,229,000 cubic feet of gas per day, or 2,272 BOE per day.
Current report
Mexco expended approximately $176,000 for the drilling and completion of two horizontal wells in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico. Mexco’s average working interest in these wells is .5%. Subsequently, in June 2025, one of these wells were completed with initial average production rates of 676 barrels of oil, 1,899 barrels of water and 729,000 cubic feet of gas per day, or 798 BOE per day
Current report
Mexco expended approximately $46,000 for the drilling of two horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .28%.
Current report
Mexco expended approximately $70,000 to participate in the development of three horizontal wells in the Spraberry trend of the Midland Basin in Reagan County, Texas. Mexco’s working interest in these wells is approximately .26%.
Current report
The Company expended approximately $207,000 for the completion costs of four horizontial wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico that the Company participated in drilling during fiscal 2024. Mexco’s working interest in these wells is .45%. In October 2024, these wells were completed with initial average production rates of 893 barrels of oil, 2,990 barrels of water and 1,161,000 cubic feet of gas per day, or 1,087 BOE per day.
Current report
In August 2024, the Company acquired royalty interests in 6 producing wells operated by Marathon Oil and located in Karnes County, Texas, for a purchase price of $50,000. This acquisition was effective August 1, 2024.
Current report
In August 2024, the Company acquired royalty interests in 10 producing wells operated by Anadarko Petroleum Corporation and located in Weld County, Colorado, for a purchase price of $118,000 and royalty interests in approximately 250 producing wells operated by Samson Exploration, EOG Resources, and others in Laramie County, Wyoming and Adams and Weld Counties, Colorado, for a purchase price of $483,000. All of these acquisitions were effective September 1, 2024.
Current report
In September 2024, the Company acquired royalty interests in 21 producing wells operated by Marathon Oil and Murphy Exploration and located in Karnes County, Texas, for a purchase price of $90,000, effective August 1, 2024.
Current report
In October 2024, the Company acquired a .3% royalty interest in 15 producing wells operated by Civitas Resources, Inc. and located in Broomfield and Adams Counties, Colorado, for a purchase price of $450,000. This acquisition was effective November 1, 2024.
Current report
In October 2024, the Company acquired a .5% royalty interest in 3 producing wells operated by Mewbourne Oil Company and located in Eddy County, New Mexico, for a purchase price of $260,000. This acquisition was effective November 1, 2024 and includes acreage for further development.
Current report
In October 2024, the Company acquired royalty interests in 8 producing wells operated by Marathon Oil and located in Live Oak County, Texas, for a purchase price of $20,000; royalty interests in 6 producing wells operated by SWN Production Company, LLC and located in DeSoto Parish, Louisiana, for a purchase price of $25,000; royalty interests in 10 producing wells operated by Ovintiv, Inc. and located in Upton County, Texas, for a purchase price of $65,000; and, royalty interests in 12 producing wells operated by Pioneer Natural Resources and located in Reagan and Upton Counties, Texas, for a purchase price of $65,000. All of these acquisitions were effective November 1, 2024.
Current report
Also, in October 2024 and effective November 1, 2024, the Company acquired various small royalty interests in over 400 producing wells operated by Petro-Hunt Corporation, Hess Bakken Investments II, LLC, Marathon Oil, WPX Energy, and others in multiple counties throughout the states of Nebraska, North Dakota, South Dakota, and Montana for a purchase price of $188,000.
Current report
*Other operating revenues.*Other revenues increased 70% to $241,581 in fiscal 2025 from $142,237 in fiscal 2024. This resulted from an increase in income from one of our limited liability company investments.
Current report
*Interest income.*Interest income on corporate funds decreased 46% to $72,629 in fiscal 2025 from $135,476 in fiscal 2024. This decrease resulted from using the corporate funds for property acquisitions and purchase of treasury stock.
Current report
Segments. Based on the Company’s organizational structure, the Company has one operating segment, which is crude oil and natural gas development, exploration and production. In addition, the Company has a single, company-wide management team that allocates capital resources to maximize profitability and measures financial performance as a single enterprise.
Current report
**Recently Adopted Accounting Pronouncements.**In December 2023, the FASB issued ASU 2023-09, Topic 740 Income Taxes: Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this standard provide for enhanced income tax information primarily through changs to the rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024. While the adoption of this ASU will modify the company’s disclosures, it will not have an impact on the Company’s financial position, results of operations, or liquidity.
Current report
**New Accounting Pronouncements Not Yet Adopted.**In November 2024, the FASB issued ASU 2024-03, Topic 220 Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures: Disaggregation of the Income Statement Expenses. The amendments in this update require disclosure in the Company’s annual and interim consolidated financial statements of specified information about certain costs and expenses, including depletion, depreciation and amortization recognized as part of crude oil and natural gas producing activities, and employee compensation. This ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. While the adoption of this ASU will modify the company’s disclosures, it will not have an impact on the Company’s financial position, results of operations, or liquidity.
Removed paragraphs (18)
Previous report
Mexco expended approximately $264,000 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%. Two of these wells began producing in November 2023 and the other two in March 2024 with initial average production rates of 822 barrels of oil, 4,159 barrels of water and 2,574,000 cubic feet of gas per day, or 1,251 barrels of oil equivalent (“BOE”) per day.
Previous report
Mexco expended approximately $152,000 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 .4%. These wells began producing in November 2023 with initial average production rates of 837 barrels of oil, 1,794 barrels of water and 659,000 cubic feet of gas per day, or 947 BOE per day.
Previous report
Mexco expended approximately $105,000 to participate in the drilling and completion 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 approximately .285%. These wells began producing in September 2023 with initial average production rates of 582 barrels of oil, 1,488 barrels of water and 791,000 cubic feet of gas per day, or 714 BOE per day.
Previous report
Mexco expended approximately $870,000 to participate in the drilling of five horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is approximately 1.16%. Subsequently, in April 2024, two of these wells were completed with initial average production rates of 1,065 barrels of oil, 2,107 barrels of water and 706,500 cubic feet of gas per day, or 1,183 BOE per day.
Previous report
In July 2023, Mexco expended approximately $36,000 to participate in the drilling and completion of two horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is approximately .1%. These wells began producing in September 2023 with initial average production rates of 898 barrels of oil, 1,969 barrels of water and 503,000 cubic feet of gas per day, or 982 BOE per day.
Previous report
In February 2024, Mexco expended approximately $170,000 to participate in the drilling of four horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .45%.
Previous report
Three horizontal wells in the Bone Spring formation of the Delaware Basin in Eddy County, New Mexico in which the Company participated during fiscal 2023 were completed in May 2023 with initial average production rates of 437 barrels of oil, 983 barrels of water and 603,000 cubic feet of gas per day, or, 538 barrels of oil equivalent per day. Mexco’s working interest in these wells is .05%.
Previous report
**Acquisitions.**During the year, the Company acquired royalty interests in 39 producing wells with additional potential locations for development in Howard and Lee Counties, Texas for an aggregate purchase price of $261,700.
Previous report
In February 2024, the Company acquired royalty interests in 8 producing wells with additional potential locations for development operated by PDC Energy, Inc. and 4 producing wellbores operated by Chevron Corporation for an aggregate purchase price of $575,600. These wells are located in Weld County, Colorado.
Previous report
In February 2024, the Company acquired royalty interests in 255 producing wells in the Haynesville trend area of Caddo Parish, Louisiana for a purchase price of $390,300.
Previous report
In December 2023, the Company acquired royalty (mineral) interests in 7 wells operated by Occidental Petroleum Corporation and located in Reeves County, Texas for a purchase price of $364,000 which is effective November 1, 2023. In January 2024, the Company acquired an additional interest in these same wells for a purchase price of $91,000, effective December 1, 2023.
Previous report
In November 2023, the Company acquired small royalty interests in 27 producing wells as well as non-producing mineral interests in 1,280 gross acres located in Crane, Ector, Midland and Upton Counties, Texas for an aggregate purchase price of $105,800.
Previous report
**Sales of Properties.**During the first quarter of fiscal 2024, the Company received approximately $280,000 in cash from a sale of joint venture leasehold acreage and marginal producing working interest wells in Reagan County, Texas, marginal producing working interest wells in Pecos County, Texas and interest in surface acreage in Palo Pinto County, Texas.
Previous report
In December 2023, the Company made on a 3-year Term Assignment of 98% of the Company’s leasehold interest in certain deep rights of 200 acres in Loving and Ward Counties, Texas. The Company received $5,000 per net leasehold acre in the total amount of approximately $980,000. The Company retained the remaining 2% leasehold interest as a participating interest in the full unit at approximately .625% working interest. The Company also retained an overriding royalty interest of 5% proportionately reduced.
Previous report
**Subsequent Participations.**In April 2024, Mexco expended approximately $80,000 to participate in the drilling of five horizontal wells in the Bone Spring formation of the Delaware Basin in Lea County, New Mexico and $127,800 to drill four horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico.
Previous report
Interest expense. Interest expense was $5,234 in fiscal 2024, a 60% decrease from $13,097 in fiscal 2023, due to a decrease in borrowings.
Previous report
Gas Balancing. Gas imbalances are accounted for under the sales method whereby revenues are recognized based on production sold. A liability is recorded when our excess takes of natural gas volumes exceed our estimated remaining recoverable reserves (over produced). No receivables are recorded for those wells where Mexco has taken less than its ownership share of gas production (under produced).
Previous report
**Recent Accounting Pronouncements.**In December 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disaggregated information about the Company’s effective tax rate reconciliation and income taxes paid. This ASU is effective for annual periods beginning after December 15, 2024 on a prospective basis and early adoption is permitted. The Company is currently evaluating the impact of this standard on its tax disclosures.
Reworded paragraphs (32)
Previous wording
**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 year ended March 31, 2024 was $4,433,935 in comparison to $6,515,895 for the year ended March 31, 2023. This decrease of $2,081,960 in our cash flow operating activities consisted of increase in our non-cash expenses of $505,448; a decrease in our accounts receivable of $426,598; an increase of $49,673 of our accounts payable and accrued expenses; and, a decrease in our net income for the current year of $3,317,518. Variations in cash flow from operating activities may impact our level of exploration and development expenditures.
Current wording
**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 year ended March 31, 2025 was $4,269,621 in comparison to $4,433,935 for the year ended March 31, 2024. This decrease of $164,314 in our cash flow operating activities consisted of increase in our non-cash expenses of $156,176; an increase in our accounts receivable of $533,564; an increase of $52,861 of our accounts payable and accrued expenses; and, an increase in our net income for the current year of $367,416. Variations in cash flow from operating activities may impact our level of exploration and development expenditures.
Previous wording
Our expenditures in operating activities consist primarily of 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.
Current wording
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.
Previous wording
**Cash Flow Used in Investing Activities.**Cash flow from investing activities is derived from changes in oil and gas property balances. For the year ended March 31, 2024, we had net cash of $3,016,499 used for additions to oil and gas properties and a $400,000 investment in two limited liability companies compared to $5,014,357 and $425,000, respectively, for the year ended March 31, 2023.
Current wording
**Cash Flow Used in Investing Activities.**Cash flow from investing activities is derived from changes in oil and gas property balances. For the year ended March 31, 2025, we had net cash of $3,154,575 used for additions to oil and gas properties and a $1,000,000 investment in two limited liability companies compared to $3,016,499 and $400,000, respectively, for the year ended March 31, 2024.
Previous wording
**Cash Flow Used in Financing Activities.**Cash flow from financing activities is derived from our changes in long-term debt and in equity account balances. Net cash flow used in our financing activities was $779,723 for the year ended March 31, 2024 compared to net cash flow used in our financing activities of $209,815 for the year ended March 31, 2023. During the year ended March 31, 2024, we expended $213,600 to pay the annual dividend, expended $585,035 to purchase 50,101 shares of our stock for the treasury account, and received proceeds of $19,662 for the exercise of employee and director stock options. During the year ended March 31, 2023, we received proceeds of $16,700 from the exercise of director stock options, received payment of $30,179 from a director for profits on purchase of stock within the six-month window of a previous stock sale, expended $244,494 for the purchase of 18,416 shares of our stock for the treasury and, expended $12,200 for the renewal of our credit facility.
Current wording
**Cash Flow Used in Financing Activities.**Cash flow from financing activities is derived from our changes in long-term debt and in equity account balances. Net cash flow used in our financing activities was $834,575 for the year ended March 31, 2025 compared to net cash flow used in our financing activities of $779,723 for the year ended March 31, 2024. During the year ended March 31, 2025, we expended $209,000 to pay the annual dividend, expended $703,216 to purchase 57,766 shares of our stock for the treasury account, and received proceeds of $77,641 for the exercise of employee stock options. During the year ended March 31, 2024, we expended $213,600 to pay the annual dividend, expended $585,035 to purchase 50,101 shares of our stock for the treasury account, and received proceeds of $19,662 for the exercise of employee and director stock options.
Previous wording
Accordingly, net cash increased $237,713, leaving cash and cash equivalents on hand of $2,473,484 as of March 31, 2024.
Current wording
Accordingly, net cash decreased $719,529, leaving cash and cash equivalents on hand of $1,753,955 as of March 31, 2025.
Previous wording
We had working capital of $3,259,200 as of March 31, 2024 compared to working capital of $3,475,776 as of March 31, 2023, a decrease of $216,576 for the reasons set forth below.
Current wording
We had working capital of $2,469,664 as of March 31, 2025 compared to working capital of $3,259,200 as of March 31, 2024, a decrease of $789,536 for the reasons set forth below.
Previous wording
**New Participations in Fiscal 2024.**The Company participated in the drilling and completion of 51 horizontal wells and 1 vertical well at a cost of approximately $2,300,000, of which $2,000,000 was expended during the fiscal year ending March 31, 2024. Nineteen of these wells have not been completed. Forty-eight 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. The remaining three horizontal wells are in the Bakken formation in McKenzie County, North Dakota and the vertical well is in Irion County, Texas.
Current wording
**New Participations in Fiscal 2025.**The Company participated in the development of 35 horizontal wells at a cost of approximately $1,100,000 for the year ending March 31, 2025. Seventeen of these wells have not been completed. Twenty-nine of these wells are in the Delaware Basin located in the western portion of the Permian Basin in Lea and Eddy Counties, New Mexico; three wells are in the Midland Basin located in the eastern portion of the Permian Basin in Reagan County, Texas; and, the remaining three horizontal wells are in Grady County, Oklahoma.
Previous wording
In addition to the above working interests, there were 101 gross wells (.025 net wells) drilled by other operators on Mexco’s royalty interests and 348 gross wells (7.65 net wells) obtained through acquisitions.
Current wording
In addition to the above working interests, there were 120 gross wells (.09 net wells) drilled by other operators on Mexco’s royalty interests and 840 gross wells (2.31 net wells) obtained through acquisitions.
Previous wording
In February 2024, Mexco expended approximately $74,000 to participate in the drilling of two horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .53%. Subsequently, in May 2024, Mexco expended approximately $90,000 to complete these wells.
Current wording
Mexco expended approximately $70,000 to participate in the drilling of six horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in these wells is .16%. Subsequently, in May 2025, Mexco expended approximately $85,000 to complete these wells.
Previous wording
In February 2024, Mexco expended approximately $153,000 to participate in an exploratory well in the Fusselman Formation of Irion County, Texas. Subsequently, in May 2024, the Company expended $27,000 for additional drilling costs. This well was later determined to be noncommercial and will be plugged and abandoned in fiscal 2025.
Current wording
Mexco expended approximately $32,000 to participate in an exploratory well in the Fusselman Formation of Irion County, Texas. This well was determined to be noncommercial and was plugged and abandoned.
Previous wording
In October 2022, the Company made an approximately 2% equity investment commitment in a limited liability company amounting to $2,000,000 of which $800,000 has been funded as of March 31, 2024. The limited liability company is capitalized at approximately $100 million to purchase mineral interests in the Utica and Marcellus areas in the state of Ohio. Subsequently, in May 2024, the Company funded another $200,000 toward this investment. This LLC has returned $81,231 or 8% of the total investment.
Current wording
In October 2022, the Company made an approximately 2% equity investment commitment in a limited liability company amounting to $2,000,000 of which $1,800,000 has been funded as of March 31, 2025. The limited liability company is capitalized at approximately $100 million to purchase mineral interests in the Utica and Marcellus areas in the state of Ohio. This LLC has returned $252,394 or 14% of the total investment.
Previous wording
Completion of Wells Drilled in Fiscal 2023. The Company expended approximately $450,000 in the completion of 21 horizontal wells in which the Company participated in fiscal 2023.
Current wording
Completion of Wells Drilled in Fiscal 2024. The Company expended approximately $300,000 for the completion of 19 horizontal wells in which the Company participated during fiscal 2024.
Previous wording
The Company expended approximately $427,000 for the completion costs of eight horizontal wells in the Wolfcamp Sand formation of the Delaware Basin in Lea County, New Mexico that the Company participated in drilling during fiscal 2023. Mexco’s working interest in these wells is .52%. These wells began producing in October 2023 with initial average production rates of 825 barrels of oil, 3,540 barrels of water and 2,150,000 cubic feet of gas per day, or, 1,183 BOE per day.
Current wording
The Company expended approximately $107,000 for the completion costs of two horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico that the Company participated in drilling during fiscal 2024. Mexco’s working interest in these wells is .53%. In July 2024, these wells were completed with initial average production rates of 1,402 barrels of oil, 2,009 barrels of water and 2,168,000 cubic feet of gas per day, or 1,763 BOE per day.
Previous wording
Seven horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico in which the Company participated during fiscal 2023 were completed with initial average production rates of 1,827 barrels of oil, 1,945 barrels of water and 2,264,000 cubic feet of gas per day, or, 2,204 barrels of oil equivalent per day. Mexco’s working interest in these wells is .033%.
Current wording
Five horizontal wells in the Bone Spring Sand formation of the Delaware Basin in Lea County, New Mexico in which the Company participated during fiscal 2024 were completed in April 2024 with initial average production rates of 732 barrels of oil, 1,481 barrels of water and 657,000 cubic feet of gas per day, or 842 of oil equivalent per day. Mexco’s working interest in these wells is approximately 1.16%.
Previous wording
In November 2023, Mexco expended approximately $32,000 to participate in the drilling and completion of one horizontal well in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico. Mexco’s working interest in this well is .165%.
Current wording
A horizontal well in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico was completed in May 2024 with the initial production rate of 964 barrels of oil, 2,441 barrels of water and 626,000 cubic feet of gas per day, or 1,068 of oil equivalent per day. Mexco’s working interest in this well is .165%.
Previous wording
Subsequently, in April 2024, the Company acquired small royalty (mineral) interests in 21 wells operated by Anadarko Petroleum Corporation and Cimarex Energy Company and located in Reeves County, Texas for a purchase price of $158,000 which is effective April 1, 2024.
Current wording
**Acquisitions.**In April 2024, the Company acquired royalty interests in 21 producing wells operated by Anadarko Petroleum Corporation and Cimarex Energy Company and located in Reeves County, Texas, for a purchase price of $158,000.
Previous wording
Also in December 2023, the Company made on a 3-year Term Assignment of the Company’s leasehold interest in 12.96 net mineral acres located in Lea County, New Mexico. The Company received $2,500 per net leasehold acre in the total amount of $32,400. The Company retained an overriding royalty interest equal to the positive difference between 25% and any existing burdens of record as of the effective date.
Current wording
**Sale of Properties.**In November 2024, the Company conveyed its working and royalty interests in 13.5 net acres in Ward County, Texas. The Company received $15,000 per acre in the total amount of $202,500. The Company retained an overriding royalty interest equal to the positive difference between 25% and any existing burdens of record as of the effective date. The divestiture of this non-core oil and gas asset did not result in a significant alteration of the relationship between the Company’s capitalized costs and proved reserves and, accordingly, the Company recorded the proceeds as sales proceeds, a reduction of its full cost pool, with no gain or loss recognized on the sale.
Previous wording
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.
Current wording
Other Projects. 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.
Previous wording
**Markets.**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 $63.10 per bbl in June 2023 to a high of $89.66 per bbl in September 2023. The Henry Hub Spot Market Price (“Henry Hub”) for natural gas has ranged from a low of $1.25 per MMBtu in March 2024 to a high of $3.34 per MMBtu in October 2023.
Current wording
Pricing. 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 $61.73 per bbl in September 2024 to a high of $82.89 per bbl in April 2024. The Henry Hub Spot Market Price (“Henry Hub”) for natural gas has ranged from a low of $1.21 per MMBtu in November 2024 to a high of $9.86 per MMBtu in January 2025.
Previous wording
On March 31, 2024 the WTI posted price for crude oil was $79.15 per bbl and the Henry Hub spot price for natural gas was $1.54 per MMBtu. See Results of Operations below for realized prices.
Current wording
On March 31, 2025 the WTI posted price for crude oil was $67.46 per bbl and the Henry Hub spot price for natural gas was $4.11 per MMBtu. See Results of Operations below for realized prices. Pipeline capacity constraints and maintenance in the Permian Basin area has contributed to a wider difference between the WaHa Hub and the Henry Hub and at times realized prices were negative.
Previous wording
We had net income of $1,344,952 for the year ended March 31, 2024 compared to $4,662,702 for the year ended March 31, 2023, a 71% decrease as a result of a decrease in operating revenues due to a decrease in oil and natural gas prices and production that is further explained below.
Current wording
We had net income of $1,712,368 for the year ended March 31, 2025 compared to $1,344,952 for the year ended March 31, 2024, a 27% increase primarily as a result of an increase in operating revenues partially offset by an increase in operating expenses that is further explained below.
Previous wording
Oil and natural gas sales. Revenue from oil and natural gas sales was $6,462,647 for the year ended March 31, 2024, a 31% decrease from $9,380,623 for the year ended March 31, 2023. This resulted from a decrease in oil and natural gas prices and production volumes. The following table sets forth our oil and natural gas revenues, production quantities and average prices received during the fiscal years ended March 31:
Current wording
Oil and natural gas sales. Revenue from oil and natural gas sales was $7,116,485 for the year ended March 31, 2025, a 10% increase from $6,462,647 for the year ended March 31, 2024. This resulted from an increase in oil and natural gas production volumes partially offset by a decrease in oil and natural gas prices. The following table sets forth our oil and natural gas revenues, production quantities and average prices received during the fiscal years ended March 31:
Previous wording
Production and exploration. Production costs were $1,526,472 in fiscal 2024, an 11% decrease from $1,719,719 in fiscal 2023. This was primarily the result of a decrease in production taxes as a result of the decrease in oil and gas revenues.
Current wording
Production and exploration. Production costs were $1,605,096 in fiscal 2025, a 5% increase from $1,526,472 in fiscal 2024. This is the result of an increase in production taxes due to an increase in oil and gas revenues and an increase in lease operating expenses on new wells in which we own an interest.
Previous wording
*Depreciation, depletion and amortization.*Depreciation, depletion and amortization (“DD&A”) expense was $1,969,742 in fiscal 2024, a 6% increase from $1,854,047 in fiscal 2023. This was primarily due to an increase in the full cost pool amortization and a decrease in the oil and gas reserves partially offset by a decrease in oil and gas production.
Current wording
*Depreciation, depletion and amortization.*Depreciation, depletion and amortization (“DD&A”) expense was $2,452,694 in fiscal 2025, a 25% increase from $1,969,742 in fiscal 2024. This was primarily due to an increase in oil and natural gas production and a decrease in oil and natural gas reserves.
Previous wording
General and administrative expenses. General and administrative expenses were $1,243,548 for the year ended March 31, 2024, an 11% increase from $1,120,691 for the year ended March 31, 2023. This was primarily due to an increase in employee stock option compensation, salaries and contract services, and accounting fees.
Current wording
General and administrative expenses. General and administrative expenses were $1,320,074 for the year ended March 31, 2025, a 6% increase from $1,243,548 for the year ended March 31, 2024. This was primarily due to an increase in salaries and contract services, office expense, engineering services and legal expenses partially offset by a decrease in employee stock option compensation.
Previous wording
*Income taxes.*Federal income tax for fiscal 2024 was $500,915. There was no federal income tax for fiscal 2023 because the Company was in a net deferred tax asset position. State income tax was $119,629 in fiscal 2024, a 27% decrease from $164,510 for fiscal 2023 due to the decrease in oil and natural gas sales in the State of New Mexico. The effective tax rate for state and federal taxes combined for fiscal 2024 and fiscal 2023 was 32% and 3%, respectively. The increase in the effective federal tax rate is the result of the Company now being in a net deferred tax liability position and the reconciliation to the federal tax return.
Current wording
*Income taxes.*Income tax for fiscal 2025 was $304,330 compared to $620,544 for fiscal 2024. This was primarily due to a decrease in state income taxes and the reconciliation to the federal tax return. The effective tax rate for state and federal taxes combined for fiscal 2025 and fiscal 2024 was 15% and 32%, respectively. The decrease in the effective tax rate is primarily the result of state income taxes, primarily in New Mexico, the impact of permanent differences between book and taxable income, and the reconciliation to the federal tax return.
Previous wording
Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the sale would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country. Under the successful efforts method, geological and geophysical costs and costs of carrying and retaining undeveloped properties are charged to expense as incurred. Costs of drilling exploratory wells that do not result in proved reserves are charged to expense. Depreciation, depletion, amortization and impairment of crude oil and natural gas properties are generally calculated on a well by well or lease or field basis versus the “full cost” pool basis. Additionally, gain or loss is generally recognized on all sales of crude oil and natural gas properties under the successful efforts method. As a result our financial statements will differ from companies that apply the successful efforts method since we will generally reflect a higher level of capitalized costs as well as a higher DD&A rate on our crude oil and natural gas properties.
Current wording
Under the successful efforts method, geological and geophysical costs and costs of carrying and retaining undeveloped properties are charged to expense as incurred. Costs of drilling exploratory wells that do not result in proved reserves are charged to expense. Depreciation, depletion, amortization and impairment of crude oil and natural gas properties are generally calculated on a well by well, lease, or field basis versus the “full cost” pool basis. Additionally, gain or loss is generally recognized on all sales of crude oil and natural gas properties under the successful efforts method. As a result, our financial statements will differ from companies that apply the successful efforts method since we will generally reflect a higher level of capitalized costs as well as a higher DD&A rate on our crude oil and natural gas properties.
Previous wording
Estimates of our proved reserves are based on the quantities of oil and gas that engineering and geological analysis demonstrates, with reasonable certainty, to be recoverable from established reservoirs in the future under current operating and economic parameters. Our reserve estimates and the projected cash flows are derived from these reserve estimates, in accordance with SEC guidelines by an independent engineering firm based in part on data provided by us. The accuracy of a reserve estimate is a function of the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions, and the judgment of the persons preparing the estimate. Estimates prepared by other third parties may be higher or lower than those included herein. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, reserve estimates will be different from the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of an estimate may justify material revisions to the estimate.
Current wording
Estimates of our proved reserves are based on the quantities of oil and gas that engineering and geological analysis demonstrate, with reasonable certainty, to be recoverable from established reservoirs in the future under current operating and economic parameters. Our reserve estimates and the projected cash flows are derived from these reserve estimates, in accordance with SEC guidelines by an independent engineering firm based in part on data provided by us. The accuracy of a reserve estimate is a function of the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions, and the judgment of the persons preparing the estimate. Estimates prepared by other third parties may be higher or lower than those included herein. Because these estimates depend on many assumptions, all of which may substantially differ from future actual results, reserve estimates will be different from the quantities of oil and gas that are ultimately recovered. In addition, results of drilling, testing and production after the date of an estimate may justify material revisions to the estimate.
Previous wording
**Revenue Recognition - Revenue from Contracts with Customers.**Revenues from our royalty and non-operated working interest properties are recorded under the cash receipts approach as directly received from the remitters’ statement accompanying the revenue check. Since the revenue checks are generally received two to three months after the production month, the Company accrues for revenue earned but not received by estimating production volumes and product prices. Any identified differences between its revenue estimates and actual revenue received historically have not been significant.
Current wording
**Revenue Recognition.**Revenues from our royalty and non-operated working interest properties are recorded in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is reported net of post-production costs when such costs are contractually deducted by the operator prior to distribution. Since the revenue checks are generally received two to three months after the production month, the Company accrues for revenue earned but not received by estimating production volumes and product prices. Any identified differences between its revenue estimates and actual revenue received historically have not been significant.
Previous wording
Accounts Receivable. Our accounts receivable includes trade receivables from joint interest owners and oil and gas purchasers. Credit is extended based on an evaluation of a customer’s financial condition and, generally, is uncollateralized. Accounts receivable under joint operating agreements have a right of offset against future oil and gas revenues if a producing well is completed. The collectibility of receivables is assessed and an allowance is made for any credit losses. The allowance for credit losses is determined based on a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the debtor’s current ability to pay its obligation to the Company, the condition of the general economy and the industry as a whole.
Current wording
Accounts Receivable. Our accounts receivable includes trade receivables from joint interest owners and oil and gas purchasers. Credit is extended based on an evaluation of a customer’s financial condition and, generally, is uncollateralized. The collectibility of receivables is assessed and an allowance is made for any credit losses. The allowance for credit losses is determined based on a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the debtor’s current ability to pay its obligation to the Company, the condition of the general economy and the industry as a whole.
Previous wording
**Investments.**The Company accounts for investments of less than 3% of any 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.
Current wording
**Investments.**The Company accounts for investments of less than 3% of any 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. The Company evaluates investments for an impairment whenever events or changes in circumstances indicate that the carrying amount of an investment may not be recoverable. Indicators of impairment may include, but are not limited to, sustained declines in market value, investee financial condition and operating performance, industry or economic trends, and other relevant factors.
Previous wording
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.
Current wording
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 9%. 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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Sales of oil and natural gas properties, whether or not being amortized currently, are accounted for as adjustments of capitalized costs. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the sale would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas. This includes any sales of properties such as Term assignments and Assignments, Bill of Sales and Conveyances.