Mexco Energy Corporation Reports Financial Results for Third Quarter
- 28% increase in net income for the third quarter of fiscal 2024 compared to the previous quarter.
- Operating revenues of $1,656,443 with an average sales price of $78.65 per barrel of oil and $1.82 per Mcf of natural gas.
- Plans to participate in drilling multiple wells with an estimated cost of $2,200,000 for the fiscal year ending March 31, 2024.
- Net income for the nine months ending December 31, 2023, decreased by 71% compared to the same period in fiscal 2023.
- Operating revenues for the first nine months of fiscal 2024 decreased by 35% due to lower production volumes and decreased sales prices.
Insights
The reported net income increase of 28% for Mexco Energy Corporation's third quarter is a positive indicator of the company's operational efficiency and market conditions. However, the substantial 71% decrease in net income for the nine-month period ending December 31, 2023, coupled with a 35% decrease in operating revenues, signals potential challenges. The decrease in net income can largely be attributed to the significant drop in the average sales price of oil and natural gas. The oil price decline from the previous year by 18% and natural gas by 66% reflects broader market trends that could affect future profitability.
Investors might find the company's cash position of $3.4 million and the absence of bank debt reassuring, as it implies financial stability and the ability to fund ongoing operations without resorting to additional financing. The planned participation in drilling and completion of new wells suggests a strategic investment in production capacity, which could pay off if oil and gas prices rebound. However, the estimated aggregate cost of approximately $2.2 million for these wells should be weighed against potential returns, considering the volatile nature of commodity prices.
The activities in the Delaware Basin and the Bakken formation are of particular interest, as these regions are known for their rich oil reserves and have been central to the U.S. shale revolution. Mexco's investment in these areas positions them within a competitive landscape that could yield high returns, dependent on market conditions. The initial average production rates reported for the 20 wells that began producing by October 2023 are impressive, with 1,437 barrels of oil equivalent per well per day. This level of productivity could significantly impact Mexco's future performance and valuation.
However, the broader context of energy market fluctuations must be considered. The transition towards renewable energy sources and the potential for regulatory changes could impact the long-term viability of investments in fossil fuels. Additionally, the production variance and the volatility of oil and gas prices remain key risks that could affect Mexco's operations and stock performance.
The reported figures and future plans of Mexco Energy Corporation must be analyzed in light of the current energy landscape. The decline in oil and gas prices over the nine-month period ending December 31, 2023, reflects the ongoing volatility in the energy sector, often influenced by geopolitical events, changes in supply and demand and technological advancements in alternative energy sources. Mexco's strategy to expand drilling operations indicates a bullish outlook on the sector, potentially banking on a price recovery.
The company's decision to focus on horizontal drilling, which is generally more expensive than vertical drilling but can yield higher production volumes, suggests a long-term strategic approach to resource extraction. The initial production rates of the new wells are notable; however, these rates typically decline over time. The company's ability to maintain production levels and manage extraction costs will be critical for sustaining profitability.
MIDLAND, TX, Feb. 09, 2024 (GLOBE NEWSWIRE) -- Mexco Energy Corporation (NYSE American: MXC) today reported net income of
Net income for the nine months ending December 31, 2023 was
The Company currently expects to participate in the drilling and completion of 45 horizontal wells in the Delaware Basin located in the western portion of the Permian Basin in Eddy and Lea Counties, New Mexico, three horizontal wells located in the Bakken formation in McKenzie County, North Dakota, and one vertical well in Irion County, Texas. The estimated aggregate cost for the total 49 wells is approximately
The Company also expended approximately
The President and Chief Financial Officer of the Company stated, “We currently have
Mexco Energy Corporation, a Colorado corporation, is an independent oil and gas company located in Midland, Texas engaged in the acquisition, exploration and development of oil and gas properties primarily in the Permian Basin. For more information on Mexco Energy Corporation, go to www.mexcoenergy.com.
In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Mexco Energy Corporation cautions that statements in this press release which are forward-looking and which provide other than historical information involve risks and uncertainties that may impact the Company's actual results of operations. These risks include, but are not limited to, production variance from expectations, volatility of oil and gas prices, the need to develop and replace reserves, exploration risks, uncertainties about estimates of reserves, competition, government regulation, and mechanical and other inherent risks associated with oil and gas production. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company's Form 10-K for the fiscal year ended March 31, 2023. Mexco Energy Corporation disclaims any intention or obligation to revise any forward-looking statements.
For additional information, please contact: Tammy L. McComic, President and Chief Financial Officer, at Mexco Energy Corporation, (432) 682-1119.
FAQ
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