[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Colorado
|
84-0627918
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification No.)
|
214 W. Texas Avenue, Suite 1101
|
79701
|
Midland, Texas
|
(Zip Code)
|
(Address of principal executive offices)
|
PART I
|
||
Item 1.
|
Business
|
4
|
Item 1A.
|
Risk Factors
|
13
|
Item 1B.
|
Unresolved Staff Comments
|
20
|
Item 2.
|
Properties
|
20
|
Item 3.
|
Legal Proceedings
|
24
|
Item 4.
|
Mine Safety Disclosures
|
24
|
PART II
|
||
Item 5.
|
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
25
|
Item 6.
|
Selected Consolidated Financial Data
|
26
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
26
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
32
|
Item 8.
|
Financial Statements and Supplementary Data
|
34
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
|
34
|
Item 9A.
|
Controls and Procedures
|
34
|
Item 9B.
|
Other Information
|
34
|
PART III
|
||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
35
|
Item 11.
|
Executive Compensation
|
35
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
35
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
35
|
Item 14.
|
Principal Accounting Fees and Services
|
35
|
PART IV
|
||
Item 15.
|
Exhibits and Financial Statement Schedules
|
35
|
Signatures
|
36
|
|
Glossary of Abbreviations and Terms
|
37
|
1993-2010
|
Tabbs Bay Oil Company and Thompson Brothers Lumber Company, respectively dissolved in 1957 and 1947. Purchase covering thousands of acres located respectively in 19 counties of Texas, 3 parishes of Louisiana and one county in Arkansas and 8 counties of Texas, respectively consisting of various mineral, royalty and overriding royalty interests.
|
1997
|
Forman Energy Corporation, purchase price of $1,591,000 consisting of primarily working interests in approximately 634 wells located in 12 states.
|
2010
|
Southwest Texas Disposal Corporation, purchase price $478,000 consisting of royalty interests in over 300 wells located in 60 counties and parishes of 6 states.
|
2012
|
TBO Oil and Gas, LLC, purchase price of $1,150,000 consisting of working interests in approximately 280 wells located in 16 counties of 3 states.
|
2014
|
Royalty interests, purchase price of $200,000 covering 43 wells in 12 counties of eight states. Of these oil and gas reserves, approximately 54% are in TX and 10% in LA.
|
Year
|
Oil(Bbls)
|
Gas (Mcf)
|
2015
|
29,557
|
369,034
|
2014
|
27,186
|
361,652
|
2013
|
23,260
|
401,077
|
2012
|
19,442
|
395,649
|
2011
|
17,040
|
459,446
|
2015
|
2014
|
2013
|
|
Holly Frontier Refining & Marketing LLC
|
17%
|
22%
|
26%
|
Name
|
Age
|
Position
|
Nicholas C. Taylor
|
77
|
Chairman and Chief Executive Officer
|
Tamala L. McComic
|
46
|
President, Chief Financial Officer, Treasurer, and Assistant Secretary
|
Donna Gail Yanko
|
70
|
Vice President and Secretary
|
March 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Oil (Bbls):
|
||||||||||||
Proved developed – Producing
|
260,580
|
278,230
|
232,850
|
|||||||||
Proved developed – Non-producing
|
23,090
|
16,390
|
4,570
|
|||||||||
Proved undeveloped
|
376,070
|
206,930
|
128,290
|
|||||||||
Total
|
659,730
|
501,550
|
365,710
|
|||||||||
Natural gas (Mcf):
|
||||||||||||
Proved developed – Producing
|
3,470,970
|
2,982,480
|
3,727,710
|
|||||||||
Proved developed – Non-producing
|
1,113,820
|
1,098,990
|
1,079,310
|
|||||||||
Proved undeveloped
|
1,703,790
|
2,177,810
|
3,037,180
|
|||||||||
Total
|
6,288,580
|
6,259,280
|
7,844,200
|
|||||||||
Total net proved reserves (Mcfe)
|
10,246,960
|
9,268,580
|
10,038,460
|
|||||||||
PV-10 Value (1)
|
$
|
23,700,470
|
$
|
24,745,250
|
$
|
17,788,790
|
||||||
Present value of future income tax discounted at 10%
|
(4,762,470
|
)
|
(5,416,250
|
)
|
(3,419,790
|
)
|
||||||
Standardized measure of discounted future net cash flows (2)
|
$
|
18,938,000
|
$
|
19,329,000
|
$
|
14,369,000
|
||||||
Prices used in Calculating Reserves: (3)
|
||||||||||||
Natural gas (per Mcf)
|
$
|
3.595
|
$
|
3.67
|
$
|
2.76
|
||||||
Oil (per Bbl)
|
$
|
74.84
|
$
|
94.23
|
$
|
85.53
|
(1)
|
The PV-10 Value represents the discounted future net cash flows attributable to our proved oil and gas reserves before income tax, discounted at 10% per annum, which is the most directly comparable GAAP financial measure. PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to our estimated net proved reserves prior to taking into account future corporate income taxes. Further, investors may utilize the measure as a basis for comparison of the relative size and value of our reserves to other companies. We use this measure when assessing the potential return on investment related to our oil and natural gas properties. Our reconciliation of this non-GAAP financial measure is shown in the table as the PV-10, less future income taxes, discounted at 10% per annum, resulting in the standardized measure of discounted future net cash flows. The standardized measure of discounted future net cash flows represents the present value of future cash flows attributable to our proved oil and natural gas reserves after income tax, discounted at 10%.
|
(2)
|
In accordance with SEC requirement, the standardized measure of discounted future net cash flows was computed by applying 12-month average prices for oil and gas during the fiscal year to the estimated future production of proved oil and gas reserves, less estimated future expenditures (based on year-end costs) to be incurred in developing and producing the proved reserves, less estimated future income tax expenses (based on year-end statutory tax rates, with consideration of future tax rates already legislated) to be incurred on pretax net cash flows less tax basis of the properties and available credits, and assuming continuation of existing economic conditions.
|
(3)
|
These prices reflect adjustment by lease for quality, transportation fees and regional price differentials and did not give effect to derivative transactions.
|
Gross
|
Net
|
||
Oil
|
3,198
|
22.8
|
|
Gas
|
2,824
|
15.0
|
|
Total Productive Wells
|
6,022
|
37.8
|
Developed Acres
|
|||
Gross
|
Net
|
||
Texas
|
564,296
|
3,625
|
|
Oklahoma
|
97,390
|
1,450
|
|
New Mexico
|
29,519
|
514
|
|
Louisiana
|
43,027
|
47
|
|
North Dakota
|
30,174
|
46
|
|
Kansas
|
9,672
|
24
|
|
Montana
|
7,868
|
5
|
|
Wyoming
|
3,738
|
5
|
|
Arkansas
|
960
|
5
|
|
Alabama
|
640
|
2
|
|
Mississippi
|
1,600
|
3
|
|
Colorado
|
1,120
|
1
|
|
Virginia
|
130
|
1
|
|
Total
|
790,134
|
5,728
|
Year Ended March 31,
|
|||||||||||||
2015
|
2014
|
2013
|
|||||||||||
Gross
|
Net
|
Gross
|
Net
|
Gross
|
Net
|
||||||||
Development Wells
|
|||||||||||||
Productive
|
56
|
.41
|
34
|
.42
|
38
|
.52
|
|||||||
Nonproductive
|
1
|
.09
|
1
|
.01
|
1
|
.01
|
|||||||
Total
|
57
|
.50
|
35
|
.43
|
39
|
.53
|
Year Ended March 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Oil (a):
|
||||||||||||
Production (Bbls)
|
29,557
|
27,186
|
23,260
|
|||||||||
Revenue
|
$
|
2,069,806
|
$
|
2,591,619
|
$
|
1,961,766
|
||||||
Average Bbls per day
|
81
|
74
|
64
|
|||||||||
Average sales price per Bbl (b)
|
$
|
70.03
|
$
|
95.33
|
$
|
84.34
|
||||||
Gas (c):
|
||||||||||||
Production (Mcf)
|
369,034
|
361,652
|
401,077
|
|||||||||
Revenue
|
$
|
1,267,020
|
$
|
1,402,676
|
$
|
1,101,941
|
||||||
Average Mcf per day
|
1,011
|
991
|
1,099
|
|||||||||
Average sales price per Mcf
|
$
|
3.43
|
$
|
3.88
|
$
|
2.75
|
||||||
Production cost:
|
||||||||||||
Production cost
|
$
|
1,024,130
|
$
|
943,730
|
$
|
843,277
|
||||||
Production and ad valorem taxes
|
$
|
276,690
|
$
|
288,084
|
$
|
238,766
|
||||||
Equivalent Mcf (d)
|
546,375
|
524,768
|
540,637
|
|||||||||
Production cost per equivalent Mcf
|
$
|
1.87
|
$
|
1.80
|
$
|
1.56
|
||||||
Production cost per sales dollar
|
$
|
0.31
|
$
|
0.24
|
$
|
0.28
|
||||||
Total oil and gas revenue
|
$
|
3,336,826
|
$
|
3,994,295
|
$
|
3,063,707
|
(a)
|
Includes condensate.
|
(b)
|
After giving effect to our derivative instruments, the average sales price per Bbl of oil was $73.48 for year ended March 31, 2015. After giving effect to our derivative instruments, the average sales price per Bbl of oil was $93.33 for year ended March 31, 2014. We did not have a price swap agreement on our oil production for the years ended March 31, 2013.
|
(c)
|
Includes natural gas products.
|
(d)
|
Oil production is converted to equivalent mcf at the rate of 6 mcf per bbl, representing the estimated relative energy content of natural gas to oil.
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
High
|
Low
|
|||||||
2015:
|
||||||||
April - June 2014
|
$
|
10.05
|
$
|
6.44
|
||||
July - September 2014
|
8.25
|
6.53
|
||||||
October - December 2014
|
7.02
|
5.43
|
||||||
January - March 2015
|
5.90
|
4.31
|
||||||
2014:
|
||||||||
April - June 2013
|
$
|
6.41
|
$
|
5.42
|
||||
July - September 2013
|
8.10
|
5.30
|
||||||
October - December 2013
|
8.50
|
6.30
|
||||||
January - March 2014
|
10.10
|
6.61
|
Number of Shares Authorized for Issuance under Plan
|
Number of Shares to be Issued upon Exercise of Outstanding Options
|
Weighted Average Exercise Price of Outstanding Options
|
Number of Shares Remaining Available for Future Issuance under Plan
|
|||||||||||||
2009 Plan
|
200,000
|
153,600
|
$
|
6.52
|
45,000
|
|||||||||||
Total
|
200,000
|
153,600
|
$
|
6.52
|
45,000
|
Total Number
of Shares
Purchased
|
Average
Price Paid
per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Program
|
Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (1)
|
||||||||||||
1,000
|
$
|
5.01
|
1,000
|
$
|
244,991
|
(1)
|
The program authorizing the use of up to $250,000 to repurchase shares of our common stock for the treasury account was approved by the board of directors on June 29, 2012 and does not have an expiration date. As of March 31, 2015, 1,000 shares of Mexco’s common stock have been purchased for a total of $5,009.
|
2015
|
2014
|
% Difference
|
||||||||||
Oil:
|
||||||||||||
Revenue
|
$
|
2,069,806
|
$
|
2,591,619
|
(20.1%)
|
|
||||||
Volume (bbls)
|
29,557
|
27,186
|
8.7%
|
|
||||||||
Average Price (per bbl)
(a)
|
$
|
70.03
|
$
|
95.33
|
(26.5%)
|
|
||||||
Gas:
|
||||||||||||
Revenue
|
$
|
1,267,020
|
$
|
1,402,676
|
(9.7%)
|
|
||||||
Volume (mcf)
|
369,034
|
361,652
|
2.0%
|
|
||||||||
Average Price (per mcf)
|
$
|
3.43
|
$
|
3.88
|
(11.6%)
|
|
(a)
|
After giving effect to our derivative instruments, the average sales price per Bbl of oil was $73.48 for year ended March 31, 2015. After giving effect to our derivative instruments, the average sales price per Bbl of oil was $93.33 for year ended March 31, 2014.
|
2014
|
2013
|
% Difference
|
||||||||||
Oil:
|
||||||||||||
Revenue
|
$
|
2,591,619
|
$
|
1,961,766
|
32.1%
|
|
||||||
Volume (bbls)
|
27,186
|
23,260
|
16.9%
|
|
||||||||
Average Price (per bbl)
(a)
|
$
|
95.33
|
$
|
84.34
|
13.0%
|
|
||||||
Gas:
|
||||||||||||
Revenue
|
$
|
1,402,676
|
$
|
1,101,941
|
27.3%
|
|||||||
Volume (mcf)
|
361,652
|
401,077
|
(9.8%)
|
|
||||||||
Average Price (per mcf)
|
$
|
3.88
|
$
|
2.75
|
41.1%
|
|
(a)
|
After giving effect to our derivative instruments, the average sales price per Bbl of oil was $93.33 for year ended March 31, 2014. We did not have a price swap agreement on our oil production for the year ended March 31, 2013.
|
Payments due in:
|
||||||||||||||||
Total
|
less than 1 year
|
1 - 3 years
|
over 3 years
|
|||||||||||||
Contractual obligations:
|
||||||||||||||||
Secured bank line of credit
(1)
|
$
|
5,950,000
|
$
|
-
|
$
|
-
|
$
|
5,950,000
|
||||||||
Leases
(2)
|
$
|
27,860
|
$
|
23,440
|
$
|
4,420
|
$
|
-
|
(1)
|
These amounts represent the balances outstanding under the bank line of credit. These repayments assume that interest will be paid on a monthly basis, no additional funds will be drawn and does not include estimated interest of $159,326 less than 1 year, $477,978 1-3 years and $265,544 over 3 years.
|
(2)
|
The lease amount represents the monthly rent amount for our principal office space in Midland, Texas under one three year lease agreement effective April 1, 2013 and a second three year lease agreement effective April 1, 2014. The total obligation for the remainder of the leases is $37,100 which includes $9,240 billed to and reimbursed by our majority shareholder for his portion of the shared office space.
|
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Tamala L. McComic
|
||
Chairman of the Board and Chief Executive Officer
|
President and Chief Financial Officer
|
/s/
|
Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chief Executive Officer, Chairman of the Board of Directors
|
||
/s/
|
Tamala L. McComic
|
|
Tamala L. McComic
|
||
Chief Financial Officer, President, Treasurer and Assistant Secretary
|
||
/s/
|
Michael J. Banschbach
|
|
Michael J. Banschbach
|
||
Director
|
||
/s/
|
Kenneth L. Clayton
|
|
Kenneth L. Clayton
|
||
Director
|
||
/s/
|
Thomas R. Craddick
|
|
Thomas R. Craddick
|
||
Director
|
||
/s/
|
Paul G. Hines
|
|
Paul G. Hines
|
||
Director
|
||
/s/
|
Christopher M. Schroeder
|
|
Christopher M. Schroeder
|
||
Director
|
Report of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated Balance Sheets
|
F-3
|
Consolidated Statements of Operations
|
F-4
|
Consolidated Statements of Changes in Stockholders’ Equity
|
F-5
|
Consolidated Statements of Cash Flows
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7
|
Mexco Energy Corporation and Subsidiaries
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
March 31,
|
March 31,
|
|||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
96,084
|
$
|
156,082
|
||||
Accounts receivable:
|
||||||||
Oil and gas sales
|
384,485
|
628,098
|
||||||
Trade
|
64,584
|
18,144
|
||||||
Prepaid costs and expenses
|
44,618
|
28,804
|
||||||
Total current assets
|
589,771
|
831,128
|
||||||
Property and equipment, at cost
|
||||||||
Oil and gas properties, using the full cost method
|
40,563,443
|
35,460,741
|
||||||
Other
|
106,792
|
94,356
|
||||||
Accumulated depreciation, depletion and amortization
|
(19,838,036
|
)
|
(18,475,174
|
)
|
||||
Property and equipment, net
|
20,832,199
|
17,079,923
|
||||||
Other noncurrent assets
|
48,980
|
7,239
|
||||||
Total assets
|
$
|
21,470,950
|
$
|
17,918,290
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued expenses
|
$
|
423,121
|
$
|
257,431
|
||||
Income tax payable
|
-
|
6,500
|
||||||
Derivative instruments
|
-
|
44,981
|
||||||
Total current liabilities
|
423,121
|
308,912
|
||||||
Long-term debt
|
5,950,000
|
2,425,000
|
||||||
Asset retirement obligations
|
1,230,216
|
926,577
|
||||||
Deferred income tax liabilities
|
660,870
|
858,449
|
||||||
Total liabilities
|
8,264,207
|
4,518,938
|
||||||
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;
|
||||||||
2,104,266 shares issued; 2,037,266 and 2,038,266 shares
|
||||||||
outstanding as of March 31, 2015 and 2014, respectively
|
1,052,133
|
1,052,133
|
||||||
Additional paid-in capital
|
7,075,031
|
6,921,645
|
||||||
Retained earnings
|
5,425,580
|
5,766,566
|
||||||
Treasury stock, at cost (67,000 and 66,000 shares, respectively)
|
(346,001
|
)
|
(340,992
|
)
|
||||
Total stockholders' equity
|
13,206,743
|
13,399,352
|
||||||
$
|
21,470,950
|
$
|
17,918,290
|
Mexco Energy Corporation and Subsidiaries
|
||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||
Year ended March 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Operating revenues:
|
||||||||||||
Oil and gas
|
$
|
3,336,826
|
$
|
3,994,295
|
$
|
3,063,707
|
||||||
Other
|
53,179
|
47,646
|
32,708
|
|||||||||
Total operating revenues
|
3,390,005
|
4,041,941
|
3,096,415
|
|||||||||
Operating expenses:
|
||||||||||||
Production
|
1,300,820
|
1,231,814
|
1,082,043
|
|||||||||
Accretion of asset retirement obligation
|
27,932
|
44,366
|
39,376
|
|||||||||
Depreciation, depletion and amortization
|
1,362,862
|
1,151,482
|
1,100,425
|
|||||||||
General and administrative
|
1,239,750
|
1,136,939
|
1,028,846
|
|||||||||
Total operating expenses
|
3,931,364
|
3,564,601
|
3,250,690
|
|||||||||
Operating (loss) income
|
(541,359
|
)
|
477,340
|
(154,275
|
)
|
|||||||
Other income (expenses):
|
||||||||||||
Interest income
|
45
|
172
|
229
|
|||||||||
Interest expense
|
(99,240
|
)
|
(65,387
|
)
|
(53,832
|
)
|
||||||
Gain (loss) on derivative instruments
|
102,069
|
(99,262
|
)
|
-
|
||||||||
Net other income (expense)
|
2,874
|
(164,477
|
)
|
(53,603
|
)
|
|||||||
(Loss) earnings before provision for income taxes
|
(538,485
|
)
|
312,863
|
(207,878
|
)
|
|||||||
Income tax (benefit) expense:
|
||||||||||||
Current
|
-
|
6,500
|
-
|
|||||||||
Deferred
|
(197,499
|
)
|
5,250
|
(31,504
|
)
|
|||||||
(197,499
|
)
|
11,750
|
(31,504
|
)
|
||||||||
Net (loss) income
|
$
|
(340,986
|
)
|
$
|
301,113
|
$
|
(176,374
|
)
|
||||
(Loss) income per common share:
|
||||||||||||
Basic:
|
$
|
(0.17
|
)
|
$
|
0.15
|
$
|
(0.09
|
)
|
||||
Diluted:
|
$
|
(0.17
|
)
|
$
|
0.15
|
$
|
(0.09
|
)
|
||||
Weighted average common shares outstanding:
|
||||||||||||
Basic:
|
2,038,250
|
2,036,950
|
2,036,959
|
|||||||||
Diluted:
|
2,038,250
|
2,042,184
|
2,036,959
|
Mexco Energy Corporation and Subsidiaries
|
||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
Years ended March 31, 2015, 2014 and 2013
|
||||||||||||||||||||
Common Stock Par Value
|
Treasury
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Total Stockholders’ Equity
|
||||||||||||||||
Balance at April 1, 2012
|
$
|
1,049,558
|
$
|
(325,445
|
)
|
$
|
6,608,350
|
$
|
5,641,827
|
$
|
12,974,290
|
|||||||||
Net loss
|
-
|
-
|
-
|
(176,374
|
)
|
(176,374
|
)
|
|||||||||||||
Purchase of stock
|
-
|
(15,547
|
)
|
-
|
-
|
(15,547
|
)
|
|||||||||||||
Issuance of stock through
|
||||||||||||||||||||
options exercised
|
1,875
|
-
|
14,438
|
-
|
16,313
|
|||||||||||||||
Stock based compensation
|
-
|
-
|
138,303
|
-
|
138,303
|
|||||||||||||||
Balance at March 31, 2013
|
$
|
1,051,433
|
$
|
(340,992
|
)
|
$
|
6,761,091
|
$
|
5,465,453
|
$
|
12,936,985
|
|||||||||
Net income
|
-
|
-
|
-
|
301,113
|
301,113
|
|||||||||||||||
Issuance of stock through
|
||||||||||||||||||||
options exercised
|
700
|
-
|
8,106
|
-
|
8,806
|
|||||||||||||||
Stock based compensation
|
-
|
-
|
152,448
|
-
|
152,448
|
|||||||||||||||
Balance at March 31, 2014
|
$
|
1,052,133
|
$
|
(340,992
|
)
|
$
|
6,921,645
|
$
|
5,766,566
|
$
|
13,399,352
|
|||||||||
Net loss
|
-
|
-
|
-
|
(340,986
|
)
|
(340,986
|
)
|
|||||||||||||
Purchase of stock
|
-
|
(5,009
|
)
|
-
|
-
|
(5,009
|
)
|
|||||||||||||
Stock based compensation
|
-
|
-
|
153,386
|
-
|
153,386
|
|||||||||||||||
Balance at March 31, 2015
|
$
|
1,052,133
|
$
|
(346,001
|
)
|
$
|
7,075,031
|
$
|
5,425,580
|
$
|
13,206,743
|
|||||||||
SHARE ACTIVITY
|
||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||
Common stock shares, issued:
|
||||||||||||||||||||
At beginning of year
|
2,104,266
|
2,102,866
|
2,099,116
|
|||||||||||||||||
Issued
|
-
|
1,400
|
3,750
|
|||||||||||||||||
At end of year
|
2,104,266
|
2,104,266
|
2,102,866
|
|||||||||||||||||
Common stock shares, held in treasury:
|
||||||||||||||||||||
At beginning of year
|
(66,000
|
)
|
(66,000
|
)
|
(63,167
|
)
|
||||||||||||||
Acquisitions
|
(1,000
|
)
|
-
|
(2,833
|
)
|
|||||||||||||||
At end of year
|
(67,000
|
)
|
(66,000
|
)
|
(66,000
|
)
|
||||||||||||||
Common stock shares, outstanding
|
||||||||||||||||||||
At end of year
|
2,037,266
|
2,038,266
|
2,036,866
|
Mexco Energy Corporation and Subsidiaries
|
||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||||||
Year ended March 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net (loss) income
|
$
|
(340,986
|
)
|
$
|
301,113
|
$
|
(176,374
|
)
|
||||
Adjustments to reconcile net (loss) income to net cash
|
||||||||||||
provided by operating activities:
|
||||||||||||
Deferred income tax (benefit) expense
|
(197,499
|
)
|
5,250
|
(31,504
|
)
|
|||||||
Stock-based compensation
|
153,386
|
152,448
|
138,303
|
|||||||||
Depreciation, depletion and amortization
|
1,362,862
|
1,151,482
|
1,100,425
|
|||||||||
Accretion of asset retirement obligations
|
27,932
|
44,366
|
39,376
|
|||||||||
(Gain) loss on derivative instruments
|
(102,069
|
)
|
99,262
|
-
|
||||||||
Changes in assets and liabilities, net of business combination:
|
||||||||||||
Decrease (increase) in accounts receivable
|
197,173
|
(90,901
|
)
|
(117,123
|
)
|
|||||||
Increase in prepaid expenses
|
(15,814
|
)
|
(9,523
|
)
|
(2,499
|
)
|
||||||
Decrease (increase) in noncurrent assets
|
-
|
109,215
|
(116,454
|
)
|
||||||||
(Decrease) increase in income tax payable
|
(6,500
|
)
|
6,500
|
-
|
||||||||
Increase (decrease) in accounts payable and accrued expenses
|
98,494
|
43,289
|
(17,358
|
)
|
||||||||
Net cash provided by operating activities
|
1,176,979
|
1,812,501
|
816,792
|
|||||||||
Cash flows from investing activities:
|
||||||||||||
Additions to oil and gas properties
|
(4,777,979
|
)
|
(2,150,478
|
)
|
(1,300,151
|
)
|
||||||
Acquisition of business
|
-
|
-
|
(1,150,000
|
)
|
||||||||
Additions to other property and equipment
|
(12,436
|
)
|
(2,030
|
)
|
(13,806
|
)
|
||||||
Settlement of asset retirement obligations
|
(39,352
|
)
|
(63,230
|
)
|
(4,918
|
)
|
||||||
Settlement of derivatives
|
57,089
|
(54,281
|
)
|
-
|
||||||||
Proceeds from sale of oil and gas properties and equipment
|
15,710
|
963,388
|
69,042
|
|||||||||
Net cash used in investing activities
|
(4,756,968
|
)
|
(1,306,631
|
)
|
(2,399,833
|
)
|
||||||
Cash flows from financing activities:
|
||||||||||||
Acquisition of treasury stock
|
(5,009
|
)
|
-
|
(15,547
|
)
|
|||||||
Proceeds from exercise of stock options
|
-
|
8,806
|
16,313
|
|||||||||
Reduction of long-term debt
|
(150,000
|
)
|
(1,375,000
|
)
|
(350,000
|
)
|
||||||
Proceeds from long-term debt
|
3,675,000
|
850,000
|
1,600,000
|
|||||||||
Net cash provided by (used in) financing activities
|
3,519,991
|
(516,194
|
)
|
1,250,766
|
||||||||
Net decrease in cash and cash equivalents
|
(59,998
|
)
|
(10,324
|
)
|
(332,275
|
)
|
||||||
Cash and cash equivalents at beginning of period
|
156,082
|
166,406
|
498,681
|
|||||||||
Cash and cash equivalents at end of period
|
$
|
96,084
|
$
|
156,082
|
$
|
166,406
|
||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid for interest
|
$
|
91,264
|
$
|
67,170
|
$
|
49,158
|
||||||
Income taxes paid
|
$
|
13,032
|
$
|
-
|
$
|
-
|
||||||
Non-cash investing and financing activities:
|
||||||||||||
Asset retirement obligations
|
$
|
274,148
|
$
|
134,113
|
$
|
114,003
|
||||||
Acquisition of subsidiary resulting in the assumption of liabilities as follows:
|
||||||||||||
Fair value of assets
|
$
|
-
|
$
|
-
|
$
|
1,276,636
|
||||||
Cash paid
|
-
|
-
|
(1,150,000
|
)
|
||||||||
Liabilities assumed
|
$
|
-
|
$
|
-
|
$
|
126,636
|
Proved oil and gas properties
|
$
|
1,202,013
|
||
Accounts receivable
|
74,623
|
|||
Total assets acquired
|
1,276,636
|
|||
Accounts payable
|
(45,876
|
)
|
||
Asset retirement obligations assumed
|
(80,760
|
)
|
||
Net purchase price
|
$
|
1,150,000
|
Principal
|
||||
Balance at April 1, 2014:
|
$
|
2,425,000
|
||
Borrowings
|
3,675,000
|
|||
Repayments
|
(150,000
|
)
|
||
Balance at March 31, 2015:
|
$
|
5,950,000
|
2015
|
2014
|
|||||||
Carrying amount of asset retirement obligations as of April 1
|
$
|
961,577
|
$
|
813,412
|
||||
Liabilities incurred
|
274,148
|
134,113
|
||||||
Liabilities settled
|
(23,441
|
)
|
(30,314
|
)
|
||||
Accretion expense
|
27,932
|
44,366
|
||||||
Carrying amount of asset retirement obligations as of March 31
|
1,240,216
|
961,577
|
||||||
Less: Current portion
|
10,000
|
35,000
|
||||||
Non-Current asset retirement obligation
|
$
|
1,230,216
|
$
|
926,577
|
2015
|
2014
|
|||||||
Deferred tax assets:
|
||||||||
Percentage depletion carryforwards
|
$
|
1,535,126
|
$
|
1,463,834
|
||||
Deferred stock-based compensation
|
36,958
|
29,475
|
||||||
Asset retirement obligation
|
384,467
|
298,089
|
||||||
Net operating loss
|
720,308
|
298,736
|
||||||
Derivative instruments
|
-
|
13,944
|
||||||
Other
|
11,111
|
9,673
|
||||||
2,687,970
|
2,113,751
|
|||||||
Deferred tax liabilities:
|
||||||||
Excess financial accounting bases over tax bases of property and equipment
|
(3,348,840
|
)
|
(2,972,200
|
)
|
||||
Net deferred tax liabilities
|
$
|
(660,870
|
)
|
$
|
(858,449
|
)
|
2015
|
2014
|
2013
|
||||||||||
Current income tax expense
|
$
|
-
|
$
|
6,500
|
$
|
-
|
||||||
Deferred income tax (benefit) expense
|
(197,499
|
) |
5,250
|
(31,504
|
)
|
|||||||
Total income tax provision:
|
$
|
(197,499
|
) |
$
|
11,750
|
$
|
(31,504
|
)
|
||||
Effective tax rate
|
(37
|
%)
|
4
|
%
|
(15
|
%)
|
2015
|
2014
|
2013
|
||||||||||
Tax expense at federal statutory rate (1)
|
$
|
(183,085
|
)
|
$
|
106,374
|
$
|
(70,678
|
)
|
||||
Statutory depletion carryforward
|
(71,292
|
)
|
(127,204
|
)
|
-
|
|||||||
Effect of graduated rates
|
12,221
|
(13,841
|
)
|
3,391
|
||||||||
Permanent differences
|
44,657
|
46,421
|
35,783
|
|||||||||
Total income tax (benefit) expense
|
$
|
(197,499
|
)
|
$
|
11,750
|
$
|
(31,504
|
)
|
||||
Effective income tax rate
|
(37
|
%)
|
4
|
%
|
(15
|
%)
|
(1)
|
The federal statutory rate was 34% for fiscal years ending March 31, 2015, 2014 and 2013.
|
2015
|
2014
|
2013
|
||||||||||
Unrecognized tax benefits at beginning of period
|
$
|
679,000
|
$
|
677,000
|
$
|
677,000
|
||||||
Additions based on tax positions related to the current year
|
-
|
2,000
|
-
|
|||||||||
Changes to tax positions of prior years
|
-
|
-
|
-
|
|||||||||
Settlements
|
-
|
-
|
-
|
|||||||||
Expirations
|
-
|
-
|
-
|
|||||||||
Unrecognized tax benefits at end of period
|
$
|
679,000
|
$
|
679,000
|
$
|
677,000
|
2015
|
2014
|
|||||||
Current assets: Derivative instruments
|
$
|
-
|
$
|
-
|
||||
Noncurrent assets: Derivative instruments
|
-
|
$
|
-
|
|||||
Total assets
|
$
|
-
|
$
|
-
|
||||
Current liabilities: Derivative instruments
|
$
|
-
|
$
|
44,981
|
||||
Noncurrent liabilities: Derivative instruments
|
-
|
$
|
-
|
|||||
Total liabilities
|
$
|
-
|
$
|
44,981
|
2015
|
2014
|
|||||||
Unrealized loss on open non-hedge derivative instruments
|
$
|
-
|
$
|
(44,981
|
)
|
|||
Gain (loss) on settlement of non-hedge derivative instruments
|
102,069
|
(54,281
|
)
|
|||||
Total gain (loss) on derivative instruments
|
$
|
102,069
|
$
|
(99,262
|
)
|
2015
|
2014
|
2013
|
||||||||||
Property acquisition costs:
|
||||||||||||
Proved
|
$
|
3,108,040
|
$
|
785,144
|
$
|
20,542
|
||||||
Unproved
|
-
|
-
|
-
|
|||||||||
Exploration
|
15,472
|
9,641
|
15,715
|
|||||||||
Development
|
1,746,582
|
1,152,986
|
1,265,126
|
|||||||||
Capitalized asset retirement obligations
|
274,148
|
134,113
|
114,003
|
|||||||||
Total costs incurred for oil and gas properties
|
$
|
5,144,242
|
$
|
2,081,884
|
$
|
1,415,386
|
2015
|
2014
|
2013
|
||||||||||
Proved oil and gas properties
|
$
|
40,489,453
|
$
|
35,386,751
|
$
|
34,138,841
|
||||||
Unproved oil and gas properties:
|
||||||||||||
subject to amortization
|
73,990
|
73,990
|
170,487
|
|||||||||
not subject to amortization
|
-
|
-
|
-
|
|||||||||
40,563,443
|
35,460,741
|
34,309,328
|
||||||||||
Less accumulated DD&A
|
19,752,994
|
18,395,619
|
17,249,803
|
|||||||||
$
|
20,810,449
|
$
|
17,065,122
|
$
|
17,059,525
|
2015
|
2014
|
2013
|
||||||||||
Net (loss) income
|
$
|
(340,986
|
)
|
$
|
301,113
|
$
|
(176,374
|
)
|
||||
Shares outstanding:
|
||||||||||||
Weighted avg. common shares outstanding – basic
|
2,038,250
|
2,036,950
|
2,036,959
|
|||||||||
Effect of the assumed exercise of dilutive stock options
|
-
|
5,234
|
-
|
|||||||||
Weighted avg. common shares outstanding – dilutive
|
2,038,250
|
2,042,184
|
2,036,959
|
|||||||||
(Loss) income per common share:
|
||||||||||||
Basic
|
$
|
(0.17
|
)
|
$
|
0.15
|
$
|
(0.09
|
)
|
||||
Diluted
|
$
|
(0.17
|
)
|
$
|
0.15
|
$
|
(0.09
|
)
|
For the year ended March 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Grant-date fair value
|
$
|
5.59
|
$
|
4.75
|
-
|
|||||||
Volatility factor
|
76.23
|
%
|
77.01
|
%
|
-
|
|||||||
Dividend yield
|
-
|
-
|
-
|
|||||||||
Risk-free interest rate
|
2.52
|
%
|
1.74
|
%
|
-
|
|||||||
Expected term (in years)
|
10
|
7
|
-
|
Number
of Shares
|
Weighted Average Exercise Price
Per Share
|
Weighted Aggregate Average Remaining Contract Life in Years
|
Intrinsic
Value
|
|||||||||||
Outstanding at April 1, 2012
|
83,750
|
$
|
6.42
|
8.65
|
$
|
127,363
|
||||||||
Granted
|
-
|
-
|
||||||||||||
Exercised
|
(3,750
|
)
|
4.35
|
|||||||||||
Forfeited or Expired
|
-
|
-
|
||||||||||||
Outstanding at March 31, 2013
|
80,000
|
$
|
6.52
|
8.03
|
$
|
-
|
||||||||
Granted
|
35,000
|
5.98
|
||||||||||||
Exercised
|
(1,400
|
)
|
6.29
|
|||||||||||
Forfeited or Expired
|
-
|
-
|
||||||||||||
Outstanding at March 31, 2014
|
113,600
|
$
|
6.35
|
7.66
|
$
|
154,062
|
||||||||
Granted
|
40,000
|
7.00
|
||||||||||||
Exercised
|
-
|
-
|
||||||||||||
Forfeited or Expired
|
-
|
-
|
||||||||||||
Outstanding at March 31, 2015
|
153,600
|
$
|
6.52
|
7.36
|
$
|
-
|
||||||||
Vested at March 31, 2015
|
77,350
|
$
|
6.42
|
6.19
|
$
|
-
|
||||||||
Exercisable at March 31, 2015
|
77,350
|
$
|
6.42
|
6.19
|
$
|
-
|
2015
|
2014
|
2013
|
||||||||||
Weighted average grant-date fair value of stock options granted (per share)
|
$
|
5.59
|
$
|
4.75
|
$
|
-
|
||||||
Total fair value of options vested
|
$
|
150,063
|
$
|
108,500
|
$
|
108,500
|
||||||
Total intrinsic value of options exercised
|
$
|
-
|
$
|
6,244
|
$
|
3,138
|
Range of Exercise Prices
|
Number of
Options
|
Weighted Average Exercise Price
Per Share
|
Weighted Average
Remaining Contract
Life in Years
|
Aggregate
Intrinsic
Value
|
|||||||||||||
$
|
5.98 – 6.25
|
45,000
|
$
|
6.00
|
|||||||||||||
6.26 – 6.50
|
28,600
|
6.29
|
|||||||||||||||
6.51 – 6.80
|
40,000
|
6.80
|
|||||||||||||||
6.81 – 7.00
|
40,000
|
7.00
|
|||||||||||||||
$
|
5.98 – 7.00
|
153,600
|
$
|
6.52
|
7.36
|
$
|
- |
Commitment Amount (1)
|
||||
Fiscal Year 2016
|
$
|
23,440
|
||
Fiscal Year 2017
|
4,420
|
(1)
|
The total commitment for the remainder of the leases is $37,100 which includes $9,240 billed to and reimbursed by our majority shareholder for his portion of the shared office space.
|
Oil
(Bbls)
|
Natural Gas
(Mcf)
|
|||
Proved Developed and Undeveloped Reserves:
|
||||
As of April 1, 2012
|
346,000
|
8,445,000
|
||
Revision of previous estimates
|
(10,000)
|
(589,000)
|
||
Purchase of minerals in place
|
48,000
|
71,000
|
||
Extensions and discoveries
|
5,000
|
318,000
|
||
Sales of minerals in place
|
-
|
-
|
||
Production
|
(23,000)
|
(401,000)
|
||
As of March 31, 2013
|
366,000
|
7,844,000
|
||
Revision of previous estimates
|
12,000
|
(1,404,000)
|
||
Purchase of minerals in place
|
50,000
|
18,000
|
||
Extensions and discoveries
|
101,000
|
163,000
|
||
Sales of minerals in place
|
-
|
-
|
||
Production
|
(27,000)
|
(362,000)
|
||
As of March 31, 2014
|
502,000
|
6,259,000
|
||
Revision of previous estimates
|
(90,000)
|
(665,000)
|
||
Purchase of minerals in place
|
43,000
|
795,000
|
||
Extensions and discoveries
|
235,000
|
269,000
|
||
Sales of minerals in place
|
-
|
-
|
||
Production
|
(30,000)
|
(369,000)
|
||
As of March 31, 2015
|
660,000
|
6,289,000
|
Oil
(Bbls)
|
Natural Gas
(Mcf)
|
||
Proved Developed Reserves:
|
|||
As of April 1, 2012
|
194,620
|
5,359,670
|
|
As of March 31, 2013
|
237,420
|
4,807,020
|
|
As of March 31, 2014
|
294,620
|
4,081,470
|
|
As of March 31, 2015
|
283,670
|
4,584,790
|
|
Proved Undeveloped Reserves:
|
|||
As of April 1, 2012
|
151,730
|
3,085,060
|
|
As of March 31, 2013
|
128,290
|
3,037,180
|
|
As of March 31, 2014
|
206,930
|
2,177,810
|
|
As of March 31, 2015
|
376,070
|
1,703,790
|
Oil & Natural Gas
|
Future
|
|||||||
(Mcfe)
|
Development Costs
|
|||||||
PUDs, beginning of year
|
3,419,362
|
$
|
4,620,320
|
|||||
Revision of previous estimates
|
(943,113
|
)
|
(441,475
|
)
|
||||
Conversions to PD reserves
|
(214,890
|
)
|
(643,429
|
)
|
||||
Additional PUDs added
|
1,698,873
|
3,081,986
|
||||||
PUDs, end of year
|
3,960,232
|
$
|
6,617,402
|
March 31
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Future cash inflows
|
$
|
72,238,000
|
$
|
70,252,000
|
$
|
52,900,000
|
||||||
Future production costs and taxes
|
(19,569,000
|
)
|
(20,647,000
|
)
|
(14,893,000
|
)
|
||||||
Future development costs
|
(6,617,000
|
)
|
(4,826,000
|
)
|
(4,850,000
|
)
|
||||||
Future income taxes
|
(9,254,000
|
)
|
(9,801,000
|
)
|
(6,374,000
|
)
|
||||||
Future net cash flows
|
36,798,000
|
34,978,000
|
26,783,000
|
|||||||||
Annual 10% discount for estimated timing of cash flows
|
(17,860,000
|
)
|
(15,649,000
|
)
|
(12,414,000
|
)
|
||||||
Standardized measure of discounted future net cash flows
|
$
|
18,938,000
|
$
|
19,329,000
|
$
|
14,369,000
|
March 31
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Sales of oil and gas produced, net of production costs
|
$
|
(2,036,000
|
)
|
$
|
(2,762,000
|
)
|
$
|
(1,982,000
|
)
|
|||
Net changes in price and production costs
|
(4,066,000
|
)
|
2,464,000
|
(5,881,000
|
)
|
|||||||
Changes in previously estimated development costs
|
2,627,000
|
270,000
|
1,150,000
|
|||||||||
Revisions of quantity estimates
|
(3,718,000
|
)
|
(657,000
|
)
|
(811,000
|
)
|
||||||
Net change due to purchases and sales of minerals in place
|
2,777,000
|
1,332,000
|
1,471,000
|
|||||||||
Extensions and discoveries, less related costs
|
4,607,000
|
3,802,000
|
321,000
|
|||||||||
Net change in income taxes
|
654,000
|
(1,997,000
|
)
|
2,178,000
|
||||||||
Accretion of discount
|
2,474,000
|
1,779,000
|
2,495,000
|
|||||||||
Changes in timing of estimated cash flows and other
|
(3,710,000
|
)
|
729,000
|
(3,928,000
|
)
|
|||||||
Changes in standardized measure
|
(391,000
|
)
|
4,960,000
|
(4,987,000
|
)
|
|||||||
Standardized measure, beginning of year
|
19,329,000
|
14,369,000
|
19,356,000
|
|||||||||
Standardized measure, end of year
|
$
|
18,938,000
|
$
|
19,329,000
|
$
|
14,369,000
|
FISCAL 2015
|
||||||||||||||||
4
th
QTR
|
3
rd
QTR
|
2
nd
QTR
|
1
st
QTR
|
|||||||||||||
Oil and gas revenue
|
$
|
551,894
|
$
|
790,335
|
$
|
987,942
|
$
|
1,006,655
|
||||||||
Operating (loss) profit
|
(412,332
|
)
|
(240,224
|
)
|
60,128
|
51,069
|
||||||||||
Net (loss) income
|
(270,975
|
)
|
(175,321
|
)
|
86,256
|
19,054
|
||||||||||
Net (loss) income per share – basic
|
(0.13
|
)
|
(0.09
|
)
|
0.04
|
0.01
|
||||||||||
Net (loss) income per share – diluted
|
(0.13
|
)
|
(0.09
|
)
|
0.04
|
0.01
|
FISCAL 2014
|
||||||||||||||||
4
th
QTR
|
3
rd
QTR
|
2
nd
QTR
|
1
st
QTR
|
|||||||||||||
Oil and gas revenue
|
$
|
953,291
|
$
|
948,633
|
$
|
1,108,102
|
$
|
984,269
|
||||||||
Operating profit
|
88,425
|
106,078
|
212,368
|
70,469
|
||||||||||||
Net income
|
2,272
|
88,659
|
194,051
|
16,131
|
||||||||||||
Net income per share – basic
|
0.00
|
0.04
|
0.10
|
0.01
|
||||||||||||
Net income per share – diluted
|
0.00
|
0.04
|
0.10
|
0.01
|
3.1
|
Restated Articles of Incorporation of Mexco Energy Corporation filed as Exhibit 3.1 to the Company’s Annual Report on Form 10-K dated June 24, 1998, and incorporated herein by reference.
|
3.2
|
Amended Bylaws of Mexco Energy Corporation as amended on September 13, 2011 filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 14, 2011, and incorporated herein by reference.
|
10.1
|
2009 Employee Incentive Stock Plan of Mexco Energy Corporation filed as Exhibit A to the Company’s Proxy Statement on Form 14C dated July 15, 2009, and incorporated herein by reference.
|
10.2
|
Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.3
|
First Amendment to Loan Agreement dated December 28, 2009 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.4
|
Second Amendment to Loan Agreement dated March 1, 2010 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.5
|
Third Amendment to Loan Agreement dated September 30, 2010 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.6
|
Fourth Amendment to Loan Agreement dated October 22, 2010 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.7
|
Fifth Amendment to Loan Agreement dated December 28, 2011 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.8
|
Sixth Amendment to Loan Agreement dated October 22, 2012 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.9
|
Seventh Amendment to Loan Agreement dated October 25, 2013 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.10
|
Eighth Amendment to Loan Agreement dated September 10, 2014 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
10.11
|
Ninth Amendment to Loan Agreement dated February 13, 2015 to the Loan Agreement between Bank of America, N.A. and Mexco Energy Corporation dated December 31, 2008
|
14.1
|
Code of Business Conduct and Ethics of Mexco Energy Corporation filed with the Company’s Quarterly Report on Form 10-Q filed on November 15, 2004, and incorporated herein by reference.
|
21.1
|
Subsidiaries of Mexco Energy Corporation
|
23.1
|
Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm
|
23.2
|
Consent of Joe C. Neal & Associates, Independent Petroleum Engineers
|
31.1
|
Certification of the Chief Executive Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of the Chief Financial Officer of the Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
99.1
|
Report of Joe C. Neal & Associates, Independent Petroleum Engineer
|
1. | FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS |
1.1 | Line of Credit Amount . |
(a) | During the availability period described below, the Bank will provide a line of credit to the Borrowers. The amount of the line of credit (the "Facility No. 1 Commitment") is the lesser of (i) FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00 ), or (ii) the Borrowing Base as determined by Bank from time to time in accordance with this Agreement. |
(b) | This is a revolving line of credit. Subject to the terms hereof, during the availability period, the Borrowers may repay principal amounts and reborrow them. |
1.2 | Availability Period . |
1.3 | Borrowing Base . |
1.4 | Repayment Terms . |
(a) | The Borrowers will pay interest on January 5, 2009, and then on the same day of each month thereafter until payment in full of any principal outstanding under this facility. |
(b) | The Borrowers will repay in full any principal, interest or other charges outstanding under this facility no later than the Facility No. 1 Expiration Date. |
(c) | The Borrowers may prepay the loan in full or in part at any time. The prepayment will be applied to the most remote payment of principal due under this Agreement. |
1.5
|
Interest Rate
.
|
(a) | The interest rate is a rate per year equal to the lesser of (i) the BBA LIBOR Daily Floating Rate, plus 2.50 percentage points, or (ii) the maximum lawful rate of interest permitted under applicable usury laws, now or hereafter enacted (the "Maximum Rate"). |
(b) | The BBA LIBOR Daily Floating Rate is a fluctuating rate of interest equal to the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time) as determined for each banking day at approximately 11:00 a.m. London Time two (2) London Banking Days prior to the date in question, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a one-month term, as adjusted from time to time in the Bank’s sole discretion for reserve requirements, deposit insurance assessment rates and regulatory costs. If such rate is not available at such time for any reason, then the rate for that interest period will be determined by such alternate method as reasonably selected by the Bank. A “London Banking Day” is a day on which banks in London are open for business and dealing in offshore dollars. |
2. | FEES AND EXPENSES |
2.1 | Unused Commitment Fee . |
2.2 | Expenses . |
2.3 | Reimbursement Costs . |
(a) | The Borrowers agree to reimburse the Bank for any expenses it incurs in the preparation of this Agreement and any agreement or instrument required by this Agreement. Expenses include, but are not limited to, reasonable attorneys' fees, including any allocated costs of the Bank's in-house counsel to the extent permitted by applicable law. |
(b) | The Borrowers agree to reimburse the Bank for the cost of periodic field examinations of the Borrowers’ books, records and collateral, and appraisals of the collateral, at such intervals as the Bank may reasonably require. The actions described in this paragraph may be performed by employees of the Bank or by independent appraisers. |
2.4 | No Excess Fees . |
3. | COLLATERAL |
3.1 | Real and Personal Property . |
4. | DISBURSEMENTS, PAYMENTS AND COSTS |
4.1 | Disbursements and Payments . |
(a) | Each payment by the Borrowers will be made in U.S. Dollars and immediately available funds by debit to a deposit account, as described in this Agreement or otherwise authorized by the Borrowers. For payments not made by direct debit, payments will be made by mail to the address shown on the Borrowers’ statement or at one of the Bank’s banking centers in the United States, or by such other method as may be permitted by the Bank. |
(b) | The Bank may honor instructions for advances or repayments given by the Borrowers (if an individual), or by any one of the individuals authorized to sign loan agreements on behalf of the Borrowers, or any other individual designated by any one of such authorized signers (each an “Authorized Individual”). |
(c) | For any payment under this Agreement made by debit to a deposit account, the Borrowers will maintain sufficient immediately available funds in the deposit account to cover each debit. If there are insufficient immediately available funds in the deposit account on the date the Bank enters any such debit authorized by this Agreement, the Bank may reverse the debit. |
(d) | Each disbursement by the Bank and each payment by the Borrowers will be evidenced by records kept by the Bank. In addition, the Bank may, at its discretion, require the Borrowers to sign one or more promissory notes. |
(e) | Prior to the date each payment of principal and interest and any fees from the Borrowers becomes due (the "Due Date"), the Bank will mail to the Borrowers a statement of the amounts that will be due on that Due Date (the "Billed Amount"). The calculations in the bill will be made on the assumption that no new extensions of credit or payments will be made between the date of the billing statement and the Due Date, and that there will be no changes in the applicable interest rate. If the Billed Amount differs from the actual amount due on the Due Date (the "Accrued Amount"), the discrepancy will be treated as follows: |
(i) | If the Billed Amount is less than the Accrued Amount, the Billed Amount for the following Due Date will be increased by the amount of the discrepancy. The Borrowers will not be in default by reason of any such discrepancy. |
(ii) | If the Billed Amount is more than the Accrued Amount, the Billed Amount for the following Due Date will be decreased by the amount of the discrepancy. |
4.2 | Telephone and Telefax Authorization . |
(a) | The Bank may honor telephone or telefax instructions for advances or repayments given, or purported to be given, by any one of the Authorized Individuals. |
(b) | The Borrowers will indemnify and hold the Bank harmless from all liability, loss, and costs in connection with any act resulting from telephone or telefax instructions the Bank reasonably believes are made by any Authorized Individual. This paragraph will survive this Agreement's termination, and will benefit the Bank and its officers, employees, and agents. |
4.3 | Direct Debit . |
4.4 | Banking Days . |
4.5 | Interest Calculation . |
4.6 | Default Rate . |
5. | CONDITIONS |
5.1 | Authorizations . |
5.2 | Governing Documents . |
5.3 | Security Agreements . |
5.4 | Perfection and Evidence of Priority . |
5.5 | Payment of Fees . |
5.6 | Good Standing . |
5.7 | Insurance . |
5.8 | Deed of Trust . |
6. | REPRESENTATIONS AND WARRANTIES |
6.1 | Formation . |
6.2 | Authorization . |
6.3 | Enforceable Agreement . |
6.4 | Good Standing . |
6.5 | No Conflicts . |
6.6 | Financial Information . |
6.7 | Lawsuits . |
6.8 | Collateral . |
6.9 | Permits, Franchises . |
6.10 | Other Obligations . |
6.11 | Tax Matters . |
6.12 | No Event of Default . |
6.13 | Insurance . |
6.14 | Location of Borrowers . |
7. | COVENANTS |
7.1 | Use of Proceeds . |
7.2 | Financial Information . |
(a) | Within one hundred (100) days of each fiscal year end of Mexco, the annual audited financial statements of Mexco. These financial statements must be audited (with an opinion satisfactory to the Bank) by a certified public accountant acceptable to the Bank. The statements shall be prepared on a consolidated basis. |
(b) | Within forty-five (45) days of the period's end (excluding the last period in each fiscal year), quarterly financial statements of Mexco, certified and dated by an authorized financial officer. These financial statements may be company-prepared. The statements shall be prepared on a consolidated basis. |
(c) | Promptly, upon sending or receipt, copies of any management letters and correspondence relating to management letters, sent or received by Mexco to or from Mexco’s auditor. If no management letter is prepared, the Bank may, in its discretion, request a letter from such auditor stating that no deficiencies were noted that would otherwise be addressed in a management letter. |
(d) | On or before June 1 of each calendar year an engineering report covering all of Borrowers’ material oil and gas properties dated effective as of March 31st of each such year, and at such other times as the Bank may request, an engineering report covering all of Borrowers’ material oil and gas properties dated effective not more than sixty (60) days prior to the delivery of the same to the Bank. Each such engineering report shall be prepared by an independent petroleum engineering firm acceptable to the Bank, utilizing economic pricing parameters used by the Bank as established from time to time, together with such other information, reports and data concerning the value of said oil and gas properties as the Bank shall deem necessary. |
(e) | Copies of the Form 10-K Annual Report, Form 10-Q Quarterly Report and Form 8-K Current Report for Mexco within thirty (30) days after the date of filing with the Securities and Exchange Commission. |
(f) | Within 100 days of the end of each fiscal year, a compliance certificate of the Borrowers, signed by an authorized financial officer and setting forth (i) the information and computations (in sufficient detail) to establish compliance with all financial covenants at the end of the period covered by the financial statements then being furnished and (ii) whether there existed as of the date of such financial statements and whether there exists as of the date of the certificate, any default under this Agreement and, if any such default exists, specifying the nature thereof and the action the Borrowers are taking and propose to take with respect thereto. |
(g) | Within 45 days of the end of each fiscal quarter, a compliance certificate of the Borrowers, signed by an authorized financial officer and setting forth (i) the information and computations (in sufficient detail) to establish compliance with all financial covenants at the end of the period covered by the financial statements then being furnished and (ii) whether there existed as of the date of such financial statements and whether there exists as of the date of the certificate, any default under this Agreement and, if any such default exists, specifying the nature thereof and the action the Borrowers are taking and propose to take with respect thereto. |
(h) | Promptly upon the Bank's request, such other books, records, statements, lists of property and accounts, budgets, forecasts or reports as to the Borrowers and as to each guarantor of the Borrowers' obligations to the Bank as the Bank may request. |
7.3
|
Tangible Net Worth
.
|
(a) | Six Million Two Hundred Fifty-Seven Thousand Dollars ($6,257,000); plus |
(b) | The sum of 50% of net income after income taxes (without subtracting losses) earned in each quarterly accounting period commencing after June 30, 2008; plus |
(c)
|
The net proceeds for from any equity securities issues after the date of this Agreement.
|
7.4 | Dividends and Distributions . |
7.5 | Other Debts . |
(a) | Acquiring goods, supplies, or merchandise on normal trade credit. |
(b) | Endorsing negotiable instruments received in the usual course of business. |
(c) | Obtaining surety bonds in the usual course of business. |
(d) | Liabilities, lines of credit and leases in existence on the date of this Agreement disclosed in writing to the Bank in the Borrowers' most recent financial statement. |
7.6 | Other Liens . |
(a) | Liens and security interests in favor of the Bank. |
(b) | Liens for taxes not yet due. |
(c) | Liens outstanding on the date of this Agreement disclosed in writing to the Bank. |
7.7 | Investments . |
(a) | Existing investments disclosed to the Bank in writing. |
(b) | Investments in the Borrowers’ current subsidiaries. |
7.8 | Loans . |
(a) | Existing extensions of credit disclosed to the Bank in writing. |
(b) | Extensions of credit in the nature of accounts receivable or notes receivable arising from the sale or lease of goods or services in the ordinary course of business to non-affiliated entities. |
7.9 | Loans to Officers or Affiliates . |
7.10 | Change of Management . |
7.11 | Additional Negative Covenants . |
(a) | Enter into any consolidation, merger, or other combination, or become a partner in a partnership, a member of a joint venture, or a member of a limited liability company. |
(b) | Acquire or purchase a business or its assets. |
(c)
|
Engage in any business activities substantially different from the Borrowers' present businesses.
|
(d) | Liquidate or dissolve either of the Borrower’s businesses. |
(e) | Sell, lease, assign or otherwise dispose of or transfer any assets, except in the normal course of business. |
7.12
|
Notices to Bank.
|
(a) | Any lawsuit against a Borrower or any Obligor. |
(b) | Any substantial dispute between any governmental authority and a Borrower or any Obligor. |
(c) | Any event of default under this Agreement, or any event which, with notice or lapse of time or both, would constitute an event of default. |
(d) | Any material adverse change in a Borrower's or any Obligor’s business condition (financial or otherwise), operations, properties or prospects, or ability to repay the credit. |
(e) | Any change in a Borrower's or any Obligor’s name, legal structure, principal residence (for an individual), state of registration (for a registered entity), place of business, or chief executive office if a Borrower or any Obligor has more than one place of business. |
(f) | Any actual contingent liabilities of a Borrower or any Obligor, and any such contingent liabilities which are reasonably foreseeable. |
7.13 | Insurance . |
(a) | General Business Insurance . To maintain insurance satisfactory to the Bank as to amount, nature and carrier covering property damage (including loss of use and occupancy) to any of the Borrowers' properties, business interruption insurance, public liability insurance including coverage for contractual liability, product liability and workers' compensation, and any other insurance which is usual for the Borrowers' businesses. Each policy shall provide for at least thirty (30) days prior notice to the Bank of any cancellation thereof. |
(b) | Insurance Covering Collateral . To maintain all risk property damage insurance policies (including without limitation windstorm coverage, and hurricane coverage as applicable) covering the tangible property comprising the collateral. Each insurance policy must be in an amount acceptable to the Bank. The insurance must be issued by an insurance company acceptable to the Bank and must include a lender's loss payable endorsement in favor of the Bank in a form acceptable to the Bank. |
(c) | Evidence of Insurance . Upon the request of the Bank, to deliver to the Bank a copy of each insurance policy, or, if permitted by the Bank, a certificate of insurance listing all insurance in force. |
7.14 | Compliance with Laws. |
7.15 | ERISA Plans . |
7.16 | Books and Records . |
7.17 | Audits . |
7.18 | Perfection of Liens . |
7.19
|
Bank as Principal Depository
.
|
7.20 | Cooperation . |
8. | HAZARDOUS SUBSTANCES - REAL PROPERTY SECURITY |
8.1 | Indemnity Regarding Hazardous Substances . |
(a) | Any hazardous substance being present at any time, whether before, during or after any construction, in or around any part of the real property collateral securing this Agreement (the "Real Property"), or in the soil, groundwater or soil vapor on or under the Real Property, including those incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work, or any resulting damages or injuries to the person or property of any third parties or to any natural resources. |
(b) | Any use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or presence of a hazardous substance. This indemnity will apply whether the hazardous substance is on, under or about any of the Borrowers' property or operations or property leased to the Borrowers, whether or not the property has been taken by the Bank as collateral. |
8.2 | Representation and Warranty Regarding Hazardous Substances . |
8.3 | Compliance Regarding Hazardous Substances . |
8.4 | Notices Regarding Hazardous Substances . |
8.5 | Site Visits, Observations and Testing . |
8.6 | Definition of Hazardous Substance . |
9. | DEFAULT AND REMEDIES |
9.1 | Failure to Pay . |
9.2 | Other Bank Agreements . |
9.3 | Cross-default . |
9.4 | False Information . |
9.5 | Bankruptcy . |
9.6 | Receivers . |
9.7 | Lien Priority . |
9.8 | Judgments . |
9.9 | Death . |
9.10 | Material Adverse Change . |
9.11 | Government Action . |
9.12 | Default under Related Documents . |
9.13 | ERISA Plans . |
(a) | A reportable event shall occur under Section 4043(c) of ERISA with respect to a Plan. |
(b) | Any Plan termination (or commencement of proceedings to terminate a Plan) or the full or partial withdrawal from a Plan by a Borrower or any ERISA Affiliate. |
9.14 | Other Breach Under Agreement . |
10.
|
ENFORCING THIS AGREEMENT; MISCELLANEOUS
|
10.1
|
GAAP.
|
10.2 | Governing Law . |
10.3 | Successors and Assigns . |
10.4 | Dispute Resolution Provision . |
(a) | This Dispute Resolution Provision concerns the resolution of any controversies or claims between the parties, whether arising in contract, tort or by statute, including but not limited to controversies or claims that arise out of or relate to: (i) this agreement (including any renewals, extensions or modifications); or (ii) any document related to this agreement (collectively a "Claim"). For the purposes of this Dispute Resolution Provision only, the term “parties” shall include any parent corporation, subsidiary or affiliate of the Bank involved in the servicing, management or administration of any obligation described or evidenced by this agreement. |
(b) | At the request of any party to this agreement, any Claim shall be resolved by binding arbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code) (the "Act"). The Act will apply even though this agreement provides that it is governed by the law of a specified state. |
(c) | Arbitration proceedings will be determined in accordance with the Act, the then-current rules and procedures for the arbitration of financial services disputes of the American Arbitration Association or any successor thereof ("AAA"), and the terms of this Dispute Resolution Provision. In the event of any inconsistency, the terms of this Dispute Resolution Provision shall control. If AAA is unwilling or unable to (i) serve as the provider of arbitration or (ii) enforce any provision of this arbitration clause, the Bank may designate another arbitration organization with similar procedures to serve as the provider of arbitration. |
(d) | The arbitration shall be administered by AAA and conducted, unless otherwise required by law, in any U.S. state where real or tangible personal property collateral for this credit is located or if there is no such collateral, in the state specified in the governing law section of this agreement. All Claims shall be determined by one arbitrator; however, if Claims exceed Five Million Dollars ($5,000,000), upon the request of any party, the Claims shall be decided by three arbitrators. All arbitration hearings shall commence within ninety (90) days of the demand for arbitration and close within ninety (90) days of commencement and the award of the arbitrator(s) shall be issued within thirty (30) days of the close of the hearing. However, the arbitrator(s), upon a showing of good cause, may extend the commencement of the hearing for up to an additional sixty (60) days. The arbitrator(s) shall provide a concise written statement of reasons for the award. The arbitration award may be submitted to any court having jurisdiction to be confirmed and have judgment entered and enforced. |
(e) | The arbitrator(s) will give effect to statutes of limitation in determining any Claim and may dismiss the arbitration on the basis that the Claim is barred. For purposes of the application of any statutes of limitation, the service on AAA under applicable AAA rules of a notice of Claim is the equivalent of the filing of a lawsuit. Any dispute concerning this arbitration provision or whether a Claim is arbitratable shall be determined by the arbitrator(s), except as set forth at subparagraph (h) of this Dispute Resolution Provision. The arbitrator(s) shall have the power to award legal fees pursuant to the terms of this agreement. |
(f) | This paragraph does not limit the right of any party to: (i) exercise self-help remedies, such as but not limited to, setoff; (ii) initiate judicial or non-judicial foreclosure against any real or personal property collateral; (iii) exercise any judicial or power of sale rights, or (iv) act in a court of law to obtain an interim remedy, such as but not limited to, injunctive relief, writ of possession or appointment of a receiver, or additional or supplementary remedies. |
(g) | The filing of a court action is not intended to constitute a waiver of the right of any party, including the suing party, thereafter to require submittal of the Claim to arbitration. |
(h) | Any arbitration or trial by a judge of any Claim will take place on an individual basis without resort to any form of class or representative action (the “Class Action Waiver”). Regardless of anything else in this Dispute Resolution Provision, the validity and effect of the Class Action Waiver may be determined only by a court and not by an arbitrator. The parties to this Agreement acknowledge that the Class Action Waiver is material and essential to the arbitration of any disputes between the parties and is nonseverable from the agreement to arbitrate Claims. If the Class Action Waiver is limited, voided or found unenforceable, then the parties’ agreement to arbitrate shall be null and void with respect to such proceeding, subject to the right to appeal the limitation or invalidation of the Class Action Waiver. The Parties acknowledge and agree that under no circumstances will a class action be arbitrated. |
(i) | By agreeing to binding arbitration, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of any Claim. Furthermore, without intending in any way to limit this agreement to arbitrate, to the extent any Claim is not arbitrated, the parties irrevocably and voluntarily waive any right they may have to a trial by jury in respect of such Claim. This waiver of jury trial shall remain in effect even if the Class Action Waiver is limited, voided or found unenforceable. WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR BY TRIAL BY A JUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW. |
10.5 | Severability; Waivers . |
10.6 | Attorneys’ Fees . |
10.7 | Joint and Several Liability . |
(a) | Each Borrower agrees that it is jointly and severally liable to the Bank for the payment of all obligations arising under this Agreement, and that such liability is independent of the obligations of the other Borrower(s). Each obligation, promise, covenant, representation and warranty in this Agreement shall be deemed to have been made by, and be binding upon, each Borrower, unless this Agreement expressly provides otherwise. The Bank may bring an action against any Borrower, whether an action is brought against the other Borrower(s). |
(b) | Each Borrower agrees that any release which may be given by the Bank to the other Borrower(s) or any guarantor will not release such Borrower from its obligations under this Agreement. |
(c) | Each Borrower waives any right to assert against the Bank any defense, setoff, counterclaim, or claims which such Borrower may have against the other Borrower(s) or any other party liable to the Bank for the obligations of the Borrower under this Agreement. |
(d) | Each Borrower waives any defense by reason of any other Borrower’s or any other person's defense, disability, or release from liability. The Bank can exercise its rights against each Borrower even if any other Borrower or any other person no longer is liable because of a statute of limitations or for other reasons. |
(e) | Each Borrower agrees that it is solely responsible for keeping itself informed as to the financial condition of the other Borrower(s) and of all circumstances which bear upon the risk of nonpayment. Each Borrower waives any right it may have to require the Bank to disclose to such Borrower any information which the Bank may now or hereafter acquire concerning the financial condition of the other Borrower(s). |
(f) | Each Borrower waives all rights to notices of default or nonperformance by any other Borrower under this Agreement. Each Borrower further waives all rights to notices of the existence or the creation of new indebtedness by any other Borrower and all rights to any other notices to any party liable on any of the credit extended under this Agreement. |
(g) | The Borrowers represent and warrant to the Bank that each will derive benefit, directly and indirectly, from the collective administration and availability of credit under this Agreement. The Borrowers agree that the Bank will not be required to inquire as to the disposition by any Borrower of funds disbursed in accordance with the terms of this Agreement. |
(h) | Until all obligations of the Borrowers to the Bank under this Agreement have been paid in full and any commitments of the Bank or facilities provided by the Bank under this Agreement have been terminated, each Borrower (a) waives any right of subrogation, reimbursement, indemnification and contribution (contractual, statutory or otherwise), including without limitation, any claim or right of subrogation under the Bankruptcy Code (Title 11, United States Code) or any successor statute, which such Borrower may now or hereafter have against any other Borrower with respect to the indebtedness incurred under this Agreement; (b) waives any right to enforce any remedy which the Bank now has or may hereafter have against any other Borrower, and waives any benefit of, and any right to participate in, any security now or hereafter held by the Bank. |
(i) | Each Borrower waives any right to require the Bank to proceed against any other Borrower or any other person; proceed against or exhaust any security; or pursue any other remedy. Further, each Borrower consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of the Borrowers under this Agreement or which, but for this provision, might operate as a discharge of a Borrower. |
10.8 | Individual Liability . |
10.9 | Set-Off . |
(a) | In addition to any rights and remedies of the Bank provided by law, upon the occurrence and during the continuance of any event of default under this Agreement, the Bank is authorized, at any time, to set off and apply any and all Deposits of a Borrower or any Obligor held by the Bank against any and all Obligations owing to the Bank. The set-off may be made irrespective of whether or not the Bank shall have made demand under this Agreement or any guaranty, and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable Deposits. |
(b) | The set-off may be made without prior notice to the Borrowers or any other party, any such notice being waived by the Borrowers (on their own behalf and on behalf of each Obligor) to the fullest extent permitted by law. The Bank agrees promptly to notify the Borrowers after any such set-off and application; provided , however , that the failure to give such notice shall not affect the validity of such set-off and application. |
(c) | For the purposes of this paragraph, “Deposits” means any deposits (general or special, time or demand, provisional or final, individual or joint) and any instruments owned by a Borrower or any Obligor which come into the possession or custody or under the control of the Bank. “Obligations” means all obligations, now or hereafter existing, of a Borrower to the Bank under this Agreement and under any other agreement or instrument executed in connection with this Agreement, and the obligations to the Bank of any Obligor. |
10.10 | One Agreement . |
(a) | represent the sum of the understandings and agreements between the Bank and the Borrowers concerning this credit; |
(b) | replace any prior oral or written agreements between the Bank and the Borrowers concerning this credit; and |
(c) | are intended by the Bank and the Borrowers as the final, complete and exclusive statement of the terms agreed to by them. |
10.11 | Indemnification . |
10.12 | Notices . |
10.13 | Headings . |
10.14 | Counterparts . |
10.15 | Borrower Information; Reporting to Credit Bureaus . |
10.16 | Prior Agreement Superseded . |
10.17 | USA PATRIOT ACT NOTICE, AFFILIATE SHARING NOTICE and AFFILIATE MARKETING NOTICE . |
Banks and Trust Companies
Bank of America, N.A.
LaSalle Bank National Association
LaSalle Bank Midwest National Association
Credit Card
Bank of America Consumer Card Services, LLC
Bank of America
Fleet Credit Card Services, L.P.
|
Brokerage and Investments
BACAP Alternative Advisors, Inc.
Bank of America Capital Advisors LLC
Banc of America Investment Advisors, Inc.
Banc of America Investment Services, Inc.
Banc of America Securities LLC
LaSalle Financial Services, Inc.
U.S. Trust Hedge Fund Management, Inc.
UST Securities Corp.
|
Insurance and Annuities
BA Insurance Services, Inc.
Banc of America Agency of Texas, Inc.
Banc of America Insurance Services, Inc.,
dba Banc of America Insurance Agency in New York State
General Fidelity Insurance Company
General Fidelity Life Insurance Company
LaSalle Financial Services, Inc.
|
Real Estate
Home Focus Services, LLC
Administrative Services
LaSalle Healthcare Administrative Services, LLC
Merchant Services
BA Merchant Services, LLC
LaSalle Merchant Services, LLC
|
10.18
|
Notice of Final Agreement.
|
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Kory Clark
|
||
Nicholas C. Taylor
|
Name:
|
Kory Clark
|
|||
President
|
Title:
|
Senior Vice President
|
FORMAN ENERGY CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
President
|
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Mark A. Formky
|
||
Nicholas C. Taylor
|
Mark A. Formky
|
||||
President
|
Assistant Vice President
|
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
President
|
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By
|
:
/s/ Jaime Pfeifer
|
||
Nicholas C. Taylor
|
Jaime Pfeifer
|
||||
President
|
Assistant Vice President
|
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
President
|
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Rose M. Storey
|
||
Nicholas C. Taylor
|
Rose M. Storey
|
||||
President
|
Assistant Vice President
|
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
President
|
(b)
|
The sum of 50% of net income after income taxes (without subtracting losses) earned in each quarterly accounting period commencing after June 30, 2010; plus
|
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Rose M. Storey
|
||
Nicholas C. Taylor
|
Rose M. Storey
|
||||
President
|
Assistant Vice President
|
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
President
|
1.2 | Availability Period . |
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA
,
N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Rose M. Storey
|
||
Nicholas C. Taylor
|
Rose M. Storey
|
||||
Chairman of the Board and
|
Assistant Vice President
|
||||
Chief Executive Officer
|
FORMAN ENERGY CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
||
SOUTHWEST TEXAS DISPOSAL CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA , N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Charles Dale
|
||
Nicholas C. Taylor
|
Charles Dale
|
||||
Chairman of the Board and Chief Executive Officer
|
Senior Vice President
|
FORMAN ENERGY CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
||
SOUTHWEST TEXAS DISPOSAL CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
||
TBO OIL & GAS, LLC
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
(a) | During the availability period, at the request of a Borrower, the Bank will issue standby letters of credit with a maximum maturity not to extend beyond the Facility No. 1 Expiration Date. |
(b) | The amount of the letters of credit outstanding at any one time (including the drawn and unreimbursed amounts of the letters of credit) may not exceed Five Hundred Thousand Dollars ($500,000.00). |
(c) | In calculating the principal amount outstanding under the Facility No. 1 Commitment, the calculation shall include the amount of any letters of credit outstanding, including amounts drawn on any letters of credit and not yet reimbursed. |
(d) | The following letter of credit is outstanding from the Bank for the account of a Borrower: |
Letter of Credit Number
|
Amount
|
120995
|
$50,000.00
|
(e) | The Borrowers agree: |
(i) | Any sum drawn under a letter of credit may, at the option of the Bank, be added to the principal amount outstanding under this Agreement. The amount will bear interest and be due as described elsewhere in this Agreement. |
(ii) | If there is a default under this Agreement, to immediately prepay and make the Bank whole for any outstanding letters of credit. |
(iii) | The issuance of any letter of credit and any amendment to a letter of credit is subject to the Bank's written approval and must be in form and content satisfactory to the Bank and in favor of a beneficiary acceptable to the Bank. |
(iv) | To sign the Bank's form Application and Agreement for Standby Letter of Credit. |
(v) | To pay any issuance and/or other fees that the Bank notifies the Borrowers will be charged for issuing and processing letters of credit for a Borrower. |
(vi) | To allow the Bank to automatically charge its checking account for applicable fees, discounts, and other charges. |
(vii) | To pay the Bank a non-refundable fee equal to 1% per annum of the outstanding undrawn amount of each standby letter of credit, payable monthly in arrears, calculated on the basis of the face amount outstanding on the day the fee is calculated." |
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Donna Gail Yanko
|
By:
|
/s/ Ricky Temkin
|
||
Donna Gail Yanko
|
Ricky Temkin
|
||||
Vice President and Secretary
|
Assistant Vice President
|
FORMAN ENERGY CORPORATION
|
||
By:
|
Donna Gail Yanko
|
|
Vice President and Secretary
|
||
SOUTHWEST TEXAS DISPOSAL CORPORATION
|
||
By:
|
Donna Gail Yanko
|
|
Vice President and Secretary
|
||
TBO OIL & GAS, LLC
|
||
By:
|
Donna Gail Yanko
|
|
Vice President and Secretary
|
“1.1 | Line of Credit Amount . |
(a) | During the availability period described below, the Bank will provide a line of credit to the Borrowers. The amount of the line of credit (the “Facility No. 1 Commitment”) is the lesser of (i) SIX MILLION THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($6,300,000.00 ), or (ii) the Borrowing |
(b) | This is a revolving line of credit. Subject to the terms hereof, during the availability period, the Borrowers may repay principal amounts and reborrow them.” |
“1.2 | Availability Period . |
“1.5 | Interest Rate . |
(a) | The interest rate is a rate per year equal to the lesser of (i) the LIBOR Daily Floating Rate, plus 2.50 percentage points, or (ii) the maximum lawful rate of interest permitted under applicable usury laws, now or hereafter enacted (the “Maximum Rate”). |
(b) | The LIBOR Daily Floating Rate is a fluctuating rate of interest which can change on each banking day. The rate will be adjusted on each banking day to equal the London Interbank Offered Rate (or a comparable or successor rate which is approved by the Bank) for U.S. Dollar deposits for delivery on the date in question for a one month term beginning on that date. The Bank will use the London Interbank Offered Rate as published by Bloomberg (or other commercially available source providing quotations of such rate as selected by the Bank from time to time) as determined at approximately 11:00 a.m. London time two (2) London Banking Days prior to the date in question, as adjusted from time to time in the Bank’s sole discretion for reserve requirements, deposit insurance assessment rates and other regulatory costs. If such rate is not available at such time for any reason, then the rate will be determined by such alternate method as reasonably selected by the Bank. A “London Banking Day” is a day on which banks in London are open for business and dealing in offshore dollars.” |
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Ricky Temkin
|
||
Nicholas C. Taylor
|
Ricky Temkin
|
||||
Chairman of the Board and Chief Executive Officer
|
Assistant Vice President
|
FORMAN ENERGY CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
||
SOUTHWEST TEXAS DISPOSAL CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
||
TBO OIL & GAS, LLC
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
BORROWERS:
|
BANK:
|
||||
MEXCO ENERGY CORPORATION
|
BANK OF AMERICA, N.A.
|
||||
By:
|
/s/ Nicholas C. Taylor
|
By:
|
/s/ Ricky Temkin
|
||
Nicholas C. Taylor
|
Ricky Temkin
|
||||
Chairman of the Board and Chief Executive Officer
|
Vice President
|
FORMAN ENERGY CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
||
SOUTHWEST TEXAS DISPOSAL CORPORATION
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
||
TBO OIL & GAS, LLC
|
||
By:
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chairman of the Board and Chief Executive Officer
|
1. | Forman Energy Corporation, a New York corporation |
2. | Southwest Texas Disposal Corporation, a Texas corporation |
3. | TBO Oil & Gas, LLC, a Texas limited liability company |
1. | I have reviewed this annual report on Form 10-K 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. |
June 24, 2015
|
/s/ Nicholas C. Taylor
|
|
Nicholas C. Taylor
|
||
Chief Executive Officer
|
1. | I have reviewed this annual report on Form 10-K 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. |
June 24, 2015
|
/s/ Tamala L. McComic
|
|
Tamala L. McComic
|
||
Chief Financial Officer, President, Treasurer, and Assistant Secretary
|
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: June 24, 2015
|
/s/ Nicholas C. Taylor
|
|
Chairman of the Board and
|
||
Chief Executive Officer
|
||
Dated: June 24, 2015
|
/s/ Tamala L. McComic
|
|
Chief Financial Officer, President,
|
||
Treasurer and Assistant Secretary
|
Re: | Evaluation of Oil and Gas Reserves of Mexco Energy Corporation effective March 31, 2015 |
Classification of Reserves
|
Oil and Condensate
(MBBL)
|
Gas
(MMCF)
|
Future Net
Revenue (M$)
|
Present Value
Discounted at 10 % (M$)
|
|||
Proved Developed:
|
|||||||
Producing
|
261
|
3,471
|
21,831
|
12,010
|
|||
Non-Producing
|
23
|
1,114
|
4,457
|
2,839
|
|||
284
|
4,585
|
26,288
|
14,849
|
||||
Proved Undeveloped
|
376
|
1,704
|
19,764
|
8,851
|
|||
Total Proved
|
660
|
6,289
|
46,052
|
23,700
|
Net Liquid
(MBBL)
|
Net Gas
(MMCF)
|
||
Total Proved Reserves Developed and Undeveloped:
|
|||
Beginning of Period March 31, 2014
|
502
|
6,259
|
|
Revisions of Previous Estimates
|
(115)
|
(687)
|
|
Beginning of Period as Revised
|
387
|
5,572
|
|
Additions from Drilling and Purchase
|
42
|
766
|
|
Extensions
|
261
|
320
|
|
Sales of Minerals-in-Place
|
0
|
0
|
|
Production
|
(30)
|
(369)
|
|
End of Period March 31, 2015
|
660
|
6,289
|
|
Proved Developed Reserves:
|
|||
Beginning of Period March 31, 2014
|
294
|
4,081
|
|
End of Period March 31, 2015
|
284
|
4,585
|
Year
|
Proved Developed
Future Net Revenue $
|
Discounted at 10% $
|
||
2016
|
2,722,180
|
2,594,230
|
||
2017
|
2,983,670
|
2,591,040
|
||
2018
|
2,574,890
|
2,032,730
|
||
Remaining
|
18,006,910
|
7,631,470
|
||
Total
|
26,287,650
|
14,849,470
|
Yours very truly,
|
|
Joe C. Neal & Associates
|
|
Licensed Professional Engineer
|
|
Registration Number: 23238
|
|
Registered Professional Engineering Firm
|
|
Registration Number: F-001308
|
1 | Joe C. Neal & Associates separates proved developed reserves into proved developed producing and proved developed nonproducing reserves. This is to identify proved developed producing reserves as those to be recovered from actively producing wells; proved developed nonproducing reserves as those to be recovered from wells or intervals within wells, which are completed but shut in waiting on equipment or pipeline connections, or wells where a relatively minor expenditure is required for recompletion to another zone. |