What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-02-08 compared with 2021-11-05 · 101 added, 88 removed, 141 unchanged (57% of the section changed)

24 unchanged sentences

that is currently available and is subject to change.

All forward-looking statements in this Form 10-Q are qualified in their entirety

All forward-looking statements in the Form 10-Q are qualified in their entirety

by the cautionary statement contained in this section.

We do not undertake to update, revise or correct any of the forward-looking information.

It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes thereto included

in the Form 10-K.

It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the

and Capital Resources.

9 unchanged sentences

working interests and non-operated properties in areas with significant development potential.

September 30, 2021, we had working capital of $744,882 compared to working capital of $618,960 at March 31, 2021, an increase of $125,922

for the reasons set forth below.

December 31, 2021, we had working capital of $1,443,678 compared to working capital of $618,960 at March 31, 2021, an increase of $824,718

primarily due to the reasons set forth below.

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

For the Six Months Ended September 30,

For the Nine Months Ended

Net cash provided by operating activities

5 unchanged sentences

account balances.

Cash flow provided by our operating activities for the six months ended September 30, 2021 was $1,584,816 in comparison

to $164,237 for the six months ended September 30, 2020.

Cash flow provided by our operating activities for the nine months ended December 31, 2021 was $2,728,586 in comparison

to $372,863 for the nine months ended December 31, 2020.

This increase of $2,355,723 in our cash flow operating activities consisted

1 unchanged sentence

an increase in our accounts receivable of $4,132;

and, an increase in our net income

for the current six months of $1,445,474 compared to a net loss the same six month period of the prior year.

Variations in cash flow

from operating activities may impact our level of exploration and development expenditures.

expenditures in operating activities consist primarily of non-operated lease expenses and production expenses.

and, an increase in our

net income for the current nine months of $2,118,279 compared to a net loss the same nine month period of the prior year.

in cash flow from operating activities may impact our level of exploration and development expenditures.

expenditures in operating activities consist primarily of lease operating expenses and production expenses.

Our expenses also consist

3 unchanged sentences

Cash flow from investing activities is derived from changes in oil and gas property balances.

For the six months ended September 30, 2021, we had net cash of $554,787 used for additions to oil and gas properties compared to $593,949

for the six months ended September 30, 2020.

For the nine months ended December 31, 2021, we had net cash of $1,021,849 used for additions to oil and gas properties compared to $818,597

for the nine months ended December 31, 2020.

Flow Provided by Financing Activities.

1 unchanged sentence

account balances.

Cash flow used in our financing activities was $994,268 for the six months ended September 30, 2021 compared to cash

flow provided by our financing activities of $458,009 for the six months ended September 30, 2020.

During the six months ended September

Cash flow used in our financing activities was $884,360 for the nine months ended December 31, 2021 compared to cash

flow provided by our financing activities of $452,369 for the nine months ended December 31, 2020.

During the nine months ended December

31, 2021 and 2020, we received advances of $275,000 and $680,000, respectively, from our credit facility.

During the six months ended

September 30, 2021 and 2020, we made payments of $1,455,000 and $225,000, respectively, on the credit facility.

For the six months ended

September 30, 2021 and 2020, we received proceeds of $185,732 and $9,435, respectively, from the exercise of employee and director stock

For the six months ended September 30, 2020, we received $68,574 under the paycheck protection program (PPP).

net cash increased $35,761, leaving cash and cash equivalents on hand of $93,574 as of September 30, 2021.

During the nine months ended

December 31, 2021 and 2020, we made payments of $1,455,000 and $375,000, respectively, on the credit facility.

For the nine months ended

December 31, 2021 and 2020, we received proceeds of $295,640 and $78,795, respectively, from the exercise of employee and director stock

For the nine months ended December 31, 2020, we received $68,574 under the paycheck protection program (PPP).

net cash increased $822,377, leaving cash and cash equivalents on hand of $880,190 as of December 31, 2021.

and Natural Gas Property Development.

4 unchanged sentences

in the Delaware Basin located in the western portion of the Permian Basin in Lea and Eddy Counties, New Mexico and Reeves County, Texas.

the six months ended September 30, 2021, Mexco expended approximately $180,000 to participate in the drilling and completion of four

November 2021, Mexco expended approximately $92,000 to participate in the completion of four horizontal wells in the Wolfcamp Sand formation

of the Delaware Basin located in the western portion of the Permian Basin in Lea County, New Mexico.

These wells were subsequently completed

in January 2022 with initial average production rates of 1,204 barrels of oil, 3,369 barrels of water and 3,141,000 cubic feet of gas

per day, or, 1,728 barrels of oil equivalent per day.

Mexco’s working interest in these wells is .37%.

in November 2021, Mexco expended approximately $59,000 to participate in the drilling of two horizontal wells in the 3 rd Bone

Spring formation and two horizontal wells in the Wolfcamp Sand formation of the Delaware Basin located in the western portion of the

Permian Basin in Lea County, New Mexico.

Mexco’s working interest in these wells is .37%.

October 2021, Mexco expended approximately $126,000 to participate in the drilling of four horizontal wells in the Wolfcamp Sand formation

of the Delaware Basin located in the western portion of the Permian Basin in Lea County, New Mexico.

Mexco’s working interest in

these wells is .52%.

the nine months ended December 31, 2021, Mexco expended approximately $180,000 to participate in the drilling and completion of four

horizontal wells in the Lower Wolfcamp Shale of the Delaware Basin in Eddy County, New Mexico.

1 unchanged sentence

wells is .44%.

during the six months ended September 30, 2021, Mexco expended $31,500 for its share to participate in the drilling and completion of

during the nine months ended December 31, 2021, Mexco expended $31,500 for its share to participate in the drilling and completion of

two horizontal wells in the 3 rd Bone Spring Sand formation of the Delaware Basin located in the western portion of the Permian

8 unchanged sentences

Mexco’s working interest in these wells is an average of approximately .22%.

August 2021, Mexco expended approximately $28,000 to participate in the drilling of two horizontal wells in the Wolfcamp Sand formation

of the Delaware Basin located in the western portion of the Permian Basin in Lea County, New Mexico.

Mexco’s working interest in

these wells is .37%.

Subsequently, in October 2021, Mexco expended approximately $42,000 for the completion of these wells.

wells have been drilled and are awaiting completion operations.

the nine months ended December 31, 2021, Mexco expended approximately $140,400 to participate in the drilling and completion of four

horizontal wells in the Wolfcamp Sand formation of the Delaware Basin located in the western portion of the Permian Basin in Lea County,

These wells were subsequently completed in January 2022 with initial average production rates of 1,008 barrels of oil, 3,563

barrels of water and 2,980,000 cubic feet of gas per day, or, 1,505 barrels of oil equivalent per day.

Mexco’s working interest

in these wells is .37%.

August 2021, Mexco expended approximately $52,000 to participate in the drilling of two horizontal wells in the Bone Spring formation

2 unchanged sentences

is approximately .6%.

These wells have been drilled and are planned to be completed in November 2021.

May 2021, Mexco expended approximately $28,000 to participate in the drilling of two horizontal wells in the Wolfcamp Sand formation

of the Delaware Basin located in the western portion of the Permian Basin in Lea County, New Mexico.

Mexco’s working interest in

these wells is .37%.

Subsequently, in October 2021, Mexco expended approximately $42,000 for the completion of these wells.

during the quarter ended June 30, 2021, Mexco participated in the drilling and completion of two horizontal wells in the Wolfcamp formation

These wells have been drilled and are being completed as of December 2021.

the quarter ended June 30, 2021, Mexco participated in the drilling and completion of two horizontal wells in the Wolfcamp formation

of the Delaware Basin located in the western portion of the Permian Basin in Lea County, New Mexico with aggregate costs of approximately

27 unchanged sentences

For example, in the last twelve months, the NYMEX West Texas

Intermediate (“WTI”) posted price for crude oil has ranged from a low of $31.75 per bbl in October 2020 to a high of $71.43

per bbl in September 2021.

Intermediate (“WTI”) posted price for crude oil has ranged from a low of $43.60 per bbl in January 2021 to a high of $80.63

per bbl in October 2021.

The Henry Hub Spot Market Price (“Henry Hub”) for natural gas has ranged from a low of $2.43 per

MMBtu in October 2020 to a high of $23.86 per MMBtu in February 2021.

September 30, 2021, the WTI posted price for crude oil as $71.01 and the Henry Hub spot price for natural gas was $5.58 per MMBtu.

Results of Operations below for realized prices.

MMBtu in April 2021 to a high of $23.86 per MMBtu in February 2021.

December 31, 2021 the WTI posted price for crude oil was $71.19 per bbl and the Henry Hub spot price for natural gas was $3.82 per MMBtu.

See Results of Operations below for realized prices.

We have no off-balance sheet debt or unrecorded obligations and have not guaranteed the debt of any other party.

following table summarizes our future payments we are obligated to make based on agreements in place as of September 30, 2021:

following table summarizes our future payments we are obligated to make based on agreements in place as of December 31, 2021:

Payments due in:

1 unchanged sentence

Contractual obligations:

lease amount represents the monthly rent amount for our principal office space in Midland, Texas under a 38 month lease agreement

The lease amount represents the monthly rent amount for our principal office space in Midland, Texas under a 38-month lease agreement

effective May 15, 2018 and extended another 36 months to July 31, 2024.

Of this total obligation for the remainder of the lease,

our majority shareholder will pay $13,481 less than 1 year and $30,640 1-3 years for his portion of the shared office space.

of Operations – Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020.

There was net income

of $708,828 for the quarter ended September 30, 2021 compared to a net loss of $41,970 for the quarter ended September 30, 2020.

was a result of an increase in oil and gas prices and an increase in oil and gas production partially offset by an increase in operating

expenses that is further explained below.

Of this total obligation for the remainder of the lease, our

majority shareholder will pay $15,572 less than 1 year and $24,656 1-3 years for his portion of the shared office space.

of Operations – Three Months Ended December 31, 2021 and 2020.

For the quarter ended December 31, 2021, there was net income

of $753,302 compared to $80,497 for the quarter ended December 31, 2020, a 836% increase as a result of an increase in operating revenues

due to an increase in oil and gas production and prices partially offset by an increase in operating expenses that is further explained

and gas sales .

Revenue from oil and gas sales was $1,541,171 for the second quarter of fiscal 2022, a 145% increase from $629,964

Revenue from oil and gas sales was $1,573,984 for the third quarter of fiscal 2022, a 127% increase from $692,243

for the same period of fiscal 2021.

This resulted from an increase in oil and gas prices as well as an increase in oil and gas production.

This resulted from an increase in oil and natural gas prices and an increase in oil and natural gas

production volumes.

Volume (bbls)

2 unchanged sentences

and exploration.

Production costs were $335,588 for the second quarter of fiscal 2022, a 55% increase from $217,117 for the same

period of fiscal 2021.

This is primarily the result of an increase in production taxes and marketing charges as a result of the increase

in oil and gas revenues.

Production costs were $291,068 for the third quarter of fiscal 2022, a 23% increase from $235,958 for the same period

of fiscal 2021.

This is primarily the result of an increase in production taxes and marketing charges as a result of the increase in

oil and gas revenues.

Depreciation,

depletion and amortization.

Depreciation, depletion and amortization expense was $280,060 for the second quarter of fiscal 2022,

a 19% increase from $236,134 for the same period of fiscal 2021, primarily due to an increase in oil and gas production and a decrease

Depreciation, depletion and amortization expense was $268,018 for the third quarter of fiscal 2022, a

13% increase from $237,459 for the same period of fiscal 2021, primarily due to an increase in oil and gas production and a decrease

in oil and gas reserves partially offset by a decrease in the full cost pool amortization base.

and administrative expenses.

General and administrative expenses were $214,242 for the second quarter of fiscal 2022, an 11% increase

General and administrative expenses were $272,552 for the third quarter of fiscal 2022, a 41% increase

from $193,288 for the same period of fiscal 2021.

This was primarily due to an increase in office and rent expenses and employee stock

option compensation expense.

Interest expense was $7,530 for the second quarter of fiscal 2022, a 44% decrease from $13,515 for the same period of fiscal

This was primarily due to an increase in employee compensation and shareholder services.

Interest expense was $3,132 for the third quarter of fiscal 2022, a 79% decrease from $14,604 for the same period of fiscal

2021, due to a decrease in borrowings.

There was no income tax expense for the three months ended September 30, 2021 and for the three months ended September 30,

The effective tax rate for the three months ended September 30, 2021 and September 30, 2020 was 0%.

We are in a net deferred tax

asset position and believe it is more likely than not that these deferred tax assets will not be realized.

of Operations – Six Months Ended September 30, 2021 Compared to Six Months Ended September 30, 2020.

For the six months ended

September 30, 2021, there was net income of $1,103,834 compared to a net loss of $341,640 for the six months ended September 30, 2020.

This was a result of an increase in operating revenues partially offset by an increase in operating expenses that is further explained

There was no income tax expense for the quarter ended December 31, 2021 and the quarter ended December 31, 2020.

The effective

tax rate for the three months ended December 31, 2021 and December 31, 2020 was 0%.

We are in a net deferred tax asset position and believe

it is more likely than not that these deferred tax assets will not be realized.

of Operations – Nine Months Ended December 31, 2021 and 2020.

For the nine months ended December 31, 2021, there was a net

income of $1,857,136 compared to a net loss of $261,143 for the nine months ended December 31, 2020.

This was a result of an increase

in operating revenues due to an increase in oil and gas production and prices partially offset by an increase in operating expenses that

is further explained below.

and gas sales .

Revenue from oil and gas sales was $2,796,736 for the six months ended September 30, 2021, a 181% increase from $994,143

Revenue from oil and gas sales was $4,370,720 for the nine months ended December 31, 2021, a 159% increase from $1,686,386

for the same period of fiscal 2021.

This resulted from an increase in oil and gas prices as well as an increase in oil and gas production.

This resulted from an increase in oil and natural gas prices and an increase in oil and natural gas

production volumes.

Volume (bbls)

2 unchanged sentences

and exploration.

Production costs were $612,575 for the six months ended September 30, 2021, a 58% increase from $388,783 for the

six months ended September 30, 2020.

Production costs were $903,643 for the nine months ended December 31, 2021, a 45% increase from $624,741 for the

nine months ended December 31, 2020.

This increase is primarily the result of an increase in production taxes as a result of the increase

3 unchanged sentences

depletion and amortization.

Depreciation, depletion and amortization expense was $544,380 for the six months ended September 30,

2021, an 18% increase from $460,239 for the six months ended September 30, 2020, primarily due to an increase in oil and gas production

and a decrease of oil and gas reserves partially offset by a decrease in the full cost pool amortization base.

Depreciation, depletion and amortization expense was $812,398 for the nine months ended December 31,

2021, an 16% increase from $697,698 for the nine months ended December 31, 2020, primarily due to an increase in oil and gas production

and a decrease in oil and gas reserves partially offset by a decrease in the full cost pool amortization base.

and administrative expenses.

General and administrative expenses were $522,409 for the six months ended September 30, 2021, an 18%

increase from $441,238 for the six months ended September 30, 2020.

General and administrative expenses were $794,961 for the nine months ended December 31, 2021, a 25%

increase from $634,526 for the nine months ended December 31, 2020.

This was primarily due to an increase in bonuses and director’s

fees which were significantly reduced last year due to the pandemic and an increase in accounting fees.

Interest expense was $20,249 for the six months ended September 30, 2021, an 18% decrease from $24,570 for the same period

fiscal 2021 due to a decrease in borrowings.

There was no income tax expense for the six months ended September 30, 2021 and for the six months ended September 30, 2020.

The effective tax rate for the six months ended September 30, 2021 and September 30, 2020 was 0%.

We are in a net deferred tax asset

position and believe it is more likely than not that these deferred tax assets will not be realized.

fees which were significantly reduced last year due to the pandemic and an increase in accounting fees and employee stock option compensation

Interest expense was $23,381 for the nine months ended December 31, 2021, a 40% decrease from $39,174 for the nine months

ended December 31, 2020 due to a decrease in borrowings.

There was no income tax for the nine months ended December 31, 2021 and for the nine months ended December 31, 2020.

The effective

tax rate for the nine months ended December 31, 2021 and December 31, 2020 was 0%.

We are in a net deferred tax asset position and believe

it is more likely than not that these deferred tax assets will not be realized.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis