What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-02-10 compared with 2025-11-12 · 200 added, 173 removed, 78 unchanged (83% of the section changed)

18 unchanged sentences

our future financial condition or results of operations;

our business strategy and other plans;

and, objectives

and our business strategy and other plans and objectives

for future operations.

3 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.

Historically, we have funded our operations, acquisitions, exploration, and development expenditures from

cash generated by operating activities, bank borrowings, sales of non-core properties, and issuance of common stock.

Historically, we have funded our operations, acquisitions, exploration and development expenditures from cash

generated by operating activities, bank borrowings, sales of non-core properties and issuance of common stock.

Our primary financial

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We have pledged our producing oil and gas properties to secure our credit facility.

do not have any delivery commitments to provide a fixed and determinable quantity of our oil and gas under any existing contract or agreement.

do not have any delivery commitments to provide a fixed and determinable quantity of its oil and gas under any existing contract or agreement.

long-term strategy is on increasing profit margins while concentrating on obtaining reserves with low-cost operations by acquiring and

developing oil and gas properties with potential for long-lived production.

We focus our efforts on the acquisition of royalty and working

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

We focus our efforts on the acquisition of royalties and

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

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,

Net cash provided by operating

For the Nine Months Ended

Net cash provided by operating activities

Net cash used in investing activities

1 unchanged sentence

$ (3,670,019 )

$ (1,457,472 )

Net cash used in financing activities

3 unchanged sentences

account balances.

Cash flow provided by our operating activities for the six months ended September 30, 2025 was $2,067,549 in comparison

to $2,006,405 for the six months ended September 30, 2024.

This increase of $61,144 in our cash flow operating activities consisted of

an decrease in our non-cash expenses of $38,080;

an increase in our accounts receivable of $167,957;

a decrease of $26,351 in our accounts

payable and accrued expenses;

and, a decrease in our net income of $42,780.

Variations in cash flow from operating activities may impact

our level of exploration and development expenditures.

Cash flow provided by our operating activities for the nine months ended December 31, 2025 was $2,930,832 in comparison

to $2,941,115 for the nine months ended December 31, 2024.

This decrease of $10,283 in our cash flow operating activities consisted of

an increase in our non-cash expenses, an increase in our accounts receivable of $481,198;

a decrease of $376,035 of our accounts payable

and accrued expenses and income tax payable;

and, a decrease in our net income for the current nine months of $461,668.

Variations in

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

expenditures in operating activities consist primarily of drilling expenses, production expenses and engineering services.

also consist of employee compensation, accounting, insurance, and other general and administrative expenses that we have incurred in

order to address normal and necessary business activities of a public company in the crude oil and natural gas production industry.

Flow Used in Investing Activities.

also consist of employee compensation, accounting, insurance and other general and administrative expenses that we have incurred in order

to address normal and necessary business activities of a public company in the crude oil and natural gas production industry.

Used in Investing Activities.

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

For the six months ended September 30, 2025, we had net cash of $870,212 used for additions to oil and gas properties compared to $2,066,957

for the six months ended September 30, 2024.

Flow Used in Financing Activities.

nine months ended December 31, 2025, we had net cash of $2,212,547 used for additions to oil and gas properties and our investment in

the limited liability company compared to $3,670,019 for the nine months ended December 31, 2024.

Provided by Financing Activities.

Cash flow from financing activities is derived from our changes in long-term debt and in equity

account balances.

Net cash flow used in our financing activities was $204,600 for the six months ended September 30, 2025 compared to

$834,575 for the six months ended September 30, 2024.

During the six months ended September 30, 2025, we expended $204,600 to pay the

regular annual dividend.

During the six months ended September 30, 2024, we expended $703,216 to purchase 57,766 shares of stock for the treasury account, $209,000

to pay the special dividend and received $77,641 from the exercise of stock options.

net cash increased $992,737, leaving cash and cash equivalents on hand of $2,746,692 as of September 30, 2025.

September 30, 2025, we had working capital of $3,282,347 compared to working capital of $2,469,664 at March 31, 2025, an increase of

$812,683 for the reasons set forth below.

and Natural Gas Property Development

Participations in Fiscal 2026.

The Company currently plans to participate in the drilling and completion of forty-six horizontal

wells and one vertical well at an estimated cost of approximately $1,000,000 for the fiscal year ending March 31, 2026.

Forty-five of

these wells are in the Delaware Basin located in the western portion of the Permian Basin in Lea and Eddy Counties, New Mexico.

The remaining

wells are in Reagan and Ward Counties, Texas.

expended approximately $166,000 to participate in the drilling of five horizontal wells in the Bone Spring formation of the Delaware

Net cash flow used in our financing activities was $204,600 for the nine months ended December 31, 2025 compared to

cash flow used in our financing activities of $834,575 for the nine months ended December 31, 2024.

During the nine months ended December

31, 2025, we expended $204,600 to pay the regular annual dividend.

During the nine months ended December 31, 2024, we expended $209,000

to pay the regular annual dividend and $703,216 to purchase 57,766 shares of our stock for the treasury account and received $77,641 from

the exercise of stock options.

net cash increased $513,685, leaving cash and cash equivalents on hand of $2,267,640 as of December 31, 2025.

31, 2025, we had working capital of $3,186,231 compared to working capital of $2,469,664 at March 31, 2025, an increase of $716,567 for

the reasons set forth below.

Oil and Natural

Gas Property Development

New Participations

in Fiscal 2026.

The Company currently plans to participate in the drilling and completion of fifty horizontal wells and one vertical

well at an estimated cost of approximately $1,700,000 for the fiscal year ending March 31, 2026.

Forty-five of these wells are in the

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

The remaining wells are in Glasscock,

Midland, and Ward Counties, Texas.

Mexco expended

approximately $166,000 to participate in the drilling and completion of five horizontal wells in the Bone Spring formation of the Delaware

Basin in Eddy County, New Mexico.

Subsequently, in October 2025, two of these wells were completed with initial average production

rates of 1,194 barrels of oil, 2,924 barrels of water, and 1,819,000 cubic feet of gas per day, or 1,497 BOE per day.

working interest in these wells is .5%.

expended approximately $79,000 to drill and complete two horizontal wells in the Bone Spring formation of the Delaware Basin in Lea County,

In August 2025, these wells were completed with initial average production rates of 741 barrels of oil, 3,276 barrels of

water, and 1,110,000 cubic feet of gas per day, or 926 BOE per day.

In November 2025, two of these wells were completed with initial average production rates of 1,194 barrels

of oil, 2,924 barrels of water, and 1,819,000 cubic feet of gas per day, or 1,497 BOE per day.

Mexco’s working interest in these

wells is .5%.

Subsequently, in February 2026, the Company expended approximately $64,000 to complete the remaining three wells.

Mexco expended

approximately $79,000 to drill and complete two horizontal wells in the Bone Spring formation of the Delaware Basin in Lea County, New

In August 2025, these wells were completed with initial average production rates of 741 barrels of oil, 3,276 barrels of water,

and 1,110,000 cubic feet of gas per day, or 926 BOE per day.

Mexco’s working interest in these wells is .3%.

September 2025, Mexco expended approximately $70,000 to participate in the drilling of three horizontal wells in the Wolfcamp Sand Formation

Mexco expended

approximately $155,000 to participate in the drilling and completion of three horizontal wells in the Wolfcamp Sand Formation of the Delaware

Basin in Lea County, New Mexico.

In December 2025, these wells were completed with initial average production rates of 827 barrels of

oil, 3,483 barrels of water, and 2,354,000 cubic feet of gas per day, or 1,219 BOE per day.

Mexco’s working interest in these wells

Mexco expended

approximately $65,000 to participate in an exploratory vertical well in the Ellenburger formation of Ward County, Texas.

this well was determined to be noncommercial.

2025, Mexco expended approximately $404,000 to participate in the drilling and completion of two horizontal development wells in the Wolfcamp

XY formation of the Delaware Basin in Eddy County, New Mexico.

Mexco’s working interest in these wells is 2.1%.

2025, Mexco expended approximately $46,000 to participate in the drilling and completion of six horizontal wells in the Bone Spring formation

of the Delaware Basin in Lea County, New Mexico.

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of Wells Drilled in Fiscal 2025.

The Company also expects to expend approximately $150,000 for the completion of seventeen horizontal

wells in which the Company participated during fiscal 2025.

Company expended approximately $85,000 for the completion costs of six horizontal wells in the Bone Spring Sand formation of the Delaware

Basin in Lea County, New Mexico that the Company participated in drilling during fiscal 2025.

In May 2025, these wells were completed

with initial average production rates of 1,375 barrels of oil, 3,499 barrels of water, and 1,934,000 cubic feet of gas per day, or 1,697

Mexco’s working interest in these wells is .16%.

horizontal wells in the Penn Shale formation of the Delaware Basin in Lea County, New Mexico in which the Company participated during

fiscal 2025 were completed during the first six months of fiscal 2026 with initial average production rates of 805 barrels of oil, 2,142

barrels of water, and 721,000 cubic feet of gas per day, or 925 BOE per day.

Mexco’s working interest in these wells is approximately

July 2025, the Company expended approximately $53,000 for the completion costs of two horizontal wells in the Bone Spring Sand formation

of the Delaware Basin in Lea County, New Mexico that the Company participated in drilling during fiscal 2025.

In September 2025, these

wells were completed with initial average production rates of 955 barrels of oil, 1,340 barrels of water, and 608,000 cubic feet of gas

per day, or 1,056 BOE per day.

Mexco’s working interest in these wells is .28%.

The Company expended approximately $150,000 for the completion of seventeen horizontal wells in which

the Company participated during fiscal 2025.

These wells, located in Delaware Basin of Lea County, New Mexico, have been completed and

turned to production.

In October 2022, the Company made an approximately 2% equity investment commitment in a limited liability company amounting to $2,000,000,

which has been fully funded as of September 30, 2025.

The limited liability company is capitalized at approximately $100 million to purchase

mineral interests in the Utica and Marcellus areas in the state of Ohio.

As of September 30, 2025, this LLC has returned $401,801 or

20% of the total investment.

Subsequently, in October 2025, the Company expended $200,000 to exercise its option to participate in a

voluntary optional cash call increasing the capitalized investment.

which was fully funded as of July 2025.

The limited liability company is capitalized at approximately $100 million to purchase mineral

interests in the Utica and Marcellus areas in the state of Ohio.

In October 2025, the Company expended $200,000 to exercise its option

to participate in a voluntary optional cash call to increase its capitalized investment.

And in December 2025, expended an additional

$27,429 to exercise its option to acquire its share of the non-consent interests from the October cash call.

As of December 31, 2025,

this LLC has returned $476,635 or 21% of the total investment.

Acquisitions.

In May 2025, the Company acquired royalty (mineral) interests in 2 wells operated by Chevron USA and located in Pecos County, Texas for

a purchase price of $40,000.

In May 2025, the Company acquired royalty (mineral) interests in 2 wells operated by Chevron Corporation and located in Pecos County,

Texas for a purchase price of $40,000.

This acquisition was effective April 1, 2025 and includes acreage for future development.

August 2025, the Company acquired royalty interests in 12 producing wells operated by Diamondback E & P and located in Martin County,

Texas for a purchase price of $60,000 and royalty interests in 25 wells operated by Chevron USA and located in Weld County, Colorado

In August 2025,

the Company acquired royalty interests in 12 producing wells operated by Diamondback Energy, Inc.

and located in Martin County, Texas

for a purchase price of $60,300 and royalty interests in 25 wells operated by Chevron Corporation and located in Weld County, Colorado

for a purchase price of $26,300.

These acquisitions were effective September 1, 2025.

Subsequently,

in October 2025, the Company acquired royalty interests in 3 producing wells operated by Expand Operating and located in Caddo Parish,

Louisiana for a purchase price of $31,000;

royalty interests in 14 producing wells wells operated by Diamondback E & P and located

In October 2025,

the Company acquired royalty interests in 3 producing wells operated by Expand Energy Corporation and located in Caddo Parish, Louisiana

for a purchase price of $31,300;

royalty interests in 14 producing wells operated by Diamondback Energy, Inc.

and located in Martin County,

Texas for a purchase price of $44,300;

royalty interests in 3 producing wells operated by Permian Resources Corporation and located in

Eddy County, New Mexico for a purchase price of $6,800;

and, overriding royalty interest in 4 producing wells operated by Tap Rock Resources

and located in Eddy County, New Mexico for a purchase price of $240,300.

These acquisitions were effective November 1, 2025.

2025, the Company acquired royalty interests in 14 producing wells operated by Anadarko Petroleum Corporation and located in Weld County,

Colorado for a purchase price of $35,300;

royalty interests in approximately 4 producing wells operated by SM Energy Company and located

in Howard County, Texas for a purchase price of $100,600;

royalty interests in 11 producing wells operated by Ovintiv Inc.

in Martin County, Texas for a purchase price of $18,300.

royalty interests in 3 producing wells operated by Permian Resources and located

in Eddy County, New Mexico for a purchase price of $7,000;

and, overriding royalty interest in 4 producing wells operated by Tap Rock

Operating and located in Eddy County, New Mexico for a purchase price of $240,000.

All of these acquisitions are effective November 1,

are participating in other projects and are reviewing projects in which we may participate.

These acquisitions were effective December 1, 2025.

Also in December

2025, the Company acquired additional royalty interests in the 3 producing wells operated by Expand Energy Corporation and located in

Caddo Parish, Louisiana for a purchase price of $22,300 and effective January 1, 2026.

Subsequently,

in January 2026, the Company royalty interests in 3 producing wells operated by ConocoPhillips and located in Karnes County, Texas for

a purchase price of $27,800.

This acquisition is effective January 1, 2026.

Other Projects.

We are participating in other projects and are reviewing projects in which we may participate.

The cost of such projects would be funded,

to the extent possible, from existing cash balances and cash flow from operations.

The remainder may be funded through borrowings on

the credit facility and, if appropriate, sales of non-core properties.

oil and natural gas prices generally remained volatile during the last year.

The remainder may be funded through borrowings on the

credit facility and, if appropriate, sales of non-core properties.

Crude oil and natural gas prices generally remained volatile during the last year.

The volatility of the energy markets makes it extremely

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For example, in the last twelve months, the NYMEX

West Texas Intermediate (“WTI”) posted price for crude oil has ranged from a low of $53.11 per bbl in May 2025 to a high

West Texas Intermediate (“WTI”) posted price for crude oil has ranged from a low of $51.25 per bbl in December 2025 to a high

of $76.02 per bbl in January 2025.

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

$1.21 per MMBtu in November 2024 to a high of $7.15 per MMBtu in February 2025.

September 30, 2025, the WTI posted price for crude oil was $58.35 and the Henry Hub spot price for natural gas was $3.12 per MMBtu.

Results of Operations below for realized prices.

Pipeline capacity constraints and maintenance in the Permian Basin area has contributed

to a wider difference between the WaHa Hub and the Henry Hub and at times prices were negative.

$2.65 per MMBtu in June and October 2025 to a high of $9.86 per MMBtu in January 2025.

31, 2025, the WTI posted price for crude oil was $53.40 and the Henry Hub spot price for natural gas was $4.00 per MMBtu.

of Operations below for realized prices.

Pipeline capacity constraints and maintenance in the Permian Basin area has contributed to a

wider difference between the WaHa Hub and the Henry Hub and at times prices were negative.

These conditions adversely impacted realized

prices during certain periods and contributed to variability in operating results.

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, 2025:

following table summarizes our future payments we are obligated to make based on agreements in place as of December 31, 2025:

Payments due in:

less than 1 year

Contractual obligations:

lease amount represents the monthly rent amount for our principal office space in Midland,

Texas under a 36-month lease agreement expiring July 31, 2027.

Of this total obligation for

the remainder of the lease, our majority shareholder will pay $10,175 less than 1 year and

$8,479 1-3 years for his portion of the shared office space.

of Operations – Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024.

There was net income

of $323,506 for the quarter ended September 30, 2025 compared to net income of $317,198 for the quarter ended September 30, 2024.

This was a result of a decrease in the provision for income taxes partially offset by a decrease in oil and gas revenues and an increase

in operating expense that is further explained below.

and gas sales.

Revenue from oil and gas sales was $1,624,566 for the second quarter of fiscal 2026, a 4% decrease from $1,695,853

for the same period of fiscal 2025.

This resulted from a decrease in oil price partially offset by an increase in gas price and production.

The following table sets forth our oil and natural gas revenues, production quantities and average prices received during the three months

ended September 30:

The lease amount represents the monthly rent amount for our principal office space in Midland, Texas under a 36-month lease agreement expiring July 31, 2027.

Of this total obligation for the remainder of the lease, our majority shareholder will pay $10,175 less than 1 year and $5,935 1-3 years for his portion of the shared office space.

Operations – Three Months Ended December 31, 2025 and 2024.

For the quarter ended December 31, 2025, there was net income of

$50,245 compared to $469,133 for the quarter ended December 31, 2024 as a result of a decrease in operating revenues and an increase in

income taxes partially offset by a decrease in operating expenses that is further explained below.

Revenue from oil and gas sales was $1,301,794 for the third quarter of fiscal 2026, a 29% decrease from $1,828,404 for the

same period of fiscal 2025.

This resulted from a decrease in oil production volumes and a decrease in oil and natural gas prices partially

offset by an increase in natural gas production volumes.

Natural gas prices have been negatively impacted by limited pipeline capacity

in the Permian Basin.

Volume (bbls)

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Average Price (per mcf)

operating revenues.

Other revenues increased 106% to $110,177 for the quarter ended September 30, 2025 from $53,374 for the quarter

ended September 30, 2024.

This resulted from an increase in income from our most recent limited liability company investment.

Other operating

Other revenues increased to $82,093 for the three months ended December 31, 2025, from $62,861 for the three months ended

December 31, 2024.

This increase resulted from an increase in income from our most recent limited liability company investment.

Interest income on corporate funds increased to $23,953 for the three months ended December 31, 2025, from $7,315 for the

three months ended December 31, 2024.

This increase resulted from an increase in our investment fund balances.

and exploration.

Production costs were $369,093 for the second quarter of fiscal 2026, an 11% decrease from $413,405 for the same

period of fiscal 2025.

This was primarily the result of a decrease in lease operating expenses on wells in which we own a working interest

and a decrease in production taxes due to the decrease in oil revenue partially offset by the increase in gas revenue.

Production costs were $302,572 for the third quarter of fiscal 2026, a 34% decrease from $460,241 for the same period

of fiscal 2025.

This was primarily the result of a decrease in lease operating expenses on wells in which we own a working interest and

a decrease in production taxes due to the decrease in oil and gas revenues.

Depreciation,

depletion and amortization.

Depreciation, depletion and amortization expense was $662,647 for the second quarter of fiscal 2026,

a 13% increase from $584,288 for the same period of fiscal 2025, primarily due to a a decrease in the full cost pool amortization base,

an increase in gas production volumes and a decrease in oil and gas reserves partially offset by a decrease in the full cost amortization

and administrative expenses.

General and administrative expenses were $332,264 for the second quarter of fiscal 2026, a 1% decrease

from $334,525 for the same period of fiscal 2025.

This was primarily due to a decrease in contract services.

Federal income tax for the three months ended September 30, 2025 was $31,001.

Federal income tax for the three months ended

September 30, 2024 was $84,833.

State income tax was $27,234 for the three months ended September 30, 2025, a 1% increase from $26,920

for the three months ended September 30, 2024.

The effective tax rate for the three months ended September 30, 2025 and 2024 was 15%

and 26%, respectively.

of Operations – Six Months Ended September 30, 2025 Compared to Six Months Ended September 30, 2024.

For the six months ended

September 30, 2025, there was net income of $565,457 compared to net income of $608,237 for the six months ended September 30, 2024.

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

and gas sales.

Revenue from oil and gas sales was $3,379,300 for the six months ended September 30, 2025, a decrease from $3,383,909

Depreciation, depletion and amortization expense was $664,265 for the third quarter of fiscal 2026, a

4% increase from $636,424 for the same period of fiscal 2025, primarily due to a decrease in oil and gas reserves and an increase in gas

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

administrative expenses.

General and administrative expenses were $317,524 for the third quarter of fiscal 2026, a 7% decrease from

$340,514 for the same period of fiscal 2025.

This resulted from a decrease in oil prices partially offset an increase in oil and gas production

and an increase in gas prices.

The following table sets forth our oil and natural gas revenues, production quantities and average prices

received during the six months ended September 30:

This was primarily due to a decrease in contract services.

Income tax expense for the three months ended December 31, 2025 was $64,106 compared an income tax benefit of $18,305 for

the three months ended December 31, 2024.

The effective tax rate for state and federal taxes combined for the three months ended

December 31, 2025 and 2024 was 56% and (4%), respectively.

The effective tax rate for the three months ended December 31, 2025

reflects the timing of estimated income tax accruals and other tax items recognized during the quarter.

See Note 7 – Income

Taxes to the Notes to Consolidated Financial Statements for additional information.

of Operations – Nine Months Ended December 31, 2025 and 2024.

For the nine months ended December 31, 2025, there was a net

income of $615,702 compared to net income of $1,077,370 for the nine months ended December 31, 2024.

This was primarily a result of

a decrease in operating revenues that is further explained below.

Revenue from oil and gas sales was $4,681,094 for the nine months ended December 31, 2025, a 10% decrease from $5,212,313 for

the same period of fiscal 2025.

This resulted from a decrease in oil price and production volume partially offset by an increase in natural

gas price and production volume.

The following table sets forth our oil and natural gas revenue, production quantities, and average prices

received during the nine months ended December 31:

Volume (bbls)

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Average Price (per mcf)

operating revenues.

Other revenues increased 82% to $169,619 for the six months ended September 30, 2025 from $93,153 for the six

months ended September 30, 2024.

This resulted from an increase in income from our most recent limited liability company investment.

Other operating

Other revenues increased 61% to $251,712 for the nine months ended December 31, 2025, from $156,014 for the nine months

ended December 31, 2024.

This increase resulted from an increase in income from our most recent limited liability company investment.

Interest income on corporate funds increased to $58,610 for the nine months ended December 31, 2025, from $50,891 for the

nine months ended December 31, 2024.

This increase resulted from an increase in our investment fund balances.

and exploration.

Production costs were $773,863 for the six months ended September 30, 2025, a 9% decrease from $850,825 for the

six months ended September 30, 2024.

This was primarily the result of a decrease in lease operating expenses on wells in which we own

a working interest and a decrease in production taxes due to the decrease in oil revenue partially offset by the increase in gas revenue.

Production costs were $1,076,435 for the nine months ended December 31, 2025, an 18% decrease from $1,311,066 for

the nine months ended December 31, 2024.

This was primarily the result of a decrease in lease operating expenses on wells in which we

own a working interest and a decrease in production taxes due to the decrease in oil revenue partially offset by the increase gas revenue.

Depreciation,

depletion and amortization.

Depreciation, depletion and amortization expense was $1,337,917 for the six months ended September 30,

2025, a 19% increase from $1,123,985 for the six months ended September 30, 2024, primarily due to an increase in oil and gas production

volumes 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 $726,701 for the six months ended September 30, 2025, a 4%

increase from $701,570 for the six months ended September 30, 2024.

This was primarily due to an increase in accounting fees and engineering

services partially offset by a decrease in contract services.

Federal income tax for the six months ended September 30, 2025 was $108,781.

Federal income tax for the six months ended September

30, 2024 was $171,353.

State income tax was $52,685 for the six months ended September 30, 2025, a 12% increase from $46,986 for the

six months ended September 30, 2024 due to the increase in oil and natural gas sales in the states that have state income tax.

The effective

tax rate for the six months ended September 30, 2025 and 2024 was 22% and 26%, respectively.

Depreciation, depletion and amortization expense was $2,002,182 for the nine months ended December 31,

2025, a 14% increase from $1,760,409 for the nine months ended December 31, 2024, primarily due to a decrease in oil and gas reserves

and an increase in gas production partially offset by a decrease in oil production and a decrease in the full cost amortization base.

administrative expenses.

General and administrative expenses were $1,044,225 for the nine months ended December 31, 2025, a .2% increase

from $1,042,084 for the nine months ended December 31, 2024.

This was primarily due to an increase in accounting and engineering services,

insurance and salaries partially offset by a decrease in contract services and stock option compensation.

Income tax expense for the nine months ended December 31, 2025 was $225,572 compared to $200,034 for the nine months

ended December 31, 2024.

The effective tax rate for the nine months ended December 31, 2025 and 2024 was 27% and 16%, respectively.

See Note 7 – Income Taxes to the Notes to Consolidated Financial Statements for additional information.

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