Mexco Energy Corporation (NYSE: MXC) reported net income of $501,065, or $0.24 per diluted share, for the quarter ended June 30, 2026. This represents a 107% increase compared to net income of $241,951, or $0.12 per diluted share, for the same quarter in the prior fiscal year.

Operating revenues for the first quarter of fiscal 2027 reached $1,983,169, up 13% from $1,756,940 in the first quarter of fiscal 2026. The revenue growth was primarily driven by a 52% increase in the average oil price. This price uplift partially offset a 15% decrease in oil production, a 9% decrease in natural gas production, and a 49% decrease in the average natural gas price.

Capital Allocation and Strategy

The company invested approximately $2.1 million in oil and gas royalty property acquisitions during the quarter, funded entirely from existing cash resources. Tammy McComic, President of Mexco Energy, stated that this investment activity aligns with the company’s ongoing strategy of acquiring royalty interests with development potential.

Looking ahead, Mexco Energy expects to participate in the drilling of 53 horizontal wells and the completion of 20 horizontal wells during the fiscal year ending March 31, 2027. The estimated aggregate cost for these activities is approximately $1.8 million. As of the end of the quarter, approximately $620,000 has been expended toward these projects. The company continues to evaluate additional drilling prospects for participation during the remainder of the fiscal year.

What the Numbers Show

The divergence between revenue growth and production volume highlights the sensitivity of Mexco Energy’s financial performance to commodity prices. While total operating revenue increased by 13%, oil production fell by 15% and natural gas production declined by 9%. This indicates that the 52% rise in average oil prices was the sole significant driver of top-line growth, effectively neutralizing the impact of reduced output. Consequently, the company’s profitability expansion (107% YoY) outpaced its revenue growth (13%), suggesting that fixed costs remained stable while variable income per unit sold improved significantly due to higher oil prices.

Mexco Energy Corporation is an independent oil and gas company headquartered in Midland, Texas, engaged in the acquisition, exploration, and development of properties primarily in the Permian Basin.

Mexco Energy Corporation reported first-quarter sales of $1,629,000, a decrease from $1,814,000 in the prior-year period. For the fiscal year ended March 31, 2026, the company reported a 24% decline in net income to $1,305,722, or $0.64 per diluted share. The decrease in annual profitability was accompanied by an 8% drop in operating revenues, which totaled $6,561,324. The financial results were disclosed in the company's Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The decline in annual revenue was primarily attributable to lower average realized oil prices and reduced oil production volumes. These factors were partially offset by higher average realized natural gas prices, increased natural gas production volumes, and increased income from one of the company’s limited liability company investments. For the fiscal year, the average realized price for oil was $64.25 per barrel, while the average realized price for natural gas was $1.86 per thousand cubic feet.

Operational Activity and Development

During fiscal 2026, Mexco Energy participated in the development of 57 horizontal wells and one vertical well at a cost of approximately $1.25 million. Of these, 20 wells are expected to be completed during the current fiscal year. The majority of the activity, 51 wells, was located in the Delaware Basin in the western portion of the Permian Basin, specifically in Eddy and Lea Counties, New Mexico. Additionally, the company expended approximately $150,000 to complete 17 horizontal wells that were drilled during fiscal 2025.

Beyond its working interest activity, other operators drilled 177 gross wells (0.07 net wells) on the company’s royalty interests. Approximately 49% of the fiscal 2026 operating revenues were derived from royalties, which are free of operating costs to Mexco.

Financial Position and Reserves

The company reported a strong balance sheet with approximately $1.4 million in cash and no outstanding indebtedness under its bank line of credit. The President and Chief Financial Officer stated that the company is actively seeking opportunities.

The estimated present value of the company’s proved reserves at March 31, 2026, was approximately $21 million, based on estimated future net revenues discounted at 10% per annum. Estimated proved oil reserves decreased 2% to 659 thousand barrels, while natural gas reserves increased 7% to 4.67 billion cubic feet compared to the prior fiscal year. Oil represented approximately 46% of the company’s total proved reserves and approximately 81% of its oil and gas sales.

Future Outlook and Acquisitions

For the fiscal year ending March 31, 2027, Mexco Energy expects to participate in the drilling and completion of 33 horizontal wells, as well as the completion of 20 horizontal wells drilled during fiscal 2026. The estimated aggregate cost of these activities is approximately $1.8 million, of which approximately $500,000 has been expended to date.

Throughout the year, the company acquired various royalty and mineral interests in 262 gross wells (0.12 net wells) located in Weld County, Colorado; Eddy County, New Mexico; and multiple counties throughout Louisiana and Texas. The aggregate purchase price for these acquisitions was approximately $800,000, funded from cash on hand.