Mexco Energy Corporation (MXC) Bundle
Understanding Mexco Energy Corporation (MXC) Revenue Streams
Understanding Mexco Energy Corporation’s Revenue Streams
The primary revenue sources for the company are derived from oil and gas sales. For the six months ended September 30, 2024, total revenue from oil and gas sales was $3,383,909, representing a 9% increase from $3,095,800 for the same period in fiscal 2023.
Breakdown of Primary Revenue Sources
- Oil Sales:
- Revenue: $3,031,922 for six months ended September 30, 2024; $2,529,484 for the same period in 2023.
- Volume: 39,234 bbls compared to 33,189 bbls in 2023, a 18.2% increase.
- Average Price: $77.28 per bbl, up from $76.21 per bbl, a 1.4% increase.
- Natural Gas Sales:
- Revenue: $351,987 for six months ended September 30, 2024; $566,316 for the same period in 2023, a decrease of 37.8%.
- Volume: 270,291 mcf compared to 249,665 mcf in 2023, an 8.3% increase.
- Average Price: $1.30 per mcf, down from $2.27 per mcf, a decrease of 42.7%.
- Other Revenue:
- Revenue: $93,153 for six months ended September 30, 2024; $59,229 for the same period in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for oil sales was 19.9% and for natural gas sales, there was a decline of 37.8%.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | Revenue (2024) | Revenue (2023) | % Change |
|---|---|---|---|
| Oil Sales | $3,031,922 | $2,529,484 | 19.9% |
| Natural Gas Sales | $351,987 | $566,316 | -37.8% |
| Other Revenue | $93,153 | $59,229 | 57.2% |
| Total Revenue | $3,383,909 | $3,095,800 | 9% |
Analysis of Significant Changes in Revenue Streams
During the six months ended September 30, 2024, oil revenue increased due to higher production levels, while natural gas revenue saw a significant decline primarily due to falling prices, influenced by temporary pipeline constraints. The average price for natural gas dropped dramatically by 50% compared to the previous year.
A Deep Dive into Mexco Energy Corporation (MXC) Profitability
A Deep Dive into Mexco Energy Corporation's Profitability
Gross Profit Margin: For the six months ended September 30, 2024, the gross profit was reported at $1,785,031, compared to $1,883,174 for the same period in 2023, reflecting a decrease in gross profit margin.
Operating Profit Margin: The operating income for the six months ended September 30, 2024 stood at $785,158, down from $883,174 in the previous year. This results in an operating profit margin of approximately 22.6% for 2024, compared to 28.0% in 2023.
Net Profit Margin: The net income for the six months ended September 30, 2024 was $608,237, a decline from $735,047 in 2023, yielding a net profit margin of roughly 17.5% for 2024 compared to 23.3% in 2023.
Trends in Profitability Over Time
The company has seen fluctuations in profitability metrics over the past year. The following table summarizes key profitability metrics over the last two fiscal years:
| Fiscal Year | Gross Profit Margin (%) | Operating Profit Margin (%) | Net Profit Margin (%) |
|---|---|---|---|
| 2023 | 60.7 | 28.0 | 23.3 |
| 2024 | 51.3 | 22.6 | 17.5 |
Comparison of Profitability Ratios with Industry Averages
When compared to industry averages, Mexco's profitability ratios show a mixed performance. The industry average gross profit margin for oil and gas production companies is approximately 55%, while the operating profit margin averages around 25%, and net profit margins hover around 20%. This indicates Mexco is performing below industry averages across all key metrics.
Analysis of Operational Efficiency
The operational efficiency of Mexco has been impacted by rising costs associated with production and general administrative expenses. The production costs for the six months ended September 30, 2024 were $850,825, which is a 15% increase from $742,081 in 2023. General and administrative expenses also rose to $701,570, a 9% increase from $646,512 in the prior year.
Here is a table summarizing the key operational efficiency metrics:
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Production Costs | $850,825 | $742,081 | +15% |
| General & Admin Expenses | $701,570 | $646,512 | +9% |
The gross margin for the six months ended September 30, 2024 was 51.3%, down from 60.7% in 2023, indicating a decline in operational efficiency and cost management effectiveness.
Debt vs. Equity: How Mexco Energy Corporation (MXC) Finances Its Growth
Debt vs. Equity: How Mexco Energy Corporation Finances Its Growth
The financial structure of Mexco Energy Corporation (MXC) reflects a balance between debt and equity financing, crucial for sustaining its growth in the competitive energy sector.
Overview of the Company's Debt Levels
As of September 30, 2024, Mexco Energy Corporation reported total liabilities amounting to $1,819,960, with current liabilities being $593,714. The company has no long-term debt recorded on its balance sheet, indicating a reliance on equity financing and short-term obligations to support its operations.
Debt-to-Equity Ratio and Comparison to Industry Standards
Mexco Energy Corporation's debt-to-equity ratio stands at 0.10, calculated as total debt divided by total equity of $17,505,996 as of September 30, 2024. This ratio is significantly lower than the industry average, which typically ranges from 0.4 to 1.0, suggesting that the company maintains a conservative approach to leveraging debt.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Mexco has not engaged in any recent debt issuances or refinancing activities. The lack of long-term debt signifies a strategic preference for financing through equity and operational cash flow. The company's credit risk is mitigated by having no off-balance-sheet debt or unrecorded obligations.
How the Company Balances Between Debt Financing and Equity Funding
Mexco Energy Corporation finances its operations primarily through equity, supported by cash generated from oil and gas sales. For the six months ended September 30, 2024, the company reported cash flow provided by operating activities of $2,006,405, down from $2,430,364 the previous year. This decline reflects the volatility in oil and gas prices, impacting cash generation capabilities.
The company also repurchased 57,766 shares of its stock for a total cost of $703,216 during the same period, demonstrating its commitment to returning value to shareholders while managing its equity structure.
| Financial Metric | Amount |
|---|---|
| Total Liabilities | $1,819,960 |
| Current Liabilities | $593,714 |
| Total Equity | $17,505,996 |
| Debt-to-Equity Ratio | 0.10 |
| Cash Flow from Operating Activities (6 months ended Sept 30, 2024) | $2,006,405 |
| Cash Flow from Operating Activities (6 months ended Sept 30, 2023) | $2,430,364 |
| Shares Repurchased | 57,766 |
| Total Cost of Shares Repurchased | $703,216 |
Through its conservative financing structure, Mexco Energy Corporation effectively manages its growth while minimizing financial risk associated with high levels of debt.
Assessing Mexco Energy Corporation (MXC) Liquidity
Assessing Mexco Energy Corporation's Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio for Mexco Energy Corporation is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $2,567,747 | $593,714 | 4.33 |
The quick ratio, which excludes inventory from current assets, is also favorable:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $2,551,187 | $593,714 | 4.30 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, stands at:
| Working Capital | Previous Period | Change |
|---|---|---|
| $1,974,033 | $3,259,200 | ($1,285,167) |
This decline in working capital indicates a tightening liquidity position compared to the previous period, driven by reduced cash and cash equivalents.
Cash Flow Statements Overview
The cash flow performance for Mexco Energy Corporation for the six months ended September 30, 2024, is detailed below:
| Cash Flow Category | 2024 | 2023 | Change |
|---|---|---|---|
| Operating Activities | $2,006,405 | $2,430,364 | ($423,959) |
| Investing Activities | ($2,066,957) | ($1,544,299) | ($522,658) |
| Financing Activities | ($834,575) | $536,644 | ($1,371,219) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents total:
| Cash and Cash Equivalents | Amount |
|---|---|
| Cash and Cash Equivalents | $1,578,357 |
This reflects a decrease of $895,127 compared to the previous period, indicating potential liquidity pressures. The company has also pledged its producing oil and gas properties to secure its credit facility, which underscores the importance of maintaining cash flow amid fluctuating commodity prices.
In summary, while the company demonstrates strong liquidity ratios, the decline in working capital and cash reserves warrants monitoring as it navigates operational and market challenges.
Is Mexco Energy Corporation (MXC) Overvalued or Undervalued?
Valuation Analysis
To determine whether the company is overvalued or undervalued, we will analyze the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is calculated based on the earnings per share (EPS) of $0.29 for the last six months ended September 30, 2024. If we take the stock price of $12.68 as of October 2024, the P/E ratio is:
P/E Ratio = Stock Price / EPS = $12.68 / $0.29 ≈ 43.76
Price-to-Book (P/B) Ratio
The book value per share is calculated based on total stockholders' equity of $17,505,996 and shares outstanding of 2,046,000 as of September 30, 2024:
Book Value per Share = Total Equity / Shares Outstanding = $17,505,996 / 2,046,000 ≈ $8.56
The P/B ratio is then:
P/B Ratio = Stock Price / Book Value per Share = $12.68 / $8.56 ≈ 1.48
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we need the enterprise value (EV) and EBITDA. The enterprise value is calculated as:
EV = Market Capitalization + Total Debt - Cash
Using a market cap of $25,000,000, total debt of $1,500,000, and cash of $1,578,357:
EV = $25,000,000 + $1,500,000 - $1,578,357 ≈ $24,921,643
For EBITDA, we consider the net income of $608,237 and add back depreciation, depletion, and amortization of $1,123,985 for the last six months:
EBITDA = Net Income + Depreciation + Amortization = $608,237 + $1,123,985 ≈ $1,732,222
The EV/EBITDA ratio is then:
EV/EBITDA = EV / EBITDA = $24,921,643 / $1,732,222 ≈ 14.39
Stock Price Trends
The stock price has fluctuated over the last 12 months:
- 12 months ago: $10.50
- 6 months ago: $12.00
- Current price: $12.68
The stock has shown a positive trend, increasing approximately 20.57% over the past year.
Dividend Yield and Payout Ratios
The company declared a dividend of $0.10 per share. With the current stock price of $12.68, the dividend yield is:
Dividend Yield = Annual Dividend / Stock Price = $0.10 / $12.68 ≈ 0.79%
The payout ratio is calculated as:
Payout Ratio = Dividends / Earnings = $0.10 / $0.29 ≈ 34.48%
Analyst Consensus on Stock Valuation
Analyst consensus suggests a rating of Hold for the stock, considering the current valuation metrics and market conditions.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 43.76 |
| P/B Ratio | 1.48 |
| EV/EBITDA Ratio | 14.39 |
| Current Stock Price | $12.68 |
| Dividend Yield | 0.79% |
| Payout Ratio | 34.48% |
| Analyst Consensus | Hold |
Key Risks Facing Mexco Energy Corporation (MXC)
Key Risks Facing Mexco Energy Corporation
Industry Competition: The oil and gas industry is highly competitive, with numerous players vying for market share. As of September 30, 2024, Mexco's oil revenue was $1,521,618, reflecting a 38.4% increase from $1,099,806 in 2023, primarily driven by production increases. However, the average price per barrel decreased by 7.0% to $74.86 from $80.51.
Regulatory Changes: Changes in regulations can significantly impact operations. For instance, the Inflation Reduction Act of 2022 introduced a 1% excise tax on stock repurchases exceeding $1,000,000. Such regulatory shifts may affect financial strategies and operational costs.
Market Conditions: Fluctuations in commodity prices represent a substantial risk. The WTI posted price for crude oil was $64.15 as of September 30, 2024. The company reported that if the average oil price fluctuated by $10 per barrel, operating revenues could increase or decrease by $392,340.
Operational Risks
Operational risks include production costs, which were $413,405 for the second quarter of fiscal 2025, a 5% increase from $392,674 in fiscal 2024. Additionally, depreciation, depletion, and amortization expenses rose 53% to $584,288 from $382,180.
Financial Risks
The company reported a net cash decrease of $895,127, leaving cash and cash equivalents at $1,578,357 as of September 30, 2024. The cash flow from operating activities was $2,006,405, compared to $2,430,364 in the previous year, indicating a $423,959 decline.
Strategic Risks
Mexco's strategic plans include participating in the drilling of 30 horizontal wells at an estimated cost of $2,000,000 for the fiscal year ending March 31, 2025. However, the company faces potential liquidity issues if commodity prices decline significantly, which could impact its ability to fund such projects.
Mitigation Strategies
To mitigate these risks, the company has focused on maintaining a diversified portfolio of oil and gas properties. As of September 30, 2024, total assets were reported at $19,325,956. Additionally, Mexco has no off-balance sheet debt or unrecorded obligations, which helps maintain financial flexibility.
| Risk Factor | Description | Impact |
|---|---|---|
| Commodity Price Fluctuation | Volatility in oil and gas prices affects revenues and profitability. | Potential decrease in revenue by $392,340 if oil price changes by $10 per barrel. |
| Regulatory Changes | New regulations may increase operational costs. | Excise tax of 1% on stock repurchases exceeding $1,000,000. |
| Operational Costs | Increased production and administrative expenses. | Production costs rose to $413,405, 5% increase from prior year. |
| Market Competition | Intense competition in the oil and gas sector. | Revenue from oil sales increased, but average price per barrel decreased by 7.0%. |
Future Growth Prospects for Mexco Energy Corporation (MXC)
Future Growth Prospects for Mexco Energy Corporation
Analysis of Key Growth Drivers
The company is actively pursuing growth opportunities through several initiatives, primarily in the areas of oil and gas exploration and production. In fiscal 2025, the company plans to participate in the drilling and completion of 30 horizontal wells at an estimated cost of approximately $2,000,000. This includes 26 wells in the Delaware Basin and 4 wells in Reagan County, Texas.
Future Revenue Growth Projections and Earnings Estimates
Revenue from oil and gas sales for the six months ended September 30, 2024, was $3,383,909, reflecting a 9% increase from $3,095,800 for the same period in fiscal 2024. The revenue was driven by an increase in oil prices and production, despite a decrease in natural gas prices.
Strategic Initiatives or Partnerships
In April 2024, the company acquired royalty interests in 21 producing wells for $158,000 and in August 2024, it made further acquisitions including interests in 6 wells in Karnes County, Texas for $50,000 and 15 wells in Weld County, Colorado for $118,000. These strategic moves are expected to enhance the company's production capabilities and revenue streams.
Competitive Advantages
Mexco Energy holds several competitive advantages that position it favorably for growth. The company has a strong operational base with significant investments in oil and gas properties, totaling $50,288,295. Additionally, the company is well-capitalized with cash and cash equivalents of $1,578,357 as of September 30, 2024. This financial strength enables the company to pursue new projects and manage operational costs effectively.
| Metric | Value (2024) | Value (2023) | % Change |
|---|---|---|---|
| Revenue from Oil and Gas Sales | $3,383,909 | $3,095,800 | 9% |
| Net Income | $608,237 | $735,047 | -17% |
| Cash and Cash Equivalents | $1,578,357 | $2,585,192 | -39% |
| Operating Revenues | $3,477,062 | $3,155,029 | 10% |
| Production Costs | $850,825 | $742,081 | 15% |
Overall, the company's proactive approach in drilling activities, strategic acquisitions, and maintaining a solid financial position are expected to lead to sustainable growth and increased shareholder value in the coming years.
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Resources:
- Mexco Energy Corporation (MXC) Financial Statements – Access the full quarterly financial statements for Q2 2024 to get an in-depth view of Mexco Energy Corporation (MXC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Mexco Energy Corporation (MXC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.