MXC - Mexco Energy Corporation

[Guest MarkS]

First this is a tiny company.  I'm hoping that some of you who deal oil and gas companies will look at this and comment.  I was struck by the CFO's comment in a recent news release.  (see below). Also, the CEO has recently added an additional 20,000 shares to his already large pile of shares - about 46% of the shares outstanding.  According to the latest annual report the proven reserves are worth about 21 million (based on $40 oil) vs a market cap of about 7 million with not much debt. What am I missing?

Thanks

Mark

 

"MIDLAND, TEXAS, Dec. 20, 2017 (GLOBE NEWSWIRE) -- Mexco Energy Corporation (NYSE MKT:MXC) today announced the sale of certain oil and gas properties in Ward and Midland Counties, Texas.

 

Mexco is to be paid approximately $1.9 million in cash from the sale of joint venture leasehold marginal producing working interests in several thousand acres located primarily in Ward, and to a minor extent, in Midland Counties, Texas.

 

Of these proceeds, approximately $1.518 million is to be applied to Mexco’s bank debt reducing its indebtedness to $950,000.  Mexco’s debt to equity ratio will then be approximately 12%.  Approximately 10% of the purchase price is being held in suspense pending payment of closing costs and resolution of title issues as to a small portion of the sale assets.

 

The President and Chief Financial Officer of the Company commented, “This sale indicates the substantial value of a number of Mexco’s remaining non-core oil and gas properties, which are held in the Permian Basin of West Texas.  The potential market value of these non-core assets are neither reflected in Mexco’s oil and gas reserve estimates nor its book value.”.... "

 

 

[Tim Eriksen]

I haven't dug into an oil company in a number of years.  Am I correct that the PV-10 figure excludes G&A costs?  If so, $20 million of PV-10 needs to be reduced for present value of the $1 million of annual G&A. 

[Guest MarkS]

Hi Tim,

 

I think you are correct about the cost estimates not including G&A.  If interested here is a link to their estimates, but they are about 9 months old.

 

https://www.sec.gov/cgi-bin/viewer?action=view&cik=66418&accession_number=0001493152-17-007227&xbrl_type=v#I'm

 

I really just found the CFO's comment coupled with the insider buying interesting?

 

Thanks

Mark