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Mexco Energy Corporation Reports Record Quarterly Earnings and Profitable Fiscal 2008

June 24, 2008

MIDLAND, Texas, June 24 /PRNewswire-FirstCall/ — Mexco Energy Corporation reported results on its Annual Report on Form 10-K to the Securities and Exchange Commission for the fiscal year ended March 31, 2008.

The Company reported net income of $466,480, or $.27 per diluted share, for the quarter ending March 31, 2008, the Company’s fourth quarter of fiscal 2008. This resulted in net income of $713,644, or $.40 per diluted share, for fiscal year 2008, a 17% increase over fiscal 2007.

Operating revenues in the fourth quarter were a record high of $1,245,653, resulting in the Company ending fiscal 2008 with operating revenues of $3,899,408, compared to $2,971,717 in fiscal 2007, an increase of 31%. This is partially the result of revenue generated from the $1,850,000 royalty interest acquisition in the Barnett Shale gas field on December 31, 2007, the largest acquisition of a property in the Company’s history. Revenues from oil and gas royalty interests, including this acquisition, accounted for approximately 29% of the Company’s revenues for fiscal 2008. On June 6, 2008, Mexco purchased additional Barnett Shale royalties for $429,000.

The Company’s total estimated proved reserves at March 31, 2008 were 7.857 Bcf of natural gas and 217,000 barrels of oil and natural gas liquids, and its estimated present value of proved reserves was approximately $41 million based on estimated future net revenues discounted at 10% per annum, pricing and other assumptions set forth in “Item 2 – Properties” of the Company’s Form 10-K. During fiscal 2008, the Company added proved reserves of 794,000 Mcfe through extensions and discoveries, added 584,000 Mcfe through acquisitions and had upward revisions of previous estimates of 43,000 Mcfe.

For fiscal 2008, gas reserves constituted approximately 86% of the Company’s total proved reserves and approximately 65% of the Company’s revenues.

Nicholas C. Taylor, President and Chief Executive Officer of Mexco Energy Corporation, said, “These fiscal year end results do not reflect any income from Mexco’s Steelhead #1 well in Loving County which is expected to be connected to a gas pipeline and commence regular sales in the second quarter of Mexco’s fiscal 2009.”

During the year ended March 31, 2008, the Company participated with working interests in 28 gross (.48 net) development wells and 5 gross (.65 net) exploratory wells.

The average sales price received of $8.03 per Mcfe increased 19% from the $6.75 per Mcfe received in fiscal 2007. Oil and gas production volumes increased 5% and 12%, respectively, during fiscal 2008.

The Company owns oil and gas properties in ten states, with the majority of its activity centered in West Texas. The Company continues to focus its efforts to increase oil and natural gas reserves, through exploration and development as well as acquisitions.

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, Mexco Energy Corporation cautions that statements in this press release which are forward-looking and which provide other than historical information involve risks and uncertainties that may impact the Company’s actual results of operations. These risks include, but are not limited to, production variance from expectations, volatility of oil and gas prices, the need to develop and replace reserves, exploration risks, uncertainties about estimates of reserves, competition, government regulation, and mechanical and other inherit risks associated with oil and gas production. A discussion of these and other factors, including risks and uncertainties, is set forth in the Company’s Form 10-K for the fiscal year ended March 31, 2008. Mexco Energy Corporation disclaims any intention or obligation to revise any forward-looking statements

                 Mexco Energy Corporation and Subsidiaries                   CONSOLIDATED STATEMENTS OF OPERATIONS                            Year ended March 31,                                           2008          2007          2006   Operating revenues:     Oil and gas                      $3,887,955    $2,969,325    $3,716,564     Other                                11,453         2,392         3,079       Total operating revenues        3,899,408     2,971,717     3,719,643    Operating expenses:     Production                        1,240,305       870,778       843,927     Accretion of asset retirement      obligation                          26,262        24,057        23,436     Depreciation, depletion, and      amortization                       779,618       652,826       658,365     General and administrative          821,786       829,180       817,332     Impairment of long-term asset             -             -       261,617       Total operating expenses        2,867,971     2,376,841     2,604,677    Operating profit                    1,031,437       594,876     1,114,966    Other income (expense):     Interest income                       5,113         4,670         2,837     Interest expense                   (105,312)      (24,046)      (98,657)        Net other expense                (100,199)      (19,376)      (95,820)    Earnings before income taxes and    minority interest                    931,238       575,500     1,019,146    Income tax expense (benefit):     Current                                   -             -       (19,312)     Deferred                            217,594       (28,050)      291,452                                         217,594       (28,050)      272,140    Earnings before minority interest     713,644       603,550       747,006    Minority interest in loss of    subsidiary                                 -         4,835        41,799    Net income                           $713,644      $608,385      $788,805     Net income per common share:    Basic:                                  $0.40         $0.35         $0.45   Diluted:                                $0.40         $0.33         $0.43                    Mexco Energy Corporation and Subsidiaries                        CONSOLIDATED BALANCE SHEETS                              As of March 31,                                                           2008         2007   ASSETS     Current assets       Cash and cash equivalents                        $303,617     $72,537       Accounts receivable:         Oil and gas sales                               758,459     399,659         Trade                                           102,403       2,987         Related parties                                  12,659           -       Income tax receivable                                   -      59,736       Prepaid costs and expenses                         22,062      65,986           Total current assets                        1,199,200     600,905      Investment in GazTex, LLC                            20,509      20,509      Property and equipment, at cost       Oil and gas properties, using the full cost        method                                        23,941,483  20,526,431       Other                                              61,362      51,412                                                      24,002,845  20,577,843       Less accumulated depreciation, depletion,        and amortization                              12,019,895  11,240,277           Property and equipment, net                11,982,950   9,337,566                                                     $13,202,659  $9,958,980    LIABILITIES AND STOCKHOLDERS' EQUITY     Current liabilities       Accounts payable and accrued expenses            $571,526    $154,074      Long-term debt                                    2,600,000     700,000     Asset retirement obligation                         374,789     350,584     Deferred income tax liabilities                   1,196,280     978,686       Stockholders' equity       Preferred stock - $1.00 par value;        10,000,000 shares authorized; none outstanding         -           -       Common stock - $0.50 par value;        40,000,000 shares authorized;        1,841,366 and 1,840,366 shares issued;        1,757,366 and 1,780,841 shares outstanding        as of March 31, 2008 and 2007, respectively      920,683     920,183       Additional paid-in capital                      4,381,269   4,291,892       Retained earnings                               3,584,729   2,871,085       Treasury stock, at cost (84,000 and        59,525 shares, respectively)                    (426,617)   (307,524)     Total stockholders' equity                        8,460,064   7,775,636                                                     $13,202,659  $9,958,980  

Mexco Energy Corporation

CONTACT: Tammy L. McComic, Vice President and Chief Financial Officer ofMexco Energy Corporation, +1-432-682-1119, mexco@sbcglobal.net




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