{"url_path":"/sec/mxc/10-k/2026/item-2","section_key":"item-2","section_title":"Item 2 ****PROPERTIES**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-29","source_url":"https://www.sec.gov/Archives/edgar/data/66418/0001493152-26-030386-index.html","accession_number":"0001493152-26-030386","cik":"0000066418","ticker":"MXC","issuer_name":"MEXCO ENERGY CORP","edgar_url":"https://www.sec.gov/Archives/edgar/data/66418/0001493152-26-030386-index.html","primary_entity_key":"0000066418","primary_entity_name":"MEXCO ENERGY CORP"},"word_count":741,"has_tables":true,"body_markdown":"**ITEM 2.****PROPERTIES**\n\n** **\n\nOur\nproperties consist primarily of oil and gas wells and ownership interests in leasehold acreage, both developed and undeveloped. As\nof March 31, 2026, we had interests in approximately 8,100 gross (26.1 net) producing oil and gas wells and owned leasehold mineral,\nroyalty and other interests in approximately 705,000 gross (2,697 net) acres.\n\n \n\nOil\nand Natural Gas Reserves\n\n \n\nIn\naccordance with current SEC rules, the average prices used in computing reserves at March 31, 2026 were $62.76 per bbl of oil compared\nto $73.79 in 2025, a decrease of 15%, and $2.24 per mcf of natural gas compared to $2.14 in 2025, an increase of 5%. These prices are\nbased on the 12-month unweighted arithmetic average of the first-day-of-the-month market prices for oil and natural gas sales during\nfiscal 2026. The benchmark price of $59.79 per bbl of oil at March 31, 2026 versus $71.00 at March 31, 2025, was adjusted by lease for\ngravity, transportation fees and market differentials and did not give effect to derivative transactions. The benchmark price of $3.72\nper mcf of natural gas at March 31, 2026 versus $2.44 at March 31, 2025, was adjusted by lease for BTU content, transportation fees and\nmarket differentials.\n\n \n\nFor\ninformation concerning our costs incurred for oil and gas operations, net revenues from oil and gas production, estimated future net\nrevenues attributable to our oil and gas reserves, the present value of future net revenues discounted at 10%, and related changes, see\nthe Notes to the Company’s consolidated financial statements.\n\n \n\nProved\noil and natural gas reserves are those quantities of oil and gas that, by analysis of geoscience and engineering data, can be estimated\nwith reasonable certainty to be economically producible under existing economic and operating conditions. Proved developed reserves are\nthose expected to be recovered from existing wells, equipment, and operating methods. Proved undeveloped reserves are those expected\nto be recovered from new wells on undrilled acreage or from existing wells requiring significant additional investment to establish production.\n\n \n\nMexco’s\nproved reserves as of March 31, 2026 and 2025 were prepared by Russell K. Hall and Associates, Inc., Environmental Engineering Consultants\n(“Hall and Associates”), an independent petroleum engineering firm located in Midland, Texas. A summary of their report is\nfiled as Exhibit 99.1 to this Annual Report.\n\n \n\nManagement\nis responsible for providing accurate technical and operating data to Hall and Associates and for maintaining internal controls over\nthe reserve estimation process to provide reasonable assurance that proved reserve estimates are calculated in accordance with SEC rules.\nOur Chief Financial Officer reviews the final reserves estimate and consults with Alan Neal, the representative at Hall and Associates\nresponsible for evaluating the proved reserves covered by this report. Our Chairman and Chief Executive Officer also reviews the final\nreserves report.\n\n \n\nEstimates\nof proved reserves are inherently imprecise and subject to change as additional data becomes available. These estimates are based on\nengineering and geological interpretation and require assumptions regarding production rates, future development costs, operating expenses,\nand commodity prices. Actual results will vary from these estimates, and such variances could be material and may adversely affect future\ncash flows, results of operations, and capital resources.\n\n \n\nIn\naccordance with SEC rules, reserve estimates and related present value calculations use the 12-month unweighted arithmetic average of\nthe first-day-of-the-month prices for oil and natural gas. Prices are held constant over the economic life of the properties. Actual\nfuture prices and costs may differ materially from those used in these estimates. Unless replaced through acquisitions, successful exploration,\nor development activities, proved reserves will decline as production occurs.\n\n \n\n16\n\n \n\n \n\nOur\nestimated proved oil and gas reserves and present value of estimated future net revenues from proved oil and gas reserves in the periods\nended March 31 are summarized below.\n\n \n\n**PROVED\nRESERVES**\n\n** **\n\n  \nMarch\n31, \n\n  \n2026  \n2025 \n\nOil (Bbls): \n    \n   \n\nProved developed – Producing \n 387,670  \n 390,940 \n\nProved developed – Non-producing \n 75,105  \n 14,900 \n\nProved undeveloped \n 195,840  \n 269,000 \n\nTotal \n 658,615  \n 674,840 \n\nNatural gas (Mcf): \n    \n   \n\nProved developed – Producing \n 3,902,120  \n 3,554,920 \n\nProved developed – Non-producing \n 302,490  \n 99,970 \n\nProved undeveloped \n 466,060  \n 704,810 \n\nTotal \n 4,670,670  \n 4,359,700 \n\n  \n    \n   \n\nTotal\nnet proved reserves (BOE) (1) \n 1,437,060  \n 1,401,460 \n\n  \n    \n   \n\nPV-10 Value (2) \n$21,131,000  \n$23,216,000 \n\nPresent value of future\nincome tax discounted at 10% \n (2,466,000) \n (3,141,000)\n\nStandardized\nmeasure of discounted future net cash flows (3) \n$18,665,000  \n$20,075,000 \n\n  \n    \n   \n\nPrices used in calculating reserves: (4) \n    \n   \n\nNatural gas (per Mcf) \n$2.24  \n$2.14 \n\nOil (per Bbl) \n$62.76  \n$73.79 \n\n \n\n(1)These\nreserve estimates do not include the Company’s interest in two LLCs referred to in"}