Mexco Energy Corp. (NYSE MKT:MXC) reports the purchase of various royalty interests ranging from .0018% to 1.1% revenue interests at a price of $580,000 covering 580 wells in 87 counties of eight US states. Of this oil and gas production, virtually all is natural gas. Mexco believes that there is potential for further development of several of these royalties. These royalty interests are free of expenses to Mexco for drilling and operations.
Approximately 90% of the net revenue from these royalties is produced by 157 wells located in the Barnett shale play of the Fort Worth Basin of Texas. Also included are interests in 423 wells in Alabama, Arkansas, Kansas, Louisiana, Mississippi, North Dakota, Oklahoma, and Texas.
Also, Mexco announced an increase in its participation in a horizontal well to be drilled to a depth of 11,100 feet in the third Bone Springs formation of Lea County, New Mexico, from 1.5% to 2.8% working interest. Mexco's estimated cost increased from $106,000 to $196,000. This well will be operated by XTO Energy Inc., a wholly owned subsidiary of Exxon Mobil Corp.
As previously planned, Mexco has advanced $116,226 which is the estimated cost of drilling and testing two horizontal wells respectively in the A and B benches of the Wolfcamp formation in Reagan County, Texas.
These and other expenditures have been funded through cash flow and bank borrowings on Mexco's line of credit which totals $4,925,000 to date.