UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D. C. 20549





FORM
      10-Q





x QUARTERLY
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the
      quarterly period ended June 30, 2007





OR





o TRANSITION
      REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the
      transition period
      from                
 to








Commission
      File No. 0-6994








**MEXCO
      ENERGY CORPORATION**


*(Exact
      name of registrant as specified in its charter)*




Colorado
            84-0627918(*State
                or other jurisdiction of*
            *(IRS
                Employer**incorporation
                or organization)*
            *Identification
                Number)*




214
      West
      Texas Avenue, Suite 1101, Midland, Texas 79701


*(Address
      of principal executive offices)*




(432)
      682-1119


*(Registrant’s
      telephone number, including area code)*








Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. YES x NO
o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in rule 12b-2 of the Exchange Act. (Check
      one):





Large
                Accelerated Filer o
            Accelerated
                Filer o
            Non-Accelerated
                Filer x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). YES o NO x





The
      number of shares outstanding of the registrant’s common stock, $0.50 par value,
      as of August 9, 2007 was 1,776,366.





**MEXCO
      ENERGY CORPORATION**






Table
      of Contents





PagePART
                I. FINANCIAL INFORMATIONItem
                1.
            Consolidated
                Balance Sheets as of June 30, 2007(Unaudited)
                and March 31, 2007
            3Consolidated
                Statements of Operations (Unaudited) forthe
                three months ended June 30, 2007 and June 30, 2006
            4Consolidated
                Statements of Cash Flows (Unaudited) forthe
                three months ended June 30, 2007 and June 30, 2006
            5Notes
                to Consolidated Financial Statements (Unaudited)
            6Item
                2.
            Management's
                Discussion and Analysis of Financial Conditionand
                Results of Operations
            8Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            10Item
                4.
            Controls
                and Procedures
            10PART
                II. OTHER INFORMATION
            11Item
                1.
            Legal
                ProceedingsItem
                1A.
            Risk
                FactorsItem
                2.
            Unregistered
                Sales of Equity Securities and Use of ProceedsItem
                3.
            Defaults
                upon Senior SecuritiesItem
                4.
            Submission
                of Matters to a Vote of Security HoldersItem
                5.
            Other
                InformationItem
                6.
            Exhibits
                and Reports on Form 8-KSIGNATURES
            11CERTIFICATIONS




Page
          2




**Mexco
      Energy Corporation and Subsidiaries**


CONSOLIDATED
      BALANCE SHEETS


June
                30,
            
            March
                31,2007
            
            2007(Unaudited)**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            106,933
            
            $
            72,537Accounts
                receivable:Oil
                and gas sales
            
            
            481,778
            
            
            399,659Trade
            
            
            256
            
            
            2,987Income
                tax receivable
            
            
            59,736
            
            
            59,736Prepaid
                costs and expenses
            
            
            40,578
            
            
            65,986Total
                current assets
            
            
            689,281
            
            
            600,905Investment
                in GazTex, LLC
            
            
            20,509
            
            
            20,509Property
                and equipment, at costOil
                and gas properties, using the full cost method
            
            
            21,017,432
            
            
            20,526,431Other
            
            
            51,412
            
            
            51,41221,068,844
            
            
            20,577,843Less
                accumulated depreciation,depletion
                and amortization
            
            
            11,413,162
            
            
            11,240,277Property
                and equipment, net
            
            
            9,655,682
            
            
            9,337,566$
            10,365,472
            
            $
            9,958,980**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Accounts
                payable and accrued expenses
            
            $
            308,595
            
            $
            154,074Long-term
                debt
            
            
            875,000
            
            
            700,000Asset
                retirement obligation
            
            
            365,277
            
            
            350,584Deferred
                income tax liability
            
            
            997,018
            
            
            978,686Commitments
                and contingenciesStockholders’
                equityPreferred
                stock - $1.00 par value;10,000,000
                shares authorized; none outstanding
            
            
            -
            
            
            -Common
                stock - $0.50 par value;40,000,000
                shares authorized;1,840,366
                shares issued; 1,776,366 shares outstanding
            
            
            920,183
            
            
            920,183Additional
                paid-in capital
            
            
            4,325,279
            
            
            4,291,892Retained
                earnings
            
            
            2,905,891
            
            
            2,871,085Treasury
                stock, at cost (64,000 and 59,525 shares, respectively)
            
            
            (331,771
            )
            
            (307,524
            )Total
                stockholders’ equity
            
            
            7,819,582
            
            
            7,775,636$
            10,365,472
            
            $
            9,958,980





**The
      accompanying notes are an integral part of** **the
      consolidated financial statements.**




Page
          3


**Mexco
      Energy Corporation and Subsidiaries**


CONSOLIDATED
      STATEMENTS OF OPERATIONS


For
      the
      Three Months Ended June 30,


(Unaudited)





2007
            
            2006Operating
                revenues:Oil
                and gas
            
            $
            850,144
            
            $
            777,412Other
            
            
            173
            
            
            167Total
                operating revenues
            
            
            850,317
            
            
            777,579Operating
                expenses:Production
            
            
            333,050
            
            
            215,629Accretion
                of asset retirement obligation
            
            
            6,611
            
            
            4,984Depreciation,
                depletion and amortization
            
            
            172,884
            
            
            150,529General
                and administrative
            
            
            269,624
            
            
            261,493Total
                operating expenses
            
            
            782,169
            
            
            632,635****Operating
                profit
            
            
            68,148
            
            
            144,944Other
                income (expense):Interest
                income
            
            
            338
            
            
            292Interest
                expense
            
            
            (15,348
            )
            
            (10,099
            )Net
                other expense
            
            
            (15,010
            )
            
            (9,807
            )Earnings
                before income taxes and minority interest
            
            
            53,138
            
            
            135,137Income
                tax expense (benefit):Current
            
            
            -
            
            
            40,245Deferred
            
            
            18,332
            
            
            (127,660
            )18,332
            
            
            (87,415
            )Earnings
                before minority interest
            
            
            34,806
            
            
            222,552Minority
                interest in loss of subsidiary
            
            
            -
            
            
            4,738Net
                income
            
            $
            34,806
            
            $
            227,290Net
                income per common share:Basic:
            
            $
            0.02
            
            $
            0.13Diluted:
            
            $
            0.02
            
            $
            0.12




**The
      accompanying notes are an integral part of** **the
      consolidated financial statements.**


Page
          4





**Mexco
      Energy Corporation and Subsidiaries**


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


For
      the
      Three Months Ended June 30,


(Unaudited)





2007
            
            2006Cash
                flows from operating activities:Net
                income
            
            $
            34,806
            
            $
            227,290Adjustments
                to reconcile net incometo
                net cash provided by operating activities:Increase
                (decrease) in deferred tax liabilities
            
            
            18,332
            
            
            (127,660
            )Stock-based
                compensation
            
            
            33,387
            
            
            21,497Depreciation,
                depletion and amortization
            
            
            172,884
            
            
            150,529Accretion
                of asset retirement obligations
            
            
            6,611
            
            
            4,984Minority
                interest in loss of GazTex, LLC
            
            
            -
            
            
            (4,738
            )(Increase)
                decrease in accounts receivable
            
            
            (79,388
            )
            
            28,365Decrease
                in prepaid expenses
            
            
            25,409
            
            
            26,565Decrease
                in accounts payable and accrued expenses
            
            
            (17,085
            )
            
            (7,047
            )Net
                cash provided by operating activities
            
            
            194,956
            
            
            319,785Cash
                flows from investing activities:Additions
                to oil and gas properties
            
            
            (311,820
            )
            
            (123,798
            )Additions
                to other property and equipment
            
            
            -
            
            
            (1,136
            )Proceeds
                from sale of oil and gas properties and equipment
            
            
            507
            
            
            24,700Net
                cash used in investing activities
            
            
            (311,313
            )
            
            (100,234
            )Cash
                flows from financing activities:Acquisition
                of treasury stock
            
            
            (24,247
            )
            
            -Reduction
                of long-term debt
            
            
            (50,000
            )
            
            (200,000
            )Proceeds
                from long-term debt
            
            
            225,000
            
            
            -Minority
                interest contributions
            
            
            -
            
            
            4,738Net
                cash provided by (used in) financing activities
            
            
            150,753
            
            
            (195,262
            )Net
                increase in cash and cash equivalents
            
            
            34,396
            
            
            24,289Cash
                and cash equivalents at beginning of period
            
            
            72,537
            
            
            52,768Cash
                and cash equivalents at end of period
            
            $
            106,933
            
            $
            77,057Interest
                paid
            
            $
            22,736
            
            $
            11,522Income
                taxes paid
            
            $
            -
            
            $
            -




**The
      accompanying notes are an integral part of** **the
      consolidated financial statements.**


Page
          5





MEXCO
      ENERGY CORPORATION AND SUBSIDIARY


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


(Unaudited)





**1.
      Nature of Operations**





Mexco
      Energy Corporation (a Colorado Corporation), its wholly owned subsidiaries,
      Forman Energy Corporation (a New York Corporation) and OBTX, LLC (a Delaware
      Limited Liability Company) (collectively, the “Company”) are engaged in the
      exploration, development and production of natural gas, crude oil, condensate
      and natural gas liquids (NGLs). Although most of the Company’s oil and gas
      interests are centered in West Texas, the Company owns producing properties
      and
      undeveloped acreage in ten states. Although most of the Company’s oil and gas
      interests are operated by others, the Company operates several properties in
      which it owns an interest.





In
      the
      opinion of management, the accompanying unaudited consolidated financial
      statements contain all adjustments (consisting only of normal recurring
      accruals) necessary to present fairly the financial position of the Company
      as
      of June 30, 2007, and the results of its operations and cash flows for the
      interim periods ended June 30, 2007 and 2006. The results of operations for
      the
      periods presented are not necessarily indicative of the results to be expected
      for a full year. The accounting policies followed by the Company are set forth
      in more detail in Note A of the “Notes to Consolidated Financial Statements” in
      the Company’s annual report on Form 10-K filed with the Securities and Exchange
      Commission (“SEC”). Certain information and footnote disclosures normally
      included in financial statements prepared in accordance with accounting
      principles generally accepted in the United States of America have been
      condensed or omitted in this Form 10-Q pursuant to the rules and regulations
      of
      the Securities and Exchange Commission. However, the disclosures herein are
      adequate to make the information presented not misleading. It is suggested
      that
      these financial statements be read in conjunction with the financial statements
      and notes thereto included in the Form 10-K.





**2.
      Summary of Significant Accounting Policies**





**Principles
      of Consolidation** .
      The
      consolidated financial statements include the accounts of Mexco Energy
      Corporation and its wholly owned subsidiaries. All significant intercompany
      balances and transactions associated with the consolidated operations have
      been
      eliminated.





**Estimates
      and Assumptions** .
      In
      preparing financial statements in conformity with accounting principles
      generally accepted in the United States of America, management is required
      to
      make informed judgments and estimates that affect the reported amounts of assets
      and liabilities as of the date of the financial statements and affect the
      reported amounts of revenues and expenses during the reporting period. Although
      management believes its estimates and assumptions are reasonable, actual results
      may differ materially from those estimates. Significant estimates affecting
      these financial statements include the estimated quantities of proved oil and
      gas reserves, the related present value of estimated future net cash flows
      and
      the future development, dismantlement and abandonment costs.





**Stock-based
      Compensation** . 
      SFAS 123(R) resulted in the recognition of compensation expense of $33,387
      or
      $.02 per basic share and diluted share and $21,497 or $.01 per basic share
      and
      diluted share for the three months ended June 30, 2007 and 2006, respectively.





The
      following table is a summary of activity of stock options for the three months
      ended June 30, 2007:





Weighted
                Average
            
            WeightedAggregateNumber
                of
            
            Exercise
                Price
            
            Average
                Contract
            
            IntrinsicShares
            
            Per
                Share
            
            Life
                in Years
            
            ValueOutstanding
                at March 31, 2007
            
            
            305,000
            
            $
            6.35Granted
            
            
            -
            
            
            -Exercised
            
            
            -
            
            
            -Forfeited
                or Expired
            
            
            30,000
            
            
            7.33Outstanding
                at June 30, 2007
            
            
            275,000
            
            $
            6.24
            
            
            3.95
            
            $
            (226,600
            )Exercisable
                at June 30, 2007
            
            
            212,750
            
            $
            5.90
            
            
            3.71
            
            $
            (101,745
            )





There
      were no stock options granted or exercised during the quarter ended June 30,
      2007. No forfeiture rate is assumed for stock options granted to directors
      or
      employees due to the forfeiture rate history for these types of awards. Prior
      to
      April 1, 2007, we sent notice of termination to a consultant and his remaining
      30,000 options forfeited on June 20, 2007. However, this was an isolated event
      which we do not expect in the future.





Page
          6


Outstanding
      options at June 30, 2007 expire between April 2008 and July 2014 and have
      exercise prices ranging from $4.00 to $8.24.





The
      total
      cost related to non-vested awards not yet recognized at June 30, 2007 totals
      approximately $102,236  which
      is
      expected to be recognized over a weighted average of 1.99 years.





**Asset
      Retirement Obligations** .
      The
      Company’s asset retirement obligations relate to the plugging of wells, the
      removal of facilities and equipment, and site restoration on oil and gas
      properties. SFAS No. 143 requires the fair value of a liability for an asset
      retirement obligation to be recorded in the period in which it is incurred
      with
      a corresponding increase in the carrying amount of the related long-lived
      asset.





The
      following table provides a rollforward of the asset retirement obligations
      for
      the first three months of fiscal 2008:





Carrying
                amount of asset retirement obligations as of April 1, 2007
            
            $
            400,584Liabilities
                incurred
            
            
            8,088Liabilities
                settled
            
            
            (6
            )Accretion
                expense
            
            
            6,611Carrying
                amount of asset retirement obligations as of June 30, 2007
            
            
            415,277Less:
                Current portion
            
            
            50,000Non-Current
                asset retirement obligation
            
            $
            365,277





The
      asset
      retirement obligation is included on the consolidated balance sheets with the
      current portion being included in the accounts payable and other accrued
      expenses.





**Income
      Per Common Share.** Basic
      net income per share is computed by dividing net income by the weighted average
      number of common shares outstanding during the period. Diluted net income per
      share is computed by dividing net income by the weighted average number of
      common shares and dilutive potential common shares (stock options) outstanding
      during the period. The following is a reconciliation of the number of shares
      used in the calculation of basic income per share and diluted income per share
      for the three month periods ended June 30, 2007 and 2006.





2007
            
            2006Weighted
                average number of common shares outstanding
            
            
            1,776,809
            
            
            1,743,041Incremental
                shares from the assumed exercise of dilutivestock
                options
            
            
            12,425
            
            
            135,467Dilutive
                potential common shares
            
            
            1,789,234
            
            
            1,878,508





For
      the
      quarter ended June 30, 2007, potential common shares of 184,000, relating to
      stock options, were excluded in the computation of diluted net income per share
      because the options are anti-dilutive. No options outstanding at June 30, 2006
      were excluded in the computation of diluted net income per share. Anti-dilutive
      stock options have a weighted average exercise price of $7.08 at June 30,
      2007.





**Income
      Taxes** .
      The
      Company recognizes deferred tax assets and liabilities for future tax
      consequences of temporary differences between the carrying amounts of assets
      and
      liabilities and their respective tax bases. Deferred tax assets and liabilities
      are measured using enacted tax rates applicable to the years in which those
      differences are expected to be settled. The effect on deferred tax assets and
      liabilities of a change in tax rates under SFAS No. 109 is recognized in net
      income in the period that includes the enactment date. There is no current
      income tax expense for the three months ended June 30, 2007, and deferred income
      tax is $18,332, an effective tax rate of 34%. The Company had a net tax benefit
      of $87,415 for the three months ended June 30, 2006.





Effective
      April 1, 2007, we adopted FASB Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes - An Interpretation of FASB Statement No.
      109* (“FIN
      48”), which clarifies the financial statement recognition and disclosure
      requirements for uncertain tax positions taken or expected to be taken in a
      tax
      return. Any interest and penalties related to uncertain tax positions are
      recorded as interest expense and general and administrative expense,
      respectively. At the time of adoption and as of June 30, 2007, we did not have
      any unrecognized tax benefits.





**Investment
      in GazTex, LLC.** The
      Company’s long-term assets consist of an investment in GazTex, LLC, a Russian
      company owned 50% by OBTX, LLC, accounted for by the equity method. OBTX, LLC
      is
      a Delaware limited liability company in which through January 15, 2007, Mexco
      owned 90% of the interest, with the remaining 10% divided equally among three
      individuals, one of whom is Arden Grover, a director of Mexco Energy
      Corporation. All geological and geophysical costs associated with the evaluation
      of Russian properties were paid 90% by Mexco and 10% by the other three owners
      of OBTX, LLC. On January 16, 2007, we purchased all of the outstanding stock
      of
      OBTX, LLC for $2,051. The investment balance of $20,509 represents the cash
      balance of our investment in GaxTex, LLC. The 10% interest in OBTX, LLC prior
      to
      this purchase is included in our financial statements as a minority interest.
      There have not been any expenses for the quarter ended June 30, 2007 and no
      expenses are expected in the foreseeable future.





Page
          7


**Long
      Term Liabilities.** Long
      term debt consists of a revolving credit agreement with Bank of America, N.A.
      (“Bank”), which provides for a credit facility of $5,000,000, subject to a
      borrowing base determination.  On
      September 26, 2006, the borrowing base was redetermined and increased to
      $4,225,000 bearing interest at prime rate per annum with a maturity date of
      September 30, 2008.  Amounts
      borrowed under this agreement are collateralized by the common stock of the
      Company’s wholly owned subsidiary and all of the Company’s oil and gas
      properties. As of June 30, 2007,  the
      balance outstanding under this agreement was $875,000.





**Recent
      Accounting Pronouncements.**  In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (“SFAS
      157”), which provides guidance for using fair value to measure assets and
      liabilities. The pronouncement clarifies (1) the extent to which companies
      measure assets and liabilities at fair value; (2) the information used to
      measure fair value; and (3) the effect that fair value measurements have on
      earnings. SFAS 157 will apply whenever another standard requires (or permits)
      assets or liabilities to be measured at fair value. SFAS 157 is effective as
      of
      the beginning of our 2009 fiscal year. Management is currently evaluating the
      impact of SFAS 157 on our financial statements.





In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Liabilities - Including an amendment
      of FASB Statement No. 115* (“SFAS
      159”). SFAS 159 permits entities to choose to measure certain financial assets
      and liabilities at fair value. Unrealized gains and losses, arising subsequent
      to adoption, are reported in earnings. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. Management does not anticipate that the
      adoption of SFAS 159 will have a material effect on our consolidated financial
      statements.





**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





Unless
      the context otherwise requires, references to the “Company”, “Mexco”, “we”, “us”
or “our” mean Mexco Energy Corporation and its consolidated
      subsidiaries.





**Cautionary
      Statements Regarding Forward-Looking Statements.** Management’s Discussion and Analysis of Financial Condition and Results of
      Operations (“MD&A”) contains “forward-looking statements” within the meaning
      of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
      and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Forward-looking statements can be identified with words and
      phrases such as “believe,” “expect,” “anticipate,” “should,” “estimate,”
“foresee” or other words and phrases of similar meaning. Forward-looking
      statements appear throughout this Form 10-Q with respect to, among other things:
      profitability, planned capital expenditures; estimates of oil and gas
      production, estimates of future oil and gas prices; estimates of oil and gas
      reserves; future financial condition or results of operations; and business
      strategy and other plans and objectives for future operations. Forward-looking
      statements involve known and unknown risks and uncertainties that could cause
      actual results to differ materially from those contained in any forward-looking
      statement. While we have made assumptions that we believe are reasonable, the
      assumptions that support our forward-looking statements are based upon
      information that is currently available and is subject to change. All
      forward-looking statements in the Form 10-Q are qualified in their entirety
      by
      the cautionary statement contained in this section. We do not undertake to
      update, revise or correct any of the forward-looking information.





**Liquidity
      and Capital Resources.** Historically, we have funded our operations, acquisitions, exploration and
      development expenditures from cash generated by operating activities, bank
      borrowings and issuance of common stock. Our primary financial resource is
      our
      base of oil and gas reserves. We pledge our producing oil and gas properties
      to
      secure our revolving line of credit.





Our
      long
      term strategy is on increasing profit margins while concentrating on obtaining
      reserves with low cost operations by acquiring and developing primarily gas
      properties and secondarily oil properties with potential for long-lived
      production.





For
      the
      first three months of fiscal 2008, cash flow from operations was $194,956
      compared to $319,785 for the first three months of fiscal 2007. The decrease
      was
      primarily due to an increase in accounts receivable. Cash of $311,820 was used
      for additions to property and equipment and we received net proceeds from long
      term debt of $175,000. Accordingly, net cash increased $34,396.




Page
          8


During
      the quarter ending June 30, 2007, we participated in the drilling of a well
      in
      Crane County, Texas of which our costs through June 30, 2007 are approximately
      $124,000. This well is currently being tested.





A
      re-entry in Andrews County involving an expenditure of approximately $47,000
      through August 7, 2007 was unsuccessful.





The
      drilling of a well in Lea County, New Mexico in which we participated was not
      successful. Costs incurred through August 3, 2007 are approximately $180,000;
      however, other methods are being evaluated for the exploration and development
      of this prospect.





We
      are
      currently participating in the drilling and completion of a well in Borden
      County, Texas. Costs incurred through June 30, 2007 are approximately $135,000.
      The results of this well are being evaluated.





In
      addition to maintenance and repairs, we spent additional resources on
      development of wells we operate in Pecos County, Texas. Through June 30, 2007,
      these costs are approximately $60,000.





We
      continue to focus our efforts on the acquisition of royalties in areas with
      significant development potential.





We
      are
      participating in several projects and are reviewing several other projects
      for
      potential participation. The cost of such projects would be funded, to the
      extent possible, from existing cash balances and cash flow from operations.
      The
      remainder may be funded through borrowings on the credit facility.





At
      June
      30, 2007, we had working capital of approximately $380,686 compared to working
      capital of $446,831 at March 31, 2007, a decrease of $66,145 due to an increase
      in accounts payable partially offset by an increase in accounts receivable
      and
      cash and cash equivalents.





Crude
      oil
      and natural gas prices have fluctuated significantly in recent years as well
      as
      in recent months. Fluctuations in price have a significant impact on our
      financial condition and liquidity. However, management is of the opinion that
      cash flow from operations and funds available from financing will be sufficient
      to provide for its working capital requirements and capital expenditures for
      the
      current fiscal year.





**Long-Term
      Debt.** We
      have a
      revolving credit agreement with Bank of America, N.A. (“Bank”), which provides
      for a credit facility of $5,000,000, subject to a borrowing base determination.
      On September 26, 2006, the borrowing base was redetermined and increased to
      $4,225,000 with no monthly commitment reductions. As of June 30, 2007, the
      balance outstanding under this agreement was $875,000. The borrowing base is
      evaluated annually, on or about August 1. Amounts borrowed under this agreement
      are collateralized by the common stock of our wholly owned subsidiary and all
      oil and gas properties.  Two
      letters of credit for $50,000 each, in lieu of a plugging bond covering the
      properties we operate, are outstanding under the facility, one with the Texas
      Railroad commission and one with the State of New Mexico. Interest under this
      agreement is payable monthly at prime rate (8.25% at June 30, 2007 and 2006).  This
      agreement generally restricts our ability to transfer assets or control of
      the
      Company, incur debt, extend credit, change the nature of our business,
      substantially change management personnel or pay cash dividends. The balance
      outstanding on the line of credit as of August 6, 2007 was
      $950,000.





**Results
      of Operations - Three Months Ended June 30, 2007 and 2006.** Net
      income decreased from $227,290 for the quarter ended June 30, 2006 to $34,806
      for the quarter ended June 30, 2007; a decrease of $192,484 as a result of
      an
      increase in production costs and depreciation, depletion and amortization
      partially offset by an increase in oil and gas revenue.





Oil
      and
      gas sales increased from $777,412 for the first quarter of fiscal 2007 to
      $850,144 for the same period of fiscal 2008. This increase of 9% or $72,732
      resulted from an increase in gas price and gas production offset partially
      by a
      decrease in oil price and production. Average gas prices increased from $5.86
      per mcf for the first quarter of fiscal 2007 to $6.74 per mcf for the same
      period of fiscal 2008, while average oil prices  decreased
      from $64.66 per bbl for the first quarter of fiscal  2007
      to
      $59.32 for the same period of fiscal 2008. Oil and gas production quantities
      were 4,631 barrels (“bbls”) and 81,537  thousand
      cubic feet (“mcf”) for the first quarter of fiscal 2007 and 4,392 bbls and
      87,539 mcf for the same period of fiscal 2008, a decrease of 5% in oil
      production and an increase of 7% in gas production.





Production
      costs increased $117,421 or 54% from $215,629 for the first quarter of fiscal
      2007 to $333,050 for  the
      same
      period of fiscal 2008.  This
      was
      the result of increased maintenance and repairs to operated wells in Pecos
      County, Texas during the quarter.





General
      and administrative expenses increased 3% from $261,493 for the first quarter
      of
      fiscal 2007 to $269,624 for the same period of fiscal 2008. This was due
      to  an
      increase in salaries, consulting services and fees.





Page
          9


Depreciation,
      depletion and amortization based on production and other methods  increased
      15%, from $150,529 for the first  quarter
      of fiscal 2007 to $172,884 for the same period of fiscal 2008 primarily due
      to  an
      increase to the full cost pool amortization base.





Interest
      expense increased 52% from $10,099 for the first quarter of fiscal 2007 to
      $15,348 for the same period of fiscal 2008, due to an increase in
      borrowings.





**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





The
      primary sources of market risk for us include fluctuations in commodity prices
      and interest rate fluctuations. At June 30, 2007, we had not entered into any
      hedge arrangements, commodity swap agreements, commodity futures, options or
      other similar agreements relating to crude oil and natural gas.





**Interest
      Rate Risk.**  At
      June
      30, 2007, we had an outstanding loan balance of  $875,000
      under our $5.0 million revolving credit agreement, which bears interest at
      the
      prime rate, which varies from time to time. If the interest rate on our bank
      debt increases or decreases by one percentage point our annual pretax income
      would change by $8,750, based on the outstanding balance at June 30,
      2007.





**Credit
      Risk.** Credit
      risk is the risk of loss as a result of nonperformance by other parties of
      their
      contractual obligations. Our primary credit risk is related to oil and gas
      production sold to various purchasers and the receivables generally are
      uncollateralized. At June 30, 2007, our largest credit risk associated with
      any
      single purchaser was $66,920. We have not experienced any significant credit
      losses.





**Volatility
      of Oil and Gas Prices** .
      Our
      revenues, operating results and future rate of growth are highly dependent
      upon
      the prevailing market prices of, and demand for, oil and natural gas. These
      commodity prices are subject to wide fluctuations and market uncertainties
      due
      to a variety of factors that are beyond our control. These factors include
      the
      level of global demand for petroleum products, foreign supply of oil and gas,
      the establishment of and compliance with production quotas by oil exporting
      countries, weather conditions, the price and availability of alternative fuels,
      and overall economic conditions, both foreign and domestic. We cannot predict
      future oil and gas prices with any degree of certainty and expect energy prices
      to remain volatile and unpredictable. Sustained
      weakness in oil and gas prices may also reduce the amount of net oil and gas
      reserves that we can produce economically. Any reduction in reserves, including
      reductions due to price fluctuations, can reduce the borrowing base under our
      revolving credit facility and adversely affect our liquidity and our ability
      to
      obtain capital for our exploration and development activities. Similarly, any
      improvements in oil and gas prices can have a favorable impact on our financial
      condition, results of operations and capital resources.  If the average oil
      price had increased or decreased by one dollar per barrel for the quarter ended
      June 30, 2007, our pretax income would have changed by $4,392. If the average
      gas price had increased or decreased by one dollar per mcf for the quarter
      ended
      June 30, 2007, our pretax income would have changed by $87,539.





**Item
      4. Controls and Procedures**





We
      maintain controls and procedures designed to ensure that information required
      to
      be disclosed by us in reports filed or submitted under the Securities Exchange
      Act of 1934 is recorded, processed, summarized and reported within the time
      periods specified in the Securities and Exchange Commission rules and forms.
      At
      the end of the period covered by this report, we carried out an evaluation,
      under the supervision and with the participation of management, including the
      Chief Executive Officer and Chief Financial Officer, of the effectiveness of
      the
      design and operation of our disclosure controls and procedures pursuant to
      Securities Exchange Act Rule 13a-15(b). Based upon that evaluation, the Chief
      Executive Officer and Chief Financial Officer concluded that its disclosure
      controls and procedures are effective.





No
      changes in the Company’s internal control over financial reporting occurred
      during the quarter ended June 30, 2007 that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.





Page
          10




PART
      II -
      OTHER INFORMATION


Item
                  1.
                Legal
                    Proceedings





Although
      we may, from time to time, be involved in litigation and claims arising out
      of
      our operations in the normal  course
      of
      business, we are not currently a party to any material legal proceedings. In
      addition, we are not aware of any
      legal
      or governmental proceedings against us, or contemplated to be brought against
      us, under various  environmental
      protection statutes or other regulations to which we are subject.





Item
                1A.
              RiskFactors


There
      have been no material changes to the information previously disclosed in Item
      1A. “Risk Factors” in our 2007 Annual Report on Form 10-K.





Item
              2.
            Unregistered
                Sales of Equity Securities and Use of
                Proceeds


None.





Item
              3.
            Defaults
                Upon Senior Securities


None.





Item
              4.
            Submission
                of Matters to a Vote of Security
                Holders


None.





Item
              5.
            Other
                Information


None.





Item
              6.
            Exhibits


Exhibits


31.1
            Certification
                of the Chief Executive Officer of Mexco Energy Corporation





31.2
            Certification
                of the Chief Financial Officer of Mexco Energy
                Corporation





32.1
            Certification
                of the Chief Executive Officer and Chief Financial Officer of Mexco
                Energy
                Corporationpursuant
                to 18 U.S.C. §1350





**SIGNATURES**





Pursuant
      to the requirements of the Securities and Exchange Act of 1934, the Registrant
      has duly caused this report to be signed on its behalf by the undersigned
      thereunto duly authorized.





MEXCO
                ENERGY CORPORATION(Registrant)Dated:
                August 9, 2007
            /s/
                Nicholas C. TaylorNicholas
                C. TaylorPresidentDated:
                August 9, 2007
            /s/
                Tamala L. McComicTamala
                L. McComicVice
                President, Treasurer and Assistant Secretary





Page
          11