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 SECURITIESEXCHANGE ACT OF
      1934





For
      the
      quarterly period ended June 30, 2008





OR





 ̈ TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE 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 1101Midland,
                Texas
            
            79701*(Address
                of principal executive offices)*
            
            *(Zip
                code)*





(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 and (2) has been subject to such filing requirements for
      the
      past 90 days. YES þ
      NO  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company
      as
      defined in Rule 12b-2 of the Exchange Act. (Check one):





Large
                Accelerated Filer  ̈
            Accelerated
                Filer ̈Non-Accelerated
                Filer þ
            Smaller
                reporting company ̈*(Do
                not check if a smaller reporting company)*





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





The
      number of shares outstanding of the registrant’s common stock, $0.50 par value,
      as of August 12, 2008 was 1,874,866.







**MEXCO
      ENERGY CORPORATION**





Table
      of Contents





PagePART
                I. FINANCIAL INFORMATIONItem
                1.
            Consolidated
                Balance Sheets as of June 30, 2008 (Unaudited) and March 31,
                2008
            3Consolidated
                Statements of Operations (Unaudited) for the three months ended June
                30,
                2008 and June 30, 2007
            4Consolidated
                Statements of Changes in Stockholders’ Equity (Unaudited) as of June 30,
                2008
            5Consolidated
                Statements of Cash Flows (Unaudited) for the three months ended June
                30,
                2008 and June 30, 2007
            6Notes
                to Consolidated Financial Statements (Unaudited)
            7Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of
                Operations
            9Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            11Item
                4.
            Controls
                and Procedures
            12PART
                II. OTHER INFORMATIONItem
                1.
            Legal
                Proceedings
            12Item
                1A.
            Risk
                Factors
            12Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            12Item
                3.
            Defaults
                upon Senior Securities
            12Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            12Item
                5.
            Other
                Information
            12Item
                6.
            Exhibits
            12SIGNATURES
            13CERTIFICATIONS








**Mexco
      Energy Corporation and Subsidiaries**


CONSOLIDATED
      BALANCE SHEETS





June 30,
            
            March 31,2008
            
            2008(Unaudited)**ASSETS**Current
                assetsCash
                and cash equivalents
            
            $
            220,713
            
            $
            303,617Accounts
                receivable:Oil
                and gas sales
            
            
            1,271,406
            
            
            758,459Trade
            
            
            255,286
            
            
            102,403Related
                parties
            
            
            1,834
            
            
            12,659Prepaid
                costs and expenses
            
            
            48,846
            
            
            22,062Total
                current assets
            
            
            1,798,085
            
            
            1,199,200Investment
                in GazTex, LLC
            
            
            -
            
            
            20,509Property
                and equipment, at costOil
                and gas properties, using the full cost method
            
            
            24,578,655
            
            
            23,941,483Other
            
            
            61,362
            
            
            61,36224,640,017
            
            
            24,002,845Less
                accumulated depreciation, depletion and amortization
            
            
            12,258,740
            
            
            12,019,895Property
                and equipment, net
            
            
            12,381,277
            
            
            11,982,950$
            14,179,362
            
            $
            13,202,659**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilitiesAccounts
                payable and accrued expenses
            
            $
            416,254
            
            $
            571,526Long-term
                debt
            
            
            2,275,000
            
            
            2,600,000Asset
                retirement obligation
            
            
            381,901
            
            
            374,789Deferred
                income tax liability
            
            
            1,227,413
            
            
            1,196,280Stockholders’
                equityPreferred
                stock - $1.00 par value; 10,000,000 shares authorized; none
                outstanding
            
            
            -
            
            
            -Common
                stock - $0.50 par value; 40,000,000 shares authorized; 1,948,866
                and
                1,841,366 shares issued; 1,864,866 and 1,757,366 shares outstanding
                as of
                June 30, 2008 and March 31, 2008, respectively
            
            
            974,433
            
            
            920,683Additional
                paid-in capital
            
            
            5,207,460
            
            
            4,381,269Retained
                earnings
            
            
            4,123,518
            
            
            3,584,729Treasury
                stock, at cost (84,000 shares)
            
            
            (426,617
            )
            
            (426,617
            )Total
                stockholders’ equity
            
            
            9,878,794
            
            
            8,460,064$
            14,179,362
            
            $
            13,202,659





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)





2008
            
            2007Operating
                revenues:Oil
                and gas
            
            $
            1,672,587
            
            $
            850,144Other
            
            
            6,733
            
            
            173Total
                operating revenues
            
            
            1,679,320
            
            
            850,317Operating
                expenses:Production
            
            
            334,988
            
            
            333,050Accretion
                of asset retirement obligation
            
            
            6,938
            
            
            6,611Depreciation,
                depletion and amortization
            
            
            238,844
            
            
            172,884General
                and administrative
            
            
            281,661
            
            
            269,624Total
                operating expenses
            
            
            862,431
            
            
            782,169Income
                from operations
            
            
            816,889
            
            
            68,148Other
                income (expense):Interest
                income
            
            
            336
            
            
            338Interest
                expense
            
            
            (33,735
            )
            
            (15,348
            )Net
                other expense
            
            
            (33,399
            )
            
            (15,010
            )Income
                before income taxes
            
            
            783,490
            
            
            53,138Income
                tax expense:Current
            
            
            213,568
            
            
            -Deferred
            
            
            31,133
            
            
            18,332244,701
            
            
            18,332Net
                income
            
            $
            538,789
            
            $
            34,806Earnings
                per common share:Basic
            
            $
            0.31
            
            $
            0.02Diluted
            
            $
            0.29
            
            $
            0.02Weighted
                average common shares outstanding:Basic
            
            
            1,762,190
            
            
            1,776,809Diluted
            
            
            1,869,075
            
            
            1,789,234





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




Page
          4





**Mexco
      Energy Corporation and Subsidiaries**


CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


(Unaudited)





Additional
            
            
            
            TotalCommon Stock
            
            Treasury
            
            Paid-In
            
            Retained
            
            Stockholders’Par Value
            
            Stock
            
            Capital
            
            Earnings
            
            EquityBalance
                at March 31, 2008
            
            $
            920,683
            
            $
            (426,617
            )
            $
            4,381,269
            
            $
            3,584,729
            
            $
            8,460,064Net
                income
            
            
            -
            
            
            -
            
            
            -
            
            
            538,789
            
            
            538,789Issuance
                of stock through options exercised
            
            
            53,750
            
            
            -
            
            
            593,178
            
            
            -
            
            
            646,928Excess
                tax benefits from stock based compensation
            
            
            
            
            
            
            
            
            213,568
            
            
            
            
            
            213,568Stock
                based compensation
            
            
            -
            
            
            -
            
            
            19,445
            
            
            -
            
            
            19,445Balance
                at June 30, 2008
            
            $
            974,433
            
            $
            (426,617
            )
            $
            5,207,460
            
            $
            4,123,518
            
            $
            9,878,794




SHARE
                ACTIVITYCommon
                stock shares, issued:Balance
                at March 31, 2008
            
            
            1,841,366Issued
            
            
            107,500Balance
                at June 30, 2008
            
            
            1,948,866Common
                stock shares, held in treasury:Balance
                at March 31, 2008
            
            
            (84,000
            )Acquisitions
            
            
            -Balance
                at June 30, 2008
            
            
            (84,000
            )Common
                stock shares, outstanding at June 30, 2008
            
            
            1,864,866





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




Page
          5




**Mexco
      Energy Corporation and Subsidiaries**


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


For
      the
      Three Months Ended June 30,


(Unaudited)


2008
              
              2007Cash
                  flows from operating activities:Net
                  income
              
              $
              538,789
              
              $
              34,806Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Increase
                  in deferred tax liabilities
              
              
              31,133
              
              
              18,332Excess
                  tax benefit from share based payment arrangement
              
              
              (213,568
              )
              
              -Stock-based
                  compensation
              
              
              19,445
              
              
              33,387Depreciation,
                  depletion and amortization
              
              
              238,844
              
              
              172,884Accretion
                  of asset retirement obligations
              
              
              6,938
              
              
              6,611Changes
                  in assets and liabilities:Increase
                  in accounts receivable
              
              
              (655,004
              )
              
              (79,388
              )(Increase)
                  decrease in prepaid expenses
              
              
              (26,785
              )
              
              25,409Increase
                  in income taxes payable
              
              
              213,568
              
              
              -Increase
                  (decrease) in accounts payable and accrued expenses
              
              
              232,841
              
              
              (17,085
              )Net
                  cash provided by operating activities
              
              
              386,201
              
              
              194,956Cash
                  flows from investing activities:Additions
                  to oil and gas properties
              
              
              (1,023,675
              )
              
              (311,820
              )Proceeds
                  from Investment in GazTex, LLC
              
              
              18,700
              
              
              -Proceeds
                  from sale of oil and gas properties and equipment
              
              
              374
              
              
              507Net
                  cash used in investing activities
              
              
              (1,004,601
              )
              
              (311,313
              )Cash
                  flows from financing activities:Acquisition
                  of treasury stock
              
              
              -
              
              
              (24,247
              )Proceeds
                  from exercise of stock options
              
              
              646,928
              
              
              -Reduction
                  of long-term debt
              
              
              (700,000
              )
              
              (50,000
              )Proceeds
                  from long-term debt
              
              
              375,000
              
              
              225,000Excess
                  tax benefit from share based payment arrangement
              
              
              213,568
              
              
              -Net
                  cash provided by financing activities
              
              
              535,496
              
              
              150,753Net
                  (decrease) increase in cash and cash equivalents
              
              
              (82,904
              )
              
              34,396Cash
                  and cash equivalents at beginning of period
              
              
              303,617
              
              
              72,537Cash
                  and cash equivalents at end of period
              
              $
              220,713
              
              $
              106,933Supplemental
                  disclosure of cash flow information:Cash
                  paid for interest
              
              $
              35,243
              
              $
              22,736Non-cash
                  investing and financing activities:Asset
                  retirement obligations
              
              $
              433
              
              $
              8,088





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




Page
          6




MEXCO
      ENERGY CORPORATION AND SUBSIDIARIES


**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, 2008, and the results of its operations and cash flows for the
      interim periods ended June 30, 2008 and 2007. 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** .
      The
      Company recognized compensation expense of $19,445 and $33,387 in general and
      administrative expense in the Consolidated Statements of Operations for the
      three months ended June 30, 2008 and 2007, respectively.





The
      following table is a summary of activity of stock options for the three months
      ended June 30, 2008:


Weighted Average
              
              Weighted AggregateNumber of
              
              Exercise Price
              
              Average Remaining
              
              IntrinsicShares
              
              Per Share
              
              Contract Life in Years
              
              ValueOutstanding at
                  March 31, 2008
              
              
              290,000
              
              $
              6.06
              
              
              3.30
              
              $
              (535,750
              )Granted
              
              
              -
              
              
              -Exercised
              
              
              107,500
              
              
              6.02Forfeited
                  or Expired
              
              
              20,000
              
              
              7.75Outstanding
                  at June 30, 2008
              
              
              162,500
              
              $
              5.88
              
              
              3.78
              
              $
              5,571,278Vested
                  at June 30, 2008
              
              
              107,500
              
              $
              5.69
              
              
              3.73
              
              $
              3,705,553Exercisable
                  at June 30, 2008
              
              
              107,500
              
              $
              5.69
              
              
              3.73
              
              $
              3,705,553





There
      were no stock options granted during the quarters ended June 30, 2008 and 2007.





Page
          7




During
      the three months ended June 30, 2008, employees and directors exercised a total
      of 107,500 options at exercise prices between $4.00 and $8.24 per share. The
      Company received proceeds of $646,928 from these exercises. The total intrinsic
      value of the exercised options was $3,901,840. No tax deduction is recorded
      when
      options are awarded. Of these exercised options, 44,500 shares resulted in
      a
      disqualifying disposition and a tax benefit for the company of $213,568 for
      the three months ended June 30, 2008. The Company issued new shares of common
      stock to settle these option exercises.





No
      forfeiture rate is assumed for stock options granted to directors or employees
      due to the forfeiture rate history for these types of awards. On April 2, 2008,
      20,000 stock options expired because they were not exercised prior to the end
      of
      their ten-year term.





Outstanding
      options at June 30, 2008 expire between September 2009 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, 2008 totals
      approximately $72,967 which is expected to be recognized over a weighted average
      of 2.41 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 2009:


Carrying
                  amount of asset retirement obligations as of April 1, 2008
              
              $
              424,789Liabilities
                  incurred
              
              
              433Liabilities
                  settled
              
              
              (259
              )Accretion
                  expense
              
              
              6,938Carrying
                  amount of asset retirement obligations as of June 30, 2008
              
              
              439,901Less:
                  Current portion
              
              
              50,000Non-Current
                  asset retirement obligation
              
              $
              381,901





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, 2008 and 2007.





2008
            
            2007Weighted
                average common shares outstanding – basic
            
            
            1,762,190
            
            
            1,776,809Effect
                of the assumed exercise of dilutive stock options
            
            
            106,885
            
            
            12,425Weighted
                average common shares outstanding **–**
                dilutive
            
            
            1,869,075
            
            
            1,789,234Earnings
                per common share:Basic
            
            $
            0.31
            
            $
            0.02Diluted
            
            $
            0.29
            
            $
            0.02





For
      the
      quarter ended June 30, 2008, no potential common shares relating to stock
      options were excluded in the computation of diluted net income per share. For
      the quarter ended June 30, 2007, 184,000 stock options were excluded in the
      computation of diluted net income per share because the options were
      anti-dilutive. The June 30, 2007 anti-dilutive stock options had a weighted
      average exercise price of $7.08.





**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. For the three months
      ended June 30, 2008, current income tax is $213,568 and deferred income tax
      is
      $31,133, resulting in an effective tax rate of 31%. The deferred income tax
      for
      the three months ended June 30, 2007 was $18,332, an effective tax rate of
      34%.
      There was no current income tax for the three months ended June 30, 2007.





Page
          8




Under
      FIN
      No. 48, any interest and penalties related to uncertain tax positions are
      recorded as interest expense and general and administrative expense,
      respectively. For the quarter ended June 30, 2008, the amount of
      unrecognized tax benefits was $754,000. For the quarter ended June 30, 2007, there
      were no unrecognized
      tax benefits.





**Investment
      in GazTex, LLC.** The
      Company's long-term asset consisted 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 from January 16,
      2007, Mexco owned 100% of the interest. In May 2008, we dissolved GazTex, LLC
      and received our initial cash investment less related fees and expenses for
      a
      net amount of $18,700.





**Long
      Term Liabilities.** Long
      term liabilities consist of a revolving credit agreement with Bank of America,
      N.A. (“Bank”), which provides for a credit facility of $5,000,000 with no
      monthly commitment reductions. The borrowing base is evaluated annually, on
      or
      about September 1. Amounts borrowed under this agreement are collateralized
      by
      the common stock of one of the Company’s wholly owned subsidiaries and all of
      the Company’s oil and gas properties. On September 26, 2007, the borrowing base
      was redetermined and set at $4,225,000 bearing interest at prime rate per annum
      with a maturity date of October 31, 2009. 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 (5.0% and 8.25% at June 30, 2008 and 2007, respectively). The
      balance outstanding on the line of credit as of June 30, 2008 was
      $2,275,000.





**Recent
      Accounting Pronouncements.**  Effective
      April 1, 2008, the Company implemented Financial Accounting Standards
      Board (“FASB”) Statement of Financial Accounting Standards No. 157, *Fair
      Value Measurements* (“SFAS
      157”), which defines fair value, establishes a framework for its measurement and
      expands disclosures about fair value measurements. Mexco elected to
      implement this Statement with the one-year deferral permitted by FASB Staff
      Position (“FSP”) 157-2 for nonfinancial assets and nonfinancial liabilities
      measured at fair value, except those that are recognized or disclosed on a
      recurring basis (at least annually). The deferral applies to nonfinancial assets
      and liabilities measured at fair value in a business combination; impaired
      properties, plants and equipment; intangible assets and goodwill; and initial
      recognition of asset retirement obligations and restructuring costs for
      which the Company uses fair value. Management does not
      expect any significant impact to the consolidated financial statements when
      SFAS 157 for these assets and liabilities is implemented.





**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 (the “Securities Act”), and Section
      21E of the Securities Exchange Act of 1934 (the “Exchange Act”). Forward-looking
      statements include statements regarding our plans, beliefs or current
      expectations and my be signified by the words “could”, “should”, “expect”,
“project”, “estimate”, “believe”, “anticipate”, “intend”, “budget”, “plan”,
“forecast”, “predict” and 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; future project dates; estimates of future oil and gas
      prices; estimates of oil and gas reserves; our future financial condition or
      results of operations; and our 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.





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          9




For
      the
      first three months of fiscal 2009, cash flow from operations was $386,201
      compared to $194,956 for the first three months of fiscal 2008. This increase
      was primarily due to an increase in net income. Cash of $1,023,675 was used
      for
      additions to oil and gas properties and $325,000 for net reduction in long
      term
      debt. Cash of $646,928 was received from exercises of stock options.
      Accordingly, net cash decreased $82,904.





During
      fiscal 2008, we participated in an exploratory well in San Patricio County,
      Texas. This well has been completed and began producing natural gas as well
      as
      oil in April 2008. Costs incurred for this project are approximately $178,000.





We
      are in
      the process of acquiring mineral, royalty and surface interests in several
      counties, mainly in Texas. Purchases incurred related to this project through
      June 2008 are approximately $34,000.





During
      the third quarter of fiscal 2008, we acted as operator and drilled an
      exploratory well in Loving County, Texas. This well has been completed and
      based
      on a four point test by an independent testing firm, was calculated to produce
      at an absolute open flow rate of 12,773,000 cubic feet of natural gas per day.
      During this test which lasted four hours, the well actually produced 1,366,000
      cubic feet of natural gas, 26 barrels of 63 gravity condensate and 12 barrels
      of
      water on chokes ranging from 11/64 to 15/64 inches. Previously the well had
      been
      shut in for a period in excess of 72 hours. The rates at which this will be
      produced and sold have not yet been determined and may be substantially
      different from these potential tests, based on regulatory and engineering
      considerations as well as performance of the well over longer periods of time.
      We are in the process of acquiring a right-of-way and preparing to build a
      pipeline to enable production and sales of natural gas from this well. Our
      share
      of the costs incurred for this project through July 31, 2008 is approximately
      $408,000.





On
      December 31, 2007, we purchased 122 mineral acres amounting to approximately
      21.45% royalty interest in Tarrant County, Texas for $1,850,000. At the time
      of
      purchase, this property contained one producing well in the Newark East (Barnett
      Shale) Field. Two additional wells have been completed and all three wells
      are
      now producing natural gas into a sales pipeline. One additional well is planned
      for a portion of this acreage.





During
      the fourth quarter of fiscal 2008, we drilled a gas well in Reeves County,
      Texas. This well has been completed and began producing in April 2008. Our
      working interest in this well is 32.5% before payout and 24.375% after payout
      (respectively, net revenue interests of 23.875% and 17.9063%).





On
      June
      6, 2008 we purchased mineral and royalty interests contained in an aggregate
      of
      522 acres with royalties varying from .126% to .385% in 6 producing natural
      gas
      wells and 5 proven undeveloped well locations in the Newark East (Barnett-Shale)
      Field of Tarrant County, Texas for approximately $429,000. There are an
      additional 6 potential drill sites on this acreage.





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





We
      are
      participating in several other projects and are reviewing several other projects
      in which we may participate. 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, 2008, we had working capital of approximately $1,381,831 compared to working
      capital of $627,674 at March 31, 2008, an increase of $754,157. This was mainly
      as a result of an increase in account receivables related to oil and gas sales
      and a decrease in accounts payable.





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 adequate liquidity for the current fiscal year.





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, 2007, the borrowing base was redetermined and increased to
      $4,225,000 with no monthly commitment reductions. The borrowing base is
      evaluated annually, on or about September 1. Amounts borrowed under this
      agreement are collateralized by the common stock of one of our wholly owned
      subsidiaries and all of our 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 (5.0% and 8.25% at June 30, 2008 and 2007, respectively). 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 under this agreement as of June 30, 2008 was $2,275,000 and
      $1,500,000 as of August 8, 2008.





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          10




**Results
      of Operations – Three Months Ended June 30, 2008 Compared to Three Months
      Ended June 30, 2007.** Net
      income increased from $34,806 for the quarter ended June 30, 2007 to $538,789
      for the quarter ended June 30, 2008; an increase of $503,983 as a result of
      an
      increase in operating revenues partially offset by an increase in depreciation,
      depletion and amortization and interest expense.





*Oil
      and gas sales.* Revenue
      from oil and gas sales increased from $850,144 for the first quarter of fiscal
      2008 to $1,672,587 for the same period of fiscal 2009. This increase of 97%
      or
      $822,443 resulted from an increase in oil and gas prices and gas production
      offset partially by a decrease in oil production. Revenues from oil and gas
      royalty interests accounted for approximately 37% of our total revenues for
      the
      first quarter of fiscal 2009 compared to 24% for the first quarter of fiscal
      2008. Average gas prices increased from $6.74 per mcf for the first quarter
      of
      fiscal 2008 to $9.70 per mcf for the same period of fiscal 2009. Average oil
      prices increased from $59.32 per bbl for the first quarter of fiscal 2008 to
      $118.57 for the same period of fiscal 2009. Oil and gas production quantities
      were 4,392 barrels (“bbls”) and 87,539 thousand cubic feet (“mcf”) for the first
      quarter of fiscal 2008 and 4,107 bbls and 122,286 mcf for the same period of
      fiscal 2009, a decrease of 6% in oil production and an increase of 40% in gas
      production.





*Production
      and exploration.* Production
      costs increased $1,938 or .6% from $333,050 for the first quarter of fiscal
      2008
      to $334,988 for the same period of fiscal 2009. This was the result of an
      increase in production taxes due to the increase in oil and gas sales partially
      offset by a decrease in lease operating expenses.





*Depreciation,
      depletion and amortization.* Depreciation, depletion and amortization expense increased 38%, from $172,884
      for the first quarter of fiscal 2008 to $238,844 for the same period of fiscal
      2009 primarily due to an increase to the full cost pool amortization base and
      an
      increase in gas production partially offset by an increase in oil and gas
      reserves.





*General
      and administrative expenses.* General
      and administrative expenses increased 4% from $269,624 for the first quarter
      of
      fiscal 2008 to $281,661 for the same period of fiscal 2009. This was due to
      an
      increase in engineering fees.





*Interest
      expense.* Interest
      expense increased 120% from $15,348 for the first quarter of fiscal 2008 to
      $33,735 for the same period of fiscal 2009, due to an increase in borrowings
      partially offset by a decrease in interest rates.





**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, 2008, 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, 2008, we had an outstanding loan balance of $2,275,000 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
      $22,750, based on the outstanding balance at June 30, 2008.





**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 are generally not
      collateralized. At June 30, 2008, our largest credit risk associated with any
      single purchaser was $385,716. We are also exposed to credit risk in the event
      of nonperformance from any of our working interest partners. At June 30, 2008,
      our largest credit risk associated with any working interest partner was
      $39,808. 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. Prices
      for oil and natural gas fluctuate widely. We cannot predict future oil and
      natural gas prices with any certainty. Historically, the markets for oil and
      gas
      have been volatile, and they are likely to continue to be volatile. Factors
      that
      can cause price fluctuations 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 political and economic
      conditions in oil producing countries.





Changes
      in oil and gas prices impact both estimated future net revenue and the estimated
      quantity of proved reserves. Any reduction in reserves, including reductions
      due
      to price fluctuations, can reduce the borrowing base under our revolving credit
      facility and adversely affect the amount of cash flow available for capital
      expenditures and our ability to obtain additional capital for our exploration
      and development activities. In addition, we may have ceiling test writedowns
      when prices decline. Lower prices may also reduce the amount of crude oil and
      natural gas that can be produced economically. Thus,
      we
      may experience material increases or decreases in reserve quantities solely
      as a
      result of price changes and not as a result of drilling or well
      performance.





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          11




Similarly,
      any improvements in oil and gas prices can have a favorable impact on our
      financial condition, results of operations and capital resources.  Oil and
      natural gas prices do not necessarily fluctuate in direct relationship to each
      other. Our financial results are more sensitive to movements in natural gas
      prices than oil prices because most of our production and reserves are natural
      gas. If the average oil price had increased or decreased by one dollar per
      barrel for the quarter ended June 30, 2008, our pretax income would have changed
      by $4,107. If the average gas price had increased or decreased by one dollar
      per
      mcf for the quarter ended June 30, 2008, our pretax income would have changed
      by
      $122,286.





**Item
      4. Controls and Procedures**





We
      maintain disclosure controls and procedures to ensure that the information
      we
      must disclose in our filings with the SEC is recorded, processed, summarized
      and
      reported on a timely basis. At the end of the period covered by this report,
      our
      principal executive officer and principal financial officer have reviewed and
      evaluated the effectiveness of our disclosure controls and procedures, as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on such evaluation,
      such officers have concluded that, as of June 30, 2008, our disclosure controls
      and procedures were effective in timely alerting them to material information
      relating to us (and our consolidated subsidiaries) required to be included
      in
      our periodic SEC filings.





No
      changes in the Company’s internal control over financial reporting occurred
      during the quarter ended June 30, 2008 that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.





PART
      II – OTHER INFORMATION





Item
              1.
            Legal
                Proceedings





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 currently a party to a
      lawsuit that is being filed against the drilling company of a well in which
      we
      have a working interest of approximately 6.5%. 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.
            Risk
                Factors





There
      have been no material changes to the information previously disclosed in Item
      1A. “Risk Factors” in our 2008 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


Exhibits31.1
              Certification
                  of the Chief Executive Officer of Mexco Energy Corporation31.2
              Certification
                  of the Chief Financial Officer of Mexco Energy
                  Corporation32.1
              Certification
                  of the Chief Executive Officer and Chief Financial Officer of Mexco
                  Energy
                  Corporation pursuant to 18 U.S.C.
§1350


Page
          12




**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 12, 2008
            /s/
                Nicholas C. TaylorNicholas
                C. TaylorPresidentDated:
                August 12, 2008
            /s/
                Tamala L. McComicTamala
                L. McComicVice
                President, Treasurer and Assistant
                Secretary





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          13