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 September 30, 1998

                          Commission file number 0-6994


                            MEXCO ENERGY CORPORATION
             (Exact name of registrant as specified in its charter)


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


             214 West Texas Avenue, Suite 1101, Midland, Texas 79701
                    (Address of principal executive offices)


                                 (915) 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 [ ]


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

State the number of shares outstanding of each of the issuer's classes of common
stock as of the latest practicable date.

Common Stock, $0.50 par value: 1,623,289 shares outstanding at October 30, 1998
<PAGE>

                            MEXCO ENERGY CORPORATION

                                TABLE OF CONTENTS
                                                                          Page
PART I.  FINANCIAL INFORMATION

 Consolidated Balance Sheets as of September 30, 1998 (Unaudited)
 and March 31, 1998                                                         3

 Consolidated Statements of Operations (Unaudited) for the three and 
 six month periods ended September 30, 1998 and September 30, 1997          4

 Consolidated Statements of Cash Flows (Unaudited) for the six month
 periods ended September 30, 1998 and September 30, 1997                    6

 Note to Unaudited Financial Statements                                     7

 Management's Discussion and Analysis of Financial Condition
 and Results of Operations                                                  8

PART II.  OTHER INFORMATION                                                11

SIGNATURES                                                                 12

                                     Page 2
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

                                                   September 30,     March 31,
                                                       1998            1998     
                                                   ------------    ------------
                                                    (Unaudited)
ASSETS

Current assets:
  Cash and cash equivalents ....................   $    135,204    $    241,348
  Accounts receivable:
    Oil and gas sales ..........................        197,973         199,427
    Related parties ............................          2,958           8,473
  Prepaid Expenses .............................         21,191          15,185
                                                   ------------    ------------
    Total current assets .......................        357,326         464,433

Property and equipment, at cost:
  Oil and gas properties and equipment,
    using full cost method, pledged ............     10,278,534       9,915,701
  Office and computer equipment and software ...         21,874          20,252
                                                   ------------    ------------
                                                     10,300,408       9,935,953
  Less accumulated depreciation, depletion
    and amortization ...........................      6,522,710       5,857,900
                                                   ------------    ------------
    Property and equipment, net ................      3,777,698       4,078,053
                                                   ------------    ------------
Total assets ...................................   $  4,135,024    $  4,542,486
                                                   ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Current portion of long-term debt ............   $    296,000    $    322,000
  Accounts payable and accrued expenses ........        118,627         121,131
                                                   ------------    ------------
    Total current liabilities ..................        414,627         443,131

Long-term debt .................................      1,526,000       1,500,000

Stockholders' equity:
  Preferred stock, par value $1 per share;
    10,000,000 shares authorized; none issued ..           --              --
  Common stock, par value $0.50 per share;
    40,000,000 shares authorized;
    1,623,289 shares issued and outstanding ....        811,644         811,644
  Additional paid in capital ...................      2,875,399       2,875,399
  Retained earnings (deficit) ..................     (1,492,646)     (1,087,688)
                                                   ------------    ------------
    Total stockholders' equity .................      2,194,397       2,599,355
                                                   ------------    ------------
Total liabilities and stockholders' equity .....   $  4,135,024    $  4,542,486
                                                   ============    ============

                    The accompanying note is an integral part
                    of the consolidated financial statements.

                                     Page 3
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
             For the Three Months ended September 30, 1998 and 1997
                                   (Unaudited)

                                                           1998          1997 
                                                        ---------     ---------
Operating revenue:
      Oil and gas sales ............................    $ 376,602     $ 499,536
      Property operator fees .......................        1,044         1,278
      Other ........................................        1,268           722
                                                        ---------     ---------

           Total operating revenue .................      378,914       501,536

Operating costs and expenses:
      Oil and gas production .......................      192,059       166,469
      Depreciation, depletion and amortization .....      168,464       210,658
      General and administrative ...................       59,793        45,625
                                                        ---------     ---------

           Total operating costs and expenses ......      420,316       422,752

Other income and (expenses):
      Interest income ..............................        1,842           629
      Interest expense .............................      (39,871)      (27,259)
                                                        ---------     ---------

           Net other income and expenses ...........      (38,029)      (26,630)
                                                        ---------     ---------

Income before income taxes .........................      (79,431)       52,154

Income tax expense .................................         --           8,233
                                                        ---------     ---------

Net income .........................................    $ (79,431)    $  43,921
                                                        =========     =========

Net income per share:
      Basic .................................           $   (0.05)    $    0.03
      Diluted ...............................           $   (0.05)    $    0.03

Weighted average shares outstanding:
      Basic ....................................        1,623,289     1,623,229
      Diluted ..................................        1,623,289     1,623,229


                   The accompanying note is an integral part
                    of the consolidated financial statements.

                                     Page 4
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
              For the Six Months ended September 30, 1998 and 1997
                                   (Unaudited)

                                                         1998           1997    
                                                     -----------    -----------
Operating revenue:
      Oil and gas sales ..........................   $   826,097    $   954,239
      Property operator fees .....................         2,087          2,556
      Other ......................................         2,196          1,285
                                                     -----------    -----------

           Total operating revenue ...............       830,380        958,080

Operating costs and expenses:
      Oil and gas production .....................       368,442        294,370
      Depreciation, depletion and amortization ...       664,809        402,030
      General and administrative .................       126,208        117,997
                                                     -----------    -----------

           Total operating costs and expenses ....     1,159,459        814,397

Other income and (expenses):
      Interest income ............................         3,140            900
      Interest expense ...........................       (79,019)       (58,824)
                                                     -----------    -----------

           Net other income and expenses .........       (75,879)       (57,924)
                                                     -----------    -----------

Income before income tax expense .................      (404,958)        85,759

Income tax expense ...............................          --           17,205
                                                     -----------    -----------

Net income .......................................   $  (404,958)   $    68,554
                                                     ===========    ===========

Net income per share:
      Basic .................................        $     (0.25)    $     0.04
      Diluted ...............................        $     (0.25)    $     0.04

Weighted average shares outstanding:
      Basic ....................................       1,623,289      1,566,398
      Diluted ..................................       1,623,289      1,566,398


                    The accompanying note is an integral part
                    of the consolidated financial statements.

                                     Page 5
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Six Months ended September 30, 1998 and 1997
                                   (Unaudited)

                                                         1998           1997
                                                     -----------    -----------
Cash flows from operating activities:
  Net income (loss) ..............................   $  (404,958)   $    68,554
  Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
      Deferred income taxes ......................          --           30,632
      Depreciation, depletion and amortization ...       664,809        402,030
      Decrease in accounts receivable ............         6,969         71,277
      Increase (decrease) in accounts payable ....        39,570        (31,520)
      Increase in prepaid assets .................        (6,006)        (2,490)
      Decrease in income taxes payable ...........          --          (38,158)
                                                     -----------    -----------

      Net cash provided by operating activities ..       300,384        500,325

Cash flows from investing activities:
  Additions to property and equipment ............      (406,528)    (1,592,073)
                                                     -----------    -----------

      Net cash used in investing activities ......      (406,528)    (1,592,073)

Cash flows from financing activities:
  Proceeds from issuance of common stock .........          --        1,000,000
  Long-term borrowings ...........................          --          685,000
  Principal payments on long-term debt ...........          --         (500,000)
                                                     -----------    -----------

      Net cash provided by financing activities ..          --        1,185,000

Net increase (decrease) in cash ..................      (106,144)        93,252
Cash, beginning of the period ....................       241,348         40,813
                                                     -----------    -----------

Cash, end of period ..............................   $   135,204    $   134,065
                                                     ===========    ===========

Interest paid ....................................   $    65,820    $    58,970
Income taxes paid ................................   $      --      $    24,731


Non-cash investing and financing activities:
Included in trade  accounts  payable at  September  30,  1998 are capital  costs
attributable  to oil and gas  properties of $40,976.  Included in trade accounts
payable  at March 31,  1998 are  purchases  of oil and gas  properties  totaling
$83,050.

                   The accompanying note is an integral part
                    of the consolidated financial statements.

                                     Page 6
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE A.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND BASIS OF PRESENTATION

     Mexco Energy  Corporation  (the  "Company"),  a Colorado  corporation,  was
organized in 1972 and  maintains  its principal  office in Midland,  Texas.  The
Company and Forman Energy Corporation  ("Forman"),  its wholly owned subsidiary,
are engaged in the acquisition,  exploration,  development and production of oil
and gas. While the Company owns producing  properties and undeveloped acreage in
twelve states,  the majority of its activities are centered in the Permian Basin
of West Texas.

PRINCIPLES OF CONSOLIDATION

     The  accompanying  consolidated  balance sheets include the accounts of the
Company and its wholly owned subsidiary.  All significant inter-company accounts
and transactions have been eliminated in consolidation.

     In the  opinion of  management,  the  accompanying  unaudited  consolidated
financial  statements  contain all  adjustments  necessary to present fairly the
financial  position  of the  Company  and  its  wholly  owned  subsidiary  as of
September  30, 1998,  and the results of its  operations  and cash flows for the
interim periods ended September 30, 1998 and 1997. 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. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted accounting  principles 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.

INCOME (LOSS) PER COMMON SHARE

     Net income (loss) per common share is based on the weighted  average number
of shares outstanding  during the periods presented.  There were no common stock
equivalents  outstanding  as of  September  30, 1997.  Common stock  equivalents
(options) are excluded at September 30, 1998,  since their  inclusion would have
an antidilutive effect on loss per share.

     The Financial  Accounting  Standards  Board (FASB) has issued  Statement of
Financial  Accounting  Standards No. 128 (SFAS 128),  "Earnings Per Share" which
requires  changes in the computation  and reporting of earnings per share.  This
pronouncement,  which becomes  effective for periods  ending after  December 15,
1997,  provides  for the  presentation  of basic  earnings  per share,  computed
without regard to options,  warrants,  and other stock equivalents,  and diluted
earnings per share, which gives effect to these potential dilutive common shares
when they have a dilutive effect on earnings per share.

                                     Page 7
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations ("MDA") 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").  All  statements,  other than  statements of  historical  fact
included  in  MD&A,  including  statements  regarding  the  Company's  operating
strategy,  plans,  objectives and beliefs of management  for future  operations,
planned capital  expenditures and acquisitions are  forward-looking  statements.
Although   the  Company   believes   that  the   assumptions   upon  which  such
forward-looking  statements are based are  reasonable,  it can give no assurance
that such assumptions will prove to be correct.

LIQUIDITY AND CAPITAL RESOURCES

Historically,  the  Company's  sources  of  funding  have  been  from  operating
activities, bank financing and the issuance of common stock.

In the first half of fiscal 1999,  net cash flow was a negative  $106,144.  Cash
flow from  operations was $300,384,  which  included the positive  effects of an
increase  of $39,570 in  accounts  payable  and a decrease of $6,969 in accounts
receivable.  Cash  flow of  $406,528  was used for  additions  to  property  and
equipment.

During the fourth  quarter of fiscal 1998 and the first  quarter of fiscal 1999,
the Company  participated  in the drilling and  completion of four wells with an
approximate 10% working and 8% net revenue  interest in the Viejos Field,  Pecos
County,  Texas  at  a  total  cost  of  approximately   $280,000.   Expenditures
attributable to these wells were  approximately  $180,000 during fiscal 1999. In
September 1998, one of these wells was proposed as a water injection well and is
being converted at an estimated cost to the Company of $10,000.

In September 1998, the Company, as operator,  successfully re-entered a gas well
in Pecos County, Texas at a cost of approximately  $104,000.  Additional capital
costs associated with this well of approximately  $15,000 are anticipated during
the third  quarter of fiscal 1999.  Funds for this project were  provided out of
cash flow from operations and existing cash balances.  A pipeline  connection is
expected to be available by the middle of December 1998. The Company owns a 100%
working  interest  and an  approximate  75% net  revenue  interest in this well.
Although  there have been  favorable  initial  potential  tests of the well, the
Company will be unable to  determine  the  production  capacity of this gas well
until production history is available.

The  Company  is  reviewing  several  other  re-entry  projects  in which it may
participate.   The  estimated   cost  of  these   projects  to  the  Company  is
approximately $200,000, part of which the Company may fund through borrowings on
its bank credit facility  discussed below. The remainder would be funded by cash
flow from operations.

At September  30,  1998,  the Company had  negative  working  capital of $57,301
compared  to working  capital of $21,302 at March 31,  1998,  a net  decrease of
$78,603.  This is due  primarily  to the adverse  impact on revenue of lower oil
prices during the first half of fiscal 1999.

The Company has a revolving  credit  agreement with  NationsBank of Texas,  N.A.
("Bank") which provides for a credit facility of $3,000,000. The credit facility
was amended on August 15, 1998 to increase  the  borrowing  base to  $2,085,000,
with scheduled  monthly  reductions of $43,000 per month beginning  September 5,
1998 and to extend the maturity date to August 15, 2000.  The borrowing  base is
subject to  redetermination on or about August 1, of each year. Amounts borrowed
under this  agreement are  collateralized  by the common stock of Forman and the
Company's  oil and gas  properties.  Interest  under this  agreement  is payable
monthly at prime rate (8.25% at September 30, 1998).  This  agreement  generally
restricts  the Company's  ability to transfer  assets or control of the Company,
incur  debt,  extend  credit,  change  the  nature  of the  Company's  business,
substantially change management personnel or pay dividends.  As of September 30,
1998, the balance outstanding under this agreement was $1,822,000.

The prices of natural gas and crude oil have fluctuated  significantly in recent
years as well as in recent  months.  Fluctuations  in price  have a  significant
impact on the Company's 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 foreseeable future.

YEAR 2000 ISSUE

The Company is in the process of conducting an assessment of the business  risks
associated  with the new century.  These risks relate to the problem  present in
certain  software and embedded logic control  devices to recognize the change in
the  century.  If not  corrected,  the year 2000 could  cause such  devices  and
software to fail or create erroneous results.

The Company's  accounting software vendor is currently modifying its software to
accurately  handle the new century,  with all necessary  changes scheduled to be
completed by the end of 1998, at no additional  cost to the Company.  Therefore,
the Company does not expect to incur any material  expense  associated  with its
own information systems.

With respect to the risks  related to the  Company's  customers,  suppliers  and
financial  institutions,  the Company has  initiated  formal  communications  to
mitigate  or  prevent  the  potential  impact on the  Company's  operations  and
financial  condition.  The  assessment  of the  extent of risk,  related  to the
Company's operations and financial condition,  should be substantially  complete
by the end of 1998.  Until the  assessment  is  complete,  the  Company  can not
reasonably  conclude  that  the  exposure  related  to the  Year  2000  will not
materially  affect the future financial  results,  condition or reporting of the
Company.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

Net income decreased from $43,921 for the three months ended September 30, 1997,
to a net  loss of  $79,431  for the  same  period  in  fiscal  1999.  Individual
categories of income and expense are discussed below.

Oil and gas sales  decreased from $499,536 for the second quarter of fiscal 1998
to $376,602 for the same period of fiscal 1999. This decrease of $122,934 or 25%
resulted from  decreased oil and gas prices and decreased oil  production due to
normal  production  declines,   offset  in  part  by  increased  gas  production
attributable to wells discussed  above.  Oil and gas production  quantities were
12,204  bbls and  117,438  mcf for the second  quarter of fiscal 1999 and 16,024
bbls and  97,561  mcf for fiscal  1998,  a decrease  of 3,820 bbls or 24% and an
increase of 19,877 mcf, or 20%.  Average gas prices decreased from $2.09 per mcf
for the second  quarter of fiscal 1998 to $1.94 per mcf for fiscal  1999,  while
average oil prices  decreased  from $18.47 per bbl for fiscal 1998 to $12.20 per
bbl for fiscal 1999.

Production  costs  increased from $166,469 for the second quarter of fiscal 1998
to $192,059 for the same period of fiscal 1999, an increase of $25,590,  or 15%.
This increase was primarily due to additional operating expenses attributable to
wells drilled and remedial work done on existing properties.

General and  administrative  expenses  were  $59,793  for the second  quarter of
fiscal 1999 and $45,625 for the second  quarter of fiscal  1998,  an increase of
$14,168, or 31%. This increase was primarily due to increased salary and benefit
costs of $18,412, offset in part by a reduction in accounting fees of $6,725.

Depreciation,  depletion and amortization  based on production and other methods
decreased  from  $210,658 for the second  quarter of fiscal 1998 to $168,464 for
the same period of fiscal 1999, a decrease of $42,194 or 20%.  This decrease was
due primarily to prior full cost ceiling  write-downs of oil and gas properties,
which  resulted from lower reserve  estimates.  Lower product  prices have had a
significant impact on the determination of reserve quantity estimates.

Interest expense increased from $27,259 for the second quarter of fiscal 1998 to
$39,871 for the same period of fiscal  1999,  an increase of $12,612 or 46%, due
to increased borrowings outstanding under the loan agreement.

RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

Net income decreased from $68,554 for the six months ended September 30, 1997 to
a net loss of $404,958 for the first half of fiscal 1999.  Individual categories
of income and expenses are discussed below.

Oil and gas sales  decreased  from  $954,239  for the first six months of fiscal
1998 to $826,097 for the same period of fiscal 1999.  This  decrease of $128,142
or 13% resulted from lower oil prices and decreased oil production due to normal
production  declines,  offset in part by  increased  gas  production  from wells
drilled.  Average gas prices  remained  relatively  stable when comparing  these
interim periods. Oil and gas production  quantities were 30,873 bbls and 194,219
mcf for the first six months of fiscal  1998 and 26,404 bbls and 243,823 mcf for
fiscal  1999,  a decrease  of 4,469 bbls or 14% and an increase of 49,604 mcf or
26%.  Average  gas prices  were $2.00 per mcf for the first six months of fiscal
1998 and $2.03 per mcf for fiscal 1999,  while average oil prices decreased from
$18.31 per bbl for fiscal 1998 to $12.59 per bbl for fiscal 1999.

Production costs increased from $294,370 for the first six months of fiscal 1998
to $368,442 for the same period of fiscal  1999,  an increase of $74,072 or 25%.
This increase was primarily due to additional operating expenses attributable to
new wells drilled and remedial work done on existing properties.

General and  administrative  expenses  increased from $117,997 for the first six
months of fiscal  1998 to  $126,208  for the same  period  of  fiscal  1999,  an
increase of $8,211 or 7%. This increase was  primarily  due to increased  salary
and benefit costs of $21,122,  offset in part by a reduction in accounting  fees
of $15,525.

Depreciation,  depletion and amortization  based on production and other methods
increased  from $402,030 for the first six months of fiscal 1998 to $664,809 for
the same period of fiscal 1999, an increase of $262,779 or 65%, due primarily to
a full cost ceiling  write-down  of $288,393.  Lower  product  prices have had a
significant impact on the determination of reserve quantity estimates.

Interest expense  increased from $58,824 for the first six months of fiscal 1998
to $79,019  for the same period of fiscal  1999,  an increase of $20,195 or 34%,
due to additional borrowings outstanding under the loan agreement.


PART II - OTHER INFORMATION

Item 1.  Legal proceedings

                  None.

Item 2  .Changes in securities

                  None.

Item 3.  Defaults upon senior securities

                  None.

Item 4.  Submission of matters to a vote of security holders

On September 15, 1998, the Annual Meeting of the Shareholders of the Company was
held in Midland, Texas, for the purpose of electing a Board of Directors.

Each of the seven directors nominated by the Board of Directors was elected with
1,194,150  votes  for and none  against  out of a total of  1,623,289  shares of
common stock of the Company  issued and  outstanding.  William G.  Duncan,  Jr.,
Thomas Graham, Jr., Nicholas C. Taylor, Thomas R. Craddick, Jack D. Ladd, Gerald
R. Martin,  and Donna Gail Yanko were duly  elected to serve as directors  until
the next annual meeting and until the election of their respective successors.

Item 5.  Other Information


Item 6.  Exhibits and Reports on Form 8-K

                  None.


                                   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: November 11, 1998                               Nicholas C. Taylor
                                                       -----------------------
                                                       Nicholas C. Taylor, 
                                                       President and Treasurer