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, 2004

                                       Or

                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                          (IRS Employer
    of incorporation)                             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 [ ]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). YES [ ] NO [X]


                      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:
                1,733,041 shares outstanding at November 5, 2004

<PAGE>

                            MEXCO ENERGY CORPORATION

                                Table of Contents
                                -----------------

                                                                            Page
                                                                            ----

PART I.  FINANCIAL INFORMATION
------------------------------

   Item 1.  Consolidated Balance Sheets as
            of September 30, 2004 (Unaudited) and March 31, 2004              3

            Consolidated Statements of Operations (Unaudited) for the
            three and six months ended September 30, 2004 and
            September 30, 2003                                                4

            Consolidated Statements of Cash Flows (Unaudited) for the
            six months ended September 30, 2004 and September 30, 2003        5

            Notes to Unaudited Consolidated Financial Statements              6

   Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                         9

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk       13

   Item 4.  Controls and Procedures                                          13

PART II.  OTHER INFORMATION                                                  14

   Item 1.  Legal Proceedings
   Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
   Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES                                                                   15

CERTIFICATIONS                                                               21


                                     Page 2
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                          September 30,     March 31,
                                                              2004            2004
                                                          ------------    ------------
                                                          (Unaudited)
<S>                                                       <C>             <C>
ASSETS
------
   Current assets:
      Cash and cash equivalents                           $     84,350    $     92,795
      Accounts receivable:
         Oil and gas sales                                     369,337         396,902
         Trade                                                  25,008           3,101
         Related parties                                         4,131              --
         Prepaid costs and expenses                             31,754          32,382
                                                          ------------    ------------
            Total current assets                               514,580         525,180

   Investment in GazTex, LLC                                    20,509              --

   Property and equipment, at cost:
      Oil and gas properties, using the full
         cost method, ($1,066,670 and $858,602
         excluded from amortization as of
         September 30, 2004 and March 31, 2004,
         respectively)                                      17,754,015      16,959,560
   Other                                                        36,063          34,542
                                                          ------------    ------------
                                                            17,790,078      16,994,102
   Less accumulated depreciation,
      depletion and amortization                             9,619,870       9,346,818
                                                          ------------    ------------

      Property and equipment, net                            8,170,208       7,647,284
                                                          ------------    ------------

                                                          $  8,705,297    $  8,172,464
                                                          ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

   Current liabilities:
         Accounts payable - trade                         $    119,141    $     97,308
         Income tax payable                                     97,230              --
         Current portion of long-term debt                          --         443,378
                                                          ------------    ------------
            Total current liabilities                          216,371         540,686

   Long-term debt                                            1,875,000       1,256,622

   Asset retirement obligation                                 397,792         420,665
   Deferred income tax liability                               532,817         519,272
   Commitments and contingencies                                    --              --
   Minority Interest                                             2,051              --


   Stockholders' equity
      Preferred stock - $1 par value;
         10,000,000 shares authorized; none outstanding             --              --
      Common stock - $0.50 par value;
         40,000,000 shares authorized;
         1,766,566 shares issued                               883,283         883,283
      Additional paid in capital                             3,808,779       3,784,493
      Retained earnings                                      1,118,129         896,368
      Treasury stock, at cost (30,525 shares)                 (128,925)       (128,925)
                                                          ------------    ------------
      Total stockholders' equity                             5,681,266       5,435,219
                                                          ------------    ------------
                                                          $  8,705,297    $  8,172,464
                                                          ============    ============
</TABLE>

                   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 and Six Months ended September 30, 2004 and 2003
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                 Three Months Ended               Six Months Ended
                                                    September 30                    September 30
                                                2004            2003            2004            2003
                                            ------------    ------------    ------------    ------------
<S>                                         <C>             <C>             <C>             <C>
Operating revenue:
   Oil and gas sales                        $    722,452    $    768,852    $  1,397,447    $  1,535,912
   Other                                           3,174           1,859           5,182           3,125
                                            ------------    ------------    ------------    ------------
      Total operating revenue                    725,626         770,711       1,402,629       1,539,037

Operating costs and expenses:
   Oil and gas production                        206,226         241,168         397,964         509,860

   Accretion expense                               6,432           5,912          13,253          11,736
   Depreciation, depletion
      and amortization                           120,280         170,695         273,052         336,914
   General and administrative                    167,528         156,644         331,947         272,622
                                            ------------    ------------    ------------    ------------
      Total operating costs
         and expenses                            500,466         574,419       1,016,216       1,131,132
                                            ------------    ------------    ------------    ------------

                                                 225,160         196,292         386,413         407,905
Other income and (expenses):
   Interest income                                    77              55             130             117
   Interest expense                              (20,963)        (20,860)        (37,806)        (45,140)
                                            ------------    ------------    ------------    ------------

      Net other income and expenses              (20,886)        (20,805)        (37,676)        (45,023)
                                            ------------    ------------    ------------    ------------

Income before income taxes                       204,274         175,487         348,737         362,882

Income tax expense:
   Current                                        70,006              --         113,431              --
   Deferred                                       15,208          57,017          13,545          92,652
                                            ------------    ------------    ------------    ------------
                                                  85,214          57,017         126,976          92,652
                                            ------------    ------------    ------------    ------------
Income before cumulative effect
   of accounting change                          119,060         118,470         221,761         270,230
Cumulative effect of accounting
   change, net of tax                                 --              --              --        (102,267)
                                            ------------    ------------    ------------    ------------
   Net income                               $    119,060    $    118,470    $    221,761    $    167,963
                                            ============    ============    ============    ============

Net income (loss) per common share:
Basic:
   Income before cumulative effect
      of accounting change                  $       0.07    $       0.07    $       0.13    $       0.16
   Cumulative effect, net of tax            $         --    $         --    $         --    $      (0.06)
   Net income                               $       0.07    $       0.07    $       0.13    $       0.10

Diluted:
   Income before cumulative effect
      of accounting change                  $       0.07    $       0.06    $       0.12    $       0.15
   Cumulative effect, net of tax            $         --    $         --    $         --    $      (0.06)
   Net income                               $       0.07    $       0.06    $       0.12    $       0.09

Pro forma amounts assuming, the new
method of accounting for asset retirement
obligations is applied retroactively:
   Net Income                               $    119,060    $    118,470    $    221,761    $    270,230
      Basic earnings per share              $       0.07    $       0.07    $       0.13    $       0.16
      Diluted earnings per share            $       0.07    $       0.06    $       0.12    $       0.15
</TABLE>

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


                                     Page 4
<PAGE>

                     MEXCO ENERGY CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Six Months ended September 30, 2004 and 2003
                                   (Unaudited)

                                                          2004          2003
                                                       ----------    ----------
Cash flows from operating activities:
   Net income                                          $  221,761    $  167,963
   Cumulative effect of accounting change,
      net of tax                                               --       102,267
   Adjustments to reconcile net income
      to net cash provided by operating
      activities:
      Increase in deferred income taxes                    13,545        92,651
      Stock-based compensation                             24,286        20,991
      Depreciation, depletion and
         amortization                                     273,052       336,914
      Accretion of asset retirement obligations            13,253        11,736
      Decrease in accounts receivable                       1,527       152,572
      (Increase)decrease in prepaid expenses                  628       (27,204)
   Increase in accounts payable
      and accrued expenses                                 13,910        20,253
   Increase in income tax payable                          97,230            --
                                                       ----------    ----------
   Net cash provided by operating
      activities                                          659,192       878,143

Cash flows from investing activities:
   Additions to property and equipment                   (824,179)     (430,209)
                                                       ----------    ----------
      Net cash used in investing
      activities                                         (824,179)     (430,209)

Cash flows from financing activities:
   Acquisition of treasury stock                               --        (1,385)
   Investment in subsidiary (GazTex, LLC)                 (18,458)           --
   Payments of capital lease obligations                       --       (42,668)
   Long-term borrowings                                   425,000            --
   Principal payments on long-term debt                  (250,000)     (400,000)
                                                       ----------    ----------
   Net cash (used in) provided by
      financing activities                                156,542      (444,053)
                                                       ----------    ----------

Net increase (decrease) in cash                            (8,445)        3,881

Cash, beginning of the period                              92,795        68,547
                                                       ----------    ----------

Cash, end of period                                    $   84,350    $   72,428
                                                       ==========    ==========

Interest paid                                          $   36,040    $   47,138
Income taxes paid                                      $       --    $       --


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


                                     Page 5
<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,  a Colorado  corporation,  was  organized in 1972 and
maintains its  principal  office in Midland,  Texas.  The Company and its wholly
owned   subsidiary,   Forman  Energy   Corporation,   a  New  York  corporation,
(collectively  the  "Company")  are  engaged  in the  acquisition,  exploration,
development  and  production  of oil and gas.  While the Company owns  producing
properties  and  undeveloped  acreage  in eleven  states,  the  majority  of its
activities are centered in the Permian Basin of West Texas. Although most of the
Company's oil and gas interests are operated by others,  the Company  operates a
number of 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 and
its wholly owned  subsidiary  as of September  30, 2004,  and the results of its
operations and cash flows for the interim  periods ended  September 30, 2004 and
2003.  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.

Principles of Consolidation
---------------------------

The accompanying consolidated balance sheets include the accounts of the Company
and its wholly owned subsidiary. Mexco Energy Corporation owns a 90% interest in
OBTX, LLC which is consolidated  herein. All significant  intercompany  accounts
and transactions have been eliminated in consolidation.

Use of Estimates
----------------

In preparing  financial  statements in  conformity  with  accounting  principles
generally  accepted in the United  States of America,  management is required to
make  estimates  and  assumptions  that  affect the  amounts  reported  in these
financial statements. 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  and the  related  present  value of
estimated future net cash flows.

Stock-Based Compensation
------------------------

The Company  accounts  for  employee  stock  option  grants in  accordance  with
Accounting  Principles  Board  Opinion No. 25  "Accounting  for Stock  Issued to
Employees"  ("APB  25"),  as amended by  Financial  Accounting  Standards  Board
("FASB")  Interpretation No. 44, "Accounting for Certain Transactions  involving
Stock  Compensation,"  an  interpretation  of APB  Opinion  No. 25. The  Company
applies the intrinsic  value method in accounting for its employee stock options
and records no compensation costs for its stock option


                                     Page 6
<PAGE>

awards to employees.  The Company recognizes  compensation cost related to stock
options awarded to independent consultants based on fair value of the options at
date of grant.  For the six  months  ending  September  30,  2004,  the  Company
recognized $24,286 related to these stock options for independent consultants.

The  following  pro forma  information,  as required by  Statement  of Financial
Accounting  Standards No. 123 "Accounting for Stock-Based  Compensation"  ("SFAS
123"), as amended by Statement of Financial  Accounting Standards No. 148 ("SFAS
148"),  presents  net income and earnings  per share  information  as if expense
relating to stock options issued had been determined  based on the fair value at
the grant dates for all employee awards under the plan:

<TABLE>
<CAPTION>
                                     Three Months Ended           Six Months Ended
                                        September 30,               September 30,
                                     2004          2003          2004          2003
                                  ----------    ----------    ----------    ----------
<S>                               <C>           <C>           <C>           <C>
Net income, as reported           $  119,060    $  118,470    $  221,761    $  167,963
Stock-based employee
compensation expense determined
under fair value based method
(SFAS 123), net of tax            $  (21,693)   $  (25,667)   $  (44,034)   $  (40,066)
                                  ----------    ----------    ----------    ----------

Net income, pro forma             $   97,367    $   92,803    $  177,727    $  127,897
                                  ==========    ==========    ==========    ==========
Basic earnings per share:

                  As reported     $     0.07    $     0.07    $     0.13    $     0.10
                  Pro forma       $     0.06    $     0.05    $     0.10    $     0.07

Diluted earnings per share:

                  As reported     $     0.07    $     0.06    $     0.12    $     0.09
                  Pro forma       $     0.06    $     0.05    $     0.10    $     0.07
</TABLE>

Long Term Assets
----------------

The  Company's  long term  assets  consist of an  investment  in GazTex,  LLC, a
Russian  Company  owned  50% by  OBTX,  LLC.  OBTX,  LLC is a  Delaware  limited
liability  company in which Mexco owns 90% of the  interest,  with the remaining
10% divided  equally among three  individuals,  one of which is Arden Grover,  a
director of Mexco Energy Corporation.

Asset Retirement Obligations
----------------------------

The  Company's  asset  retirement   obligations   relate  to  the  plugging  and
abandonment of oil and gas properties. The Company adopted SFAS No. 143 on April
1,  2003.  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 and a
corresponding  increase in the carrying amount of the related  long-lived asset.
The related cumulative  adjustment to 2004 net income was a decrease of $102,267
net of tax, or ($0.06) per share. Additionally, in 2004, the Company recorded an
initial asset retirement obligation liability of $358,419 and an increase to net
properties and equipment and other assets of $210,206.

The asset  retirement  obligations  are  recorded  at fair  value and  accretion
expense,  recognized  over the life of the property,  increases the liability to
its  expected  settlement  value.  If the  fair  value  of the  estimated  asset
retirement  obligation  changes,  an  adjustment  is recorded for both the asset
retirement obligation and the asset retirement cost.


                                     Page 7
<PAGE>

The following table provides a rollforward of the asset  retirement  obligations
for the current period:

Carrying amount of asset retirement obligations
   as of April 1, 2004                                               $ 420,665
Liabilities incurred                                                     1,469
Liabilities settled                                                    (25,815)
Accretion expense                                                       13,253
                                                                     ---------
Carrying amount of asset retirement obligations
   as of September 30, 2004                                          $ 409,572
                                                                     =========

The current portion of the asset retirement  obligation as of September 30, 2004
is $11,780 and is included in accounts payable and other accrued expenses.

Oil and Gas Costs
-----------------

The cost of certain oil and gas leases that the  Company has  acquired,  but not
evaluated has been excluded in computing amortization of the full cost pool. The
Company will begin to amortize these properties when the projects are evaluated,
which is currently  estimated to be within this fiscal year. Costs excluded from
amortization  at  September  30, 2004 total  $874,978  for U.S.  properties  and
$191,692  for Russian  properties.  The Russian  costs in fiscal 2004 and fiscal
2005  were for the  feasibility  study  referred  to in Note H to the  Company's
financial statements in its Annual Report to the SEC on Form 10K.

Earnings Per Share
------------------

Basic  earnings  per share is computed by  dividing  net income by the  weighted
average number of common shares outstanding during the period.  Diluted earnings
per share is computed by dividing net income by the weighted  average  number of
common shares and dilutive  potential common shares (stock options and warrants)
outstanding  during the period.  The following is a reconciliation of the number
of shares  used in the  calculation  of basic  earnings  per  share and  diluted
earnings per share for the three and six month periods ended  September 30, 2004
and 2003.

<TABLE>
<CAPTION>
                                         Three Months Ended         Six Months Ended
                                            September 30              September 30
                                         2004         2003         2004         2003
                                      ----------   ----------   ----------   ----------
<S>                                   <C>          <C>          <C>          <C>
Weighted average number of
   common shares outstanding           1,736,041    1,736,041    1,736,041    1,736,054
Incremental shares from the
   assumed exercise of dilutive
   stock options                          95,291       98,006      108,114       67,102
                                      ----------   ----------   ----------   ----------
   Dilutive potential common shares    1,831,332    1,834,047    1,844,155    1,803,156
                                      ==========   ==========   ==========   ==========
</TABLE>

Options and warrants to purchase  110,000 shares at an average exercise price of
$7.24 and 70,000 shares at an average  exercise  price of $7.61  outstanding  at
September 30, 2004 and September  30, 2003,  respectively,  were not included in
the  computation  of diluted net income per share because the exercise  price of
the options and warrants was greater than the average market price of the common
stock of the Company and, therefore, the effect would be antidilutive.

Income Taxes
------------

Current income tax expense for the three and six months ended September 30, 2004
is $70,006 and $113,431,  respectively.  There is no current  income tax expense
for  the  three  or six  months  ended  September  30,  2003  due to a tax  loss
carryforward of approximately $139,000 from the year ending March 31, 2003.


                                     Page 8
<PAGE>

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  July  29,  2004,  the  borrowing  base  was
redetermined  and set at  $2,500,000.  As of  September  30,  2004,  the balance
outstanding  under this  agreement  was  $1,875,000.  No principal  payments are
required for fiscal 2005 based on the revised  borrowing base.  Amounts borrowed
under this  agreement  are  collateralized  by the common stock of the Company's
wholly owned subsidiary and all oil and gas properties.

The asset retirement  obligation as of September 30, 2004 represents the present
value of the Company's estimated asset retirement obligations under SFAS 143.

Accounting Pronouncements
-------------------------

In September,  2004 the  Securities and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin No. 106. This pronouncement will require companies that use
the full cost method for accounting  for their oil and gas producing  activities
to include an  estimate  of future  asset  retirement  costs to be incurred as a
result of future development  activities on proved reserves in their calculation
of  depreciation,  depletion  and  amortization.  This  pronouncement  will also
require  these  companies to exclude any future cash  outflows  associated  with
settling  asset  retirement  liabilities  from  their  full  cost  ceiling  test
calculation.  This standard  will also require  these  companies to disclose the
impact of their  asset  retirement  obligations  on their oil and gas  producing
activities,   ceiling  test   calculations  and   depreciation,   depletion  and
amortization  calculations.  The  Company  will  adopt  the  provisions  of this
pronouncement  in the third  quarter of fiscal 2005 and is currently  evaluating
the impact, if any, on the Company's consolidated financial statements.


                     MEXCO ENERGY CORPORATION AND SUBSIDIARY

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
                                  OF OPERATIONS

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 "believes,"  "expects,"  "anticipates,"  "should,"  "estimates,"
"foresees"  or other  words and  phrases  of  similar  meaning.  Forward-looking
statements  appear  throughout this Form 10-Q and include  statements  regarding
Company  plans,  beliefs or current  expectations  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  the  Company  has  made  assumptions  that  it  believes  are
reasonable,  the  assumptions  that support its  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.  The  Company  does not
undertake to update, revise or correct any of the forward-looking information.

Liquidity and Capital Resources
-------------------------------

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


                                     Page 9
<PAGE>

The Company's  focus is on increasing  profit  margins  while  concentrating  on
obtaining  gas reserves with low cost  operations  by acquiring  and  developing
primarily gas properties with potential for long-lived production.

For the first six months of fiscal 2005,  cash flow from operations was $659,192
compared to $878,143 for the first six months of fiscal 2004. The cash flow from
operations  for the first six months of fiscal  2005  included  the effects of a
decrease in accounts receivable and prepaid expenses and an increase in accounts
payable and accrued expenses.  Long-term  borrowings  provided $175,000,  net of
repayments  on the line of credit.  Cash of $824,179  was used for  additions to
property and equipment. Accordingly, net cash decreased $8,445.

In August 2004, the Company purchased  partially  developed royalty interests in
Freestone  County,  Texas for $500,000.  These  properties,  operated by XTO and
Anadarko  Energy,  Inc.,  contain 31  producing  wells and an  additional  seven
permitted  and/or  drilling wells in the Cotton Valley  formation.  This acreage
contains approximately 19 potential undrilled locations on 40 acre spacing.

In March 2004 the Company  purchased  partially  developed  royalty interests in
Jackson  Parish,   Louisiana  and  interests  in  Limestone  County,  Texas  for
approximately  $224,000.  The  properties in Limestone  County,  operated by XTO
Energy,  Inc., are in the Cotton Valley formation and contain 23 producing wells
and an  additional 6 permitted  and/or  drilling  wells.  This acreage  contains
approximately 100 potential undrilled locations on 40 acre spacing. The property
in Louisiana,  operated by Anadarko and  producing  from the Lower Cotton Valley
formation,  contains 3 producing  wells and an  additional  5  permitted  and/or
drilling wells.  These royalty purchases  advanced the Company's primary goal of
acquiring natural gas reserves.

In March 2004,  the Company  signed an  agreement  in Moscow,  Russia to begin a
preliminary feasibility study for exploration and development of oil and natural
gas  reserves  in  Russia.  A team  of  U.S.  and  Russia  experts  commenced  a
feasibility study of a number of partially  developed oil and natural gas fields
located in Russia.  Mexco Energy  Corporation  has formed OBTX,  LLC, a Delaware
limited liability company, in which Mexco owns a 90% interest with the remaining
10%  interest  split  equally  among  three  individuals,  one of which is Arden
Grover, a director of Mexco Energy Corporation.  OBTX, LLC, plans to participate
in any Russian ventures entered into and own a 50% interest subject to obtaining
financing and owns a 50% interest in a recently formed Russian  Company,  GazTex
LLC.

The Company has acquired and also is  reviewing  several  projects in the United
States for future  participation.  The cost of such projects would be funded, to
the extent possible,  with existing cash balances and cash flow from operations.
The  remainder  may be funded  through  borrowings  on the bank credit  facility
discussed below.

At September 30, 2004, the Company had working capital of approximately $298,209
compared  to a working  capital  deficit of  approximately  $15,506 at March 31,
2004,  an increase of $313,715  due  primarily  to the  reclassification  of the
current   portion  of  long-term   debt  as  a  result  of  the  borrowing  base
redetermination.

The  Company  has 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  redetermination.  On December 15, 2003 the credit  agreement was
amended  with a maturity  date of August 15, 2005,  which was later  extended to
October 1, 2005.  The borrowing  base was  redetermined  on this date and set at
$1,938,372 with monthly commitment reductions of $45,450 beginning on January 5,
2004. On July 29, 2004,  the borrowing  base was  redetermined  and increased to
$2,500,000, with no monthly commitment reductions. As of September 30, 2004, the
balance  outstanding under this agreement was $1,875,000.  No principal payments
are  anticipated  to be required for fiscal 2005 based on the revised  borrowing
base. A letter of credit for $50,000,  in lieu of a plugging bond with the Texas
Railroad  Commission  covering  the  properties  the Company  operates,  is also
outstanding  under the  facility.  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
(4.75% and 4.00% at September  30, 2004 and 2003,  respectively).  The 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 cash dividends.  The balance
outstanding on the line of credit as of November 1, 2004 was $1,850,000.


                                     Page 10
<PAGE>

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 current fiscal year.

Results of Operations - Three Months Ended September 30, 2004 and 2003
----------------------------------------------------------------------

Net  income  increased  from a net  profit of  $118,470  for the  quarter  ended
September 30, 2003 to a net profit of $119,060 for the quarter  ended  September
30, 2004. Individual categories of income and expense are discussed below.

Oil and gas sales  decreased from $768,852 for the second quarter of fiscal 2004
to $722,452 for the same period of fiscal 2005.  This  decrease of 6% or $46,400
resulted  primarily  from a  decrease  in both  oil and gas  production,  offset
partially by higher oil and gas prices.  Average gas prices  increased 21%, from
$4.73 per mcf for the  second  quarter  of fiscal  2004 to $5.71 per mcf for the
same period of fiscal 2005,  while average oil prices increased 42%, from $28.66
per bbl for the second  quarter of fiscal  2004 to $40.72 for the same period of
fiscal 2005. Oil and gas production  quantities were 5,627 barrels  ("bbls") and
128,560  thousand  cubic feet ("mcf") for the second  quarter of fiscal 2004 and
4,137 bbls and 96,981 mcf for the same period of fiscal  2005, a decrease of 26%
in oil production and a decrease of 25% in gas production.

Production  costs  decreased 14% from $241,168 for the second  quarter of fiscal
2004 to $206,226 for the same period of fiscal 2005.  This was  primarily due to
the decrease in production  taxes and other charges as a result of a decrease in
sales for the quarter  combined  with a decrease in repairs and  maintenance  to
operated wells during the quarter.

General and  administrative  expenses  increased 7% from $156,644 for the second
quarter of fiscal 2004 to $167,528 for the same period of fiscal  2005.  This is
primarily  the  result  of  an  increase  in  consulting  services,  travel  and
organization  costs  related  to  participating  in the  formation  of a Russian
company.

Depreciation,  depletion and amortization  based on production and other methods
decreased  30%, from $170,695 for the second  quarter of fiscal 2004 to $120,280
for the same  period  of  fiscal  2005  primarily  due to  decreased  production
combined with an increase in company  reserves  from the royalties  purchased in
August 2004.

Interest  expense  increased less than 1% from $20,860 for the second quarter of
fiscal 2004 to $20,963 for the same period of fiscal 2005  primarily as a result
of the increase in interest rates during the second quarter of fiscal 2005.

Results of  Operations - Six Months Ended  September  30, 2004 and September 30,
--------------------------------------------------------------------------------
2003
----

Net income before the cumulative  effect of an accounting  change decreased 18%,
from a net profit of $270,230 for the six months ended  September  30, 2003 to a
net profit of $221,761 for the six months ended  September 30, 2004.  Individual
categories of income and expense are discussed below.

                                     Page 11
<PAGE>

Oil  and gas  sales  decreased  9% from  $1,535,912  for  the six  months  ended
September  30,  2004 to  $1,397,447  for the same  period of fiscal  2005.  This
decrease of 9% or $138,465  resulted  primarily  from a decrease in both oil and
gas  production,  offset  partially  by higher oil and gas  prices.  Average gas
prices increased 12%, from $4.82 per mcf for the first six months of fiscal 2004
to $5.38 per mcf for fiscal 2005,  and average oil prices  increased  39%,  from
$27.79  per bbl for the first six  months of fiscal  2004 to $38.54  for  fiscal
2005. Oil and gas production quantities were 11,146 bbls and 254,209 mcf for the
first six months of fiscal 2004 and 8,004 bbls and 202,328 mcf for fiscal  2005,
a decrease of 28% and 20%, respectively.

Production  costs decreased 22% from $509,860 for the six months ended September
30, 2004 to $397,964 for the same period of fiscal 2005.  This was primarily due
to the decrease in production  taxes and other charges as a result of a decrease
in sales  combined with a decrease in repairs and  maintenance to operated wells
during the first and second quarters of fiscal 2005.

Depreciation,  depletion and amortization  based on production and other methods
decreased 19%, from $336,914 for the first six months of fiscal 2004 to $273,052
for the same  period  of  fiscal  2005  primarily  due to  decreased  production
combined with an increase in company  reserves  from the royalties  purchased in
August 2004.

Interest  expense  decreased 16% from $45,140 for the first six months of fiscal
2004 to $37,806  for the same  period of fiscal  2005  primarily  as a result of
lesser borrowings.

General and  administrative  expenses  increased 22% from $272,622 for the first
six months of fiscal 2004 to $331,947 for the same period of fiscal  2005.  This
is  primarily  the result of an  increase  in  consulting  services,  travel and
organization  costs  related  to  participating  in the  formation  of a Russian
company. These expenses were approximately $59,065 for the six-month period.

Asset Retirement Obligations
----------------------------

The  Company's  asset  retirement   obligations   relate  to  the  plugging  and
abandonment of oil and gas properties. The Company adopted SFAS No. 143 on April
1,  2003.  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 and a
corresponding  increase in the carrying amount of the related  long-lived asset.
The related cumulative  adjustment to 2004 net income was a decrease of $102,267
net of tax, or ($0.06) per share. Additionally, in 2004, the Company recorded an
initial asset retirement obligation liability of $358,419 and an increase to net
properties and equipment and other assets of $210,206.

The asset  retirement  obligations  are  recorded  at fair  value and  accretion
expense,  recognized  over the life of the property,  increases the liability to
its  expected  settlement  value.  If the  fair  value  of the  estimated  asset
retirement  obligation  changes,  an  adjustment  is recorded for both the asset
retirement obligation and the asset retirement cost.

The following table provides a rollforward of the asset  retirement  obligations
for the current period:

Carrying amount of asset retirement obligations
   as of April 1, 2004                                    $  420,665
Liabilities incurred                                           1,469
Liabilities settled                                          (25,815)
Accretion expense                                             13,253
                                                          ----------
Carrying amount of asset retirement obligations
   as of September 30, 2004                               $  409,572
                                                          ==========
                                    Page 12
<PAGE>

The current portion of the asset retirement  obligation as of September 30, 2004
is $11,780 and is included in accounts payable and other accrued expenses.

New Accounting Pronouncements
-----------------------------

In September,  2004 the  Securities and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin No. 106. This pronouncement will require companies that use
the full cost method for accounting  for their oil and gas producing  activities
to include an  estimate  of future  asset  retirement  costs to be incurred as a
result of future development  activities on proved reserves in their calculation
of  depreciation,  depletion  and  amortization.  This  pronouncement  will also
require  these  companies to exclude any future cash  outflows  associated  with
settling  asset  retirement  liabilities  from  their  full  cost  ceiling  test
calculation.  This standard  will also require  these  companies to disclose the
impact of their  asset  retirement  obligations  on their oil and gas  producing
activities,   ceiling  test   calculations  and   depreciation,   depletion  and
amortization  calculations.  The  Company  will  adopt  the  provisions  of this
pronouncement  in the third  quarter of fiscal 2005 and is currently  evaluating
the impact, if any, on our consolidated financial statements.

       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  primary  sources of market  risk for the Company  include  fluctuations  in
commodity  prices and interest rate  fluctuations.  At September  30, 2004,  the
Company had not entered into any hedge arrangements,  commodity swap agreements,
commodity futures, options or other similar agreements relating to crude oil and
natural gas.

At September 30, 2004, the Company had an outstanding loan balance of $1,875,000
under its $5.0 million revolving credit  agreement,  which bears interest at the
prime  rate,  which  varies  from  time to  time.  If the  interest  rate on the
Company's  bank  debt  increases  or  decreases  by one  percentage  point,  the
Company's annual pretax income would change by $18,750, based on the outstanding
balance at September 30, 2004.

Credit Risk.  Credit risk is the risk of loss as a result of  nonperformance  by
other parties of their  contractual  obligations.  The Company's  primary credit
risk is related to oil and gas  production  sold to various  purchasers  and the
receivables generally are uncollateralized. At September 30, 2004, the Company's
largest  credit risk  associated  with any single  purchaser  was  $98,498.  The
Company has not experienced any significant credit losses.

Volatility of Oil and Gas Prices. The Company's 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  Company  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.  The Company  cannot  predict
future oil and gas prices with any degree of  certainty.  Sustained  weakness in
oil and gas prices may adversely affect the Company's  ability to obtain capital
for the  Company's  exploration  and  development  activities  and may require a
reduction  in the  carrying  value  of the  Company's  oil and  gas  properties.
Similarly,  an improvement in oil and gas prices can have a favorable  impact on
the Company's financial condition, results of operations and capital resources.

                         ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Mexco's  Chief  Executive  Officer  and Chief  Financial  Officer  performed  an
evaluation of the Company's disclosure controls and procedures.


                                    Page 13
<PAGE>

Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that  information  required to be disclosed by an
issuer in the reports that it files or submits under the Securities Exchange Act
is accumulated and communicated to the issuer's management,  including its Chief
Executive  Officer and Chief Financial  Officer,  as appropriate to allow timely
decisions regarding required disclosure.

Based on this  evaluation,  the Chief  Executive  Officer  and  Chief  Financial
Officer have concluded that the Company's disclosure controls and procedures are
effective as of September 30, 2004. In addition,  there has been no  significant
change in the Company's  internal  control over financial  reporting  during the
quarter ended September 30, 2004 that has materially affected,  or is reasonably
likely to  materially  affect the  Company's  internal  control  over  financial
reporting.

PART II - OTHER INFORMATION

Item 1.  Legal proceedings
         -----------------

         None.

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

         None.

Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------

EXHIBITS

14.    Code of Business Conduct and Ethics

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 by the Chief Executive Officer of Mexco Energy Corporation
       pursuant to 18 U.S.C. ss.1350

32.2   Certification by the Chief Financial Officer of Mexco Energy Corporation
       pursuant to 18 U.S.C. ss.1350


REPORTS ON FORM 8-K

Form 8-K filed October 27, 2004 pursuant to Item 8.01, announcing stock purchase
for the treasury account.


                                     Page 14
<PAGE>

                                   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 9, 2004                  /s/ Nicholas C. Taylor
                                         --------------------------------------
                                         Nicholas C. Taylor
                                         President



Dated: November 9, 2004                  /s/ Tamala L. McComic
                                         --------------------------------------
                                         Tamala L. McComic
                                         Vice President, Treasurer and Assistant
                                         Secretary


                                     Page 15