Lucas Energy to Join with Victory

February 4, 2015 Elizabeth Alford

Analysts have predicted that when the dust settles from plummeting crude prices, the real victims will be small energy companies. Big corporations have been slashing budgets to help them weather the storm, but smaller companies often don’t have the resources to carry them long term and it is beginning to show.

One such company is Lucas Energy, an Eagle Ford shale oil and gas exploration and production company located in Houston that maintains interests in over 10,000 acres in South and East Texas. Lucas has been scrambling to stay on top of its obligations and recently slashed its expenses by approximately $160,000 per month. But these efforts have not been enough to keep the company out of trouble. Last week, Lucas confirmed that they defaulted on a $7.7 million debt.

“The plunge in crude oil prices has required us to reconsider all alternatives. We are actively and aggressively pursuing options to secure funding through a corporate combination or project financing arrangement. We believe we have made significant progress toward establishing a definitive path forward. Management remains confident that a suitable solution will be agreed upon in the coming weeks and resulting public announcement at the appropriate time.”

— CEO, Anthony Schnur

A ‘suitable solution’ surfaced yesterday as the company announced it had executed a letter of intent for a proposed business combination with Victory Energy Corporation. This is the preliminary step to an official merger agreement that allows the companies to negotiate exclusively. Part of the agreement will be to provide for the capital necessary for Lucas to satisfy its obligations for its Eagle Ford wells, accounts payable and necessary working capital.

Lucas Energy Announces Eagle Ford Joint Venture

August 28, 2014 Kirk Eggleston

Houston-based Lucas Energy Inc. has signed a joint venture agreement to develop its Eagle Ford Karnes County acreage with Oak Valley Resources, LLC.

Lucas, which is in financial trouble, recently received an extension from the New York Stock Exchange (NYSE) through October to avoid delisting. Lucas management indicates the joint venture meets the company's objective to focus on Eagle Ford drilling and development, therefore maximizing production and cash flow.

“We are pleased to finalize this joint venture agreement with a respected and experienced independent operator to begin to develop our Eagle Ford reserves in south Texas. Our objective is to continue to focus on drilling our most valuable asset, our Eagle Ford shale acreage, in order to maximize production and grow cash flow. We will continue to seek appropriate opportunities to work with Oak Valley Resources on future drilling projects.”

— CEO, Anthony Schnur

At closing, Lucas will receive $444,000 for a 50% working interest on approximately 400 acres. Oak Valley will manage the drilling of the wells and each company will bear 50% of the drilling and completion costs. Once the wells are on production and initial oil sales begin, all revenues and operating costs will also be split between the parties on a 50%-50% basis. The first well is expected to be spudded no later than December 2014. The joint venture expects to drill a minimum of four wells on the property.

Lucas Energy Sells Stock for Cash As It Attempts to Regain Compliance with NYSE

April 18, 2014 Kirk Eggleston

Lucas Energy

Houston-based Lucas Energy has entered into an agreement to sell shares of its stock for $2-million to funds managed by two of it's existing shareholders - Ironman Energy Master Fund and John B. Helmers (Long Focus Capital Management).

The Eagle Ford focused company is facing de-listing by the New York Stock Exchange (NYSE), and has until July 31, 2014, to regain compliance. This $2-million equity offering extends the original compliance deadline of April 14, 2014, which was set by the NYSE from the company's initial compliance plan on March 28, 2014. Lucas Energy intends to use the proceeds for continued oil and gas development in the Eagle Ford.

In 2013, Lucas held back on Eagle Ford development as it went through a restructuring process. In 2014, company officials indicated the focus would be on asset development. A recent farm-out of ~400 acres in Karnes County for $1-million in March 2014 was in-keeping with the company's strategy for the year.

Lucas Energy Deal Terms with Ironman Energy Master Fund and John B. Helmers

Under the deal, Lucas will sell up to 3,333,332 units at 60 cents per unit to Ironman Energy Master Fund and John B. Helmers (Long Focus Capital Managmenet).

“We are encouraged to have two of our existing significant shareholders, Ironman and Mr. Helmers, demonstrate a vote of confidence by taking an increased stake in our Company.”

— Lucas CEO, Anthony Schnur

Each unit is comprised of one share of common stock plus associated warrants to purchase 1,666,666 shares of common stock at an exercise price of $1 per share with a five-year term. Officials say Lucas will receive cash proceeds when the deal closes on April 21st.

Lucas Energy Farms Out Eagle Ford Acreage for $1 Million

March 28, 2014 Kirk Eggleston

Houston-based Lucas Energy announced in March 2014 that it will farm out ~400 Eagle Ford acres to a private independent operator in exchange for $1-million. The acreage is located on the company's Karnes County leasehold.

Lucas held back on Eagle Ford development in 2013 as it went through a restructuring process. In 2014, company officials indicate the focus has shifted to development.

“This agreement demonstrates our previously-announced strategy to develop our Eagle Ford reserves in South Texas,” said Anthony Schnur, CEO of Lucas Energy. “The final terms and conditions are currently being negotiated and are subject to the final signed joint operating agreement. Once finalized, we hope to commence drilling by the end of the calendar 2014 second quarter. Also, in anticipation of increased drilling activity in the Eagle Ford, the Company sold out of the recently-announced 8% participation proposal in Madison County, and received $156,000 for our interests.”

Lucas Terms of Eagle Ford Farm Out Agreement

The operator (farmee) will drill an initial horizontal well in exchange for a 75% working interest. Lucas (farmor) will retain a 25-percent carried working interest, under which the operator will bear 100-percent of the drilling costs, estimated at $2-million. In the remaining acreage, Lucas will retain a 75-percent working interest and the operator will have a 25-percent working interest.

Lucas Energy Reverses Production Declines With Austin Chalk Workovers

December 23, 2013 R.T. Dukes

Lucas Energy Map of Offset Operators - Eagle Ford

Lucas Energy has reversed production declines with four workovers in the Austin Chalk.

After nine months of restructuring, the company is moving forward with development of its Austin Chalk and Eagle Ford assets.

Lucas has over 12,000 net acres prospective for the Austin Chalk and ~4,000 net acres prospective for the Eagle Ford. The company estimates development potential of 25+ Austin Chalk drilling locations and 75+ Eagle Ford locations (15% WI with Marathon operating).

"So far, this workover program has not only stabilized, but reversed the recent declines in production, adding 40 barrels of oil per day (BOPD) of gross production in November alone," added Ken Daraie, Board Chairman.

Lucas Energy launched a workover program in September and completed its fourth Austin Chalk workover on November 30th.

The company also completed a horizontal re-entry in the Austin Chalk (RVS #1 Sidetrack) in Gonzales County that produced 113 boe/d while flowing back completion fluids. A second re-entry well is awaiting arrival of the drilling rig.

"Also, our development program in the Austin Chalk is progressing as planned with our continuing well cleanout program and the addition of horizontal Austin Chalk re-entries. This has allowed Lucas to access productive layers within the Austin Chalk formation, believed to be separated by impermeable layers of ash, at significantly lower costs by utilizing and reentering existing horizontal wells.