Lucas Energy Enters The Permian Basin With The Purchase Of 3,630 Net Mineral Acres

Lucas Energy Enters The Permian Basin With The Purchase Of 3,630 Net Mineral Acres

Lucas Energy, Inc. (NYSE MKT: LEI) (“Lucas Energy” or the “Company”), an independent oil and gas company with operations in Texas and Oklahoma, announced today that it has entered into a Lease Acquisition and Participation Agreement with a privately-held, Houston, Texas-based oil and gas holding company (“Partner”) to acquire a leasehold position in the Permian Basin in Texas (the “Agreement”).

Under the Agreement, Lucas Energy will purchase the initial lease comprised of 16,322 gross, 3,630 net, mineral acres, and the parties have agreed to form an area of mutual interest (the “AMI”) on the Central Basin Platform of the Permian Basin covering approximately twenty thousand (20,000) net mineral acres.

This transaction represents the opening of a new core area where the Company will operate the properties and own a 90% working interest and the Partner will hold a 10% working interest in the initial leases and all subsequently acquired leases.  The initial cash consideration paid by Lucas Energy is $1.43 million, in exchange for access to the Partner’s regional, technical database and the Company’s 90% interest in the initial leases.  Over $1.1 million of this amount is being deferred until on or before January 31, 2017, pending title approval.  As additional leases are acquired under the AMI, the Company will pay the Partner its lease acquisition costs and grant an incentive overriding royalty interest.  Upon meeting certain acreage acquisition goals based on size and location of the properties, Lucas Energy will also issue to the Partner 200,000 unregistered shares of its common stock and pay the Partner an acreage fee based on the total leasehold and brokerage costs.

The San Andres is found at relatively shallow depths and has similar attributes to the Company’s de-watering Hunton play in Oklahoma.  Lucas Energy believes it has certain advantages in initiating a development program in the San Andres.  Both the Hunton and San Andres are highly water-saturated carbonates where the production profile appears to be optimized by a de‑watering process which slowly de‑pressurizes the formation allowing fuller depletion of the reservoir.  Lucas Energy will transfer its twenty plus year technical evolution and knowledge of the Hunton to its development and production of the San Andres.  To date, the horizontal development of the San Andres has been largely dominated by private E&P companies, many of which are backed by leading private equity firms.

Since the acquisition of the Segundo assets the Company has sought an opportunity to expand its de-watering expertise to another productive formation.  For over nine months, the Company has evaluated seismic, geologic, and other technical data provided by the Texas Railroad Commission and other industry sources.  Multiple acreage targets in the AMI have already been mutually identified, and the Company and the Partner plan to secure additional leases over the term of the agreement.  Drilling is expected to commence upon the acquisition of additional acreage and is anticipated to occur in the second half of 2017.

“We are pleased to announce another potentially transformational transaction for our Company,” said Anthony C. Schnur, Chief Executive Officer of Lucas Energy.  “With this initial leasehold position, we have established our entry into the prolific Permian Basin.  We believe the similarities of the San Andres to our existing Hunton properties play well into our technical strengths in drilling carbonates, as well as water and other infrastructure management capabilities.

“We are confident in our ability to expand our leasehold position beyond this initial commitment and look forward to increasing our participation in the development of the Permian Basin,” Mr. Schnur continued.  “The Company has now delivered on the next step expanding beyond the platform our recent acquisition provided and will continue to maintain an advantageous growth posture.”

SOURCE:  http://ir.camber.energy/press-releases/detail/542/lucas-energy-enters-the-permian-basin-with-the-purchase-of

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