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Lucas Energy Testing Workover Process in Austin Chalk

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   |    Friday,December 20,2013

Lucas Energy, Inc, an independent oil and gas company with its main operations in Texas, today provided an operational update on the status of its drilling activity in the Austin Chalk and other certain matters.

Operational Update

Lucas' new Chairman of the Board, Ken Daraie, said "After nine months of organizational restructuring and improvements under the leadership of Chief Executive Officer, Anthony "Tony" Schnur and former board chair, Ryan Morris, the Company is singularly focused on its engineering and operational functions for the development of its five million barrels of proved reserves in central Texas."

During the first three quarters of calendar 2013, ending on September 30, the Company generated positive working capital of $1.1 million, reduced total debt by approximately $20 million, lowered lease operating expense (LOE) by 47% and decreased general & administrative expense by 31%(1).

In September, Lucas launched its work-over program in the Austin Chalk, completing its fourth workover on November 30th, and is currently in the process of putting the well back on production.

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

Additionally, the Company completed the first of two planned horizontal drilling projects, the Merit RVS #1 Sidetrack in Gonzales County, Texas. On November 24, Lucas swabbed the well and recovered 113 barrels per day of fluid in total, of which 47 BOPD was crude oil. The well is on continuous production and has thus far returned just over 50% of load water. Lucas plans to spud its second Austin Chalk re-entry, the Upton Ruddock #1 Sidetrack, on a location has been already been constructed, and we are waiting on the arrival of a drilling rig. The Company has an inventory of 15 re-entry candidates, which are being reviewed for further development.

Platypus Hunter-1H: Lucas participated in the recently-completed Platypus Hunter-1H well operated by Penn Virginia. Penn Virginia completed the horizontal well in the Eagleville field in Lavaca County, Texas. During its first 24 hours, the well flowed 1,651 BOPD and 1,512 thousand cubic feet per day (Mcfd) from the Eagleford reservoir.

Mr. Daraie continued "Although Lucas' working interest is only 1.48% in the Platypus Hunter, we believe the well exemplifies the quality and potential of its leasehold position in the Eagleford play.

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.

The Company continues to focus on further refining its operating efficiency and productivity of existing wells, as well as the development initiatives before it. The Company is actively reviewing a number of opportunities for strategic partnership, acquisitions, and mergers with a focus on development of reserves, increasing revenue, and improving shareholder value."