Lucas Energy, Inc. (LEI) Announces Completion of Acquisition and Related Financings

Lucas Energy, Inc. (NYSE MKT: LEI) earlier today announced that it successfully acquired working interests in producing properties and undeveloped acreage in Texas and Oklahoma, including varied interests in two contiguous acreage blocks in the liquids-rich Mid-Continent region of the U.S., from Segundo Resources LLC (“Segundo”) and other sellers.  The assets are currently producing over one thousand net barrels of oil equivalent per day (BOE/d), of which 53% are liquids and which are being produced primarily from the Hunton formation.  Notably, the company has identified further offset development drilling opportunities and it is planning specific development activities.

The day after closing, Lucas Energy added three new members to its board of directors:  Richard N. Azar II, Robert D. Tips and Alan W. Dreeben, with Azar appointed as chairman of the board.  Azar brings three decades of experience in the oil and gas exploration and production industry.  Over the last 20 years, he served in a key role developing the Hunton Dewatering Resource play in central Oklahoma through his ownership/partnership in Altex Resources, Inc., which was sold to a Canadian Energy Trust in March 2006.  Tips is well recognized as a business leader who oversees a family-owned organization and engages in various volunteer activities, and Dreeben is an owner and director of Republic National Distributing Company, LLC, currently serves on two other boards, and engages in various philanthropic activities.  Anthony C. Schnur, Lucas’ chief executive officer, will continue to serve as a member of the board in addition to existing members Fred Zeidman and Fred Hofheinz.

In exchange for the assets, Lucas assumed approximately $30.6 million of commercial bank debt and issued the sellers 552,000 shares of Series B Redeemable Convertible Preferred Stock and approximately 13 million shares of restricted common stock in addition to a cash payment of $4,975,000. Lucas also entered into a $40 million loan agreement with the International Bank of Commerce (“IBC”), the majority of which funds were used for the debt assumption and closing payment discussed above, which is due on August 25, 2019, and a promissory note pursuant to which $1.5 million was borrowed from RAD2 Minerals, Ltd., one of the sellers owned and controlled by Azar, payable on or before the earlier of (a) October 31, 2016 and (b) the date that Lucas receives at least $1.5 million in proceeds from the April 2016 Stock Purchase Agreement.

Additional information regarding the transactions and related financings are included in the Current Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2016.

“We are very pleased to have closed the acquisition of properties in Texas and Oklahoma,” stated CEO Schnur.  “We now have a foundation of producing and undeveloped assets on which to grow the Company.  Not only are we diversifying our production profile to include natural gas liquids, but the conventional nature of the long-lived Hunton reserves are lower-risk and lower-cost to develop than our Eagle Ford assets.

“This has been an eventful month for the Company.  Last week, we entered into an agreement to fund the development of our Eagle Ford shale assets with a successful operator in the area, and with the closing of the Segundo transaction, we have completed a significant step toward our strategy of expanding the Company into proven reservoirs outside of the Eagle Ford, while improving our financial stability.  We want to thank IBC for having confidence in our team and being an integral part of the financing transaction and look forward to working with them in the future as we continue to execute on our acquisition strategy.”

For more information on the company, visit www.lucasenergy.com

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