Houston-based
Lucas Energy, Inc. (NYSEMKT: LEI) is a growth-oriented, independent oil and gas
company developing significant acreage positions in the Eagle Ford and Austin
Chalk resource plays in South Texas. Since mid-2014, the price of a barrel of
oil has dropped from over $100 to less than $50, bottoming at about $26 in
February of this year. The result has been more than 80 bankruptcies in the
energy sector over the past 18 months, with survival becoming the primary
objective for industry operators.
Leaning
on the experience of its management team, Lucas Energy has survived the recent
downturn in energy prices while simultaneously positioning itself to capitalize
on the current market environment and expand its national footprint. As part of
these efforts, the company announced a purchase agreement to acquire working
interests in producing properties and undeveloped acreage in two largely
contiguous acreage blocks in the Mid-Continent region. This proposed
acquisition, which includes assets from 21 different entities and individuals,
is currently under review by the Securities and Exchange Commission, with closing
expected to occur by October 2016.
“While
the past year was another difficult one for the energy industry, it afforded
our Company with multiple opportunities, with the most significant being our
agreement to acquire the working interests in certain oil and gas properties in
Texas and Oklahoma from Segundo Resources,” Anthony C. Schnur, chief executive
officer of Lucas Energy, added in a recent news release.
Moving
forward, the completion of the Mid-Continent acquisition will play a key role
in Lucas Energy’s growth strategy. The company anticipates a significant
increase in daily production stemming from this transaction that will
effectively redirect its strategic vision. To better reflect this updated
vision, Lucas Energy has also announced plans for a rebranding name change to
Camber Energy, a name which the company believes better reflects the inclining
production rates typically observed with assets in the Hunton formation of
Central Oklahoma’s Mid-continent reserves.
Outside
of this planned acquisition, Lucas Energy’s primary development activities are
located in the Eagle Ford Shale trend, which is recognized as one of the most
active plays in the United States. With the precipitous drop in oil prices over
the past year and a half, activity at the company’s Eagle Ford assets has been
limited. However, advances in drilling and completion technologies continue to
decrease drilling costs, and Lucas Energy will continue to review opportunities
to accelerate development of its five million barrels of proved reserves
through direct development or strategic partnerships.
Though
revenues are down across the board in the oil and gas industry, Lucas Energy
paints a promising picture for the future with a three-pronged long-term
strategy designed to navigate the prolonged down cycle. First, the company
intends to continue developing its acquired and existing assets by working
closely with its lender and entering agreements with institutional investors.
Second, Lucas Energy will look to capitalize on the down cycle through the
completion of bolt-on acquisitions that offer significant value with minimal
upfront costs. Finally, the company will continue to pursue material
acquisitions in order to create a marketable asset portfolio with expanded
drilling inventory.
“The
last several years have been difficult for Lucas, and the fiscal 2016 results
bear that out. However, we are confident in our future direction and ambitious
growth initiative,” reads a recent statement from the company’s management
team. “What we will create with Segundo and the establishment of Camber is a
platform on which to build our Company, through the acquisition, and
development of additional reserves through and out of this cyclical downturn.”
For
more information visit www.lucasenergy.com
MissionIR is committed to connecting the investment community with companies that have great potential and a strong dedication to building shareholder value. We know our reputation is based on the integrity of our clients and go to great lengths to ensure the companies represented adhere to sound business practices.
Sign up for “The Mission Report” at www.MissionIR.com
Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.html
