Company Continues to Acquire Acreage and Completes Installation of
Natural Gas Pipeline
Significant Production Increases Expected in Fiscal 2009
HOUSTON, July 21, 2008 (PRIME NEWSWIRE) -- Lucas Energy, Inc. (AMEX:LEI), a U.S. based independent oil and gas company, provided an update on operations.
Additional Acreage and Wells Acquired
During the first quarter of fiscal year 2009, which began on April 1, 2008, the Company has focused its efforts on acquiring additional acreage in its primary area of operations, Gonzales County in South Texas. To date, the Company has successfully acquired an additional 300 acres with an additional 500 acres under consideration. This new acreage provides ample room to execute the Company's planned lateral drilling program and has provided the Company with new inventory of one shut-in well and six wells that have been plugged and abandoned. The Company feels these wells hold potential for significant production once proper work-over techniques have been applied. The new leases in the region have been acquired under terms that will result in lowering Lucas' overall cost per barrel. Additionally, the Company is working to develop strategies that allows for less downtime for each well for routine maintenance. Well maintenance is front- loaded on the first quarter and creates downtime making for inconsistent daily production. As Lucas adds more producing wells to its portfolio, this volatile production profile will be reduced. Once the work-over on these new wells is completed and has been brought on line, not only will daily production increase but a smoother production profile will be established.
Gas Pipeline Completed
The Company also completed the installation of a natural gas pipeline to Houston Pipeline's central metering point. The line runs from the Hagen #3 well to a sales point approximately two miles away. With this line completed, the Hagen #3 well is connected and is piping approximately 30 mcf (thousand cubic feet) of natural gas per day. An additional flow line is being laid to Hagen #1 well which is expected to add another 10-15 mcf/day of natural gas production. This is rich gas that contains 1,200 btus per thousand cubic feet and commands a premium to NYMEX pricing. Although the amount of natural gas initially being produced is small, the Company anticipates that the gas production will increase as the planned lateral well program progresses, and will contribute incrementally to the company's overall cash flow.
Drilling program to resume
In the second quarter of the current fiscal year, the Company will resume work on both the lateral drilling program and the work-over of well bores currently in inventory. Current plans for the remainder of fiscal year 2009 include the completion of a new lateral well every 70 to 90 days and re-entrance and completion for work-over efforts on four shut-in or abandoned wells each quarter. Drilling on the lateral extension of the Hagen Ranch well will begin within a few weeks.
Management Comments
Mr. James Cerna, CEO of Lucas Energy said: "We are very pleased with the results of our efforts to increase both our acreage position in the region and the completion of the pipeline. These were critical projects needed to continue a successful drilling program. We also added to our inventory of old well bores. This inventory is critical to our long-term success as these are the primary contributors to our undeveloped reserves. In converting these to producing wells we add to both our daily production totals and proved reserves. In addition, maintaining a focus on our announced lateral drilling program and completing a new well every 90 days will demonstrate our ability to grow this company and add shareholder value. That said, although we did not experience production growth in the first fiscal quarter, we believe that we have built the foundation to meaningfully add to our production for this fiscal year, and that our cash flows will continue to grow."
About Lucas Energy
Lucas Energy, Inc. (AMEX:LEI) is an independent crude oil and gas company building a diversified portfolio of valuable oil and gas assets in the United States. The company is focused on identifying underperforming oil and gas assets, which are revitalized through a meticulous process of evaluation, application of modern well technology, and stringent management controls. This process allows the company to increase its reserve base and cash flow while significantly reducing the risk of traditional exploration projects. The Company's headquarters are located at 3000 Richmond Avenue, Suite 400, Houston, Texas 77098.
The Lucas Energy logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4192
Forward-Looking Statement
This Press Release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. A statement identified by the words "expects," "projects," "plans," "feels," "anticipates" and certain of the other foregoing statements may be deemed "forward-looking statements." Although Lucas Energy believes that the expectations reflected in such forward-looking statements are reasonable, these statements involve risks and uncertainties that may cause actual future activities and results to be materially different from those suggested or described in this press release. These include risks inherent in the drilling of oil and natural gas wells, including risks of fire, explosion, blowout, pipe failure, casing collapse, unusual or unexpected formation pressures, environmental hazards, and other operating and production risks inherent in oil and natural gas drilling and production activities, which may temporarily or permanently reduce production or cause initial production or test results to not be indicative of future well performance or delay the timing of sales or completion of drilling operations; risks with respect to oil and natural gas prices, a material decline in which could cause the Company to delay or suspend planned drilling operations or reduce production levels; and risks relating to the availability of capital to fund drilling operations that can be adversely affected by adverse drilling results, production declines and declines in oil and gas prices and other risk factors. The complete filing is available at http://www.sec.gov.