Under the LOI, Lucas will receive a payment of $1 million, payable in four monthly installments of $250,000, and the operator will drill an initial horizontal well in exchange for a 75% working interest. Also, Lucas will retain a 25% carried working interest, under which the operator will bear 100% of the drilling costs, estimated at $2 million. In the remaining acreage, Lucas will retain a 75% working interest and the operator will have a 25% working interest.
"This agreement demonstrates our previously-announced strategy to develop our Eagle Ford reserves in South Texas," said Anthony C. Schnur, CEO of Lucas Energy. "The final terms and conditions are currently being negotiated and are subject to the final signed joint operating agreement. Once finalized, we hope to commence drilling by the end of the calendar 2014 second quarter. Also, in anticipation of increased drilling activity in the Eagle Ford, the company sold out of the recently announced 8% participation proposal in Madison County, and received $156,000 for our interests."