Lucas Energy Inc. (NYSE MKT: LEI) has failed to make a required principal payment that was due on Dec. 13, 2014, under the terms of an amended loan agreement. On Jan. 26, the company received notice from a representative of its lender that Lucas had defaulted on a payment. Consequently, the amount owed under the loan agreement of approximately $7.7 million will accrue at a default interest rate of 18% per annum.
No further action has been taken by Lucas’ lender, who has also waived a required interest payment, which Lucas also failed to pay, that was due in January. The lender has also reserved the right to enter into an amended agreement with Lucas at any time or to enforce other rights under the agreement as a result of such default.
"The plunge in crude oil prices has required us to reconsider all alternatives," said Lucas CEO Anthony C. Schnur. "We are actively and aggressively pursuing options to secure funding through a corporate combination or project financing arrangement. We believe we have made significant progress toward establishing a definitive path forward. Management remains confident that a suitable solution will be agreed upon in the coming weeks and resulting public announcement at the appropriate time.
"Over the past six weeks, we have slashed our general and administrative and operating expenses by approximately $160,000 per month, or about $2 million per year,” he added. “Our production has been maintained at current levels considering natural declines, and we continue to anticipate drilling on our Eagle Ford shale acreage in Karnes County as soon as we are able to finalize alternative financing arrangements."