Lucas Energy Inc. (NYSE MKT: LEI) has entered into a convertible note purchase agreement, which provides for up to $600,000 of funding, of which $450,000 has been received to date, and a short-term promissory note with a third party relating to a loan of $250,000, each to fund near-term financial obligations.
These agreements replace the previous non-revolving line of credit agreement that was entered into with Silver Star Oil Co. in August 2015. Silver Star has had difficulty providing the required funding per the terms of the line of credit, which provides Lucas the right to request up to $2.4 million in convertible promissory notes over a 12-month period. Lucas has sold $1 million in such convertible promissory notes to Silver Star. In an effort to raise funding for ongoing expenses and as a replacement for the amounts previously sought from Silver Star, Lucas entered into the convertible note purchase agreement and short-term promissory note.
"We firmly believe that the current oil and gas market continues to offer acquisition opportunities, and we are pleased that thus far the investment community is willing to provide the funding so that we can work to capitalize on those opportunities," said Anthony C. Schnur, CEO of Lucas Energy. "We continue to move efficiently toward completing our acquisition of the Segundo Resources assets and seek to expand the company's asset base into more conventional plays and improve our returns to our shareholders."