Lucas Energy (Lucas Energy), an independent oil and gas company with its operations in central Texas, announced that its wholly-owned subsidiary, CATI Operating (CATI), entered into an agreement with its senior lender, as evidenced by a promissory note, to borrow $1m.
The Company plans to use the funds to participate in the drilling and completion of certain Eagle Ford wells under a joint operating agreement with Lonestar Resources US, Inc. ("Lonestar") and conduct improvement maintenance operations on the existing assets of CATI. The agreement with Lonestar covers over 1,450 gross acres and Lucas' participation will vary from an 8% to a 14% working interest in the units.
"We are pleased to partner with Lonestar, a known and successful operator in the Eagle Ford, by initially participating in the Cyclone #9H and #10H wells in which CATI has a working interest of 8%," said Anthony C. Schnur, Chief Executive Officer of Lucas Energy. "This represents another step in the growth and expansion of our assets and our company. It is anticipated that the wells will enhance our reserve portfolio and production in addition to securing the leaseholds of the locations."
Under the terms of the note, a total of 80% of all cash flow generated by the wells is required to first be paid to satisfy amounts owed under the new and existing notes with the lender with the remaining 20% to be used by CATI for lease and other operating expenses and capital expenditures.