Oil and gas company Lucas Energy has entered into a letter of intent (LOI) to buy up to a 77.5% interest in and operatorship of the Hospah field in New Mexico from a private company for $20.5m.

Lucas Energy funded the purchase of an undivided 7.56% interest in the property for $2m and plans to purchase the balance of the interests, subject to funding.

The acquisition covers six shallow producing units and more than 100 existing well bores drilled to the Hospah oil and Dakota gas formations in McKinley County, New Mexico.

Lucas Energy president and CEO William Sawyer said that this acquisition strategically fits the company’s business model of reworking old fields and diversifies its asset base out of Texas.