Current Activities

Gonzales County, Texas is located approximately 150 miles west of Houston, and approximately 70 miles south east of San Antonio Texas and is in the heart of the Austin Chalk formation, one of the most prolific hydrocarbon producers' in the area.

Gonzales County is also located about mid-way between two major oil fields, the Giddings field to the northeast and the Pearsall field to the southwest, both have been producing oil and gas for over 40 years. The Austin Chalk formation in Gonzales County was generally overlooked until the late 1980's and early 1990's, during those years over 450 wells were drilled in Gonzales County alone. When the price of oil fell below $10 per barrel in the late 1990's, most of these wells were either shut-in or plugged and abandoned and the lease rights reverted back to the landowner.

When Lucas Energy was founded in 2004, we felt that most of these wells could again be economically productive with very little investment in either cash or man hours. These wells had been producing just a few years earlier and no changes had occurred in the reservoir to adversely affect the underlying reserves.

The operations staff of Lucas Energy had worked extensively in the region and understood the production profile and nuances of the Austin Chalk formation. No single well is going to be a prolific producer although many of the wells would produce a steady flow of high quality oil, with minimal water, for many years with just proper management, routine well treatments and regular maintenance.

In 2004 Lucas began actively acquiring lease rights to individual wells from landowners in Gonzales County. The leases were obtained with little or no upfront lease money paid to landowners, only a commitment to attempt to put the well back into production within a reasonable period of time and to pay a royalty to the landowner based on total monthly production.

The first well, was successfully re-entered and turned to production in and is producing to this day. Thereafter over 12,000 acres were leased in the area with numerous previously drilled well bores all with production enhancement, re-entry and rework potential.

This Lucas Energy business strategy enables it to minimize costs of finding and producing oil, a significant advantage that allows Lucas to be profitable in a wide range of commodity price environments. A 100% working interest is typically owned in all our wells with no other joint interest owners or partners and none of the administrative or accounting costs related to joint ownership. Since up-front lease bonuses paid to landowners are generally modest, the majority of our capital is invested in these low risk oil production processes which differ significantly from those companies engaged in high risk, high cost exploration. These low development costs and lease operating costs allow us to a typical payback of less than 12 months on each well investment.

The Gonzales County area offers several different opportunities for Lucas Energy. First are underperforming wells and those that have simply been shut-in. These are the easiest and most inexpensive wells to clean up and put back into production since the investment is primarily for equipment, in most cases a new or re-built pump jack, and well treatment procedures.

Another opportunity are those wells that have been plugged and abandoned. In these situations a relatively inexpensive truck mounted workover rig is used to drill out the plugs that were set when the well was abandoned, clean out the well bore and install new or re-built pumping equipment and restart the production of oil.

Many of the wells which are reworked have an existing lateral extension which can be further extended in order to maximize production from additional in-place proven recoverable oil reserves. In some instances an existing lateral extension may be plugged and a new lateral extension drilled in a different direction. The Austin Chalk formation has a «grain» feature and lateral extensions must be drilled in the proper direction relative to this grain in order to reach maximum production and recoverability. Large and expensive drilling rigs are not required to drill these new lateral extensions so rework costs are low when compared with the cost to drill the original well or the costs of a new well bore.

The tri-county area around Gonzales, Texas offers Lucas tremendous opportunities for significant growth in both daily production and long-lived reserves. We have demonstrated in a wide variety of commodity price environments that the Lucas business strategy works and yields increasing shareholder value. By keeping staffing requirements to a minimum and having an experienced management team with a focus on keeping operating costs low we ensure that the bulk of our capital expenditure is put to work growing the company.