Lucas Energy, Inc. (NYSE MKT: LEI), an independent oil and gas company with its operations in central Texas, today announced its first quarter results for the period ending June 30, 2016 and the filing of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, on August 12, 2016.
"With the shareholder vote on the proposed acquisition of oil and gas properties from a consortium of sellers and Segundo Resources just a couple of weeks away, the recent financial results will be less meaningful if the transaction is approved," said Anthony C. Schnur, Chief Executive Officer of Lucas Energy, who continued, "As previously disclosed, we entered into an agreement last December to acquire the working interests in producing properties and undeveloped acreage in Texas and Oklahoma that would add about 1,000 net barrels of equivalent (BOE) oil production to our existing productive base if the deal is closed.
"As demonstrated in the current quarterly financial results, we continue to diligently reduce our overhead and operating costs, excluding the impact of transaction costs associated with our acquisition. We resumed our workover program in late June as we returned several shut-in wells back into service, and we saw a resulting uptick in our production volumes. We expect to see an increase in production from our legacy wells continue throughout the remainder of this year. Going forward, our outlook for the Company as outlined in our year-end earnings release that we published on July 13, 2016, remains unchanged. We are excited about the course we have chosen, and we are eager to bring it to a close."
Fiscal 2017 First Quarter Results
For the three months ending June 30, 2016, Lucas reported a fiscal year net loss of $1.4 million, or a loss of($0.80) per share, compared to a net loss of $1.0 million or loss of ($0.73) per share in the three months ending June 30, 2015. The net loss increased primarily because of a $0.2 million decrease in sales revenues and an increase of $0.1 million in operating expense.
Total revenues from the sale of crude oil for the fiscal 2017 first quarter were $0.15 million compared to $0.39 million in the same period a year ago largely reflecting a 24% drop in the price of crude oil coupled with a 49% decline in crude oil volumes. The decline in crude oil prices reduced revenues by approximately $0.09 millionand the lower production volumes reduced revenues by another $0.15 million when compared with the same period last year. The Company has implemented several workover plans in the later part of the current reporting period in order to get these wells on-line and increase production flows, funding permitting. Additional production declines can be attributed to workover drilling and lateral programs with higher front-end production in the prior reporting period coupled with interference from offset activity in the current period.
Lease operating expenses of $0.28 million for the fiscal 2017 first quarter increased by $0.11 million from $0.16 million for the same period a year ago, principally because several workovers were completed in the current quarter. The Company implemented the workover programs in the later part of the fiscal 2017 first quarter in order to address wells that had been shut-in for a significant period of time. As a result of these workovers, production volumes rose in the latter part of the quarter and are expected to continue to increase over the next few quarters.
General and administrative (G&A) expenses (excluding share-based compensation) increased by approximately $0.12 million in the fiscal 2017 first quarter compared to the prior year's first quarter primarily related to transaction costs associated with the pending Segundo acquisition. Excluding those transaction costs, certain other G&A expenses have decreased significantly, reflecting improved efficiencies in daily operating activities as a result of internal restructuring initiatives. Share-based compensation also decreased, by about 30%, reflecting cuts in employee stock-based options and compensation. Last year's expenses included $0.3 million of legal expenses, investment banking fees and other transaction costs related to strategic initiatives that were subsequently abandoned.
Depreciation, depletion, amortization and accretion (DD&A) expense decreased for the current quarter as compared to the prior year period by approximately $0.1 million primarily related to lower production volumes of 3,428 BOE compared to the previous period. The production decrease was primarily due to numerous wells being shut-in during the early part of current reporting period and drilling and lateral programs with higher front-end production when compared to the prior period.
About Lucas Energy, Inc.
Based in Houston, Texas, Lucas Energy (NYSE MKT: LEI) is a growth-oriented, independent oil and gas company engaged in the development of crude oil and natural gas in the Austin Chalk and Eagle Ford formations in South Texas.
For more information, please visit the updated Lucas Energy web site at www.lucasenergy.com.
