In an effort to operate more efficiently, Houston, TX-based independent oil and gas company Lucas Energy Inc. (NYSE: LEI) has reduced its staffing levels and entered into a litigation settlement.
In an effort to reduce expenses, Lucas Energy has reduced its staff by roughly 40%. The staff cuts include both office and operational personnel. Over the course of calendar 2013, Lucas hopes to reduce its total general and administrative expenses by approximately 40% from the same period in 2012. A total decrease in general and administrative expenses of approximately $1.7 million (annualized) has already been completed with another $0.5 million anticipated to come off the books as contracts expire during the remainder of calendar 2013. Reductions in Lease Operating Expenses are being studied and will be implemented where warranted.
The company will continue to seek opportunities to operate more efficiently as it reviews alternative strategies to deliver value to its shareholders. During the final quarter of fiscal year 2013, Lucas will focus on the following goals: to become a cash-flow positive entity; to resolve the pending legal proceedings; to increase efficiency through the utilization of existing systems and infrastructure; and to evaluate and develop low-risk, low cost opportunities to increase production, while also re-evaluating the overall capital and development strategy required to realize the full potential of the company's asset base.
On January 28, 2013, the Company entered into a Settlement Agreement with Seidler Oil & Gas LP. Seidler had previously filed a lawsuit against the Company on August 13, 2012, in the District Court for the 25th Judicial District of Texas, located in Gonzales County, Texas (Cause No. 25,052). Pursuant to the settlement and in an effort to avoid protracted and costly litigation, Lucas agreed to, among other things, release certain suspended revenues to Seidler; enter into a joint operating agreement with Seidler; together with Seidler, to return to Seidler and certain private investors approximately $1.38 million in connection with the Hagen Unit 5-H well (the "5-H well"), which well was never drilled; and defend, together with Seidler, any claims associated with certain entities bringing claims against Seidler or Lucas in connection with the 5-H well.
Additionally, in the event that Lucas receives executed releases from certain private investors in the 5-H well prior to March 31, 2013, Lucas agreed to reimburse Seidler an additional $85,000 and release Seidler from any and all claims associated with the suit. Seidler in turn agreed to release Lucas from claims associated with the 5-H well, repay investors in the 5-H well all sums paid by such investors upon the receipt of a release from such investors and dismiss the lawsuit that Seidler previously filed against Lucas with prejudice.
