As the old saying goes, “just when you thought things couldn’t get any worse.” Well, for Houston-based Lucas Energy, things have gone from bad to worse. The company said Friday that it has defaulted on a debt payment dating back to December 13 of last year, which means it will now be paying a defaulted interest of 18 percent per year on the $7.7 million it owes under the loan agreement.
Lucas had been in financial turmoil for months as it struggled to boost revenue in a weakening energy sector. The company was even in danger of being delisted from the New York Stock Exchange in August 2014, but was granted a compliance extension shortly thereafter through October.
Lucas Energy CEO Anthony Schnur commented:
“The plunge in crude oil prices has required us to reconsider all alternatives. We are actively and aggressively pursuing options to secure funding through a corporate combination or project financing arrangement. We believe we have made significant progress toward establishing a definitive path forward. Management remains confident that a suitable solution will be agreed upon in the coming weeks and resulting public announcement (made) at the appropriate time.”
Schnur said that over the past six weeks Lucas has slashed its general, administrative and operating expenses by approximately $160,000 per month, or about $2 million per year. “Our production has been maintained at current levels considering natural declines, and we continue to anticipate drilling on our Eagle Ford shale acreage in Karnes County as soon as we are able to finalize alternative financing arrangements,” Schnur said.
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