Lucas Energy Inc., which operates in the Eagle Ford Shale, has defaulted on debt payment that was due in December.
The company announced that it failed to make a principal payment due Dec. 13, and was notified on Jan. 26 by its lender that it had defaulted on a payment.
The amount owed – $7.7 million – will accrue at a default interest rate of 18 percent per year.
Lucas Energy also said it missed a required interest payment in January, but that its lender has not taken further action. The company has been slashing spending.
The independent oil and gas company is based in Houston and trades under the symbol LEI.
It targets the Eagle Ford and Austin Chalk formations in South Texas, where it has acreage in Karnes, Gonzales and Wilson counties.
“The plunge in crude oil prices has required us to reconsider all alternatives,” said Anthony C. Schnur, the CEO of Lucas, in a prepared statement. “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 at the appropriate time.
“Over the past six weeks, we have slashed our general and 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.”
Lucas’ lender “has also reserved the right to enter into an amended agreement with Lucas at any time or to enforce other rights under the agreement as a result of such default,” the company said in a statement.
Lucas Energy had 11 full-time employees at the end of September, $9.8 million in liabilities and $1.1 million in assets as of Sept. 30, according to regulatory filings.
Lucas shares have fallen from 69 cents in June, when oil prices hovered above $100 a barrel, to 9 cents apiece in mid-day trading Monday.
The Houston Chronicle contributed to this report.