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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (40816)	1/25/2011 10:24:25 PM
From: E_K_S	of 78667

Hi Paul - This deal announced after the market close today. The Hospah field (located in New Mexico) seems like a perfect fit for LEI w/ additional financing to be obtained from JV partners. Oil and gas production from the Hospah Sandstones reservoirs since 1927 have yielded nearly 22 million barrels of oil and nearly 53 MCF of gas through 2005. Re: Lucas Energy, Inc. (LEI) Lucas Energy Enters Into Letter of Intent and Partially Funds Oil and Gas Acquisition of Up to $20.5 Million finance.yahoo.com From the article:"..."Strategically, this acquisition fits our business model of reworking old fields and plays to our core strengths," commented William A. Sawyer, president and CEO of Lucas Energy. "It also diversifies our asset base out of Texas." The acquisition covers six shallow producing units and more than 100 existing well bores drilled to the Hospah oil and Dakota gas formations in McKinley County, New Mexico. Production averaged approximately 100 barrels per day of light sweet crude during 2010. Management believes that daily production can be increased to 500 barrels of oil and 2 million cubic feet of gas in the first year at a capital cost under $9 million. The development plan includes deepening certain wells and using them to re-inject formation water into non-producing zones, putting existing wells back on production, and by removing carbon dioxide from the natural gas to bring it up to pipeline quality....". ======================================================= It will be interesting to see how the stock reacts to this news tomorrow. It's not in the Eagle Ford area (that you prefer) but management believes this can be a profitable venture which can be structured using JV partner's financing. $2 Million is a pretty big bet for this company (6.4% of their market Cap.). EKS

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