Technology in the oil and gas business is now widespread, allowing access to even the newest innovations by the smallest of companies willing to invest in development of natural resources. In exploration, it may be 3-D seismic. In drilling, it may be the horizontal lateral. In production, it may be something else. But almost all of the new technology is now available to the small, independent producer.

Lucas Energy, Inc., is particularly interested in, and has personnel experienced in, the drilling, completion, and production technology. Company personnel have contributed to such areas of the industry technology as sand control, well completions and stimulation, and production technology.

About Lucas Energy, Inc.

Lucas Energy, Inc., is an independent crude oil and gas company building a diversified portfolio of valuable oil and gas assets in the United States. The company is focused on identifying under performing oil and gas assets, which are revitalized through a meticulous process of evaluation, application of modern well technology, and stringent management controls. This process allows the company to increase its reserve base and cash flow while significantly reducing the risk of traditional exploration projects. Lucas Energy's financial structure allows it to minimize the high overhead of traditional E&P companies.

Since 2004, Lucas Energy has acquired 61 properties encompassing over 11,000 acres in Texas. The company now holds more than 1,500,000 barrels of oil in independently proven reserves and 28 producing wells, with an additional 20 PUDs (proven undeveloped) held by production. A combination of rigorous ROI criteria and leading-edge technologies provides the company with a payback period of less than 10 months per well. This has produced a finding cost of less than $5 per barrel. By applying strict fiscal controls, the management team has achieved and maintained profitability since inception.

Lateral Drilling Program
Lucas has embarked on an aggressive 12-month, 10-well lateral drilling program in order to increase production and reserves from existing properties. This program will exploit the multiple pay zones in the Austin Chalk formation in Texas. Twenty years of experience with Austin Chalk horizontal drilling gives the Lucas team a replicable platform, enabling them to obtain leases and drill hot spots By executing Lucas lateral drilling program, production is expected to increase dramatically.

Competitive Advantages
In the current oil and gas market where price of the commodities has risen so fast and so high within the past two years, other definitive advantages are more important. The roller-coaster ride up on prices may not be the free ride that so many companies used in the past two years to justify acquisitions. The Company has several distinct competitive advantages in the industry. These areas are size, experience, and contacts. These competitive advantages are brought to the company in the form of its technical and management personnel, and the short-term focus established by management at this point in time.

As to size, it forms two important guidelines for the company. First, being a small company looking for small acquisitions is a decided advantage in the oil and gas industries today. Larger companies, and most mid-size companies, are searching for large acquisitions to make a successful increase in the size of company. However, large acquisitions go for a premium; and are difficult to locate. Even smaller acquisitions are expensive; but a good deal on a smaller acquisition is easier to find than one on a larger acquisition.

Experience is the most important factor in the location of acquisitions, in evaluating the acquisitions, and in the cleanup and improvement of the acquisitions. You make money now in the oil and gas industry by finding a good acquisition, at a good price, with the potential for improvement. You make the improvement possible with talent and expertise to evaluate the improvement needed, to know the method of improvement, and to have the ability to implement the work over programs. Lucas Energy has this expertise available to it.

Management in the oil and gas industry is critical. The most important management factor for a small company is the hands-on experience to manage wells at the field level. The improvement and protection of assets for a small oil and gas company is essential. Breakdown of equipment, formation hydraulics, and oil field theft are all part of the management day, and the Company has the management experience to make this work.