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Lucas Energy can Help Fulfill the Demand for U.S. On-Shore Oil

August 15, 2010

Volume 2 Issue 4

www.LucasEnergy.com

Lucas Energy, Inc. (NYSE Amex: LEI) is an emerging Independent oil and gas company based out of Houston, Texas. The Company has been dramatically increasing production of oil in 4 counties in Southern Texas. LEI has 100% working interest in the ma-jority of their 17,000 acres of oil and gas leases.

Lucas operates 47 wells with a gross average daily production of 300+ BOE/day. The Company also controls an additional 28 shut-in or plugged well bores in the Austin Chalk formation.

Lucas’s acreage is located in the middle of the new Eagle Ford trend and it is currently testing both the Eagle Ford (EF) and Buda formations as part of the LEI Business Plan. EF is rich in American oil and is positioned directly beneath the Austin Chalk Formation. EFS spans across 11 counties in South Texas and produces oil and gas from 4,000 to 12,000 feet. Acreage in Gonzalez County just sold for $ 4,500/acre. Lucas paid just $ 3,400 /acre.

Oil production has catapulted year to year and quarter to quarter. Production sales increased 1,813 bbls in the April/ June up from Jan– March quarter a 31% increase. June sales are 100% above January with oil prices about the same. ( $ 71-73 ) One of the largest privately owned U.S. oil companies, Hillcorp Energy Co., acquired 85% interest in 10,500 acres of Lucas’s EF leases in Gonzales County, Texas. In June 2010, LEI acquired an additional 9 wells in the EF/Austin Chalk that are being worked over to restore production. In July 2010, the Company acquired 2 additional producing wells along the EF and has 100% working interest in them.

GROWTH STRATEGIES

For Lucas Energy, growth of oil production is expected to come from acquiring abandoned or shut-in wells. Revitalizing existing wells with work-over rigs has brought a significant source of oil and gas recovery. Also, drilling new laterals has produced oil on leases that have been previously underdeveloped. The recently acquired wells along the EF have produced beyond the Company’s expectations.

The Company has a mission to protect the environment from man-made disasters. Horizontal drilling is a technology that allows oil extraction with less surface exposure. LEI has been utilizing laterals to improve economics, having the ability to produce oil faster, safer and more efficiently. About 25% of domestic independent oil companies use horizontal drilling. Lucas builds relationships with land owners to ensure fairness and protection of their property. LEI has no debt.

Lucas improved their cash position having $ 4 mill in cash in addition to having repaid $ 2.2 million in debt and having spent $ 4.6 million in capital expenditures including the acquisition of 2,800 new acres, increasing the Company’s leverage and strengthening their position in Gonzales County.

The first fiscal quarter, April-June 2010 showed a 60% improvement in the adjusted EBITDA over the Last quarter 2009-2010 ( January-March.) Oil production is expected to be unabated in Q3 2010 and Q4 in 2011. As of March 31, 2010 the undiscounted value of proved reserves was $81.7 million. The PV10 value was $47.5 million.

Lucas also has leverage over other companies because it has lower operating expenses on its leases. By the numbers, LEI has a very good financial growth potential. The Company has low equipment, exploratory and lifting costs. An increase in production, reserves and cash flow gives the company a strong financial position and a significant financial advantage in the oil & gas market sector.

PROPERTIES & PRODUCTION

Properties: 17,000 acres/4 counties (Gonzales, Wilson, Atascosa, Karnes)

• Total: 75

• Producing: 47

• Shut-In/P&A’d: 28

Reserves: Proven: 1.97 million BOE Oil Production(Avg):

Yearly: (Fiscal)

• 2008: 48,000 BOE

• 2009: 52,000 BOE

• 2010: 56,000 BOE

Daily: 300+ BOPD

Inception-to-date well production:

• Perkins Oil Unit #1: 13,500 BBL (2006)

• Hagen Ranch # 3: 13,500 BBL (2006)

• Griffen Oil Unit #2: 31,800 BBL (2006)

• Cone-Dubose Unit #1: 4300 BBL (2007)

• Gescheidle #1: 254 BBL/day (6/2010)

• Wall Unit #1: 91 BBL/day (6/2010)

Future of American Oil

Over the next year, the demand for American crude oil is expected to grow with drilling offshore becoming such high risk. Penn Virginia Corp acquired 6,800 acres with access to the Eagle Ford Shale paying $ 31.1 million. That comes to a huge $ 4,300 per acre. Lucas has averaged no more than $ 400-600 cost per acre as they were grandfathered into some properties years ago. The business of independ-ent oil and gas companies is increasing incrementally as technologies improve and value of production remains at reasonable levels. More reliance on energy will be on shore and should help reduce dependence on imported oil. It is inevitable that we must find new sources of oil production in the United States to meet Americas need for fuel in their vehicles, homes or factories, which is 2/3 of our energy usage. We need to focus on increasing our domestic oil supply to keep consumer prices lowered, reduce reliance on foreign oil suppliers and to prevent an extremely high trade deficit. Currently there are about 5000 independent oil & gas producers in the U.S. In America, the independent companies drill out of 90% of the wells that produce 68% of our oil & 82% of our natural gas. A major benefit financially, is that domestic producers reinvest profits into new energy projects and technology right here at home.

Prepared by Princeton Research Inc. www.Princetonresearch.com. Rule 17B: requires disclosure of monies paid for investor relations. Princeton Research is paid $2500 for this report. This newsletter may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, but not limited to, statements as to future operating results and plans that involve risks and uncertainties. We use words such as “expects”, “anticipates”, “believes”, “estimates”, the negative of these terms and similar expressions to identify forward looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to differ materi-ally from any future results, performance or achievements expressed or implied by those projected in the forward-looking statements for any reason.

Mike King is the President and chief econo-mist of Princeton Research, Inc. of Nevada. He has over 45 years of cumulative experience beginning as a broker/trader to consulting corporations on financial matters. Mike later evolved into investment banking and corporate finance for private and public companies. His propensity over the years has been specializing in economic analysis of public companies, equities, derivatives, and physicals or cash market trends throughout the world. Mike’s experience, reputation and expertise behind all of us here at Princeton Research, it is our policy and our promise to you to do our best to provide services of excellence and dedication so that your business will succeed and prosper.

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