Lucas Energy, a Houston-based independent oil and gas company with operations in Texas, announced Friday that oil and gas explorer and producer Victory Energy terminated the LOI for the merger. Lucas Energy defaulted on its debt earlier this year, while Austin, Texas-based Victory Energy was the subject of a going-concern warning by its auditors in March.
Victory Energy is focused on the Permian Basin, while Lucas Energy has concentrated on the Austin Chalk and Eagle Ford formations in South Texas.
Lucas Energy's stock closed at 17.8 cents on Monday, down 8.77%. Victory Energy's stock closed at 21 cents on Friday, down 27.6%
The merger, which was announced on Feb. 4, would have issued the majority of Lucas Energy's equity to Victory Energy's shareholders and would not have included any cash payment. Victory Energy's shareholders and its partner, Navitus Energy Group, would have held the majority of Lucas Energy's stock once the transaction was completed. Navitus Energy is a group of 120 investors who are doctors and other high net worth individuals.
The merged company was going to be called Renaissance Natural Resources Corp. The company would have been 40%-owned by Lucas Energy shareholders, 30%-owned by Victory Energy shareholders and 30%-owned by Navitus Energy Group, according to an April 20 presentation about the merger.
Victory Energy had agreed to help provide Lucas Energy with the $12 million it was expected to need until the merger closed. The merger was expected to reduce Lucas Energy's debt by at least $8 million.