Lucas Forms JV With Milestone

JV formed to develop Austin Chalk and Eagle Ford formations.

Lucas Energy Inc. has formed a joint venture with Milestone Energy LLC to develop oil and gas properties in the Eagle Ford and Austin Chalk formations.

The properties for development are in Gonzales, Wilson and Karnes counties, Texas. Under the terms of the agreement, Milestone will contribute 80% of the cost of the acreage, while Lucas Energy will contribute the remaining 20%. Milestone will be responsible for 100% of the drilling and completion cost as well as project generation fees. Milestone is expected to contribute between $40 million and $100 million to the joint venture.

Milestone is a privately-held company backed by investors from mainland China and Hong Kong which seeks multi-well crude oil investments via participation programs which give it direct ownership positions in the wells. Its headquarters is in Houston, Texas.

Lucas will be the operator of the properties, contributing its expertise and knowledge of the area and making available to the joint venture certain acreage it has acquired in the past. Milestone will earn an 80% working interest in those properties in which Lucas has an undivided interest, and 80% of the company's working interest where it has a divided interest in such properties. Lucas will retain 20% of its current working interest in such properties, with all such working interests being subject to the terms of the final participation agreement.

The formal participation agreement is expected to be finalized, and drilling is anticipated to begin, in late October 2012.

Lucas Energy is an independent oil and gas company based in Houston, Texas. It seeks to acquire underdeveloped oil and gas properties and restore the production. Currently, Lucas is active in the Austin Chalk, Eagle Ford, Eaglebine, and Buda trends.