Lucas Energy Inc. terminated its nonbinding letter of intent (LOI) with Victory Energy Corp. on May 11, the company said May 15. Under the LOI, either company could terminate the agreement, by written notification, for any reason.

The LOI concerned the merger of the companies, and a combination of their businesses.

The Feb. 26 pre-merger loan and funding agreement between the companies said that Victory would not provide further credit to Lucas.

The two companies are negotiating a mutually agreeable end to the proposed merger and business combination, Lucas said.

Anthony C. Schnur, CEO of Lucas, said that it reached out to known parties to reexamine transactions that were abandoned after oil prices fell, or that were abandoned after the Feb. 4 announcement of the merger with Victory.

"We are encouraged about the opportunities available to us now that crude oil prices have stabilized and drilling costs have been declining. Reduced drilling costs have significantly improved the economics of our Eagle Ford shale development wells. The favorable drilling metrics also reduce our total capital needs required to participate in the development of two Eagle Ford wells in Karnes County; two of which are scheduled and require Lucas' funding. We will continue to discuss potential business combinations or financing ventures that are a fit with our company and potentially less dilutive to our shareholders," he added.

Houston-based Lucas Energy Inc. development of Austin Chalk and Eagle Ford crude oil and natural gas.