Oil and Gas Reserves. Users of this information should be aware that the process of estimating quantities of "proved," "proved developed," and "proved undeveloped" crude oil, natural gas liquids and natural gas reserves is complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions (upward or downward) to existing reserve estimates may occur from time to time. Although reasonable effort is made to ensure that reserve estimates reported represent the most accurate assessments possible, the significance of the subjective decisions required and variances in available data for various reservoirs make these estimates generally less precise than other estimates presented in connection with financial statement disclosures. See ITEM 1A. Risk Factors.

Proved reserves represent estimated quantities of crude oil, natural gas liquids and natural gas that geoscience and engineering data can estimate, with reasonable certainty, to be economically producible from a given day forward from known reservoirs under economic conditions, operating methods and government regulation before the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.

Proved developed reserves are proved reserves expected to be recovered under operating methods being utilized at the time the estimates were made, through wells and equipment in place or if the cost of any required equipment is relatively minor compared to the cost of a new well.

Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required. Reserves on undrilled acreage are limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time. Estimates for proved undeveloped reserves are not attributed to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

All of the Company's reserves are located in the United States. The following tables set forth Lucas’ net proved reserves, including proved developed and proved undeveloped reserves, at March 31 for each of the three years in the period ended March 31, 2012, and the changes in the net proved reserves for each of the two years in the period ended March 31, 2012, as estimated by the international petroleum consulting firm Forrest A. Garb & Associates, Inc.:

During the year ended March 31, 2011, Lucas added 1.6 million BOE of proved reserves primarily in the Eagle Ford and Austin Chalk formations. Approximately 93% of the reserve additions were crude oil. Sales in place of 0.3 million BOE were primarily related to farmouts of the Eagle Ford formation. See Note 4.

	March 31,
	2012			2011			2010
Crude Oil (Bbls)
Net proved reserves at beginning of year		2,768,200			1,970,230			2,238,860
Revisions of previous estimates		(313,810	)		(575,988	)		(389,520	)
Purchases in place		1,193,746			284,155			694,610
Extensions, discoveries and other additions		3,456,560			1,464,040			47,510
Sales in place		(26,710	)		(336,550	)		(595,630	)
Production		(54,466	)		(37,687	)		(25,600	)
Net proved reserves at end of year		7,023,520			2,768,200			1,970,230

Natural Gas (Mcf)
Net proved reserves at beginning of year		843,250			31,170			67,510
Revisions of previous estimates		194,160			37,187			(30,490	)
Purchases in place		-			126,200			-
Extensions, discoveries and other additions		9,699,630			657,430			-
Sales in place		-			-			-
Production		(14,560	)		(8,737	)		(5,850	)
Net proved reserves at end of year		10,722,480			843,250			31,170

Oil Equivalents (Boe)
Net proved reserves at beginning of year		2,908,742			1,975,425			2,250,112
Revisions of previous estimates		(281,450	)		(569,790	)		(394,602	)
Purchases in place		1,193,746			305,188			694,610
Extensions, discoveries and other additions		5,073,165			1,573,612			47,510
Sales in place		(26,710	)		(336,550	)		(595,630	)
Production		(56,893	)		(39,143	)		(26,575	)
Net proved reserves at end of year		8,810,600			2,908,742			1,975,425

For the year ended March 31, 2012, total proved undeveloped reserves (PUDs) increased by 5.6 million BOE to 8.4 million BOE. The proved undeveloped reserve additions were primarily in the Eagle Ford and approximately 72% of the additions were crude oil. During the year ended March 31, 2012, Lucas drilled and transferred 51,000 BOE of

Lucas does not have a material amount of reserves that have remained undeveloped for five years or more. In addition, our plan is to convert our PUD balance as of March 31, 2012 to proved developed reserves within five years or prior to the end of fiscal year 2016.

Our reserves concentrate mainly in the Austin Chalk and Eagle Ford formations. At March 31, 2012, Lucas’ net proved reserves at the Austin Chalk and Eagle Ford formations were 2.5 million BOE, or 28%, and 4.1 million BOE, or 46%, out of the total net proved developed and undeveloped reserves of 8.8 million BOE.

			Proved
	Proved		Developed		Proved		Total
	Developed		Non-Producing		Undeveloped		Proved
Austin Chalk
At March 31, 2012		170,209		-		2,290,064		2,460,273
At March 31, 2011		51,725		-		1,394,110		1,445,835

Eagle Ford
At March 31, 2012		195,432		-		3,877,769		4,073,201
At March 31, 2011		29,012		-		1,395,368		1,424,380

Buda
At March 31, 2012		21,296		-		2,240,403		2,261,699
At March 31, 2011		2,120		-		-		2,120

Other
At March 31, 2012		15,423		-		-		15,423
At March 31, 2011		36,407		-		-		36,407

Total
At March 31, 2012		402,360		-		8,408,236		8,810,596
At March 31, 2011		119,264		-		2,789,478		2,908,742

	At March 31,
	2012			2011
Proved leasehold costs	$	35,454,781		$	6,043,061
Costs of wells and development		29,858,429			17,504,183
Capitalized asset retirement costs		927,165			305,646
Total cost of oil and gas properties		66,240,375			23,852,890
Oil and gas properties
not subject to amortization		-			797,950
Accumulated depreciation and depletion		(5,625,961	)		(3,709,719	)
Net Capitalized Costs	$	60,614,414		$	20,941,121

Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities. The following table sets forth the costs incurred in Lucas’ oil and gas property acquisition, exploration and development activities for the years ended March 31, 2012 and 2011:

	2012			2011

Crude oil and natural gas revenues	$	5,258,461		$	3,022,085
Production costs		(4,605,979	)		(1,903,285	)
Depreciation and depletion		(1,916,242	)		(1,227,286	)
Results of operations for producing activities,
excluding corporate overhead and interest costs	$	(1,263,760	)	$	(108,486	)

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves. The following information has been developed utilizing procedures prescribed by ASC Topic 932 and based on crude oil and natural gas reserves and production volumes estimated by the independent petroleum consultants of Lucas. The estimates were based on a 12-month average for commodity prices for the years ended March 31, 2012 and 2011. The following information may be useful for certain comparison purposes, but should not be solely relied upon in evaluating Lucas or its performance. Further, information contained in the following table should not be considered as representative of realistic assessments of future cash flows, nor should the Standardized Measure of Discounted Future Net Cash Flows be viewed as representative of the current value of Lucas.

The future cash flows presented below are based on cost rates and statutory income tax rates in existence as of the date of the projections and average prices over the preceding twelve months. It is expected that material revisions to some estimates of crude oil and natural gas reserves may occur in the future, development and production of the reserves may occur in periods other than those assumed, and actual prices realized and costs incurred may vary significantly from those used.

Management does not rely upon the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable and possible as well as proved reserves, and varying price and cost assumptions considered more representative of a range of possible economic conditions that may be anticipated.

	At March 31,
	2012			2011
Future cash inflows	$	688,709,390		$	218,750,890
Future production costs		(107,064,090	)		(39,353,540	)
Future development costs		(300,395,000	)		(67,955,000	)
Future income taxes		(72,444,823	)		(27,246,082	)
Future net cash flows		208,805,477			84,196,268
Discount to present value at 10% annual rate		(133,420,621	)		(41,471,451	)
Standardized measure of discounted future net
cash flows relating to proved oil and gas
reserves	$	75,384,856		$	42,724,817

Changes in Standardized Measure of Discounted Future Net Cash Flows. The following table sets forth the changes in the standardized measure of discounted future net cash flows at March 31, for each of the two years in the period ended March 31, 2012:

	2012			2011
Standardized measure, beginning of year	$	42,724,817		$	39,206,493
Crude oil and natural gas sales, net of production costs		(1,059,860	)		(1,118,800	)
Net changes in prices and production costs		(9,255,307	)		(2,458,269	)
Extensions, discoveries, additions and improved recovery		41,658,210			21,585,840
Changes in estimated future development costs		(12,435,000	)		(690,440	)
Development costs incurred		2,410,000			1,535,000
Revisions of previous quantity estimates		(5,465,785	)		(11,875,235	)
Accretion of discount		5,648,786			4,751,838
Net change in income taxes		(15,196,819	)		(5,451,156	)
Purchases of reserves in place		22,710,732			2,606,360
Sales of reserves in place		(998,050	)		(4,221,993	)
Change in timing of estimated future production		4,643,132			(1,144,821	)
Standardized measure, end of year	$	75,384,856		$	42,724,817