Item 1.01 Entry into a Material Definitive Agreement.

Effective as of October 2, 2012, Cubic Energy, Inc. (the "Company") entered into a Settlement Agreement and Mutual Release (the "Agreement") with Tauren Exploration, Inc. ("Tauren"), EXCO Operating Company, LP ("EXCO") and BG US Production Company, LLC ("BG"). The Agreement provides that EXCO and BG shall
(a) apply the Company's prepaid drilling credits as provided in the Agreement and place the Company in consent status on specified wells and (b) pay to the Company the total amount of $12,179,853.40 in cash. Pursuant to the Fourth Amendment to Credit Agreement between the Company and Wells Fargo Energy Capital, Inc., $9,134,890.05 of such total amount shall be paid to Wells Fargo in order to reduce the borrowings under the Company's revolving credit facility with Wells Fargo. The Agreement also provides for mutual releases among the parties.

Tauren is wholly owned by Calvin A. Wallen, III, the Company's President and Chief Executive Officer. Tauren was named as a co-petitioner along with the Company in the dispute with EXCO and BG.

The foregoing summary of the Agreement is qualified in its entirety by reference to the full text of the Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K, which is incorporated by reference into this Item 1.01.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.1 Settlement Agreement and Mutual Release effective as of October 2, 2012 by and between Cubic Energy, Inc., Tauren Exploration, Inc., EXCO Operating Company, LP and BG US Production Company, LLC