ZaZa Energy Corporation provided operational updates related to its core properties in the Eaglebine and Eagle Ford regions in Texas. The Company also provided further details on its proposed sale of its French assets and confirmed that it remains on track for a closing in December 2012.
Eagle Ford Update
ZaZa initially owned ~12,300 net acres in the Eagle Ford and increased its net acreage position to ~72,000 with 100% working interest as a result of the Hess division of assets. The Company intends to divest, in the first quarter of 2013, two of the prospects it considers non-core (Dilley Prospect ~2,000 net acres and Hackberry/Oakland Prospect ~23,000 net acres), which collectively represent ~25,000 net acres. The Company expects to have ~47,000 net acres post-divestiture.
The Company disclosed today that it has reached TD in its Boening A-1H well located in DeWitt County, Texas, and is running production casing and preparing for completion operations. Once released from the Boening, the Company will then move the Nabors Drilling USA rig, currently under a multi-well contract with ZaZa, back to its Eaglebine acreage in Walker County to drill the Commodore A-1 well to test the Lower Cretaceous zone.
Commenting on today's announcement, Todd A. Brooks, CEO of ZaZa Energy Corporation stated, "We remain firm believers in our first-mover advantage and the enormous potential our company has today, given the resources we believe are prevalent in both our Eaglebine and our Lower Cretaceous position in Walker and Grimes Counties, in addition to our proven Eagle Ford acreage. We have a well-defined strategy in place to harness these resources and, at the same time, continuously improve our operational and financial position. By divesting non-core assets, we continue to generate capital that places us in a stronger position to further delineate our Eagle Ford and Eaglebine projects, while enabling us to successfully pay down our debt. 2013 should be a breakout year for ZaZa, and we remain focused on generating value for our shareholders, our company and our partners."
Brooks continued, "Several of our senior executives, including myself, Ian Fay our CFO and Scott Gaille, our Chief Compliance Officer, among others, intend to make purchases of our common stock in the open market over the coming days. We've been in a lock-up period for most of 2012 as we've pursued transactions and completed our debt offering. Now that we have a window to conduct transactions, we intend to purchase ZAZA stock pursuant and subject to the restrictions of, and consistent with, applicable laws and our securities trading policy. This, we believe, is testament to our strong belief in our company and its potential."
Update on Definitive Sales and Purchase Agreement with Vermilion Energy
On November 14, 2012, ZaZa announced that it entered into a definitive share purchase agreement ("Purchase Agreement") with Vermilion Energy Inc. ("Vermilion"), whereby Vermilion, through its wholly-owned subsidiary Vermilion REP SAS would acquire 100% of the shares of ZaZa Energy France SAS ("ZEF") for a total purchase price of US$85.8 million, subject to customary adjustments.
The Company announced today that it has received a letter of non-objection from the French Minister of Energy and Minister of Economy and Finance on December 10, 2012 approving the transfer of 100% of the shares of ZEF to Vermilion as per the Share Purchase Agreement. ZaZa remains on track to close the transaction with Vermilion prior to year-end 2012 and intends to use a portion of the proceeds from the disposition to pay down part of its remaining senior secured notes and fund its drilling program across its Eaglebine and Eagle Ford plays.
Mr. Brooks concluded, "With the sale of our French conventional asset, we will have paid down our Senior Secured Notes to approximately $33 million. We believe ZaZa is well positioned to achieve significant rates of return on our investments and we look forward to providing our shareholders with updates on our progress."