ZaZa Energy Gathers Funds for Eaglebine Development

July 23, 2014 Kirk Eggleston

Eagle Ford-focused ZaZa Energy Corp. entered into a $7.5 stock deal with Los Angeles-based Crede Capital Group LLC, the company said in late July of 2014.

The proceeds will fund additional development and lease acquisitions in ZaZa's East Texas area, the company said in a prepared release.

Crede purchased a total of $5-million of ZaZa common stock, priced at $0.83 each. The investment will be made in two phases, according to the company. The first phase closed on July 21st. The transaction includes 0.6 warrants for every share of ZaZa common stock with a price of $1.1205 per share.

The second phase, which is expected to close in late October, also includes 0.6 warrants for every share of ZaZa common stock. The price for additional shares will be determined by the closing price on the day of closing.

ZaZa - EOG Resources East Texas Eagle Ford JV

In March of 2013, ZaZa Energy and EOG Resources finalized terms on a joint venture (JV) targeting the Eaglebine in Grimes, Madison, Montgomery, Trinity, and Walker counties.

The company has re-focused its attention to the Eaglebine, after divesting 10,300 net Eagle Ford acres in July of 2013 to a subsidiary of Sanchez Energy for $28.8 million. Approximately 82% of ZaZa’s first quarter 2014 production came from the Eaglebine.

ZaZa Energy Continues Laying Groundwork for Eagle Ford Growth

May 14, 2014 Kirk Eggleston

ZaZa's first quarter 2014 average combined production in the Eagle Ford (South Texas) and Eaglebine (East Texas) was 630 boe/d. The company has re-focused its attention to the Eaglebine, after divesting 10,300 net Eagle Ford acres in July of 2013 to a subsidiary of Sanchez Energy for $28.8 million. Approximately 82% of ZaZa's first quarter production came from the Eaglebine.

During the first-quarter, the company continued to position itself for growth across its portfolio. In May of 2014, ZaZa announced that its CEO, Todd Brooks, will be taking a salary of $1 dollar for the next two years. During that time frame, Brooks' compensation will consist of equity grants or other equity-related compensation.

“Through a series of transactions over the last two years, we have transformed ZaZa into a growth vehicle for emerging unconventional plays, particularly in East Texas. The elimination of my salary and adoption of STI and LTI performance hurdles for the next two years further aligns me with shareholders as we look forward to the delivery of continued production and reserves growth.”

— Todd Brooks

ZaZa Energy is currently operating at a net loss of $1.4 million, compared to $2.9 million last year at this time.

ZaZa Energy Eagle Ford First Quarter 2014 Operations Update

During the quarter, one of ZaZa's joint venture partners, Sabine South Texas LLC, completed its commitments to drill two horizontal wells in ZaZa's Sweet Home Prospect. The first commitment well was completed on February 14th and the second on March 11th. Sabine has now been assigned a 75% interest in 7600 net acres in the Sweet Home Prospect, and a well that ZaZa refers to as the "Boening well." Participating interests in any additional drilling or acquired lease acreage in the Sweet Home Prospect will be shared 75% by Sabine and 25% by ZaZa under an area of mutual interest agreement (AMI) that will expire during the third quarter.

ZaZa Energy Eaglebine First Quarter 2014 Operations Update

ZaZa entered into a further amendment of its joint venture with EOG Resources in the Eaglebine during the first quarter. Under the ammendment, ZaZa will receive ~$14 million and a two-well drilling commitment from EOG. As part of the agreement, EOG must begin drilling the first of two wells by July 1, 2014. In exchange, EOG will gain a 75% working interest in all of Zaza’s remaining acreage (9,600 net acres).

During the quarter, ZaZa acquired 5,000 net acres in Houston County and Southeastern Leon County in its core East Texas area. This acreage is currently held 100% by ZaZa.

EOG Resources - ZaZa Energy Move into Third and Final Phase of Joint Venture Agreement

March 21, 2014 Kirk Eggleston

EOG Resources joint venture with ZaZa Energy moves into its third and final phase in the Eaglebine. Plans were accelerated in the latter part of 2013 to move forward with the second phase of the joint venture.

In the third phase, ZaZa will receive $15 million and an additional two-well drilling commitment from EOG. As part of the agreement, EOG must begin drilling the first of two wells by July 1, 2014. In exchange, EOG will gain a 75% working interest in all of Zaza's remaining acreage.

Under the third phase, ZaZa Resources will also receive an additional $1.1 million in cash from EOG for the completion of the Range Resources-ZaZa joint venture agreement. Range Resources has an interest in portions of the acreage.

EOG Resources - Zaza Energy Phase III Joint Venture Highlights

Zaza Energy receives $4.7 million in cash from EOG Resources
Zaza Energy receives a carry of EOG's share of future joint venture costs of up to ~$9.2 million
Zaza Energy receives $1.1 million in cash from EOG for the completion of the Range Resources-ZaZa joint venture agreement
EOG Resources will begin drilling the first of two wells by July 1, 2014 as part of a two-well drilling commitment
EOG Resources is assigned a 75% working interest in all of ZaZa's remaining acreage

ZaZa Energy and EOG Resources reached terms on the joint venture agreement early in 2013. The company's eastern Eagle Ford acreage is in Grimes, Madison, Montgomery, Trinity, and Walker counties.

ZaZa Energy Signs Eagle Ford JV In DeWitt County

November 14, 2013 R.T. Dukes

ZaZa Energy Sweet Home DeWitt County Eagle Ford Acreage

ZaZa Energy has agreed to a joint venture (JV) with a private operator on "non-core" acreage in DeWitt County.

The private company will receive a 75% net revenue interest in 7,600 net acres and has committed to carry ZaZa's costs for drilling two horizontal wells before April 15, 2014. The property includes 12 "high graded" development units in an area where ZaZa has ~23,000 net acres.

Additionally, ZaZa receives a credit of $750,000 for infrastructure expenses and a $300,000 credit for lease upkeep from its JV partner.

“During the third quarter, we continued to execute on our strategy as we consummated a new JV on a 7,600 acre portion of our Sweet Home acreage in DeWitt and Lavaca Counties with a proven operator who is actively running multiple rigs nearby.”

— Todd A. Brooks, CEO

ZaZa Is Active in Deals Across the Eagle Ford and Eaglebine

ZaZa is also participating in a JV in the Eaglebine. EOG, ZaZa's partner, recently opted into phase two of the JV agreement and accelerated development in the area.

During the third quarter, ZaZa sold 10,000 acres in Fayette, Gonzales, and Lavaca counties for ~$29 million.

The two joint ventures combined with asset sales are providing the liquidity needed for ZaZa to develop its assets more aggressively.

Todd A. Brooks, CEO, stated, "In addition, we closed on the sale of our remaining Eagle Ford Moulton acreage in Gonzales and Fayette Counties, and we made significant progress as it relates to our JV partnership in the Eaglebine/Eagle Ford East.”

Read the full release at zazaenergy.com

EOG Accelerates Eaglebine JV With ZaZa by Electing Into Phase II

October 1, 2013 R.T. Dukes

EOG Resources joint venture with ZaZa in the Eaglebine is moving into phase two of three. EOG is expected to complete the first three wells this year and was expected to elect into phase two in early 2014. Instead, the company has accelerated its plans.

The deal includes several forms of consideration, so we'll break it out by company:

EOG receives the following:

20,000 net acres as part of agreeing to phase II
The companies also agree that EOG will receive an additional 6,000 net acres if the company elects into phase II on or before January 31, 2014

ZaZa receives:

$17 million
Interests in 15 wells outside the current AMI in Madison County, with a PDP present value of $3 million
Costs carry on 1 vertical well, two horizontal wells, and a $1.25 million credit toward land & operational expenses
As part of phase III, ZaZa will receive additional interests in the Southern Madison County wells valued at $9 million
Additionally in phase II, ZaZa retains 14,000 net acres that EOG can elect into on or before January 31, 2014

ZaZa also receives a 25% interest in approximately 19,000 net acres that have been acquired by EOG in exchange for $2 million plus additional acreage. ZaZa is assigning a 75% working interest in approximately 18,500 net acres in Walker and Madison counties.

“This is a significant step forward for our company as we establish our production base and create the right platform for growth. Through this transaction we’ve successfully increased our contiguous JV acreage footprint, established $16.1 million in PDP value across interests in 23 producing wells and will see an influx of $16.5 million in net cash.”

— Todd A. Brooks, ZaZa’s CEO

While two wells are still waiting to be completed, I believe this deal signals that EOG is confident in what they've seen from operated and non-operated wells in the area. There would not have been a reason to accelerate the timeline without an optimistic outlook.

Watch to see if EOG elects into phase three later in the year or in January 2014. If they do, I believe we'll see the companies planning for development instead of exploration at some point in 2014.

Read the full press release at zazaenergy.com