ZaZa Splits With Hess, Seeks Partner In Eagle Ford, Woodbine Plays
To swap assets, with ZaZa receiving 60,500 net acres in TX Eagle Ford shale, in Gonzalez, Fayette, Lavaca, DeWitt, Frio & Colorado counties, and Hess receiving 2% ORRI in Hackberry and Sweet Home prospect areas in the Eagle Ford & 50% WI in Paris Basic exploration licenses in France.
ZaZa Energy Corp., Houston, (NYSE: ZAZA) is unwinding its joint-venture agreement with Hess Corp., Houston, (NYSE: HESS) involving assets in the Texas Eagle Ford shale and the Paris Basin in France.
As part of an asset swap, ZaZa will receive 60,500 net acres in the Eagle Ford shale, including approximately 10,810 acres in the Moulton prospect area (Gonzalez, Fayette and Lavaca counties), 35,650 acres in the Sweet Home prospect area (DeWitt and Lavaca counties), 1,970 acres in the Cotulla prospect area in the southern region of Frio County, and 23,120 acres in the Hackberry prospect area (Lavaca and Colorado counties).
ZaZa will also receive an additional $70 million in cash.
Hess will receive a 2% overriding royalty interest in the Moulton prospect area and a 1% ORRI in the Hackberry and Sweet Home prospect areas in the Eagle Ford. ZaZa will additionally transfer a 50% working interest in the Paris Basin exploration licenses in France while retaining a 5% ORRI, with total proceeds capped at $130 million.
Closing is expected by Aug. 15. The effective date is June 1, 2012.
Pro forma, ZaZa will hold approximately 72,000 acres in the Eagle Ford, and approximately 24,260 wholly-owned acres of conventional assets in the Paris Basin currently producing 850 barrels of oil per day with proved and probable reserves of 10 million barrels of oil.
ZaZa chief executive Craig McKenzie says, “Upon closing the transaction, we will have created a critical mass of assets in the prolific Eagle Ford core and emerging Woodbine/Eaglebine plays, where we will be the operator of approximately 170,000 net acres. We will also retain our French-based business and preserve access to upside from future exploration success associated with the 1 million acres targeting the Liassic resource.”
ZaZa also announced it has retained Jefferies & Co. Inc. to seek a joint-venture partner for its Eagle Ford and Woodbine/Eaglebine assets, as well as to evaluate strategic opportunities. ZaZa holds 98,520 nearly contiguous net acres in the Woodbine/Eaglebine play in Grimes, Madison and Walker counties, Texas.