ZaZa Energy reaches deals to create JV, sell land
HOUSTON (AP) — Shares of ZaZa Energy Corp. jumped Monday after the exploration and development company announced a deal to form a joint venture and another to sell more than 10,000 acres of land in Texas.
Under the agreement, ZaZa will partner with an unidentified oil and natural gas company to further develop its Eaglebine assets in Texas.
The joint venture partner will receive up to a 75 percent working interest in up to 55,000 net acres and operate the joint venture acreage including 73,000 of ZaZa's 92,000 net mineral acres. ZaZa will retain a 25 percent working interest in the 73,000 acres.
Early-stage drilling preparations are under way for the first two joint venture wells. The company expects that the first three earning wells will be drilled by January. ZaZa said the joint venture will focus on boosting field development, while also speeding up production at a lower cost.
Specific financial terms were not disclosed. ZaZa said the development program includes three phases, each covering a three-well drilling program plus related cash payments. Phases two and three are options for the joint venture partner.
Also on Monday, ZaZa said it reached a deal to sell about 10,000 net acres of land located in Texas, which it refers to as the Moulton properties, for about $43.3 million. The deal includes the company's interest in seven producing wells. Net proceeds are expected to total about $42 million.
The company also said it reached a separate deal to sell its remaining acreage in the Moulton properties for about $9.2 million.
ZaZa said it plans to use proceeds from both sales, which are expected to close in the second quarter, to fund exploration on its other properties and pay down debt.
In morning trading, ZaZa shares rose 16 cents, or 9 percent, to $1.81, after peaking at $1.98 earlier in the day. Over the past 52 weeks, the company's shares have traded between $1.20 and $5.18.
Over the past year, the stock has lost about 57 percent of its value.