To strengthen its balance sheet and provide working capital for its Eaglebine and Eagle Ford Shale assets, Houston-based ZaZa Energy Corp. (NASDAQ: ZaZa) has agreed to sell its French assets to Vermilion Energy Inc. for $85.8 million.
Read about ZaZa Energy's recent Eaglebine and Eagle Ford Shale operations update.
ZaZa Energy Corp. entered into a definitive share purchase agreement with Vermilion Energy, whereby Vermilion, through its wholly-owned subsidiary Vermilion REP SAS, will acquire 100% of the shares of ZaZa Energy France SAS (ZEF) for a purchase price of approximately US$85.8 million, subject to customary closing adjustments, with an effective date of October 1, 2012 and an anticipated closing prior to year-end 2012.
ZEF’s operating interests cover approximately 24,300 acres and a 100% working interests in the Neocomian Complex and Charmottes fields in the Paris Basin. Current production is approximately 850 Bbl/d of light Brent-based crude oil. Proved Reserves at 30 June 2012, as evaluated by Gaffney, Cline & Associates, were estimated to be approximately 5.6 million Bbls.
"This divestiture falls directly in-line with ZaZa's strategic objective to focus on further developing our core operating acreage in Texas," said Todd A. Brooks, CEO of ZaZa Energy. "It strengthens our balance sheet and provides us with additional working capital to drill in the Eaglebine and Eagle Ford plays. We have now amassed over 160,000 net acres between the two, including a dominant, nearly contiguous 90,000 net acre block in the Eaglebine located in the thickest part of the basin, which we are currently developing.”
Upon closing, ZaZa intends to use a portion of the proceeds from the disposition to pay-down part of its remaining senior secured notes and accelerate its drilling program in its core operating acreage in Texas. Additionally, as part of the Paris Basin Agreement signed with Hess in July 2012, ZaZa will hold $15.0 million of the proceeds in escrow until all Paris Basin exploration permits are successfully transferred to Hess.