ZaZa Energy has entered into an agreement with its existing US joint venture (JV) partner to acquire additional production and further develop its Eagle Ford East assets.
Under the second amendment and first restatement of joint exploration and development agreement, ZaZa will receive $17m in cash consideration.
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The company will also receive interests in 15 of its venture partner’s wells outside of the area of mutual interest (AMI) line in Madison county (Southern Madison wells) with a PDP present value of $3m based on an independent reserves report as consideration for the Phase II election.
A 100% carry consideration for one vertical well completion, two horizontal well completions and a $1.25m credit towards miscellaneous land or operational expenses will also be offered. Around 20,000 net Phase II acres will be assigned by ZaZa to its joint venture partner in return.
The company, as consideration for the assignment of at least 6,000 net former Phase III acres, will receive additional interests in the Southern Madison wells with an incremental PDP present value of approximately $9m based on an independent reserves report.
ZaZa’s JV partner can make a further cash payment to the company and elect into some or all of the acreage on or before 31 January 2014. The original agreement, according to ZaZa, called for a Phase III election by 31 January 2015.
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By GlobalDataZaZa president and CEO Todd Brooks said: "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."
