ZaZa Ends Agreements With Hess, Gets $15 Million Payment
ZaZa Energy Corp. has ended partnership agreements with Hess Corp. to explore and develop the Eagle Ford shale formation in Texas and the Paris basin in France, and the oil-and-gas company is seeking another joint venture partner in Texas.
ZaZa has received an immediate payment of $15 million to end its exploration and development agreement with oil company Hess for the Eagle Ford region in Texas. The companies will also end their partnership agreement in the Paris basin, France. The companies expect to sign definitive agreements by June 29, and close the transaction before August 15. The companies will transfer to each other certain oil, gas and mineral interests, well bores and production in Texas and France.
Under the terms of the deal, which includes an agreement of royalty payments to Hess, ZaZa's net acreage in the Eagle Ford region will increase to 72,000 acres, from 11,500 acres. Upon closing, ZaZa will receive an additional $70 million in cash.
ZaZa has also engaged Jefferies & Co. to seek joint venture partners for its assets in the Eagle Ford and the emerging Woodbine/Eaglebine area, and to evaluate all strategic opportunities available to the energy company.
ZaZa has also agreed to pay down $33 million of $100 million in senior notes due 2017.
The energy company said last month that it had received a letter from the Nasdaq Stock Market LLC, part of NASDAQ OMX Group Inc., indicating that since it had not filed its financial results for the period ended March 31, it is required to submit a plan to regain compliance by June 18.
"Our immediate priority is to regain reporting compliance by filing our financial statements over the next few weeks and, with our high-graded asset portfolio, begin our joint venture process with Jefferies for both our Eagle Ford and Eaglebine acreage," said Chief Executive Craig McKenzie.
Hess in April reported that its first-quarter earnings fell 41% without the benefit of a large year-earlier asset sale. It has increased spending in recent years in an effort to fund an ambitious exploration and development program.
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