ZaZa Energy Corp. (NASDAQ: ZAZA) closed the purchase and sale agreement with an affiliate of private-equity firm Quantum Energy Partners concerning development of East Texas acreage, the company said Sept. 22.
In part of a series of agreements with Quantum, acreage in Grimes, Houston, Madison, Trinity and Walker counties was given to the Quantum affiliate for about $17 million, ZaZa said, noting that the amount included $11 million in cash that was paid Sept. 18. A total of 6,000 net acres in undeveloped leases in ZaZa’s southern development area were given to Quantum, which has an undivided interest. The southern development area holds 144,000 total acres, the company noted.
With the agreements closed, ZaZa’s East Texas holdings comprise two separate development areas with different operators and ownership structures, the company added. In the southern development area, the company has a 20.78% working interest (about 30,000 net acres). Quantum holds a 4.22% working interest (6,000 acres) in the area, which is operated by EOG Resources Inc. (NYSE: EOG), the company said. In the northern development area, in Houston, Leon and Trinity counties, ZaZa has full ownership and operations of about 10,000 acres, which were not subject to agreements with Quantum, ZaZa added.
“Our new venture with Quantum Energy Partners better enables ZaZa to finance a more aggressive drilling program. It also represents further validation of ZaZa’s positioning within the East Texas unconventional oil and gas play, where ZaZa was a first mover more than four years ago. We look forward to working with Quantum’s team to realize the potential of our area’s multiple stacked pay zones,” Todd Brooks, president and CEO of ZaZa, said.
Out of the total amount of proceeds, $1.1 million will reduce senior secured debt, the company said, noting that it has been reduced to $13.9 million from $100 million. The proceeds will mostly fund drilling capex and lease acquisitions, ZaZa added.
ZaZa Energy Corp. and Quantum Energy Partners are based in Houston.
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