ZaZa agrees to sell French business to Vermilion Energy for $85.8 million
BY SAABIRA CHAUDHURI
HOUSTON -- ZaZa Energy Corp. has agreed to sell its French business to Vermilion Energy Inc. for $85.8 million, as the oil-and-gas company looks to focus on further developing its core operating acreage in Texas.
Shares of Zaza jumped 8.8% to $1.97 in recent premarket trading. The stock has fallen 65% so far this year.
Zaza Chief Executive Todd A. Brooks, said the sale "strengthens our balance sheet and provides us with additional working capital to drill in the Eaglebine and Eagle Ford plays." He added that Zaza has 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."
The company's operating interests cover about 24,300 acres and a 100% working interest in the Neocomian Complex and Charmottes fields in the Paris Basin, France.
Zaza said it expects the deal to close prior to the end of this year. It intends to use a portion of the proceeds from the sale to pay-down debt and accelerate its drilling program in its core operating acreage in Texas.
Last month, Zaza had revealed it had entered into an exclusivity agreement relating to the potential sale of its French arm. At the time, the company said the agreement followed "an unsolicited request from an interested party." ZaZa said it was allowing the party to conduct due diligence on ZaZa Energy France's assets.
Earlier this year, the company said it had ended partnership agreements with Hess Corp. (HES) to explore and develop the Eagle Ford shale formation in Texas and the Paris Basin, and was seeking another joint venture partner in Texas. Zaza received an immediate payment of $15 million to end its exploration and development agreement with the oil company.
Wednesday, Zaza noted that as part of the agreement with Hess, it will hold $15 million of the proceeds in escrow until all Paris Basin exploration permits are successfully transferred to Hess.
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