Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

ZaZa Energy Reports Record 2012 Third Quarter Results



  ZaZa Energy Reports Record 2012 Third Quarter Results

  Company Reports Record Revenues and Net Income, Takes Steps to Improve its
 Financial Position and Provides Updates on its Core Eaglebine and Eagle Ford
                                  Resources

Business Wire

HOUSTON -- November 13, 2012

ZaZa Energy Corporation (“the Company” or “ZaZa”) (NASDAQ: ZAZA) today
announced operational and financial results for its third quarter and nine-
months ended September 30, 2012.

On February 21, 2012, following the successful consummation of a transaction
under an Agreement and Plan of Merger and Contribution, ZaZa Energy
Corporation became the parent company of ZaZa LLC and Toreador Resources
Corporation. The results of operations noted within this release and in the
Company’s Form 10-Q on file with the Securities and Exchange Commission
(“SEC”) include the results of the Company’s accounting predecessor, ZaZa LLC
from January 1, 2012 through February 20, 2012, and all of its subsidiaries,
including ZaZa LLC and Toreador, since February 21, 2012. As such, all
information for the comparable three and nine-month periods include pro forma
results of operations as if the merger between ZaZa and Toreador has been
completed at the beginning of each period presented.

“This marks our second quarter reporting pro forma results of the combined
entity and should provide our shareholders with greater insight into our
operations and financial performance,” stated Todd Brooks, Chief Executive
Officer of ZaZa. “There has been a lot of positive activity during the
quarter, and we have taken prudent steps to position ZaZa for the future. We
enhanced our management and operating teams, successfully completed a debt
offering which, along with other capital received from strategic transactions,
has enhanced our capital position, and we took positive steps to increase our
Eaglebine and Eagle Ford acreage. We believe the Company is well positioned to
realize both top and bottom line improvements and enhance shareholder value
both near and long-term.”

Third Quarter Financial Comparisons

The Company reported total revenues and other income for the third quarter
ended September 30, 2012 of $207.2 million as compared to $4.4 million in the
comparable year-ago period. This includes oil and gas revenues of $10.2
million and $0.8 million for the periods ended September 30, 2012, and
September 30, 2011, respectively. Other income for the 2012 third quarter was
$197.0 million and there was no other income realized in the comparable
year-ago period.

Operating expenses for the 2012 third quarter were $51.7 million (including
$22 million in impairment charges and $8 million in stock compensation
expense), as compared to $6.9 million in the 2011 third quarter, resulting in
operating income of $155.5 million, as compared to an operating loss of $2.5
million in the comparable period last year. Net income available to common
shareholders for the three months ended September 30, 2012, was $133.8
million, or $1.02 per diluted share, as compared to a net loss of $2.6
million, or a loss per diluted share of $0.03, for the three months ended
September 30, 2011.

Third Quarter Milestones and Operational Updates

  * Hess Joint Venture: The Company successfully negotiated the exit of its
    Joint Venture with Hess Corporation, when the two companies entered into
    agreements where ZaZa Energy France sold its 50% interest in certain Paris
    Basin exploration permits to Hess Oil France while retaining a 5%
    overriding royalty interest capped at $130 million, and divided the Texas
    assets held by ZaZa Energy, LLC and Hess Corporation in the Eagle Ford
    area. The division of assets in Texas resulted in ZaZa receiving
    approximately 60,500 additional net acres in the Eagle Ford core located
    in Southern Frio, Gonzalez, Fayette, DeWitt, Colorado and Lavaca Counties,
    increasing ZaZa’s net acreage position from 11,500 to 72,000 net acres.
    Additionally, and subject to a threshold sales amount and a time
    limitation, a portion of net proceeds will be paid to ZaZa for any sales
    of Hess’ retained working interests in the Cotulla Prospect Area. The
    companies also mutually agreed to terminate their Agreements in both
    France and Texas. At the closing of this transaction, ZaZa received
    approximately $69 million in cash in addition to the previously received
    $15 million dollars related to an amendment of the companies’ Texas joint
    venture agreements in the second quarter of 2012.
  * Private Offering of Convertible Senior Notes: As announced in the third
    quarter, but consummated in the first week of the fourth quarter, ZaZa
    successfully completed the sale and issuance of $40.0 million in aggregate
    principal amount of 9% Convertible Senior Notes. The Notes will be senior,
    unsecured obligations and will bear interest at a fixed rate of 9.0% per
    annum, and will mature in August, 2017, unless earlier converted, redeemed
    or repurchased. The Company intends to use the net proceeds from the
    offering to fund drilling capital expenditures and leasehold transactions,
    as well as for general corporate purposes.
  * Filing of Financial Statements: During the third quarter, ZaZa filed its
    Form 10-K for the period ended December 31, 2011, and both its first and
    second quarter Form 10-Qs for the periods ending March 31, 2012, and June
    30, 2012, respectively. As announced on September 13, 2012, ZaZa was
    informed by NASDAQ that it regained full compliance with NASDAQ’s
    continued listing standards.
  * Management Enhancements: The Company announced the appointments of Todd
    Brooks as Chief Executive Officer, Ian Fay as Chief Financial Officer and
    John Hearn, Jr. as Chief Operating Officer. All three senior executives
    have significant experience in the oil & gas sector, in negotiating and
    executing financial transactions and in asset development. ZaZa also
    continued to enhance its operating team across its Eaglebine and Eagle
    Ford properties.
  * Eaglebine/Woodbine Stingray Well: During the third quarter, ZaZa completed
    the initial pilot hole drilling on its Eaglebine Stingray A-1H well in
    Walker County, TX. The Company officially commenced hydraulic fracturing
    operations today, with initial production planned for late November.
    Additionally, and as previously announced, ZaZa has entered into a
    multi-well rig contract with Nabors Drilling USA and has entered into a
    multi-year lease for a field office and yard near its Eaglebine acreage in
    Walker County, as it further appraises and delineates its Eaglebine
    acreage position. Additionally, during the fourth quarter, the Company
    will begin drilling operations at its Eagle Ford Boening Well.

Mr. Brooks added, “The decision to exit our Joint Venture and divide assets
with Hess was mutual and in the best interest of our Company and our
shareholders. It provided us financial resources, a significantly larger
resource base and Working Interest in the Eagle Ford, and the opportunity to
develop these resources at a more aggressive pace. Additionally, the large,
strategic 90,000 net acre block we have begun to develop in the Eaglebine play
is located in the thickest part of one of the most prolific emerging oil and
gas resource plays in North America.”

Ian Fay, Chief Financial Officer of ZaZa added, “With the cash received from
the Hess division of assets, we paid down approximately one third of our debt
on our Senior Secured Notes, while improving our balance sheet and liquidity
position. We have focused exploration and development efforts in our Eagle
Ford and Eaglebine acreage and believe we have sufficient resources at our
disposal to execute our drilling plans. We are also exploring strategic and
operational alternatives to quickly and efficiently tap the resources we know
are prevalent in these plays and which will provide additional capital to
further develop our assets.”

Nine-Month Financial Comparisons

Total revenues and other income for the nine-month period ended September 30,
2012, were $224.0 million as compared to $16.3 million for the comparable 2011
nine-month period. This includes oil and gas revenues of $27.0 million and
$1.3 million for the nine month periods ended September 30, 2012, and
September 30, 2011, respectively. Other income for the 2012 nine-month period
was $197.0 million and there was no other income realized in the comparable
year-ago period.

Operating expenses for the 2012 nine-month period were $154.7 million
(including legal and advisory fees incurred in connection with the Combination
of $9.7 million, payment of $4.8 million to four executives of ZaZa LLC
pursuant to net profit agreements between ZaZa LLC and each such executive,
bonuses to ZaZa LLC Members of $17.5 million triggered by the Combination, as
well as stock compensation expense of $13 million and impairment charges of
$62.5 million) as compared to $11.2 million for the nine-month period ended
September 30, 2011. The Company reported operating income of $62.5 million
compared to $5.2 million for the comparable nine-month periods in 2012 and
2011, respectively. For the 2012 nine-month period, ZaZa reported a net loss
of $33.4 million, or a loss per diluted share of $0.35, as compared to net
income available to common shareholders of $5.0 million, or earnings per
diluted share of $0.07.

For the period from February 21, 2012 to September 30, 2012, Toreador
contributed $19.7 million in revenue and a $62.9 million net loss.

Results of Operations

The table below relates to the Company’s corporate activities and oil and gas
exploration and production operations in the United States and France.

                                                  
                 For the Three Months Ended        For the Nine Months Ended
                 September 30,                     September 30,
                 2012               2011           2012            2011
Production:
Oil (Bbls):
United States        24,263             8,422         74,051          13,499
France               76,742             -             185,982         -
Total                101,005            8,422         260,033         13,499
                                                                       
Gas (Mcf):
United States        38,547             14,627        114,323         15,715
France               -                  -             -               -
Total                38,547             14,627        114,323         15,715
                                                                       
BOE:
United States        30,688             10,860        93,104          16,118
France               76,742             -             185,982         -
Total                107,430            10,860        279,086         16,118
                                                                       
Average Price:
Oil ($/Bbl):
United States    $   86.61          $   87.00      $  95.15        $  89.15
France           $   104.41             -          $  105.59          -
                                                                       
Gas($/Mcf):
United States    $   2.50           $   4.64       $  2.69         $  4.68
                                                                       

The following table sets forth the Company’s interest in undeveloped acreage,
developed acreage and productive well count as of September 30, 2012:

                                                        
                    Acres                                Productive Wells
                    Undeveloped        Developed         Gross       Net
                    Gross     Net      Gross    Net      Gas   Oil   Gas   Oil
Eagle Ford:
Cotulla (1)         2,270     1,973    -        -        -     -     -     -
Moulton (2)         11,432    8,699    2,924    2,924    -     7     -     1.6
Sweet Home (3)      36,679    34,858   -        -        -     -     -     -
Hackberry (4)       23,334    20,761   1,324    1,324    2     -     2     -
Eaglebine           134,844   88,312   -        -        -     -     -     -
Other Onshore       640       426      2,424    59       -     4     -     0.1
U.S.
Paris Basin         -         -        24,260   24,260   -     133   -     133
                                                                            

The following table presents ZaZa’s production data for the referenced
geographic areas for the period ended September 30, 2012:

                
                 For the Three Months Ended September 30, 2012
                 Gas             Oil             Equivalent
                 (Mcf)           (Bbls)          (BOE)
Eagle Ford:
Cotulla (1)      12,617          8,289           10,392
Moulton (2)      1,437           11,393          11,633
Sweet Home (3)   -               -               -
Hackberry (4)    24,249          2,763           6,804
Eaglebine        -               -               -
Other Onshore    244             1,819           1,859
Paris Basin      -               76,742          76,742
Total            38,547          101,005         107,430
                                                  

(1) As of July 24, 2012 we had an average working interest in the Cotulla
properties of 9.75% and a net revenue interest of 7%. We did not retain any
interests in the Cotulla properties after the Hess separation, although we
retained undeveloped acres.

(2) As of July 24, 2012 we had an average working interest in the Moulton
properties of 10% and a net revenue interest of 7.4%. Our average interest
increased to 100% working interest and 74% net revenue interest after the Hess
separation.

(3) As of July 24, 2012 we had an average working interest in the Sweet Home
properties of 10% and a net revenue interest of 7.4%. Our average interest
increased to 100% working interest and 74% net revenue interest after the Hess
separation.

(4) As of July 24, 2012 we had an average working interest in the Hackberry
properties of 10% and a net revenue interest of 7.4%. Our average interest
increased to 100% working interest and 74% net revenue interest after the Hess
separation.

Balance Sheet Update

As of November 1, 2012, after giving effect to the receipt of net proceeds of
the Convertible Note offering in October, 2012, and funding of overhead,
operating and capital expenditures, the Company had $48.7 million of cash and
cash equivalents. The Company anticipates capital expenditures of
approximately $23.8 million for the fourth quarter of 2012, primarily to drill
a 2^nd exploration well on its Eaglebine acreage and participate in three
non-operated wells in the Gonzales/Fayette County Prospect. Projected capital
expenditure will also be used to fund lease extensions and options in the
Eaglebine and Eagle Ford areas. Additionally, ZaZa disclosed that it
anticipates activities for the remainder of 2012 to result in positive working
capital of approximately $29 - $33 million at December 31, 2012, including the
potential sale of the Company’s French subsidiary.

During the third quarter and immediately following the closing of the division
of assets contemplated by the Hess Agreement, ZaZa paid down the outstanding
principal amount of the Senior Secured Notes by $33.0 million and paid a $3.5
million associated fee. Additionally, as part of the Paris Basin Agreement and
upon selling the Paris Basin conventional assets, ZaZa will hold $15.0 million
in escrow until all permits are successfully transferred to Hess. Until such
time as this transfer is completed, the escrow deposit and proceeds thereof
will be invested in a JPMorgan Money Market deposit account.

Additional Updates

On October 2, 2012, ZaZa’s Board of Directors provided management the
authorization to negotiate the sale of the Company’s French subsidiaries
(“ZaZa France” or “ZEF”). Numerous unsolicited offers were received prior to
this authorization, and ZaZa signed an exclusivity agreement with one company
to begin due diligence. As such, pursuant to ASC 360, the Company assessed the
carrying value of its French assets compared to the preliminary negotiations
on the purchase price, less costs to sell. Based on that analysis, the Company
recorded an impairment to oil and gas properties of $20.6 million for the
three and nine-month periods ended September 30, 2012.

Mr. Brooks commented, “The effort to sell our France assets is consistent with
our stated strategy to divest non-core assets, improve our capital structure
and focus resources on the Eaglebine and Eagle Ford territories in Texas, as
we believe these operations will result in greater value for our shareholders.
That has been, and continues to be, our primary focus.”

About ZaZa Energy Corporation

Headquartered in Houston, Texas, with offices in Corpus Christi, Texas and
Paris, France, ZaZa Energy Corporation is a publicly-traded exploration and
production company with primary assets in the Eagle Ford and Eaglebine
resource plays in Texas. More information about the Company may be found at
www.zazaenergy.com.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements can be identified by words
such as "anticipates," "intends," "plans," "seeks," "believes," "estimates,"
"expects," "forecasts" and similar references to future periods. These
statements include, but are not limited to, statements about ZaZa’s ability to
execute on exploration, production and development plans, estimates of
reserves, estimates of production, future commodity prices, exchange rates,
interest rates, geological and political risks, drilling risks, product
demand, transportation restrictions, actual recoveries of insurance proceeds,
the ability of ZaZa to obtain additional capital, and other risks and
uncertainties described in the Company’s filings with the Securities and
Exchange Commission. While forward-looking statements are based on our
assumptions and analyses that we believe to be reasonable under the
circumstances, whether actual results and developments will meet our
expectations and predictions depend on a number of risks and uncertainties
that could cause our actual results, performance and financial condition to
differ materially from our expectations. See "Risk Factors" in our 2011 Form
10-K filed with the Securities and Exchange Commission for a discussion of
risk factors that affect our business. Any forward-looking statement made by
us in this news release speaks only as of the date on which it is made.
Factors or events that could cause our actual results to differ may emerge
from time to time, and it is not possible for us to predict all of them. We
undertake no obligation to publicly update any forward-looking statement,
whether as a result of new information, future development, or otherwise,
except as may be required by law.

 
ZAZA ENERGY CORPORATION
 
CONSOLIDATED BALANCE SHEETS
                                                       
                                September 30,               December 31,
                                2012                        2011
                                (Unaudited)
                                (In thousands except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents       $       24,623              $      10,619
Restricted cash                         -                          111
Accounts receivable — joint             2,632                      37,303
interest
Accounts receivable — revenue           838                        533
receivable
Accounts receivable — related           -                          164
party
Prepayments and other current           3,587                      2,150
assets
Total current assets                    31,680                     50,880
                                                                    
Property and equipment
Oil and gas properties,                 271,888                    17,410
successful efforts method
Furniture and fixtures                  3,913                      2,806
Total property and equipment            275,801                    20,216
Accumulated depletion,                  (10,687)                   (1,260)
depreciation and amortization
Property and equipment, net             265,114                    18,956
                                                                    
Goodwill                                -                          -
Other assets                            3,232                      170
                                                                    
Total assets                    $       300,026             $      70,006
                                                                    

Continued on next page

 
ZAZA ENERGY CORPORATION
 
CONSOLIDATED BALANCE SHEETS
                                                         
                                September 30,                December 31,
                                2012                         2011
                                (Unaudited)
                                (In thousands except share and per share data)
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable — trade        $      9,377                 $      38,209
Accounts payable — related             115                          419
parties
Advances from joint interest                                        112
owner
Accrued liabilities                    9,210                        19,895
Revolving line of credit               -                            5,000
Notes payable to members               -                            3,000
Income taxes payable                   4,982                        123
Total current liabilities              23,684                       66,758
                                                                     
Long-term accrued liabilities          348                          -
Asset retirement obligations           4,984                        309
Deferred income taxes                  69,547                       -
Subordinated notes                     47,330                       -
Senior Secured Notes, net of           46,752                       -
discount
Warrants associated with               38,947                       -
Senior Secured Notes
Total liabilities                      231,592                      67,067
                                                                     
Stockholders’ equity
(deficit) (See Note 1):
Preferred stock, $0.01 par
value, 25,000,000 shares               -                            -
authorized; zero issued or
outstanding
Common stock, $0.01 par
value, 250,000,000 shares
authorized; 101,769,953 and
75,976,500 shares issued and           1,018                        760
outstanding at September 30,
2012 and December 31, 2011,
respectively
Additional paid-in capital             100,909                      -
Accumulated (deficit)                  (31,275     )                2,179
retained earnings
Accumulated other                      (2,218      )                -
comprehensive income
Total stockholders’ equity             68,434                       2,939
(deficit)
                                                                     
Total liabilities and
stockholders’ equity            $      300,026               $      70,006
(deficit)
                                                                     

                                                                 
ZAZA ENERGY CORPORATION
 
CONSOLIDATED STATEMENTS OF OPERATION
                                                                            
                  Three Months Ended September      Nine Months Ended
                  30,                               September 30,
                  2012              2011            2012          2011
                  (Unaudited)                       (Unaudited)
                  (In thousands, except per         (In thousands, except
                  share data)                       per share data)
Revenues and
other income:
Oil and gas       $  10,211         $  801          $ 26,991      $ 1,277
revenues
Bonus income         -                 3,560          -             15,049
Other income         196,985           -              197,027       -
Total revenues
and other            207,196           4,361          224,018       16,326
income
Operating costs
and expenses:
Lease operating      3,457             596            8,894         627
expense
Exploration          3,181             -              3,284         -
expense
Depreciation,
depletion and        4,130             200            10,395        485
amortization
Accretion            54                1              411           1
expense
Impairment of
oil and gas          22,746            -              22,746        -
properties
Impairment of        -                 -              39,749        -
goodwill
General and          18,155            6,104          76,057        10,054
administrative
Total operating
costs and            51,723            6,901          161,536       11,167
expenses
Operating            155,473           (2,540 )       62,482        5,159
income (loss)
Other expense
Foreign
currency             (85      )        -              138           -
exchange (gain)
loss
Loss on
extinguishment       15,224            -              15,224        -
of debt
Interest             3,736             51             9,999         153
expense, net
(Gain) loss on
fair value of        (27,106  )        -              5,315         -
warrants
Total other          (8,231   )        51             30,676        153
expense
Income (loss)        163,704           (2,591 )       31,806        5,006
before taxes
Income tax           29,872            (29    )       65,260        56
provision
Net income
(loss)
available to      $  133,832        $  (2,562 )     $ (33,454 )   $ 4,950
common
shareholders
                                                                            
Basic income
(loss)
available to      $  1.32           $  (0.03  )     $ (0.35   )   $ 0.07
common
shareholders
per share:
                                                                            
Diluted income
(loss)
available to      $  1.02           $  (0.03  )     $ (0.35   )   $ 0.07
common
shareholders
per share:
                                                                            
Weighted
average shares
outstanding:
Basic                101,731           75,977   (a)   96,879        75,977 (a)
Diluted              105,020           75,977   (a)   96,879        75,977 (a)
                                                                            
Consolidated
Statement of
Comprehensive
Income
Net income        $  133,832        $  (2,562 )     $ (33,454 )   $ 4,950
(loss)
Foreign
currency
translation          (4,398   )        -              (2,218  )     -
adjustments,
net of taxes
Comprehensive     $  129,434        $  (2,562 )     $ (35,672 )   $ 4,950
income (loss)
                                                                            

(a) Adjusted to reflect the February 21, 2012 Merger with Toreador Resources
Corporation, giving retroactive effect for the issuance of shares to former
ZaZa LLC members. See Note 1 to the consolidated financial statements.

(b) General and administrative expense for the nine months ended September 30,
2012 totaled $76.1 million, compared to $10.1 million for the same period in
2011. This increase is due to legal and advisory fees incurred in connection
with the Combination of $9.7 million, payment of $4.8 million to four
executives of ZaZa LLC pursuant to net profit agreements between ZaZa LLC and
each such executive; and bonuses to ZaZa LLC Members of $17.5 million
triggered by the Combination. Also included is stock compensation expense of
$13.0 million due to stock granted in the second quarter of 2012. The French
operations also contributed $13.2 million of general and administrative costs.
Additionally, in the nine months ended September 30, 2012 and 2011, G&A
expense was offset by $3.2 million and $6.6 million, respectively, for
reimbursements made under the terms of the Hess joint venture for expenses
related to lease acquisition costs.

Contact:

JMR Worldwide
Jay Morakis, Partner
212-786-6037
jmorakis@jmrww.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement