ZaZa Energy Reports 2013 Second Quarter and Six Month Results and Provides Operational Update

  ZaZa Energy Reports 2013 Second Quarter and Six Month Results and Provides
  Operational Update

Business Wire

HOUSTON -- August 14, 2013

ZaZa Energy Corporation (“the Company” or “ZaZa”) (NASDAQ: ZAZA) today
announced financial and operational results for its second quarter and six
months ended June 30, 2013.

2013 Second Quarter Results

For the quarter ended June 30, 2013, the Company reported total revenues and
other income from continuing operations of $2.4 million as compared to $3.1
million reported for the comparable 2012 period. This decrease is primarily
due to the loss of the Cotulla revenues of $2.5 million as a result of the
division of assets from ZaZa’s former joint venture, partially offset by
additional revenue realized from the Boening A1H well in Sweet Home, the
increase in Moulton production from the Crabb Ranch A-1H well and the
non-operated Ring Unit wells.

Operating costs and expenses for the second quarter ended June 30, 2013 were
$107.1 million as compared to $15.4 million in the comparable 2012 period.
This increase was primarily related to the impairment of oil and gas
properties of $93.1 million in the second quarter of 2013. Certain leasehold
costs and producing oil and gas properties were written down to their fair
values, resulting in pretax non-cash impairment charges in the period ended
June 30, 2013. Excluding the impact of the impairment charges, total operating
costs and expenses decreased by approximately $1.4 million.

The Company reported an operating loss of $104.8 million for the three months
ended June 30, 2013 as compared to an operating loss of $12.3 million for the
three months ended June 30, 2012. The second quarter of 2013 included an
income tax benefit of $36.2 million as compared to an income tax expense of
$1.4 million for the comparable 2012 period. Net loss from continuing
operations was $58.7 million, as compared to a net loss from continuing
operations of $13.6 million for the three months ended June 30, 2013 and June
30, 2012, respectively. Additionally, the Company reported income from
discontinued operations, net of income taxes, of $0.6 million for the second
quarter of 2013 as compared to a loss of $35.8 million for the comparable
second quarter in 2012. ZaZa reported a net loss of $58.1 million as compared
to a net loss of $49.5 million, or a loss per basic and diluted share of $0.57
and $0.49 for the three months ended June 30, 2013 and June 30, 2012,
respectively.

Todd A. Brooks, President and Chief Executive Officer, stated, “The strategy
we initiated during the negotiations of our Division of Assets Agreement with
our former joint venture partner was to obtain as much value as possible. This
was achieved by negotiating for an $84 million cash payment and by negotiating
for maximum value through acreage assignment, which we could strategically
monetize over time. ZaZa’s plan and focus have been constant since that
negotiation: reduce our senior secured debt, rationalize and monetize our
Eagle Ford assets, and develop and grow our production base and acreage block
in the Eaglebine/Eagle Ford East. We continue to execute on and move forward
with this plan. During the second quarter we successfully negotiated the
transaction to sell our remaining Moulton assets, which closed July 26, 2013.
We also made operational progress with our Joint Venture partner in the
development of our Eaglebine/Eagle Ford East assets. This Joint Venture is
continuing as planned and we anticipate timely drilling of the first three
wells as part of the Agreement. We are currently evaluating an additional
joint venture to develop our retained Eaglebine/Eagle Ford East assets. We are
also active in discussions to divest other non-core assets in the Eagle Ford
trend. While we reported losses through the first half of the year, much of
this was attributed to non-cash impairment charges. In the first half of 2013,
we’ve taken aggressive steps to lower our overall capital spend and reallocate
our resources. I remain steadfast in my commitment to continue to improve our
balance sheet and create value for our shareholders over the coming year.”

2013 Six-Months Results

For both the six months ended June 30, 2013 and June 30, 2012, respectively,
the Company reported total revenues and other income from continuing
operations of $5.2 million. Revenue remained relatively constant as a result
of the loss of Cotulla revenues of $4.1 million related to the division of
assets from the former joint venture, offset by higher production realized at
the Boening well in Sweet Home and the increase in Moulton production from the
Crabb Ranch and Ring Unit wells.

Operating costs and expenses for the six months ended June 30, 2013 were
$115.8 million as compared to $59.1 million in the comparable 2012 period.
This increase was primarily related to the impairment of oil and gas
properties of $93.1 million taken in 2013, partially offset by a $34.3 million
decrease in general and administrative expenses. Excluding the impact of the
impairment charge, total operating costs and expenses decreased by
approximately $36.5 million. Additionally, the Company realized a 35%
reduction in its general and administrative costs beginning in the second
quarter of 2013 and expects the impact to be realized starting in the third
quarter due to the non-recurring severance expenses that have been captured in
the current period.

The Company reported an operating loss of $110.6 million for the six months
ended June 30, 2013 as compared to an operating loss of $53.9 million for the
six months ended June 30, 2012. During the 2013 six month period, ZaZa
reported an income tax benefit of $40.8 million as compared to an income tax
expense of $35.2 million for the comparable 2012 six month period. Net loss
from continuing operations was $61.1 million, as compared to a net loss from
continuing operations of $128.7 million for the six months ended June 30, 2013
and June 30, 2012, respectively. Additionally, the Company reported income
from discontinued operations, net of income taxes of $0.03 million for the six
month period ended June 30, 2013 as compared to a loss from discontinued
operations, net of taxes of $38.5 million for the comparable 2012 period. ZaZa
reported a net loss of $61.0 million as compared to a net loss of $167.3
million, or a loss per basic and diluted share of $0.59 and $1.77 for the six
months ended June 30, 2013 and June 30, 2012, respectively.

First and Second Quarter 2013 Milestones

  *Eaglebine/Eagle Ford East Joint Venture. On March 21, 2013, ZaZa entered
    into a Joint Exploration and Development Agreement with one of the largest
    independent crude oil and natural gas companies in the United States to
    jointly develop certain Eaglebine/Eagle Ford East properties located in
    Walker, Grimes, Madison, Trinity and Montgomery Counties, Texas. Under
    this agreement, ZaZa and its Joint Venture partner will jointly develop up
    to approximately 100,000 gross acres (approximately 73,000 net acres) that
    ZaZa currently owns in the Eaglebine trend in these counties. As
    previously announced, our Joint Venture partner will act as the operator
    and will pay ZaZa (i) certain cash amounts, (ii) the drilling and
    completion costs of certain specified wells, and (iii) a portion of the
    Company’s share of any additional seismic or well costs in order to earn
    their interest in these properties. The joint development has been divided
    into three phases.

       *Phase I commenced on April 2, 2013. In this phase, ZaZa transferred
         20,000 net acres, (approximately 15,000 of which came from our joint
         venture with Range) in exchange for a cash payment of $10 million and
         an obligation of our counterparty to drill and pay 100% of the
         drilling and completion costs of three wells. The second of these
         three wells to be drilled will be the substitute well that we are
         required to drill pursuant to our agreement with Range Resources.
         Drilling operations on the third well in the first phase of joint
         development must be commenced by our counterparty before
         December31,2013.
       *Within 60 days of completion of the third well under the first phase,
         our Joint Venture partner will have the option to elect to go forward
         with Phase II of the joint development. If they so elect, ZaZa will
         transfer an additional 20,000 net acres in exchange for a cash
         payment of $20 million, an obligation of our Joint Venture partner to
         drill and pay 100% of the drilling and completion costs of an
         additional three wells, and an obligation of our Joint Venture
         partner to pay for up to $1.25 million of ZaZa’s share of additional
         costs for seismic or well costs.
       *The same terms and conditions apply to Phase III, the only difference
         being that, if our Joint Venture partner elects to go forward with
         the third phase of the joint development, ZaZa would transfer an
         additional 15,000 net acres to the counterparty.

  *Moulton Properties Sales. On June 27, 2013, ZaZa entered into an agreement
    to sell approximately 10,000 net acres of its properties located in the
    Eagle Ford trend located in Fayette, Gonzalez and Lavaca Counties, Texas
    (“Moulton properties”), including seven producing wells, for approximately
    $28.8 million. This transaction closed on July 26, 2013, during the
    Company’s 2013 third quarter and ZaZa received $29.3 million in cash.
    Additionally, on April 5, 2013, the Company closed a purchase and sale
    agreement with the same party for approximately $9.2 million and received
    approximately $8.8 million in cash.

Liquidity Update

As of June 30, 2013, ZaZa had $3.2 million in cash and cash equivalents, which
excludes restricted cash of $16.1 million. Total cash and cash equivalents as
of December 31, 2012 were $34.6 million and restricted cash was $21.9 million.
In the second quarter of 2013, ZaZa consummated the sale of certain Moulton
properties and entered into the first development phase of its Eaglebine/Eagle
Ford East joint venture, resulting in a combined total cash receipt of $18.8
million. Additionally, during the 2013 third quarter, the Company sold its
remaining Moulton properties for cash consideration of $29.3 million,
including a $1.4 million deposit that the Company received in the 2013 second
quarter. Furthermore, the Company remains in discussions to monetize
additional non-core assets.

Total long-term debt as of June 30, 2013 was $97.6 million, of which, $11.3
million is classified as current, as compared to $96.3 million as of December
31, 2012. As of June 30, 2013, the Company’s long-term debt consisted of $23.7
million related to its Senior Secured Notes, net of discount, $26.6 million
related to its Convertible Senior Notes, net of discount, and $47.3 million
related to Subordinated notes.

Ian H. Fay, ZaZa’s Chief Financial Officer, added, “There have been several
material transactions over the past 18 months which we have executed in
accordance with our Eaglebine/Eagle Ford East development strategy. These
transactions have generated significant value for the Company and positioned
ZaZa for future growth. While our cash position has declined and our long-term
debt has increased at June 30 versus year-end, the cash generated from the
sale of our Moulton properties provided us with additional resources. ZaZa
intends to use a portion of the net proceeds from the transaction to further
reduce its outstanding debt obligations as required under its debt agreements.
Furthermore, the cost reduction plans that we announced last quarter will
begin to show positive results in our third quarter. We remain committed to
monetize non-core assets and to raise additional capital to fund near-term
growth. From a financing perspective, our goal remains to improve our balance
sheet while remaining focused on the potential needs for the multifaceted
Eaglebine/Eagle Ford East play. We feel confident in our ability to execute
with our JV partners and are excited about the possibilities present in this
emerging play.”

Operational Update - Proof of Concept Well Results

As previously announced, prior to entering into its Eaglebine/Eagle Ford East
joint venture, ZaZa commenced drilling two proof of concept wells in Walker
County, Texas, which we refer to as the Stingray A-1H/RE and Commodore A-1
wells. These wells were the first of their kind in the area and were designed
to gather data in an incremental fashion, as the Company works to better
understand the many productive zones in its Eaglebine/Eagle Ford East acreage.

ZaZa’s initial Eaglebine/Eagle Ford East well was the Stingray A-1H. As
previously disclosed, after completion of hydraulic fracturing operations, the
casing, under normal operating conditions, suffered a collar failure, which is
thought to have caused a down-hole constriction in the lateral portion of the
well. After losing the lateral portion of the well, ZaZa reentered the
vertical portion of the well and deepened it to test certain vertical zones
(from the Buda to the Upper Glen Rose), which is referred to as the Stingray
A-1RE. Initial production tests were conducted with processing and facilities
limitations, with daily production ranging from 11-30 barrels of oil and
732-1,939 mcf per day (over the course of three one-point tests). For each
one-point test, the well was flowed on a single choke setting for 72 hours.
After production facilities were completed, the daily production results of
the initial one-point test were: 21 barrels of oil and 1,005 mcf. Based on
these results, the Company is evaluating next steps for the Stingray A-1RE,
which may include completion and testing of additional vertical zones and/or
drilling a new lateral well and completion.

ZaZa’s second Eaglebine/Eagle Ford East well, the Commodore A-1 was designed
to compare production from two different groups of zones in Northern Walker
County. The Company focused first on the deeper zones in the well, testing
production from the Edwards to the Upper Glen Rose. Two one-point tests of
these zones resulted in daily production ranging from 35-54 barrels of oil and
956-1073 mcf of gas. Next, the Company set a plug above these zones for
purposes of isolating them, and proceeded to complete a series of upper zones
ranging from the Buda to the Georgetown. Four one-point tests on the upper
zones resulted in daily production of 10-15 barrels of oil and 592-830 mcf of
gas, but also 1,110 barrels of water per day. Based on these results, the
Company is evaluating next steps for the Commodore A-1, which may include
removing the plug and commingling production from both zones: cumulatively
45-69 barrels of oil and 1,548-1,903 mcf of gas per day.

Results of Operations

The results of operations include the results of our accounting predecessor,
ZaZa LLC, from January 1, 2012 through February 20, 2012 and all of our
subsidiaries, since February 21, 2012 excluding ZEF which was sold on December
21, 2012 and is presented as discontinued operations. The discussion below
relates to our continuing corporate activities and oil and gas exploration and
production operations, and excludes discontinued operations.

The following table presents our production and average prices obtained for
our production for the three and six months ended June 30, 2013 and 2012:

                                                          
                     Three Months Ended June 30,       Six Months Ended June
                                                       30,
                     2013             2012             2013           2012
Production:
Oil (Bbls):             23,672           29,786           51,848        49,787
Gas (Mcf):              39,797           64,261           76,919        75,776
Equivalents             30,305           40,496           64,669        62,416
(BOE):
                                                                        
Average
Price:
Oil ($/Bbl):         $  93.09         $  97.31         $  94.36       $ 99.31
Gas($/Mcf):          $  4.09          $  2.74          $  3.53        $ 2.78
                                                                        

The following tables present our production data for the referenced geographic
areas for the periods indicated:

                                                               
                 Three Months Ended June 30, 2013     Six Months Ended June 30, 2013
                 Gas        Oil        Equivalent     Gas        Oil        Equivalent
                 (Mcf)      (Bbls)     (BOE)          (Mcf)      (Bbls)     (BOE)
Eagle Ford:
Moulton          3,995      18,241     18,907         9,249      40,676     42,218
Sweet Home       6,665      2,080      3,191          20,705     5,691      9,142
Hackberry        26,856     1,739      6,215          44,670     3,550      10,995
Eaglebine/
Eagle Ford       2,085      1,430      1,778          2,085      1,430      1,778
East
Other
Onshore          196        182        215            210        501        536
Non-Operated
Total            39,797     23,672     30,305         76,919     51,848     64,669
                                                                            

                                                                    
                    Three Months Ended June 30, 2012       Six Months Ended June 30, 2012
                    Gas          Oil        Equivalent     Gas        Oil        Equivalent
                    (Mcf)        (Bbls)     (BOE)          (Mcf)      (Bbls)     (BOE)
Eagle Ford:
Cotulla             21,323       24,859     28,413         27,707     40,843     45,461
Moulton             986          2,048      2,212          1,225      4,613      4,817
Sweet Home          -            -          -              -          -          -
Hackberry           41,965       2,316      9,310          46,665     3,522      11,299
Eaglebine/Eagle     -            -          -              -          -          -
Ford East
Other Onshore       (13    )     563        561            179        809        839
Non-Operated
Total               64,261      29,786     40,496         75,776     49,787     62,416
                                                                                 

Conference Call and Webcast

ZaZa Energy Corporation (NASDAQ: ZAZA) will be hosting a conference call and
webcast to discuss its financial and operating results on August 14, 2013, at
10 a.m. EDT. Interested parties can listen to the call by dialing toll-free at
+1 800-299-9086 and entering pass code 58913985 (International number: +1
617-786-2903). Interested parties can also participate on the webcast by
visiting the ZAZA Energy Corporation website at www.zazaenergy.com. For those
who will be unable to participate, a webcast and teleconference replay will be
available approximately one hour after the completion of the call (toll-free:
+1 888-286-8010 / International: +1 617-801-6888 / pass code: 95835890). The
live webcast and replay link can be found in the “Investor Relations” section
of the ZAZA Energy Corporation website at
http://phx.corporate-ir.net/phoenix.zhtml?c=68298&p=irol-IRHome.

About ZaZa Energy Corporation

Headquartered in Houston, Texas, ZaZa Energy Corporation is a publicly-traded
exploration and production company with primary assets in the Eagle Ford and
Eaglebine/Eagle Ford East 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, ZaZa’s ability to
enter into joint venture arrangements and the success of such joint ventures,
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 2012 Form
10-K and 2013 First and Second Quarters Forms 10-Q 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.

Contact:

JMR Worldwide
Jay Morakis, 212-266-0191
Partner
jmorakis@jmrww.com
 
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