ZaZa Energy Reports 2013 Third Quarter and Nine Month Financial and Operational Results

  ZaZa Energy Reports 2013 Third Quarter and Nine Month Financial and
  Operational Results

  *ZaZa accelerates remaining Eaglebine/Eagle Ford East JV phases and
    exchanges acreage and production
  *Company discloses new JV to further develop its Eagle Ford Sweet Home
    assets
  *ZaZa files Universal Shelf Registration Statement on Form S-3 with the
    Securities and Exchange Commission; Company takes steps to provide access
    to public capital markets and improve capital structure

Business Wire

HOUSTON -- November 12, 2013

ZaZa Energy Corporation (the “Company” or “ZaZa”) (NASDAQ:ZAZA) today
announced results for the three and nine months ended September 30, 2013.

2013 Third Quarter Results

For the quarter ended September 30, 2013, the Company reported total revenues
and other income from continuing operations of $1.1 million as compared to
$199.2 million reported for the comparable 2012 period. This decline was
primarily related to other income of $197.0 million recorded in the prior year
period and comprises the gain on the termination of the agreements with the
Company’s former JV partner in conjunction with the division of assets. Oil
and gas revenues for the comparable 2013 and 2012 third quarters were $1.1
million as compared to $2.2 million. This decline is primarily due to the loss
of the Cotulla revenues of $0.8 million as a result of the division of assets
from ZaZa’s former joint venture partner and a decrease in Moulton production
following the sale of that property in July 2013. This was partially offset by
increased production from the Company’s Boening well in Sweet Home.

Operating costs and expenses for the third quarter ended September 30, 2013
were $15.2 million as compared to $22.3 million in the comparable 2012 period,
a decrease of 31.8%. This decrease was primarily related to a decline in
general and administrative expenses of approximately $13.1 million, as well as
lower lease operating expenses and lower depreciation and amortization
expenses. These declines were partially offset by impairments of oil and gas
properties of $9.2 million in the third quarter of 2013 as compared to $2.2
million in the comparable 2012 quarter. Certain producing and non-producing
oil and gas properties were written down to their fair values, resulting in
pretax non-cash impairment charges in the periods ended September 30, 2013 and
September 30, 2012. Additionally, the Company recorded an expense of
approximately $0.8 million related to asset divestitures, primarily pertaining
to customary purchase price adjustments. Furthermore, ZaZa continues to
execute cost reduction programs in an effort to reduce its working capital
requirements as production volumes increase over the coming year.

The Company reported an operating loss of $14.1 million for the three months
ended September 30, 2013 as compared to operating income of $176.9 million for
the three months ended September 30, 2012. During the 2013 three-month period,
ZaZa reported an income tax expense of $5.4 million as compared to an income
tax expense of $37.6 million for the comparable 2012 period.

ZaZa reported a net loss of $20.6 million or a loss per diluted share of
$0.20, as compared to net income of $133.8 million or income per diluted share
of $1.02 for the three months ended September 30, 2013 and September 30, 2012,
respectively. Note, both operating income/(loss) and net income/(loss) were
impacted by other income of $197.0 million pre-tax, recorded in the 2012 third
quarter.

Todd A. Brooks, President and Chief Executive Officer, stated, “During the
third quarter, we continued to execute on our strategy as we consummated a new
JV on a 7,600 acre portion of our Sweet Home acreage in DeWitt and Lavaca
Counties with a proven operator who is actively running multiple rigs nearby.
In addition, we closed on the sale of our remaining Eagle Ford Moulton acreage
in Gonzales and Fayette Counties, and we made significant progress as it
relates to our JV partnership in the Eaglebine/Eagle Ford East.”

2013 Nine Months Results

For the nine months ended September 30, 2013 the Company reported total
revenues and other income from continuing operations of $6.3 million as
compared to $204.4 million in the comparable 2012 period. Similar to the
quarter comparisons, this decline was primarily related to other income of
$197.0 million recorded in the prior year period and comprises the gain on the
termination of the agreements with the Company’s former JV partner in
conjunction with the division of assets. Oil and gas revenues for the
comparable 2013 and 2012 nine-month periods were $6.3 million as compared to
$7.4 million, respectively. Similar to the quarters’ results, this decline was
primarily related to the loss of Cotulla revenues of $5.4 million as a result
of the division of assets with the Company’s former joint venture partner,
partially offset by the increase in production of the Boening well in Sweet
Home and the increase in Moulton production for the Crabb Ranch and Ring Unit
wells.

Operating costs and expenses for the nine months ended September 30, 2013 were
$131.0 million as compared to $81.4 million in the comparable 2012 period.
This increase was primarily related to the impairment of oil and gas
properties of $102.3 million recognized in 2013 and $2.2 million recognized in
the comparable 2012 period. The impairment of $102.3 million primarily related
to certain leasehold costs and producing oil and gas properties that were
written down to their fair values in the second quarter of 2013. The Company
also reported a decline in general and administrative expenses of $47.4
million, as well as lower depreciation and amortization, and lower lease
operating expenses for the comparable nine-month periods. Excluding the impact
of the impairment charge, total operating costs and expenses decreased by
approximately $50.6 million or 63.9%.

The Company reported an operating loss of $124.7 million for the nine months
ended September 30, 2013 as compared to operating income of $122.9 million for
the nine months ended September 30, 2012. During the 2013 nine-month period,
ZaZa reported an income tax benefit of $35.4 million as compared to an income
tax expense of $71.4 million for the comparable 2012 nine-month period. ZaZa
reported a net loss of $81.7 million as compared to a net loss of $33.5
million, or a loss per diluted share of $0.79 and $0.35 for the nine months
ended September 30, 2013 and September 30, 2012, respectively.

2013 Third Quarter Milestones

  *During the third and fourth quarters, ZaZa entered into amendments to its
    Joint Exploration and Development Agreements (announced on March 25, 2013)
    with one of the largest independent crude oil and natural gas companies to
    jointly develop certain Eaglebine/Eagle Ford East properties located in
    Texas. Under these amended agreements, the companies accelerated both
    Phase II and Phase III of the initial JV and entered into new exchanges of
    leases and wells in the area.

       *Phase II Acceleration. ZaZa assigned to its JV partner, ~20,000 net
         acres for cash consideration of $17 million and approximately $3
         million of interests (based on an independent reserve report) in 15
         producing wells owned by the partner and located outside of the
         parties’ Area of Mutual Interest (“AMI”). Additionally, under Phase
         II, ZaZa’s JV partner will drill two horizontal wells and one
         vertical well in the parties’ AMI, carry ZaZa’s interests in those
         wells and provide a miscellaneous work and land carry of up to $1.25
         million. Our counterparty may, however, elect to drill one or more
         vertical wells in order to achieve carry parity value for drilling
         horizontal wells. To complete its former obligation in respect to the
         third well as part of Phase I, the JV partner will also pay for an
         additional $1.5 million of ZaZa’s costs for one or more additional
         vertical wells and has provided a $1.5 million cash payment to ZaZa.
       *Phase III Acceleration. ZaZa has assigned ~7,800 net acres from the
         former Phase III acreage, for which the company will receive
         approximately $11 million of interests (based on an independent
         reserve report) in the 15 producing wells part of Phase II. In
         addition, ZaZa’s JV partner has the option, until January 31, 2014,
         to acquire an interest in the remaining approximately 12,300 former
         Phase III net acres at a fixed price per net acre from ZaZa.
       *Acreage and Production Exchange. The Company’s JV partner has
         acquired ~19,000 net acres and interests in related wells in the
         parties’ AMI, and has assigned to ZaZa a 25% working interest in
         these leases and multiple producing wells with a PDP present value of
         approximately $3 million. The Company also expects additional
         production in the near future from two recently drilled wells, in
         various stages of completion, within this newly assigned acreage. In
         consideration for ZaZa’s participation in these leases and
         immediately available production, ZaZa has assigned to its partner
         approximately 13,875 additional net acres and paid approximately
         $700,000 of cash.

  *Sale of Moulton Properties: On July 26, 2013, ZaZa closed a transaction to
    sell approximately 10,000 additional net acres in the Eagle Ford trend
    located in Fayette, Gonzalez and Lavaca Counties, Texas, including seven
    producing wells. ZaZa received cash proceeds of $29.3 million for the
    transaction. The Company had previously reached a separate agreement to
    sell additional Moulton assets to the same party for approximately $9.2
    million, and received approximately $8.8 million in cash upon closing.

Eagle Ford - Sweet Home Joint Venture

ZaZa also announced today that during the third quarter it consummated a Joint
Exploration and Development Agreement with a privately held exploration and
production company to further develop its Eagle Ford Sweet Home assets. Under
the terms of the Agreement, ZaZa’s Eagle Ford JV partner, who has a focus on
developing Eagle Ford shale, received a 75% net revenue interest in ~7,600 net
acres and will be the operator on this acreage.

ZaZa retained a 25% working interest in the ~7,600 net acres, which contains
the position previously “high-graded” into twelve developmental units. These
assets include certain lands located in DeWitt County, Texas, which were
wholly owned by ZaZa. ZaZa also received a drilling commitment for two
horizontal Eagle Ford wells to be drilled and completed on or before April 15,
2014, and received a full carry consideration for the drilling and completion
of ZaZa’s 25% interest in these first two wells. Additionally, per the terms
of the agreement, ZaZa received a $750,000 credit for its interest of
post-completion infrastructure costs and a $300,000 credit for its share of
land lease upkeep in the JV acreage.

Liquidity Update

As of September 30, 2013, ZaZa had $6.6 million in cash and cash equivalents,
which excludes restricted cash of $15.5 million. Total cash and cash
equivalents as of December 31, 2012 were $34.6 million and restricted cash was
$21.9 million.

In 2013, ZaZa consummated the sale of the majority of its non-core assets and
entered into the first development phase of its Eaglebine/Eagle Ford East
joint venture, resulting in combined total cash proceeds of $49.6 million. The
cash proceeds received from these transactions were used to fund general
corporate activities, and reduce liabilities and outstanding principal on the
Company’s Senior Secured Notes. During the 2013 fourth quarter, ZaZa received
approximately $16.3 million in cash. ZaZa also received working interests in
several producing wells with a PV-10 value of $17.0 million. As a result,
ZaZa’s pro-forma cash balance, excluding restricted cash of $15.5 million, was
approximately $21 million as of October 15, 2013.

Total debt as of September 30, 2013 was $97.0 million, of which $9.9 million
is classified as current, as compared to $96.3 million as of December 31,
2012, of which $25.3 million was considered current. As of September 30, 2013,
the Company’s debt consisted of $22.4 million related to its Senior Secured
Notes, net of discount, $27.3 million related to its Convertible Senior Notes,
net of discount, and $47.3 million related to Subordinated notes.

The Company also announced today that it expects to file today a universal
shelf registration statement on Form S-3 with the U.S. Securities and Exchange
Commission (“SEC”). The registration statement, if and when it becomes
effective, is intended to provide the Company flexibility to access the public
capital markets in order to respond to business opportunities and restructure
the balance sheet at more favorable terms.

While no specific plans to issue securities under the registration statement
have been disclosed, ZaZa intends to evaluate all financial instruments that
will best position the Company for the future. If and when the registration
statement is declared effective by the SEC, the registration will provide ZaZa
with the flexibility to offer and sell from time to time, up to $150 million
of securities such as senior, subordinated or convertible debt securities,
warrants, units, common and preferred stock, or any combination thereof. This
press release shall not constitute an offer to sell or a solicitation of an
offer to buy the securities registered under the registration statement or any
other securities, and shall not constitute an offer, solicitation or sale in
any state or jurisdiction in which such an offer, solicitation or sale would
be unlawful.

The Company is also considering entering into discussions with the holders of
its Convertible Notes in order to exchange the Convertible Notes for
non-convertible senior debt. Furthermore, the Company has engaged in
discussions with the ZaZa LLC Members, each of whom is a director of the
Company, to exchange all or part of their Subordinated Notes for common stock,
preferred stock, cash or some combination thereof (subject to any applicable
subordination provisions for the benefit of the Senior Secured Notes or the
Convertible Notes). The Board of Directors has created a committee of
independent directors to consider and make recommendations to the Board with
respect to whether to approve the exchange of the Subordinated Notes by any or
all of the ZaZa LLC Members and, if so, on what terms. The exchange of
Subordinated Notes by the three ZaZa LLC Members would be conditioned upon the
full repayment of the Senior Secured Notes and exchange of the Convertible
Notes described above.

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. Average daily
production for the month ended October 31, 2013 was approximately 631 barrels
of oil equivalent (BOE) per day, at a rate of 48% Oil.

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


                 Three Months Ended            Nine Months Ended September
                  September 30,                   30,
                  2013            2012           2013           2012
Production:
Oil (Bbls):           10,251          24,263         62,098          74,051
Gas (Mcf):            72,494          38,547         149,414         114,323
Equivalents           22,333          30,688         87,001          93,104
(BOE):
                                                                     
Average Price:
Oil ($/Bbl):      $   83.17        $  86.61       $  92.51        $  95.15
Gas ($/Mcf):      $   3.45         $  2.50        $  3.49         $  2.69


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


               Three Months Ended September   Nine Months Ended September
                30, 2013                         30, 2013
                Gas     Oil     Equivalent     Gas      Oil     Equivalent
                (Mcf)    (Bbls)   (BOE)          (Mcf)     (Bbls)   (BOE)
                                                                    
South Texas     34,584   9,047    14,811         109,208   58,963   77,165
(1)
East Texas      37,932   1,089    7,411          40,018    2,519    9,189
(2)
Other Onshore   (22)     115      111            188       616      647
Non-Operated
Total           72,494   10,251   22,333         149,414   62,098   87,001

(1) South Texas area includes the following sub-regions: Moulton, Sweet Home,
and Hackberry/Oakland.
(2) East Texas area includes the following sub-regions: Eaglebine/Eagle Ford
East.



               Three Months Ended September   Nine Months Ended September
                30, 2012                         30, 2012
                Gas     Oil     Equivalent     Gas      Oil     Equivalent
                (Mcf)    (Bbls)   (BOE)          (Mcf)     (Bbls)   (BOE)
                                                                    
South Texas     38,303   22,445   28,829         113,900   71,422   90,405
(1)
East Texas      -        -        -              -         -        -
(2)
Other Onshore   244      1,819    1,859          423       2,628    2,699
Non-Operated
Total           38,547   24,263   30,688         114,323   74,051   93,104

(1) South Texas area includes the following sub-regions: Moulton, Sweet Home,
and Hackberry/Oakland.
(2) East Texas area includes the following sub-regions: Eaglebine/Eagle Ford
East.


CONSOLIDATED BALANCE SHEETS

The following tables present our balance sheets (in thousands, except share
data) for the periods indicated:


                                       September 30, 2013  December 31, 2012
                                             (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents               $    6,646           $   34,649
Restricted cash                              500                 21,875
Accounts receivable                          282                 1,354
Prepayments and other current assets        983               1,134      
Total current assets                        8,411             59,012     
                                                                 
Property and equipment:
Oil and gas properties, successful           51,021              151,828
efforts method
Furniture and fixtures                      1,855             2,947      
Total property and equipment                 52,876              154,775
Accumulated depletion, depreciation         (5,596     )       (4,705     )
and amortization
Property and equipment, net                 47,280            150,070    
                                                                 
Restricted cash                              15,000              -
Assets held for sale, net                    -                   9,965
Other assets                                 2,410               4,066
                                                              
Total assets                            $    73,101         $   223,113    
                                                                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
Current liabilities:
Accounts payable - trade                $    1,541           $   8,431
Accrued liabilities                          6,857               12,200
Deferred income taxes                        -                   14,568
Senior Secured Notes, net of discount        9,858               -
Convertible Senior Notes, net of             -                   25,298
discount
Embedded conversion options
associated with Convertible Senior           -                   21,382
Notes
Income taxes payable                        1,013             3,658      
Total current liabilities                   19,269            85,537     
                                                                 
Long-term accrued liabilities                12,076              53
Asset retirement obligations                 384                 130
Deferred income taxes                        490                 32,597
Long-term payable - related parties          4,128               4,128
Senior Secured Notes, net of discount        12,563              23,647
Convertible Senior Notes, net of             27,267              -
discount
Subordinated notes                           47,330              47,330
Warrants associated with Senior              19,161              28,043
Secured Notes
Embedded conversion options
associated with Convertible Senior          6,599             -          
Notes
Total liabilities                           149,267           221,465    
                                                                 
Stockholders’ equity (deficit):
Common stock, $0.01 par value,
250,000,000 shares authorized;
107,287,481 and 102,519,001 shares           1,073               1,025
issued and outstanding at September
30, 2013 and December 31, 2012,
respectively
Additional paid-in capital                   108,544             104,639
Accumulated retained deficit                 (185,705   )        (104,048   )
Accumulated other comprehensive             (78        )       32         
income (loss)
Total stockholders’ equity (deficit)         (76,166    )        1,648
                                                              
Total liabilities and stockholders’     $    73,101         $   223,113    
equity (deficit)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

The following tables present our unaudited statements of operations and
comprehensive income (in thousands, except share data) for the periods
indicated:


                 Three Months Ended September    Nine Months Ended
                  30,                               September 30,
                  2013             2012            2013          2012
Revenues and                     
other income:
Oil and gas       $  1,102          $ 2,198         $ 6,266        $ 7,353
revenues
Other income        -              196,985       -            197,027 
Total revenues
and other           1,102          199,183       6,266        204,380 
income
                                                                     
Operating costs
and expenses:
Lease operating      688              845             1,627          2,992
expense
Depreciation,
depletion,           259              1,986           2,550          5,244
amortization,
and accretion
Impairment of
oil and gas          9,204            2,160           102,349        2,160
properties
General and          4,230            17,313          23,642         71,048
administrative
Loss on asset       829            -             829          -       
divestitures
Total operating
costs and           15,210         22,304        130,997      81,444  
expenses
                                                                     
Operating            (14,108  )       176,879         (124,731 )     122,936
income (loss)
                                                                     
Other expenses:
Foreign
currency             15               (85     )       30             138
exchange (gain)
loss
Loss on
extinguishment       405              15,224          16,568         15,224
of debt
Interest             3,491            3,802           10,378         10,767
expense, net
(Gain) loss on
fair value of        (1,350   )       (27,106 )       (19,772  )     5,315
warrants
(Gain) loss on
fair value of
embedded            (1,408   )      -             (14,783  )    -       
conversion
option
Total other
expenses            1,153          (8,165  )      (7,579   )    31,444  
(income)
                                                                     
Income (loss)
from continuing
operations           (15,261  )       185,044         (117,152 )     91,492
before income
taxes
Income tax
expense             5,387          37,634        (35,445  )    71,362  
(benefit)
Income (loss)
from continuing      (20,648  )       147,410         (81,707  )     20,130
operations
Income (loss)
from
discontinued        17             (13,578 )      50           (53,584 )
operations, net
of taxes
Net income        $  (20,631  )     $ 133,832      $ (81,657  )   $ (33,454 )
(loss)
                                                                     
Basic income
(loss) per
share:
Continuing        $  (0.20    )     $ 1.45          $ (0.79    )   $ 0.21
operations
Discontinued        -              (0.13   )      -            (0.56   )
operations
Total basic
income (loss)     $  (0.20    )     $ 1.32         $ (0.79    )   $ (0.35   )
per share
                                                                     
Diluted income
(loss) per
share:
Continuing        $  (0.20    )     $ 1.15          $ (0.79    )   $ 0.21
operations
Discontinued        -              (0.13   )      -            (0.56   )
operations
Total diluted
income (loss)     $  (0.20    )     $ 1.02         $ (0.79    )   $ (0.35   )
per share
                                                                     
Weighted
average shares
outstanding:
Basic                102,706          101,731         103,055        96,879
Diluted              102,706          105,020         103,055        96,879
                                                                     
Consolidated
Statement of
Comprehensive
Loss
Net income        $  (20,631  )     $ 133,832       $ (81,657  )   $ (33,454 )
(loss)
Foreign
currency            47             (4,398  )      (110     )    (2,218  )
translation,
net of taxes
Comprehensive     $  (20,584  )     $ 129,434      $ (81,767  )   $ (35,672 )
income (loss)


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 November 12, 2013,
at 10 a.m. EDT. Interested parties can listen to the call by dialing toll-free
at +1 866-515-2909 and entering pass code 44064834 (International number: +1
617-399-5123). 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: 38260734). 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 Eaglebine/Eagle
Ford East resource play 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, the
ability of ZaZa to optimize its balance sheet, 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, Second and Third 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:

For ZaZa Energy Corporation:
JMR Worldwide
Jay Morakis, 212-266-0191
Partner
jmorakis@jmrww.com