The Company initially guided that it would commence production from the Stingray in early December, and today reiterated that such production remains on track for this month; however, it has encountered a restriction during its completion process that will, in the near-term, limit the production capabilities of the Stingray. Despite this limit to production capabilities, and in order to satisfy certain contractual obligations to Range Texas Production, LLC (“Range”), a wholly-owned subsidiary of Range Resources Corporation, ZaZa intends to produce the Stingray A-1H well and initiate sales by December 16, 2012, or such later time as may be agreed upon by Range. Shortly after initiating sales and satisfying its obligation to Range, ZaZa intends to temporarily shut-in the Stingray in order to remedy the restriction and, once successful, establish initial full production rates for the Stingray.
Eagle Ford Update
ZaZa initially owned ~12,300 net acres in the Eagle Ford and increased its net acreage position to ~72,000 with 100% working interest as a result of the Hess division of assets. The Company intends to divest, in the first quarter of 2013, two of the prospects it considers non-core (Dilley Prospect ~2,000 net acres and Hackberry/Oakland Prospect ~23,000 net acres), which collectively represent ~25,000 net acres. The Company expects to have ~47,000 net acres post-divestiture.
The Company disclosed today that it has reached TD in its Boening A-1H well located in DeWitt County, Texas, and is running production casing and preparing for completion operations. Once released from the Boening, the Company will then move the Nabors Drilling USA rig, currently under a multi-well contract with ZaZa, back to its Eaglebine acreage in Walker County to drill the Commodore A-1 well to test the Lower Cretaceous zone.Commenting on today’s announcement, Todd A. Brooks, CEO of ZaZa Energy Corporation stated, “We remain firm believers in our first-mover advantage and the enormous potential our company has today, given the resources we believe are prevalent in both our Eaglebine and our Lower Cretaceous position in Walker and Grimes Counties, in addition to our proven Eagle Ford acreage. We have a well-defined strategy in place to harness these resources and, at the same time, continuously improve our operational and financial position. By divesting non-core assets, we continue to generate capital that places us in a stronger position to further delineate our Eagle Ford and Eaglebine projects, while enabling us to successfully pay down our debt. 2013 should be a breakout year for ZaZa, and we remain focused on generating value for our shareholders, our company and our partners.”