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ZaZa Sees Success as Eagle Ford, Eaglebine Ops Grow

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   |    Thursday,November 13,2014

ZaZa Energy Corporation provided an operational update concerning its East Texas development.

The Company is pleased to report successful progress with its two active wells in East Texas: 

• Josey Wales #1HR. The Company is preparing to test commingled production from two different types of completion approaches within the well's lateral: (i) open-hole completion that has been stimulated with acid and (ii) a 14-stage limited cased stimulation designed to fracture a controlled area around the well bore. Both approaches have confirmed petroleum production from the Buda formation without significant water. Following a commingled production test, the joint venture plans to evaluate options for a larger stimulation of certain stages, which would seek to extend the well's reach.

• Colburn #3H. The Company has completed the drilling of its new Colburn #3H well targeting one of the deeper formations in the area. The Colburn #3H is currently awaiting completion operations, which are scheduled to commence by the end of December.

President and CEO Todd A. Brooks commented, "While the process of methodically testing and evaluating the substantial number of productive pay zones in East Texas is both time- and capital-intensive, the Company has made significant progress in East Texas over the last year, confirming our assessment of the area's great potential." 

ZaZa's current East Texas acreage holding is estimated to be ~158,000 gross acres and ~41,200 net acres, comprised of ~30,200 net acres within the EOG JV and ~11,000 wholly-owned net acres (subject to completion of elections). The below table illustrates how ZaZa has advanced its East Texas operating area between September 30, 2013 and 2014:

* Acreage totals assume election into all phases of EOG JV, even though the transfer of the related acreage from ZaZa to the EOG JV occurred after September 30, 2013.

East Texas Drilling Accomplishments

• Confirmed East Texas horizontal development option with McAdams 1H 30-day IP of 929 boe/d

• Confirmed East Texas vertical development option with one-year production results from three vertical wells averaging 485 boe/d

• Successfully drilled two new horizontal wells, which are currently in the process of or awaiting completion operations

East Texas Commercial Accomplishments

• Entered into agreements with Quantum Energy Partners to sell a portion of ZaZa's EOG JV properties for $17MM in total consideration

• Extended or renewed ~53,000 acres in the EOG JV since July 2013

• ~27,000 acres in the EOG JV are now held by production

• ~20,000 acres in the EOG JV are newly acquired since July 2013

• Acquired more than 11,000 new East Texas acres, outside of the EOG JV

East Texas Technical Accomplishments

• Selectively completed, tested, and evaluated 106 separate completion intervals in 14 Eagle Ford and Lower Cretaceous Wells

• Evaluated all East Texas JV wells for add-pay and workover opportunities; 26 wells with recompletion or workover potential identified

• Gathered ~900 feet of whole core in 5 productive zones, in 3 different wells geographically spread out across the acreage -- results validate productivity in all 5 zones and analyzed a further 600 feet of core from other wells

• Gathered more than 250 side wall cores

• Ongoing analysis of gas chromatograph data in multiple zones to determine source rock origin and ultimate potential

Looking forward, we are following both imminent and longer-term East Texas milestones.

East Texas Short-Term Value Creating Milestones (4Q 2014)

• Production testing results and possible further completion operations for the East Texas EOG JV Josey Wales #1H well, which is 16 miles away from McAdams Cattle Company #1H

• Completion of East Texas EOG JV well Colburn #3H -- initial results will test a deeper target and pave way for holding acreage with larger units

• Currently shooting 3D Seismic with expected initial data in December 2014 -- which will allow the Company to complete subsurface mapping and avoid drilling and completion hazards 

East Texas Longer-Term Value Creating Milestones (2015)

• Production results from the Colburn #3H's test of a deeper formation

• Use 3D seismic to optimize placement of further development wells, both horizontal and vertical

• Test additional productive zones in the stacked pay for potential as stand-alone horizontal development targets

• Begin to monetize East Texas Northern Development Area (consummate operational JV or develop with ZaZa as operator)

• 200,000 barrels per day crude oil pipeline for Madison and Walker counties (operational by first quarter 2016), which is expected to increase realized oil prices in the area

• Local utilities expanding electricity infrastructure, which is expected to lower field operations costs