ZaZa Energy Corporation provided operational updates related to its core properties in the Eaglebine and Eagle Ford regions in Texas. The Company also provided further details on its proposed sale of its French assets and confirmed that it remains on track for a closing in December 2012.
Eaglebine and Lower Cretaceous Update
ZaZa owns and operates approximately 88,000 net acres in the Eaglebine, one of the fastest growing and most prolific oil and gas plays in the U.S. ZaZa's acreage block is located in the highly organic and thickest area of the basin. The Company has begun development in the Lower Eaglebine and is exploring development scenarios associated with its Upper Eaglebine resource potential. Additionally, the Lower Cretaceous section sits below the Upper and Lower Eaglebine targets and has a gross thickness of approximately 1,300' on the ZaZa acreage block. The Company will spud its first Lower Cretaceous vertical test this month as it evaluates the potential for producing multiple Lower Cretaceous targets in a vertical, comingled development strategy.
As previously announced on November 6, 2012, ZaZa completed drilling and running production casing on its Eaglebine Stingray A-1H well ("Stingray") in Walker County, Texas (11,780 feet - True Vertical Depth (TVD) / 17,060 feet - Measured Depth). The Company drilled a pilot hole through the objective section (12,242 feet - TVD), took sidewall cores and ran a full suite of logs for the empirical measurement of hydrocarbons in place. ZaZa also announced at that time that it completed drilling a ~4,700-foot, in-zone lateral in the objective section of the Stingray, commenced completion operations, and began hydraulic fracturing operations. Initial pilot drilling, using the Schlumberger ELAN analysis tool, showed 21 BCF and 29 MMBO per section in place and ~4.85 million BOE of oil in place per well bore or ~980,000 BOE/EUR recoverable, applying a recovery factor of 18-20 percent.
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.