ZaZa Energy Corp. recently struck a joint venture (JV) deal with Sabine Oil & Gas LLC unit Sabine South Texas LLC to jointly develop its Sweet Home prospect in the Eagle Ford Shale.
Sweet Home is in Lavaca and DeWitt counties in South Texas. DeWitt has been among the top-10 oil-producing counties in Texas in recent months (see Shale Daily,Oct. 31). According to a recent filing with the Securities and Exchange Commission, ZaZa and Sabine will develop 7,600 net acres that ZaZa owns and that comprise a portion of its interest in the Sweet Home prospect.
Sabine has agreed to pay 100% of the drilling and completion costs of two commitment wells and up to $750,000 of construction costs related to gathering and infrastructure in exchange for a 75% working interest in 7,600 acres of the Sweet Home prospect and the Boening well. Sabine has also agreed to carry up to $300,000 of ZaZa's expenses related to the extension and renewal of certain leases in the Sweet Home prospect.
If Sabine completes the first commitment well by Feb.15, ZaZa will transfer to to the company a 75% working interest in about 3,200 net acres and the Boening well. If Sabine completes the second commitment well by April 15, ZaZa will transfer a 75% working interest in the remaining net acres to the company.
Assuming the initial two commitment wells (or substitute wells, if necessary) are successful in achieving production, participating interests in any additional wells drilled or lease acreage acquired in Sweet Home will be shared 75% by Sabine and 25% by ZaZa under an area of mutual interest to expire Sept. 15, 2015, according to the filing.
ZaZa has been focused on unlocking the Eaglebine play while it has been teeing up Sweet Home (see Shale Daily,Nov. 7, 2012). ZaZa recently expanded its JV agreement with EOG Resources Inc. in Eaglebine/Eagle Ford Shale East (see Shale Daily,Oct. 1).
ZaZa claims to hold "the premier land position in the liquids-rich window in the Eaglebine/Eagle Ford East play, which is positioned in the thickest, most organic rich section of the entire Eaglebine/Eagle Ford East trend.”
The key areas of focus for Sabine Oil & Gas are East Texas (Cotton Valley Sand and Haynesville Shale), North Texas (Granite Wash and Cleveland Sand) and South Texas, where it is active in the Eagle Ford.