French producer Toreador Resources Corp. and ZaZa Energy LLC, a privately held oil and gas company based in Houston, have announced plans to merge in a cash and stock deal valued at approximately $294 million, creating a single company with significant shale holdings on two continents.

“It’s a beautiful marriage because what it does for us it brings forward our future growth potential,” Toreador CEO Craig McKenzie said during a conference call Wednesday announcing the deal. “With our combined portfolios we have a steady incline beginning with day one. There’s tremendous upside.”

The combined company will be called ZaZa Energy Corp. with McKenzie as CEO, and will control about 423,000 net acres in Texas and France combined, mostly in the Eagle Ford shale play and the Paris Basin. Combined net production figures from the Eagle Ford and the Paris Basin are expected to exceed 1,100 boe/d by the end of 2011, and increase further to 5,000 boe/d by the end of 2013.

ZaZa Energy will have its headquarters in Houston with additional offices in Corpus Christi, TX, and Paris, France. Shares of the new company will be traded on the NASDAQ exchange. Toreador, which is currently traded on the NASDAQ, will be delisted.

Shares of Toreador closed at $3.40/share on Wednesday, up 48 cents.

The deal must still receive regulatory approval and the blessing of Toreador’s stockholders. ZaZa’s equity holders and Toreador’s board of directors have already approved the deal. All parties hope to close the transaction during 4Q2011.

Under the terms of the deal, which is essentially a reverse merger, ZaZa equity holders will receive $50 million in notes or cash and approximately 76.2 million shares in the combined company, a 75% stake. Toreador stockholders will get the remaining 25% stake, about 25.4 million shares.

Before the merger, Toreador and ZaZa had separate joint ventures (JV) with Hess Corp. subsidiaries, both of which will continue.

ZaZa held 123,000 gross acres (12,300 net) in the Eagle Ford, and 70,000 gross acres in an eastern extension of the Eagle Ford the company has dubbed “Eaglebine.” ZaZa currently has 14 wells drilled (six producing) in the Eagle Ford and plans to start a one-rig exploration program in the Eaglebine during 1Q2012. ZaZa’s JV with the undisclosed Hess subsidiary calls for 280 wells to be drilled in the Eagle Ford by the end of 2013. ZaZa also hopes to expand its Eaglebine holdings to 100,000 gross acres within one year.

Meanwhile Toreador holds 780,000 gross acres (340,000 net) in the Paris Basin, with conventional oil production of 880 b/d and proved reserves of 5.5 MMbbl. Toreador has exploration permits for 340,000 net acres with its JV partner, Hess Oil France SAS. The JV calls for starting a one-rig conventional exploration program by late 2011 to target 40 MMbbl in traditional reservoirs.

Toreador also plans to begin drilling, pending French government approval, into the Liassic shale play by the end of 2011. The drilling would be performed without hydraulic fracturing (fracking), which France has recently banned (see Shale Daily, July 15).

McKenzie briefly addressed France’s ban on fracking, which some investors cited as the reason behind the Toreador-ZaZa merger.

“From the Toreador perspective, everybody knows that we have gone through some regulatory uncertainty this year,” McKenzie said. “But the oil hasn’t changed. The [Paris] Basin potential hasn’t changed. It has tremendous resource potential. From the ZaZa perspective, this simply provides them with access to this sort of upside. But they’re giving up what they have created, which is a truly tremendous business in its own right in the Eagle Ford core.”