ZaZa Energy Corp. and joint venture (JV) partner EOG Resources Corp. have revised their agreement in order to further develop and expand their Eaglebine/Eagle Ford Shale East assets

“This is a significant step forward for our company as we establish our production base and create the right platform for growth,” said ZaZa CEO Todd Brooks. “Through this transaction we’ve successfully increased our contiguous JV acreage footprint, established $16.1 million in PDP [proved developed producing] value across interests in 23 producing wells and will see an influx of $16.5 million in net cash.”

EOG has elected to accelerate the second phase of the development agreement, ZaZa said Monday.

ZaZa is to receive $17 million in cash and interests in 15 of EOG’s wells outside of the area of mutual interest (AMI) line in Madison County (Southern Madison Wells), in Texas with a PDP present value of $3 million. ZaZa will also receive 100% carry consideration for one vertical well completion, two horizontal well completions and a $1.25 million credit toward miscellaneous land or operational expenses. In return, ZaZa will assign to EOG 20,000 net Phase II acres. ZaZa said it also continues to anticipate timely drilling and completion of three carried Phase I obligation wells.

As consideration for the assignment of at least 6,000 net former Phase III acres, ZaZa will receive additional interests in the Southern Madison Wells with an incremental PDP present value of about $9 million. Pro forma for this transaction, ZaZa will retain about 14,000 net Phase III acres, and EOG has the option to elect into some or all of this acreage by January 31, by making a further cash payment to ZaZa. The original agreement called for a Phase III election by Jan. 31, 2015.

EOG is to assign to ZaZa a 25% working interest in about 19,000 net additional acres and related AMI interests in multiple producing wells with a PDP present value of about $4.1 million. ZaZa said it expects additional production soon from two recently drilled wells, in various stages of completion, within this newly assigned acreage. In return for the 25% working interest and immediately available production, ZaZa will pay $2 million and assign a 75% working interest in about 18,500 net acres of its retained acreage position in Walker and Madison counties.

ZaZa and EOG formed their JV early this year (see Shale Daily, March 26). Last spring during a conference call with investors, Brooks emphasized the company’s heavy exposure to the Eaglebine (see Shale Daily, April 8)…”[I]t is important to understand that it is not just the lower Eaglebine zone that we are looking to develop. The company is not taking single-reservoir risk; we are dealing with stacked pay here. There are multiple zones for development and multiple ways to go about developing these different zones, which is important from a risk diversification standpoint,” Brooks said at the time.

Through the end of September, Madison County had issued 92 drilling permits this year, about 12% of the 748 total permits issued by counties with Eaglebine formation acreage, according to Railroad Commission of Texas data. Milan County remains the most active county in the play, having issued 305 drilling permits so far this year and 1,214 permits since 2008.