ZaZa Energy (ZAZA) 8-K/A Completion of Acquisition or Disposition of Assets

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 21, 2012

ZAZA ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	001-35432	45-2986089
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)
1301 McKinney Street, Suite 2850 Houston, Texas		77010
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (713) 595-1900

NOT APPLICABLE

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01Completion of Acquisition or Disposition of Assets.

On December 21, 2012, ZaZa Energy Corporation (the “Company”), pursuant to that certain Share Purchase Agreement dated November 13, 2012 (the “Purchase Agreement”), through its wholly-owned subsidiary ZaZa France SAS (“Seller”), completed the sale of 100% of the shares in ZaZa Energy France SAS to Vermillion REP SAS, a wholly-owned subsidiary of Vermillion Energy Inc. 

Upon the closing, the net purchase price paid to Seller was approximately $76.0 million in cash following the application of certain closing adjustments required by the Purchase Agreement.  Following reductions for advisor fees, estimated liquidation costs and taxes, the net proceeds to Company were approximately $68.0 million.  The Company used approximately half of the net proceeds to pay down part of its remaining senior secured notes.  Additionally, as part of the Paris Basin Agreement signed with Hess Corporation (“Hess”) in July 2012, $15.0 million of the sales proceeds will be held in escrow until all exploration permits for the Paris Basin are successfully transferred to Hess.  The remaining net proceeds will be used by the Company to fund its development program.    

The foregoing description of the Purchase Agreement is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2012 and incorporated herein by reference.

Item 9.01Financial Statements and Exhibits

(b)       Pro Forma Financial Information. 

This Current Report on Form 8-K/A of ZaZa Energy Corporation (the "Company") amends the Company's Current Report on Form 8-K filed on December 27, 2012.  This Amendment is being filed solely to furnish pro forma information with respect to the divestiture of the Company's wholly-owned subsidiary ZaZa Energy France SAS.

The unaudited pro forma consolidated financial statements giving effect to the disposition of as of September 30, 2012 and for the three and nine months ended September 30, 2012 as Exhibit 99.1.

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The following exhibits are filed in accordance with the provisions of Item 601 of Regulation S-K:  

Exhibit No.	Description
2.1	Share Purchase Agreement, dated November 13, 2012, by and between ZaZa France SAS and Vermillion REP SAS (incorporated herein by reference to Exhibit 10.1 to ZaZa Energy Corporation’s Current Report on Form 8-K filed on November 19, 2012)
99.1*	Unaudited Pro Forma Consolidated Financial Statements of ZaZa Energy Corporation

____________________________

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ZAZA ENERGY CORPORATION
Date: January 25, 2013	By:	/s/ TODD A. BROOKS
	Name:	Todd A. Brooks
	Title:	President and Chief Executive Officer

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EXHIBIT INDEX

Exhibit No.	Description
2.1	Share Purchase Agreement, dated November 13, 2012, by and between ZaZa France SAS and Vermillion REP SAS (incorporated herein by reference to Exhibit 10.1 to ZaZa Energy Corporation’s Current Report on Form 8-K filed on November 19, 2012)
99.1*	Unaudited Pro Forma Consolidated Financial Statements of ZaZa Energy Corporation

____________________________

* Filed herewith.

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA

        The unaudited pro forma consolidated statements of income for the three and nine months ended September 30, 2012 have been prepared as though the divestiture had occurred on July 1, 2012 and January 1, 2012, respectively.   The unaudited pro forma consolidated balance sheet at September 30, 2012 has been prepared as though the divestiture had occurred on September 30, 2012. The pro forma adjustments are based on available information and assumptions that our management believes are reasonable; however, such adjustments are subject to change based on the finalization of the terms of the divestiture. In addition, such adjustments are estimates and may not prove to be accurate.

The unaudited pro forma financial statements are provided for illustrative purposes only and do not purport to represent what the actual consolidated results of operations or the consolidated financial position of ZaZa Energy Corporation would have been had the transactions occurred on the dates assumed, nor are they necessarily indicative of future consolidated results of operations or consolidated financial position.

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ZAZA ENERGY CORPORATION

PRO FORMA CONSOLIDATED BALANCE SHEET

(Unaudited)

AS OF SEPTEMBER 30, 2012

	Historical		Pro Forma Adjustments		Pro Forma
	(In thousands except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	24,623	$	16,974	$	41,597
Restricted cash		-		15,000		15,000
Accounts receivable - joint interest		2,632		(2,574)		58
Accounts receivable - revenue receivable		838		-		838
Accounts receivable - related party		-		-		-
Prepayments and other current assets		3,587		(2,662)		925
Total current assets		31,680		26,738		58,418
Property and equipment
Oil and gas properties, successful efforts method		271,888		(111,002)		160,886
Furniture and fixtures		3,913		(1,029)		2,884
Total property and equipment		275,801		(112,031)		163,770
Accumulated depletion, depreciation and amortization		(10,687)		4,250		(6,437)
Property and equipment, net		265,114		(107,781)		157,333
Goodwill		-		-		-
Other assets		3,232		(104)		3,128
Total assets	$	300,026	$	(81,147)	$	218,879

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ZAZA ENERGY CORPORATION

PRO FORMA CONSOLIDATED BALANCE SHEET

(Unaudited)

AS OF SEPTEMBER 30, 2012

	Historical		Pro Forma Adjustments		Pro Forma
	(In thousands except share and per share data)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable - trade	$	9,377	$	(4,420)	$	4,957
Accounts payable - related parties		115		-		115
Advances from joint interest owner		-		-		-
Accrued liabilities		9,210		-		9,210
Revolving line of credit		-		-		-
Notes payable to members		-		-		-
Income taxes payable		4,982		(1,764)		3,218
Total current liabilities		23,684		(6,184)		17,500
Long-term accrued liabilities		348		(329)		19
Asset retirement obligations		4,984		(4,705)		279
Deferred income taxes		69,547		(33,630)		35,917
Subordinated notes		47,330		-		47,330
Senior Secured Notes, net of discount		46,752		(33,800)		12,952
Warrants associated with Senior Secured Notes		38,947		-		38,947
Total liabilities		231,592		(78,648)		152,944
Stockholders’ equity (deficit):
Preferred stock, $0.01 par value, 25,000,000 shares authorized; zero issued or outstanding		-		-		-
Common stock, $0.01 par value, 250,000,000 shares authorized; 101,769,953 and 75,976,500 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		1,018		-		1,018
Additional paid-in capital		100,909		-		100,909
Accumulated retained (deficit) earnings		(31,275)		(4,717)		(35,992)
Accumulated other comprehensive income		(2,218)		2,218		-
Total stockholders’ equity (deficit)		68,434		(2,499)		65,935
Total liabilities and stockholders’ equity (deficit)	$	300,026	$	(81,147)	$	218,879

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ZAZA ENERGY CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS 

(Unaudited)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012

	Historical		Pro Forma Adjustments		Pro Forma
	(In thousands except per share data)
Revenues and other income:
Oil and gas revenues	$	26,991	$	(19,638)	$	7,353
Bonus income		-		-		-
Other income		197,027		-		197,027
Total revenues and other income		224,018		(19,638)		204,380
Operating costs and expenses:
Lease operating expense		8,894		(5,902)		2,992
Exploration expense		3,284		(3,284)		-
Depreciation, depletion and amortization		10,395		(5,165)		5,230
Accretion expense		411		(399)		12
Impairment of oil and gas properties		22,746		(20,586)		2,160
Impairment of goodwill		39,749		(39,749)		-
General and administrative		76,057		(5,022)		71,035
Total operating costs and expenses		161,536		(80,107)		81,429
Operating income (loss)		62,482		60,469		122,951
Other expense
Foreign currency exchange (gain) loss		138		(107)		31
Loss on extinguishment of debt		15,224		-		15,224
Interest expense, net		9,999		(899)		9,100
(Gain) loss on fair value of warrants		5,315		-		5,315
Total other expense		30,676		(1,006)		29,670
Income (loss) before taxes		31,806		61,475		93,281
Income tax provision		65,260		(31,697)		33,563
Net income (loss) available to common shareholders	$	(33,454)	$	93,172	$	59,718
Basic income (loss) available to common shareholders per share:	$	(0.35)			$	0.62
Diluted income (loss) available to common shareholders per share:	$	(0.35)			$	0.62
Weighted average shares outstanding:
Basic		96,879				96,879
Diluted		96,879				96,879

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ZAZA ENERGY CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS 

(Unaudited)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2012

	Historical		Pro Forma Adjustments		Pro Forma
	(In thousands except per share data)
Revenues and other income:
Oil and gas revenues	$	10,211	$	(8,013)	$	2,198
Bonus income		-		-		-
Other income		196,985		-		196,985
Total revenues and other income		207,196		(8,013)		199,183
Operating costs and expenses:
Lease operating expense		3,457		(2,611)		846
Exploration expense		3,181		(3,181)		-
Depreciation, depletion and amortization		4,130		(2,148)		1,982
Accretion expense		54		(50)		4
Impairment of oil and gas properties		22,746		(20,586)		2,160
General and administrative		18,155		(842)		17,313
Total operating costs and expenses		51,723		(29,418)		22,305
Operating income (loss)		155,473		21,405		176,878
Other expense
Foreign currency exchange (gain) loss		(85)		84		(1)
Loss on extinguishment of debt		15,224		-		15,224
Interest expense, net		3,736		(618)		3,118
(Gain) loss on fair value of warrants		(27,106)		-		(27,106)
Total other expense		(8,231)		(534)		(8,765)
Income (loss) before taxes		163,704		21,939		185,643
Income tax provision		29,872		(30,037)		(165)
Net income (loss) available to common shareholders	$	133,832	$	51,976	$	185,808
Basic income (loss) available to common shareholders per share:	$	1.32			$	1.83
Diluted income (loss) available to common shareholders per share:	$	1.02			$	1.51
Weighted average shares outstanding:
Basic		101,731				101,731
Diluted		105,020				105,020

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NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Overview

On December 21, 2012, ZaZa Energy Corporation (the “Company”), pursuant to that certain Share Purchase Agreement dated November 13, 2012 (the “Purchase Agreement”), through its wholly-owned subsidiary ZaZa France SAS (“Seller”), completed the sale of 100% of the shares in ZaZa Energy France SAS to Vermillion REP SAS, a wholly-owned subsidiary of Vermillion Energy Inc.

1. Pro forma adjustments to assets consist of the following (in thousands):

	Cash and cash equivalents		Restricted cash		Accounts receivable - joint interest		Prepayments and other current assets		Property and equipment, net		Other assets
Receipt of proceeds	$	70,800	$	15,000	$	-	$	-	$	-	$	-
Payment of Senior Secured Notes principal, interest and prepayment fee		(35,950)		-		-		-		-		-
Payment of restructuring costs		(11,542)		-		-		-		-		-
Elimination of the French subsidiary assets		(6,334)		-		(2,574)		(2,662)		(107,781)		(104)
	$	16,974	$	15,000	$	(2,574)	$	(2,662)	$	(107,781)	$	(104)

2. Pro forma adjustments to liabilities consist of the following (in thousands):

	Accounts payable - trade		Income taxes payable		Long-term accrued liabilities		Asset retirement obligations		Deferred income taxes		Senior Secured Notes, net of discount
Elimination of the French subsidiary liabilities	$	(4,420)	$	(4,331)	$	(329)	$	(4,705)	$	(33,630)	$	-
Accrual for additional income taxes		-		2,567		-		-		-		-
Payment of Senior Secured Notes principal		-		-		-		-		-		(33,800)
	$	(4,420)	$	(1,764)	$	(329)	$	(4,705)	$	(33,630)	$	(33,800)

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3. Pro forma adjustments to equity consist of the following (in thousands):

	Accumulated retained (deficit) earnings		Accumulated other comprehensive income
Senior Secured Notes principal prepayment fee	$	(2,150)	$	-
Accrual for additional income taxes		(2,567)		-
Elimination of the French subsidiary accumulated other comprehensive income				2,218
	$	(4,717)	$	2,218

4. Pro forma statements of operations have been prepared as if the divestiture had occurred at the beginning of the period and consist of the following adjustments for the periods indicated (in thousands):

Nine months ended September 30, 2012

	Oil and gas revenues		Operating costs and expenses		Foreign currency exchange (gain) loss		Interest expense, net		Income tax expense (benefit)
Elimination of the French subsidiary income and expenses	$	(19,638)	$	(80,107)	$	(107)	$	768	$	(34,264)
Accrual for additional income taxes		-								2,567
Elimination of interest on Senior Secured Notes repaid		-		-		-		(1,667)		-
	$	(19,638)	$	(80,107)	$	(107)	$	(899)	$	(31,697)

Three months ended September 30, 2012

	Oil and gas revenues		Operating costs and expenses		Foreign currency exchange (gain) loss		Interest expense, net		Income tax expense (benefit)
Elimination of the French subsidiary income and expenses	$	(8,013)	$	(29,418)	$	84	$	66	$	(32,604)
Accrual for additional income taxes		-								2,567
Elimination of interest on Senior Secured Notes repaid		-		-		-		(684)		-
	$	(8,013)	$	(29,418)	$	84	$	(618)	$	(30,037)

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