Toreador Resources Corp. and ZaZa Energy, LLC announced late Tuesday night the execution of a definitive agreement to merge the pair into a single enterprise, with Toreador bringing its oil holdings and ZaZa coming in with its oil and gas portfolio. Based on Toreador stock’s Tuesday close, the implied market capitalization for the new company is about $294 million.
Rodman & Renshaw, LLC is serving as financial advisor to Houston-based ZaZa in the deal, while RBC Capital Markets is serving as financial advisor to Toreador. The new company will assume the name ZaZa Energy Corporation.
Under the merger terms, though Toreador stockholders have yet to approve the deal, equity holders in ZaZa will get about 76.2 million shares, or approximately 75 percent of the new company, together with $50 million in notes or cash. Toreador stockholders will get about 25.4 million shares, or approximately 25 percent of the new Company. Toreador’s board and ZaZa’s equity holders have already approved the transaction.
The Company will be headquartered in Houston, with additional offices in Corpus Christi and Paris. The new Nasdaq symbol for the merged company is expected to be ZAZA. The companies’ press release indicated they expect to finalize the merger by late this year.
Combined, the two companies’ portfolios comprise three areas – the Eagle Ford core, the emerging Eagle Ford/Woodbine resource sites in Texas, and the Paris Basin in France for a total of 423,000 acres.
Net production at the Eagle Ford site and Paris Basin is expected to be more than 1,100 boe/d by the end of the year, with an increase to 5,000 boe/d by the end of 2013. This does not include any production from future drilling at Eagle Ford/Woodbine or Paris Basin conventional.
Toreador non-executive chairman Adam Kroloff said, “This combination offers a strategically distinctive international E&P investment opportunity. Together with ZaZa, we are offering stockholders access to the rapid growth of the Eagle Ford and will also maintain attractive exposure to the potential of the Paris Basin.”
ZaZa co-founder Todd Brooks commented, “Our combination with Toreador is the culmination of our efforts over the past two years to diversify our asset base while building a growth oriented company and exploiting one of the most economic shale plays in the continental United States.”
Shares of TRGL spiked to $3.79 to open the day, but have given back a good portion of the move as the markets continue to move in a chaotic fashion.
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