As volatile oil prices continue to affect energy companies, troubled ZaZa Energy Corp. (Nasdaq: ZAZA) has raised $2.5 million.

Oil companies have largely struggled because of the decline in oil prices. One company previously on Mergers & Acquisitions Distressed Company Watch List, American Eagle Energy Corp., filed for bankruptcy protection on May 11.

Houston-based ZaZa, which owns and develops shale assets through joint ventures in Texas, said it planned to continue debt restructuring efforts in its latest annual filing with the U.S. Securities and Exchange Mission, filed on March 31.

The company's accountant, BDO USA LLP, raised substantial doubts about ZaZa's ability to continue as a going concern, or without the threat of liquidation, because the company had a working capital deficiency and didn't expect to have enough cash flow to fund operations and debt service requirements for the next year.

ZaZa however, has been able to raise money, both through the $2.5 million it announced April 30, and $100 million in senior secured notes it issued in February. The company also hired Seaport Global Securities LLC in February to evaluation new partnerships and joint ventures.

"Oil prices have declined from a price of approximately $105 per barrel in June 2014 to approximately $50 per barrel as of March 1," the company says in an SEC filing. "This substantial decline in oil and gas prices has impacted our estimated net cash flows from our oil and gas reserves, which estimates are used to determine impairments of our oil and gas properties. As a result of the decline in oil and gas prices, we have revised our estimated reserves downward and have significantly reduced our estimated future cash flows."

The company says its joint venture strategy allows it to reduce operational costs. ZaZa considers itself a "first mover" – meaning that it aims to identify and move on early trends early, when acquisition prices are lower, it says.

In 2014 the company had a 76 percent increase in production and a 29 percent increase in revenue, from $8.9 million to $11.5 million. The company had a net loss of $8.2 million compared with $67.6 million, and its total debt declined by about 7 percent.

The revenue increase was due to production increases in east and south Texas, and was offset by decreases from divestments of non-core assets it made in 2013. In 2013, the company sold assets in Texas for $9.3 million, which it used to part of to pay notes.

ZaZa's net loss for 2014 also decreased, to $22.1 million compared with $106.4 million in 2013.

Dealmakers are seeing distress in the industry as an opportunity to buy assets for less money. For more, see Investors Flow Into Oil & Gas and 5 Ways Plummeting Energy Prices are Changing Mergers & Acquisitions.

For the previous edition of Turnaround Tuesday, see Struggling Drug Maker Zogenix Sells Unit, Refocuses.  

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