Waterflood successful - Dejour to host first earnings call - Analyst Blog
May 27 2011 - 9:25AM
Zacks
Steven Ralston, CFA
Waterflood successful – Dejour to host first earnings
call
Dejour (DEJ) announced that the
waterflood at the Woodrush Field has been successfully implemented.
After two months of water injection, the producing gas/oil ratio
(GOR) indicates that the secondary recovery process has been
effective, with the GOR having declined from 2,700 CF/BBL to less
than 900 CF/BB. Since production is no longer constrained by the
well allowables imposed by the British Columbia Oil and Gas
Commission (OGC), well production can be gradually increased from
180 BOPD (barrels of oil per day) to 400 BOPD in July, bringing
gross field production (oil and gas) to more than 800 BOEPD
(barrels of oil equivalent per day). Management expects to further
increase oil production throughout 2011 and into 2012, when peak
oil production should reach 1,000 BOPD and gas production continue
to be maintained at 400 BOEPD, bringing gross production to 1,400
BOEPD, 100 BOEPD above management’s prior guidance of 1,300
BOEPD.
Also, Dejour has contracted AJM Petroleum Consultants (independent
reservoir engineering consultants) to quantify (via a 3D reservoir
simulator) the expected performance of the Woodrush Field. AJM
Petroleum Consultants is also expected to produce a NI 51-101
compliant reserve report in the third quarter that could result in
a positive valuation step-shift of the company’s stock, along with
reducing the company’s cost of capital.
Lastly, but very importantly, Dejour's management will host its
first earnings call on or before June 14, 2011, detailing the
results of the first quarter of 2011. This is a major milestone for
the company and ultimately will increase the company’s exposure to
a larger pool of sophisticated investors.
We reiterate our Outperform rating based upon the attractive
valuation level of the stock and the company’s improving production
profile from the company’s Woodrush producing property in northeast
British Columbia. Our current price target is $1.00 based on NAV
analysis.
For a free copy of the full research report, please email
scr@zacks.com with DEJ as the subject.
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