Dejour Announces Peace River Arch Projects


Piceance Basin
(Click to Enlarge)
Dejour Energy Alberta Ltd. (DEAL) has negotiated agreements covering six strategic projects in the Peace River Arch area of northwest Alberta and northeast British Columbia, Canada. The first of these projects has commenced operations and all six are scheduled for drilling and or completion prior to the end of June 2007. Dejour is earning a 33% average net working interest in these projects inclusive of the previously announced Noel project, one of the six projects.

Dejour will invest approximately CDN$4 million in an initial nine well drilling and recompletion program which has the potential for as many as 30 wells to maximize gas production from earned and optioned lands. As of this date, DEAL estimates that its share of a prospective resource estimate ranges from 16 - 32 BCFG. Dejour's share of full development is preliminarily budgeted at a further CDN$12 million. This would equate to a finding and development cost into pipe of CDN$0.50-$1.00/mcf.

Dejour estimates that a successful program should result in daily production of 8 mmcf/d net to Dejour (risked 50%), providing gross revenues approximating CDN$ 18 million annually (cash flow CDN$ 12 million) using $6/mcf gas pricing when fully developed. Dejour and its partners expect to be drilling some of these projects into pending land sales. Consequently, drilling results may be held confidential where sensitive. A complete summary of the initial nine well program will be forthcoming when concluded.

Company personnel are very active reviewing a proliferation of projects of healthy economic potential, coupled with relatively low geologic risk, that are finding their way to market during this temporary period of uncertainty in the Canadian gas E&P business. Piceance-Uinta Basin Project

Dejour Energy USA has increased its gross land position in this project to greater than 285,000 acres (59,400 net) through recent acquisitions of federal leases at auctions. These purchases were designed to enhance the respective existing land holdings by Dejour and its partners, Brownstone and Retamco. Retamco, the major partner and operator has been notified by the Bureau of Land Management that applications for drilling permits are currently being reviewed and should be issued late in Q1-07. This time frame is viewed positively by Dejour and its partners, as land prices are continually rising, new 'flex' rigs are being introduced to the area bringing important drilling economies, and the drilling and acquisition plans of the larger companies in the region are poised to positively impact our lease investment in these basins.

Dejour expects that the initial permits to be approved will cover the Barcus Federal leases (1920 acres) of the Rio Blanco Deep project, targeting the blanket Mesa Verde sands at 11000'. Drilling activity in this area has been very active by companies such as Williams Co. (on Exxon lands) and Bass Operating on adjacent leases. Williams Cos. has recently completed a pipeline to the edge of this lease block to tie-in Bass wells. Exxon stated late in 2006 that it is mobilizing 14 rigs to drill 1000 wells in this same area.

The Oil & Gas Investor (November 2006) states that the overall drilling activity in the Rocky Mountain basins, where the Piceance and Uinta basins are dominant, will exceed 43,000 wells in the next 5 years representing an industry investment of over $25 billion. Key major players include EnCana Oil & Gas (USA) Inc., The Williams Cos., Bill Barrett Corp., ExxonMobil and ConocoPhillips, Occidental and Marathon.

Dejour Enterprises Ltd. is a Canadian energy company focused on exploration and development of uranium and oil & gas while leveraging opportunities that exist as a result of the global market's decreasing conventional supply and increasing demand for energy.

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