For the yar ended December 31, Dejour has reported the following highlights:
"Dejour has prepared its 2009 plan based on its 2008 accomplishments. Year end 2008 was a shocking period for the energy sector in which we saw our reserve values drop by C$28MM from June 30, 2008, solely a reflection of commodity prices. The drop to a 7-year low in natural gas prices, combined with the onset of a restrictive credit cycle has caused Dejour to reassess its business model, concentrating its efforts in 2009 on maintaining cash resources, while developing at a moderated pace, assets with the highest potential for short term gains, and protecting our valuable land positions," commented Robert L. Hodgkinson, Chairman & CEO.
"This kind of business environment does, however, have its silver lining. It provides the impetus to reduce overheads, eliminate excessive service sector costs and prepare margins for better profitability as commodity prices turn positive. It also sharpens the focus on development of the highest quality assets in our organization."
Building this production in the high cost and unanticipated sharply decreasing commodity price environment of last year impacted cash resources. Revenues did not meet forecasted targets due to the rapid decline of oil and gas prices during the second half of the year. Dejour has monetized certain non-core assets to replenish cash and will prudently continue to do so. Overall, the Company has developed a plan to regain the momentum it had one year ago.
In the interest of minimizing shareholder dilution, the Company is weighing the advantages of additional credit facilities versus the elimination of its bank debt and trade payables by selling down a portion of its producing assets in Canada by the end of Q2/09 (currently less than C$6.4MM including signed agreements for sale). This would allow the Company to focus on the leverage offered by developing joint ventures to drill its properties offering the greatest potential return, both in Canada and the US, while maintaining a meaningful position in its core Woodrush/ Drake production projects.
Dejour's 2009 Exploration and Production Plan
Peace River Arch
Dejour has implemented procedures to cut operating costs and plans to fully develop the Woodrush oil pool. Company 3D seismic interpretation confirmed by 2 discovery wells indicates that 3 oil wells and one gas well should be drilled and placed into the existing $7 million production facility that was completed in 2008, 100% owned by Dejour. It is the Company plan to drill as many of these wells as
A successful program at Woodrush provides Dejour with sharply higher net backs on its oil and gas revenues, increased proven reserves, the establishment of reservoir pressure data to allow Dejour better knowledge of the pool size and the applicability of secondary recovery potential. At this time, being a new pool discovery with limited production history; independent engineers have assumed only 240,000 barrels of recoverable oil in each of 3 wells, to date. Wells in analogous pools in this immediate area have produced in excess of one million barrels.
A thorough test of the Company's NE-BC "Montney" project is also a priority this summer. The company is in discussion with joint venture partners to fast track the testing program.
Dejour is in talks with industry and non industry partners to pursue joint ventures to expedite exploration to prepare proven reserve drill sites for the return of the gas market. This would include lease holdings at Roan Creek, and Gibson Gulch held and operated by Dejour. These properties are over the basin centered Williams Fork sands of the Piceance Basin. Roan Creek can be ready to drill in Q4/09 based on joint venture partnerships and the price of natural gas. Chevron has recently drilled over 100 wells in the West Grand Valley Field adjacent to one 880 acre parcel of Company.
This is one of Dejour's most accessible drill ready projects, with seven drill pad applications in place. As noted previously, Dejour has a joint venture agreement with Laramie Energy ll LLC for the Rangely project. The joint venture agreement entails Laramie will have the right to earn 55% of the 22,000 gross acres (15,700 net acres) prospect by completing at least four commercially productive oil wells. Drilling is expected in Q3/09.
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