I just spoke with Craig (Investor Relations) and received clarification on a number of items.
Between December and January approximately 5 million of the warrants priced at $0.35 were exercised bringing $1.75M into the Dejour coffers. These warrants were set to expire in February 2012. Management feels as I do that they would love to see ALL of the remaining outstanding warrants and options exercised as it would result in an additional $11-12M coming into the company.
There is no rush to secure the financing for Kokapelli for a couple of reasons including:
- the construction of roads and the first drill pad have been completed using internal funds (proceeds from Woodrush oil/gas sales, warrants exercised etc.)
- the multiple offers have been contingent upon taking the entire loan at once and at this point, there is no need for all of the money in a lump sum as they would have to pay out interest on money that they are not immediately putting to use
- they were awaiting this final approval (received today) in respect to the first 54 wells or so - until this approval was received, there was no need for additional funds outside of what they have done to this point (road construction, pad construction)
- they are only responsible for 72% of the total cost of the project and up to this point again have had no need for additional funds to keep things moving forward
- they must wait for the Williams pipeline to be completed before any production could begin anyway - meaning, even if they were to drill all 8 wells today, they would simply have to cap them until the Williams pipeline is completed - this pipeline is expected to be completed in Q3. So, they have months to raise the cash to complete the drilling, which can be raised through further exercise of warrants if the price stays high enough.
Other discussions included the fact that, like the release in respect to the S Rangely test well, they are wanting to ensure they provide a stabilized production rate before releasing the information regarding the third producing Woodrush well. He would not tell me if they were targeting a 30 day, 60 day, or some other established rate, just that they wanted to be able to provide the public with an established, stabilized rate rather than an IP rate that is irrelevant due to rapid decline over the first week, month, etc.
In respect to warrants/options if the price rises to over a $1/share for a minimum 20 trading days, there are approx 8M warrants that would meet the forced conversion criteria, meaning the holders would have no choice but to exercise the warrants. He would not provide specifics as to the expiry or strike prices of these warrants.
Further in respect to warrants, since the Feb 2012 warrants have all been exercised (or almost all), the next upcoming warrants are not set to expire until 2014, although, as mentioned earlier, management is hoping that ALL warrants will be exercised immediately but at this point nothing can be forced upon the holders to exercise them.
The cover page of the January presentation actually shows Dejour's lease at Kokapelli and that is William's rig in the background to show how close their first wells will be drilled in relation to Williams.
Plans for further S Rangely development are expected in Q2 and keep an eye out for additional plans possibly regarding North Rangely or Roan Creek in this first quarter.
I'm new to DEJ have been doing my research but its always nice to hear from a knowledgable Long time shareholders. If you don't mind what is your opinion on share prices moving forward as more and more wells are producing. Also I get a feeling that they maybe positioning themselve for a buyout in the future what is your view. Thx in advance and for your great posts.
My own personal feelings are that we see $3 or better by the end of 2012. As for what comes after that, I will be honest, since $3 is my personal exit price I have not put a tremendous amount of thought into that.
The next couple of months will be about Kokapelli financing (or lack of need for it due to increased oil/gas sales, production increases and of course increased cash due to exercise of warrants) - Dejour is currently sitting on $2M cash and still has another $1M available on their line of credit. Not to mention that Dejour is only responsible for 72% of the costs at Kokapellim, followed by year end earings (around March 31 2012) which I expect to show not only a quarterly profit with increasing positive cash flow, but potentially a full year profit.
We should expect drilling to begin at Kokapelli shortly after spring with production to begin in Q3 (provided the Williams pipeline is completed on schedule - Dejour can not produce anything at Kokapelli until this pipeline is completed.) If Dejour is able to bring production to a total 2000 boe/d NET by Q4, hitting $3 should be no problem at all, considering that with each earnings release cash flow, profit and production will grow by leaps and bounds as well as the news announcements along the way.
Add to this the fact that a drilling program could be started as early as this summer in respect to the S Rangely acreage and the planned announcement of plans for 'something' for either N Rangely and or Roan Creek sometime this first quarter and you have the makings to support a sustained rise in share price throughout the entire year.
I don't personally believe that oil is going to drop far below $100/bbl for much of the year - nat gas on the other hand is a different story. Remember that even at $3, Kokapelli is profitable due to the liquids rich content, so an increase in gas prices anything above $3 goes right to the bottom line.
There are many that completely disagree with my price projections, however, I have made my calculations based on a fully diluted share basis, considered the current proven reserves have been calculated on less than 5% of the total land holdings and understand that there is a tremendous amount of potential reserves under even the Woodrush and Kokapelli deeper formations in addition to the uncounted potential of another 100K+ acres.
I don't ask anyone to simply accept my price projections, nor the information I offer. Rather I expect people to verify the information for themselves and suggest starting with the Dejour website and reviewing the archived news items, SEC filings and keep up to date with the presentations. Last, contact Craig for clarification of anything that you are unsure of. callison at dejour.com
In respect to your comments about a buyout, I would not count it out as a future possibility, but think it is something that is a couple/few years away. If Dejour meets my $3 target by the end of this year, I fully expect they will be able to continue to develop the additional lands and could very easily see a price of $5-7 over the next couple of years.
Hope that helps
Thanks for sharing that information. I'm here for the long haul, and I'm sure we will do well eventually. It just takes patience. I plan to keep adding at every opportunity that presents itself, like today. I think this is a better bet than Ram Energy, and look what's happening there.
BTW, PGM, you do good work and you are one of the few longs that has credibility. I just think you are underestimating the future impact of dilution. Very few stocks can hold up when millions of new cheap shares are printed.
Actually, I fully understand what I own and ensure that I do, BEFORE I purchase a single share.
I fully understood exactly how many shares were outstanding and how many options/warrants were also outstanding, including strike prices as well as expiration dates. I also understood the benefits of a rising price which would encourage the execution of the warrants/options and how that would benefit the company as it grows resulting in less dependancy upon outside financing for projects.
This is FUNDAMENTAL information to know BEFORE you make a purchase. Without this information, how could you possibly set a sell price or a target price? How did YOU come up with the $2/share price that you felt was reasonable just weeks ago if you did not take this information into account?
What concerns me is that you were promoting Dejour to be a $2 stock, but did not know that in order to get to that $2 mark all of these options/warrants would be exercised thus resulting in this 'mass dilution' that you now equate to armageddon and others may be making investment decisions based on your apparent lack of knowledge.
So thi proves exactly what I have been saying, lots of new dilution, and DEJ is basically selling stock below current market price to warrant holders some of whom are quickly flipping for cash profit.
It would be better if DEJ just did another secondary now rather than give the profit away to warrant holders who are flipping before the warrants expire.
You say it has been about 5 million shares so far but I am sure alot more is coming. DEJ selling millions of shares of stock for 35 cents is not what people who have paid 45, 50 and 60 cents want to hear. We have not felt the full effects of this dilution and new supply of stock yet, but in time we will and I believe that means DEJ will go right back to its usual trading zone 30-35 cents ESPECIALLY if oil is breaking lower to 85 per barrel. If Europe blows up, DEJ could be right back to a quarter as it was in Oct.
Do you actually understand warrants and options and how they work, how they are exercised, how they are established in the first place and any of the rules/terms associated with them?
These warrants and options have been on the books for at least a full year. These are not NEW, they are not dilution as you are promoting them to be and they are not a negative as you would like to try to portray.
First, these warrants/options were awarded at a time when Dejour had NO other choice but to obtain financing through selling shares in the company (as most small/micro caps do). The exercise prices were established at that time and in no way can they be modified. Your claims of Dejour seemingly giving these things away at prices below the trading price are absurd. That is the exercise price and there is nothing that can be done to change that. Every company on every exchange of every size has outstanding warrants and options at some point or other, some that are exercisable well below the current trading price just as we are seeing here.
Every single warrant/option exercised means the warrant holder has to give the money to Dejour to receive the share. Of course they have the right to immediately sell that share on the open market, just as you had done when you bought your shares at $0.21 and sold them in the $0.50 range. How are the warrant/option holders any different from you? They also have the right to hold those shares if they choose to. You sold your shares for a quick buck, I would imagine many of these holders will as well. There is nothing wrong with that. It is the reason that they purchased them in the first place - to be compensated when they exercised them.
This is NOT a new round of dilution. There is no dilution coming. Every single presentation, quarterly report, annual report, analyst report, etc., has clearly indicated the current outstanding shares and the fully diluted shares. Look back, every single one of them indicates 153M fully diluted. The fact that you based your assumptions on them expiring out of the money is absolutely a false statement as you were just a few weeks ago, claiming that Dejour would rise to $2/share. Were you claiming then it would be 2016 before we reached $2/share - after these warrants expired? Anyone that spends 5 minutes doing proper due diligence knows the current outstanding and the fully diluted share counts. If not, you are not an investor nor trader, you are a gambler.
As I have stated and management also feels, we certainly hope there is a great deal more exercise of warrants/options coming. It would be a huge benefit to Dejour to have the additional $11-12 million in the bank at this very moment and reaching the fully diluted basis of 153M shares. This would COMPLETELY eliminate the need for additional funding and Kokapelli (as well as other projects) would be fully funded already (internally). That would be the very best possible scenario, but unfortunately is not likely to happen since they do not expire for another 2 years. I only wish that every single one of those warrants could be forced into conversion, but that is not how this works.
I know you are working hard to prove yourself to be right and desperately want the price to drop back into the $0.30s. It may, it may not, but please, stick to the actual facts and use your posts to share truthful information about the exercise of warrants/options. If you do not understand the concept of them, try investopedia.com for a quick explanation.
All the best
The last tidbit, is that Dejour is focused on being more of an 'exploration' rather than 'production' company. What this means is that now that they are in the financial position to be able to do so, expect them to start to develop / prove up additional properties to build the reserve base and to showcase what assets they have. Of course they will continue to build upon the production they currently have, but they want to be able to show the market the value in the acreage they have.
There has been a great deal of interest (meetings) with investors from the past Red Chip conferences as well as phone calls etc from attendees of the recent Sidoti. Any future funding required for Dejour will be through debt based financing and not dilution - other than the outstading warrants/options that we already have on the books.
All the best