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Dejour Energy Inc. Message Board

  • harold33272 harold33272 Aug 14, 2012 9:22 AM Flag

    Today's earnings report is not surprising ... at all

    A few weeks ago I mentioned here on the board that the holdup with Kokopelli would be NGL prices which have tanked over the last two months, now in a similar glut that dry nat gas found itself in back in April. While NG prices are recovering and may double over the next 6-9 months, I think the recovery for NGL prices is going to be further out.

    I said a few weeks ago that it would not surprise me to see the company drill the minimum wells required at Kokopelli. Management's decision to do that is in my opinion the only decision it could have made. Actually, there's no decision to make. With NGL liquids prices in the ditch, it behooves the company and its shareholders to proceed slower at Kokopelli, otherwise you're going to draw down on a ton of credit and millions only to do so at a loss.

    Woodrush's production continues to rise, as it has been doing since the spring and as management has forecasted it would.

    A few weeks ago I said my primary question with Dejour now wasn't with Kokopelli. My question was with South and North Rangely. These are potential significant oil plays and as of mid-August shareholders are no closer to knowing where the company is in securing a JV than they were six months ago. The company cannot update shareholders on every move it's making in negotiations. In other words, if BBG or WMB dial up Mr. Hodgkinson, he's not going to send out a press release detailing the conversation, nor should he. But I do think in light of the continuous, lagging stock price performance and because the decision has now been made to again delay a sizable chunk of Kokopelli, it behooves management to be as inclusionary as possible and communicate in general terms where things stand with regard to South Rangely and North Rangely.

    Does the company feel it's realistic that a JV will be secured for one or both of the plays within the next six months? In general, how have talks gone with prospective JV candidates in recent months? Could there be an explanation in general terms of the company's approach to securing JV partners so that shareholders can be educated on this process while waiting on further developments? Is there additional financing likely so that drilling either South or North Rangely can be expedited, even without the arrangement or partnership of a JV?

    What is the company's position on NGL prices over the next year or so? What is management hearing from its industry contacts on this? In the last conference call, Mr. Blacker stated that he felt NG prices would indeed rise over the next year, and of course that has begun to happen. We heard Chesapeake CEO Aubrey McClendon give his shareholders his take on NG prices and his outlook for the commodity in the coming years. I've seen numerous articles document that it's possible the NGL glut could continue as late as 2014+. Is that management's position?

    If you're willing to hold Dejour for the long-term, as I am, this is still an outstanding bargain that continues to trade well below book value. But again, in my opinion, there are some fair, legitimate questions that I believe in the process of being inclusionary, should be answered, as it would benefit all involved. I'm a big believer in communication, even if there's no new news to report. Insight and perspective from management of a company can usually provide clarity. That would be a positive course of action for Dejour in my opinion.

    Just my two cents.

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