Steve Ralston, CFA

Dejour To Drill in the U.S.

Dejour (DEJ) today announced a stock and warrant offering, the proceeds of which will be used to fund an exploratory drilling program at the company’s 7,000+ acres on the south side of Rangely field in western Colorado. This announcement is important for several reasons. First, this is exploratory drilling outside of the company’s producing acreage at Woodrush in Canada, potentially providing additional producing acreage for Dejour. Secondly, the offering provides financing for the drilling program; therefore, an additional partner, and the subsequent dilution, is not required to explore and develop this field. And thirdly, insiders are obviously confident in this project, since they are acquiring 20% of the offering. The area has been analyzed by two deep seismic soundings. In addition, a private company has previously drilled nearby and is currently operating a producing oil well.

Drilling is expected to begin in May as the required permits have already been issued. Management believes that the company’s South Rangely field holds approximately 8 million barrels of oil.
 

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