After the close yesterday, Dejour ( DEJ ) announced that the company has submitted an application to the British Columbia Oil and Gas Commission (OGC) for a waterflood program to be implemented in the Halfway Oil Pool at the Woodrush Field. The implementation of a waterflood will dramatically increase production due to the current well allowable restriction imposed by the OGC of British Columbia, which has artificially limited production. Average daily gross production from Woodrush is now expected to increase from the current 650 BOE/D to over 1,200 BOE/D in the second half of 2011.
Dejour is expected to report third quarter earnings on November 15, 2010. However, based on the stronger conviction of a waterflood project being completed in early 2011, we are raising our 2011 earnings estimate to $0.07.
We reiterate our Outperform rating based upon the attractive valuation level of the stock and the company’s improving production profile.
Written by Steven Ralston, CFA
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