Dejour Energy Inc. Highlights 2010 Year End Results
Achieves Significant Year over Year Operating Improvement
- Proved and Probable Reserves: 32.6 Million BOE
- Present Value (discounted 10%):$181 Million
- Net Book Value of Energy Properties: $40 Million
- Revenues: $8,154,000 vs. $6,786,000 +20.2%
- Operating Netback (non GAAP):$4,237,000 vs. $3,302,000
+28.3% - Positive EBITDA (non GAAP):$192,000 vs. ($6,685,000)
- Adjusted EBITDA (non GAAP):$822,000 vs. ($63,000)
- Operating Cash Flow (non GAAP):($137,000) vs. ($1,119,000)
- Net Loss: ($0.05)/share vs. ($0.16)/share
Dejour Energy, Inc. (NYSE-AMEX: DEJ / TSX: DEJ) ('Dejour?), an
independent oil and natural gas company operating multiple exploration
and production projects in Northeastern British Columbia and Western
Colorado, today announced the release of its financial results for the
fourth quarter and full year period ended December 31, 2010.
Q4 2010 Key achievements
In the 4th quarter of 2010, Dejour continued its long-term focus on
increasing production and operational efficiency at the Drake/Woodrush
properties, while maintaining all prospective acreage holdings and
positioning for renewed drilling activities as both the business
environment and commodity prices improved. As previously announced,
Dejour initiated a waterflood program intended to improve future oil
recovery in the Halfway Oil Pool at the Woodrush Field, Northeast
British Columbia that was subsequently completed in Q1 2011 as
indicated. The Company forecasted, on a temporary basis, to experience
lower sequential operating revenue and cash flow in Q4 2010 as compared
to Q3 2010 during the waterflood implementation period. Dejour exceeded
revenue guidance of $8,000,000 for 2010 through a combination of Q4
operating revenue and the proceeds from the previously announced
disposition of a non-core property during the period.
2011 Outlook
'We look forward to an eventful 2011 given the furtherance of several of
our key U.S. and Canadian resource projects. We have branded ourselves
as Dejour Energy to further identify our organization as a progressive
exploration and production company. Our recently completed waterflood at
Woodrush represents a significant milestone in the evolution of Dejour,
and this event, along with the potential of additional resource
development via our recently announced Canadian JV partnership, provides
upside for resource expansion. With the trend of oil prices rising into
2011, plus more favorable natural gas pricing and the development of
high profile production at Gibson Gulch in Western Colorado by major
companies such as Barrett and Williams, Dejour′s management is
encouraged by the potential realization of significant values for our
U.S. property portfolio,? states Robert Hodgkinson, Co-Chairman and CEO.
Summary of Selected Financial Highlights | |||||||||||||||||||
| Three months ended December 31, | For the year ended December 31, | ||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||
Revenue | Note(1) | 1,536,000 | 1,346,000 | 8,154,000 | 6,786,000 | ||||||||||||||
Net loss | Note(2) | (1,451,000 | ) | (7,049,000 | ) | (5,165,000 | ) | (12,807,000 | ) | ||||||||||
Net loss per share | Note(3) | (0.01 | ) | (0.08 | ) | (0.05 | ) | (0.16 | ) | ||||||||||
Operating cash flow (1) | (406,000 | ) | (497,000 | ) | (137,000 | ) | (1,119,000 | ) | |||||||||||
Operating netback (1) | Note(4) | 799,000 | 893,000 | 4,237,000 | 3,302,000 | ||||||||||||||
EBITDA (1) | Note(5) | (360,000 | ) | (5,987,000 | ) | 192,000 | (6,685,000 | ) | |||||||||||
Adjusted EBITDA (1) | Note(6) | (204,000 | ) | (395,000 | ) | 822,000 | (63,000 | ) | |||||||||||
(1) | Operating cash flow, Operating netback, EBITDA and Adjusted EBITDA are non-GAAP measures and are defined in details in the 'Non-GAAP Measures? at the end of this press release. |
Notes: | ||
(1) | Revenue for Q4 2010 and fiscal 2010 increased when compared to Q4 2009 and fiscal 2009. The increase in revenue was mainly attributable to the increased oil and gas production from the two new wells in the Woodrush area that commenced production in May 2010. However, this was partly offset by the result of disposition of 100% interest in the Carson Creek and 25% interest in the Drake/Woodrush properties in 2009. | |
(2) | Decrease in net loss for fiscal 2010 over fiscal 2009 was due to higher revenues and lower depletion expenses and general and administrative expenses. In addition, the decrease in net loss was attributable to no impairment of oil and gas properties recorded for the current year. | |
Net loss for Q4 2010 decreased to $1,451,000 from $7,049,000 for Q4 2009. The decrease in net loss was attributable to no impairment of oil and gas properties recorded for the current quarter. | ||
(3) | Net loss per share for Q4 2010 and fiscal 2010 decreased when compared to Q4 2009 and fiscal 2009. The decrease was mainly the result of lower net loss for the current periods. | |
(4) | Increase in operating netbacks for fiscal 2010 over fiscal 2009 was mainly due to higher revenues and lower operating and transportation expenses. This was partly offset by increased royalties for the current year. | |
Decrease in operating netbacks for Q4 2010 over Q4 2009 was due to higher royalties and operating and transportation expenses. This was partly offset by higher revenues. | ||
(5) | For fiscal 2010, EBITDA was $6,877,000 higher than fiscal 2009. It was primarily due to lower net loss for the current year. In 2009, the Company recorded an impairment loss of $5,360,000 on its oil & gas properties. | |
(6) | For fiscal 2010, Adjusted EBITDA was $885,000 higher than fiscal 2009. It was primarily due to higher EBITDA for the current year due to higher revenue from oil & gas production. |
Summary of Selected Operational Highlights | |||||||||||||||
| Dejour Energy (Alberta) Production and Netback Summary | |||||||||||||||
| Three Months Ended December 31, | For the Year Ended December 31, | ||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||
| Production Volumes: | |||||||||||||||
Oil and natural gas liquids (bbls) | 13,698 | 14,106 | 86,119 | 74,282 | |||||||||||
Gas (mcf) | 148,489 | 89,082 | 548,890 | 566,158 | |||||||||||
Total (BOE) | Note (1) | 38,455 | 28,842 | 177,599 | 166,353 | ||||||||||
| Average Price Received | |||||||||||||||
| (Wellhead): | |||||||||||||||
Oil and natural gas liquids ($/bbls) | 71.17 | 64.07 | 67.46 | 54.63 | |||||||||||
Gas ($/mcf) | 3.73 | 4.19 | 4.13 | 4.35 | |||||||||||
Total ($/BOE) | 39.76 | 44.28 | 45.53 | 38.92 | |||||||||||
| Royalties ($/BOE) | Note (2) | 4.64 | 2.18 | 7.39 | 3.42 | ||||||||||
| Operating and Transportation | |||||||||||||||
| Expenses ($/BOE) | Note (3) | 14.54 | 11.36 | 14.67 | 17.55 | ||||||||||
| Netbacks ($/BOE) | Note (4) | 20.58 | 30.75 | 23.48 | 17.95 | ||||||||||
Notes: | ||
(1) | The increase in production was mainly due to the two new wells commenced production in May 2010. | |
(2) | Royalties of $4.64 per BOE for Q4 2010 and $4.39 per BOE for fiscal 2010 were higher than the prior year′s quarter of $2.18 per BOE and $3.42 per BOE in fiscal 2009 respectively. The increase was due to higher oil production, which is subject to higher royalty rate compared to the royalty rate for natural gas. During fiscal 2009, the British Columbia provincial government approved a royalty holiday for the first 72,000 barrels of oil production on one of the Company′s oil wells. The Company received a royalty credit of $280,000 from the BC provincial government, resulting in a substantially lower royalty for the quarter. | |
(3) | Operating and transportation expenses for Q4 2010 increased to $14.54 per BOE from $11.36 per BOE for Q4 2009. The increase was mainly due to higher maintenance and service costs associated with the new well commenced production in the current quarter. | |
Operating and transportation expenses for fiscal 2010 decreased to $14.67 per BOE from $17.55 per BOE for fiscal 2009 despite higher revenues. The decrease was also attributable to the addition of production from three new wells in Woodrush and the positive impact to the Company′s operations as a result of the installation of the rental compressor, which lowered the ongoing compression costs and operating costs. | ||
(4) | Operating netbacks for the current quarter decreased to $20.58 per BOE from $30.75 per BOE for Q4 2009. The decrease was mainly due to lower natural gas price and restricted oil production pending waterflood initiation. | |
Operating netbacks for fiscal 2010 increased to $23.48 per BOE from $17.95 per BOE for fiscal 2009. The increase was mainly due to higher oil price, lower operating and transportation expenses. This was partly offset by increased royalties for the current year. |
Liquidity and Capital Resources
Working Capital
The Company had cash and cash equivalents of $4,758,000 as at December
31, 2010. In addition to the cash balance, the Company also had accounts
receivable of $689,000, most of which related to December 2010 oil and
gas sales and had been received subsequent to December 31, 2010.
Our investing activities during the year ended December 31, 2010 were
financed primarily by the proceeds raised from the issuance of
flow-through shares and draw down of bridge loan during the year.
Subsequent to December 31, 2010, the Company also raised net proceeds of
approximately $2.9 million in equity under challenging market
conditions, allowing Dejour to support the accelerated development of
the Drake/Woodrush properties and retire certain debt obligations.
Bank Loan and Bridge Loan Financing
During the year ended December 31, 2010, the bank line of credit of
$850,000 was paid off in full in cash.
In March 2010, the Company negotiated a credit facility for a bridge
loan of up to $5,000,000. This facility is secured by a first floating
charge over all assets of DEAL, bears interest at 12% per annum and was
due September 22, 2010 but was extended to March 31, 2011. In March
2011, the lender approved to extend the due date of the loan to April
30, 2011 and the Company is in discussion with the lender for further
extension.
During the year ended December 31, 2010, the Company made principal
payment of $100,000 and reduced the outstanding balance to $4,800,000.
Subsequent to December 31, 2010, the Company made principal repayment of
$300,000, bring the outstanding balance to $4.5 million as at March 31,
2011. This facility is used to support the development of its oil and
gas properties in the Drake/Woodrush area.
Related Party Loans
The Company repaid a total of $2,208,000 of related party loans during
fiscal 2010. Subsequent to December 31, 2010, the Company repaid another
$250,000 and no related party loans are outstanding as at March 31, 2011.
Consolidated Condensed Balance Sheets | ||||||||||
As at December 31, | As at December 31, | |||||||||
| Assets: | ||||||||||
Cash and cash equivalents | $ | 4,758,000 | $ | 2,733,000 | ||||||
Other current assets | 781,000 | 851,000 | ||||||||
Equipment | 103,000 | 115,000 | ||||||||
Other non-current assets | 40,713,000 | 42,187,000 | ||||||||
| Total assets | $ | 46,355,000 | $ | 45,886,000 | ||||||
| Liabilities and shareholders′ equity: | ||||||||||
Bank line of credit and bridge loan | $ | 4,800,000 | $ | 850,000 | ||||||
Current liabilities | 2,473,000 | 2,753,000 | ||||||||
Loans from related parties | 250,000 | 2,345,000 | ||||||||
Other long-term liabilities | 573,000 | 249,000 | ||||||||
Shareholders′ equity | 38,259,000 | 39,689,000 | ||||||||
| Total liabilities and shareholders′ equity | $ | 46,355,000 | $ | 45,886,000 | ||||||
Consolidated Statements of Operations and Deficit | |||||||||||||||||||||
For the three months ended | For the Year Ended December 31, | ||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||
| Revenues: | |||||||||||||||||||||
Oil and natural gas revenue | $ | 1,529,000 | $ | 1,340,000 | $ | 8,086,000 | $ | 6,471,000 | |||||||||||||
Realized financial instrument gain | 7,000 | 6,000 | 68,000 | 315,000 | |||||||||||||||||
1,536,000 | 1,346,000 | 8,154,000 | 6,786,000 | ||||||||||||||||||
| Expenses: | |||||||||||||||||||||
Royalties | 178,000 | 63,000 | 1,312,000 | 569,000 | |||||||||||||||||
Operating and transportation | 559,000 | 390,000 | 2,605,000 | 2,915,000 | |||||||||||||||||
General and administrative | 997,000 | 1,203,000 | 3,424,000 | 4,038,000 | |||||||||||||||||
Interest expense and finance fee | 239,000 | 157,000 | 1,075,000 | 819,000 | |||||||||||||||||
Stock-based compensation | 156,000 | 198,000 | 620,000 | 697,000 | |||||||||||||||||
Foreign exchange loss (gain) | 16,000 | 131,000 | 28,000 | (257,000 | ) | ||||||||||||||||
Impairment of oil and gas properties | - | 5,360,000 | - | 5,360,000 | |||||||||||||||||
Amortization, depletion and accretion | 1,357,000 | 904,000 | 5,250,000 | 6,437,000 | |||||||||||||||||
3,502,000 | 8,406,000 | 14,314,000 | 20,578,000 | ||||||||||||||||||
Loss before the following and |
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Interest and other income | 11,000 | 45,000 | 37,000 | 417,000 | |||||||||||||||||
Loss on disposition of investment | - | - | - | (274,000 | ) | ||||||||||||||||
Equity loss from Titan | - | - | - | (143,000 | ) | ||||||||||||||||
Impairment of uranium properties | - | (34,000 | ) | (10,000 | ) | (148,000 | ) | ||||||||||||||
| Loss before income taxes | (1,955,000 | ) | (7,049,000 | ) | (6,133,000 | ) | (13,940,000 | ) | |||||||||||||
| Future income taxes recovery | 504,000 | - | 968,000 | 1,133,000 | |||||||||||||||||
| Net loss for the period | (1,451,000 | ) | (7,049,000 | ) | (5,165,000 | ) | (12,807,000 | ) | |||||||||||||
| Deficit, Beginning of period | (43,100,000 | ) | (32,337,000 | ) | (39,386,000 | ) | (26,579,000 | ) | |||||||||||||
| Deficit, End of period | $ | (44,551,000 | ) | $ | (39,386,000 | ) | $ | (44,551,000 | ) | $ | (39,386,000 | ) | |||||||||
Net loss per share ? basic and |
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Weighted average number of common shares outstanding ? basic |
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Consolidated Condensed Statements of Cash Flows | |||||||||||||||||||||
For the three months ended | For the Year Ended December 31, | ||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||
| Cash, beginning of period | $ | 2,410,000 | $ | 403,000 | $ | 2,733,000 | $ | 744,000 | |||||||||||||
Cash used in operating activities | 1,106,000 | (260,000 | ) | 396,000 | (1,167,000 | ) | |||||||||||||||
Cash from (used in) investing activities: | |||||||||||||||||||||
Purchase of equipment | (11,000 | ) | (4,000 | ) | (27,000 | ) | (39,000 | ) | |||||||||||||
Deposits | (5,000 | ) | 20,000 | (13,000 | ) | (158,000 | ) | ||||||||||||||
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Proceeds on disposal of investment | - | - | - | 2,305,000 | |||||||||||||||||
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Resource properties expenditures | (1,595,000 | ) | (1,458,000 | ) | (5,016,000 | ) | (2,587,000 | ) | |||||||||||||
Total cash from (used in) investing activities | (7,000 | ) | (1,442,000 | ) | (3,855,000 | ) | 3,877,000 | ||||||||||||||
Cash from (used in) financing activities | 1,249,000 | 4,032,000 | 5,484,000 | (721,000 | ) | ||||||||||||||||
| Cash, end of period | $ | 4,758,000 | $ | 2,733,000 | $ | 4,758,000 | $ | 2,733,000 | |||||||||||||
Further Information
The Fiscal Year-Ended December 31, 2010 audited financial statements,
MD&A, and Annual Information Form are available on our Company′s website
and on www.sedar.com.
The reserve information as at December 31, 2010 is available in our
Annual Information Form. All of the Company's reserves herein reported
were evaluated by independent evaluators in accordance with NI 51-101
and the COGE Handbook. In 2010, GLJ Petroleum Consultants ('GLJ?),
independent petroleum engineering consultants based in Calgary, Alberta
were retained by the Company to evaluate the Canadian properties of the
Company. Their report, titled 'Reserves Assessment and Evaluation of
Canadian Oil and Gas Properties?, is dated March 22, 2011 and has an
effective date of December 31, 2010.
Gustavson Associates ('Gustavson?), an independent petroleum engineering
consultants based in Denver, Colorado were retained by the Company to
evaluate the US properties of the Company. Their report, titled 'Reserve
and Resources Evaluation Report, Dejour Energy (USA) Corp., Leasehold
Uintah, Grand, and Emery Counties, Utah and Moffat, Rio Blanco,
Garfield, Mesa, Delta, and Gunnison Counties, Colorado, USA? is dated
March 23, 2011 and has an effective date of January 1, 2011.
About Dejour Energy Inc.
Dejour is an independent oil and natural gas company operating multiple
exploration and production projects in North America′s Piceance Basin
(107,000 net acres) and Peace River Arch regions (15,000 net acres).
Dejour′s seasoned management team has consistently been among early
identifiers of premium energy assets, repeatedly timing investments and
transactions to realize their value to shareholders' best advantage.
Dejour maintains offices in Denver, USA, Calgary and Vancouver, Canada.
The company is publicly traded on the New York Stock Exchange Amex (NYSE
Amex: DEJ) and Toronto Stock Exchange (TSX: DEJ).
Non-GAAP Measures: This news release contains references to
non-GAAP measures as follows:
Operating Cash Flow is a non-GAAP measure defined as net cash provided
by operating activities before changes in assets and liabilities.
Operating Netback is a non-GAAP measure defined as revenues less
royalties and operating and transportation expenses.
EBITDA is a non-GAAP measure defined as net income (loss) before income
tax expense, interest expense and finance fee, and amortization,
depletion and accretion.
Adjusted EBITDA excludes certain items that management believes affect
the comparability of operating results. Items excluded generally are
non-cash items, one-time items or items whose timing or amount cannot be
reasonably estimated.
Certain measures in this document do not have any standardized meaning
as prescribed by Canadian GAAP such as Operating Cash Flow, Operating
Netback, EBITDA and Adjusted EBITDA and therefore are considered
non-GAAP measures. These measures may not be comparable to similar
measures presented by other issuers. These measures have been described
and presented in this document in order to provide shareholders and
potential investors with additional information regarding our liquidity
and our ability to generate funds to finance our operations.
BOE Presentation: Barrel of oil equivalent amounts have been
calculated using a conversion rate of six thousand cubic feet of gas to
one barrel of oil. The term 'BOE? may be misleading if used in
isolation. A BOE conversion ratio of one barrel of oil to six mcf of gas
is based on an energy equivalency conversion method primarily applicable
at the burner tip and does not represent a value equivalency at the well
head. Total BOEs are calculated by multiplying the daily production by
the number of days in the period.
Statements Regarding Forward-Looking Information: This news
release contains statements about oil and gas production and operating
activities that may constitute 'forward-looking statements' or
'forward-looking information? within the meaning of applicable
securities legislation as they involve the implied assessment that the
resources described can be profitably produced in the future, based on
certain estimates and assumptions. Forward-looking statements are based
on current expectations, estimates and projections that involve a number
of risks, uncertainties and other factors that could cause actual
results to differ materially from those anticipated by Dejour and
described in the forward-looking statements. These risks, uncertainties
and other factors include, but are not limited to, adverse general
economic conditions, operating hazards, drilling risks, inherent
uncertainties in interpreting engineering and geologic data,
competition, reduced availability of drilling and other well services,
fluctuations in oil and gas prices and prices for drilling and other
well services, government regulation and foreign political risks,
fluctuations in the exchange rate between Canadian and US dollars and
other currencies, as well as other risks commonly associated with the
exploration and development of oil and gas properties. Additional
information on these and other factors, which could affect Dejour′s
operations or financial results, are included in Dejour′s reports on
file with Canadian and United States securities regulatory authorities.
We assume no obligation to update forward-looking statements should
circumstances or management's estimates or opinions change unless
otherwise required under securities law.
The TSX does not accept responsibility for the adequacy or accuracy
of this news release.
Dejour Energy, Inc.
Vancouver:
Robert L. Hodgkinson,
604-638-5050
Co-Chairman & CEO
Facsimile: 604-638-5051
investor@dejour.com
or
New
York:
Craig Allison, 914-882-0960
Investor Relations
callison@dejour.com
