Dejour Energy Inc. (NYSE AMEX: DEJ / TSX: DEJ) announces today it has commenced development at its gas, gas liquids and condensate Gibson Gulch Project in Western Colorado with pre-drilling construction and procurement activities. Phase 1 development of its 72% owned 2200 acre lease position consists of the drilling and completion of 24 wells over two years. Initial drilling is scheduled for the first quarter of 2012 following construction of pads and roads this November. Dejour's land position could eventually support 220 wells (10 acre well spacing units) in the current Williams Fork production zone.
At current natural gas prices, Phase One project economics show that natural gas liquids (NGL's) and condensate support over 45% of the estimated $145 mm gross revenue stream net to Dejour. It also supports an estimated internal rate of return of at least 40% per annum, pre-tax, with tax pools in place to mitigate taxes through most, if not all, of this stage of development. The magnitude of the NGL revenue assumed in Dejour's economics has recently been substantiated by operator's data from nearby leases and through contract discussions with gas processors in the Piceance Basin.
As Dejour moves through this first phase of development of the Williams Fork formation, a plan for testing and developing the underlying Mancos Shale gas is now being evaluated. It is believed that William's Co. (NYSE: WMB) has recently completed a Mancos gas well test to the southeast of Dejour lands. The completion of the William’s well to the southeast, coupled with an ongoing Mancos development to the northwest by privately held Antero Resources, further suggests that this deeper gas-bearing zone holds significant additional resource potential for Dejour.
"While we continue to work with a limited number of selected companies to finalize an attractive development funding package, internal funds are being utilized to proceed with the build out of necessary infrastructure including roads, drill pads, water and power facilities," states Harrison Blacker, COO. "After two years of detailed preparation, it is very rewarding for Dejour and its partners to begin developing the Gibson Gulch resource, creating significant value for all our stakeholders," concludes Blacker.
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