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Dejour Enterprises Limited (DEJ)

Wall Street Analyst Forum

February 14, 2007 11:10 am ET

Executives

Gerry Scott - President of Wall Street Analyst Forum

Douglas Cannaday - President & COO

Robert Hodgkinson - Chairman & CEO

TRANSCRIPT SPONSOR

Gerry Scott

I am going to attempt to adhere the public schedule. I would like to introduce the next company of this morning’s oil and gas program. As I already mentioned a couple of times today, some things we are doing differently in this conference we have not done before. One is that the managements for the most part will be standing by for a dedicated management investor luncheon program taking place from 12:25 until 1:30. Oil and gas room will be the room next door, which really serves as a breakout session for companies and attending analysts.

The second thing that’s sort of new and different -- well, there is three things. The second is that we are doing a lot of scheduled one-on-one meetings with the clients since it was not done on the scale that we are doing now with some new software interface that the buy side users are going to attempt, so there is a lot that going on.

And then the third thing is that all the presentations are now web searchable. This is the first time for us and it’s the first time any analyst conference has made the presentation and Q&A sessions web searchable on Google Finance, Yahoo Finance, AOL Finance and SeekingAlpha.com, a site that a lot of the buy side uses, companies are probably a little less familiar with it, is actually doing the transcription. And they are same day web searchable, may be a little short, maybe 8 hours after the conference.

So what that means is that some investor in Portland, Oregon or London, England can actually look you up on Google Finance and find the transcript including the Q&A session in detail just a few hours after the conference.

In any case, I would like to introduce the next company in this morning’s program, Dejour Enterprises is a small cap Canadian oil and gas and uranium company, and lot of -- bunch of uranium guys here -- a Uranium exploration company with a significant holdings in two of the world’s premier regions. This includes exploring and developing 285,000 gross acres in Colorado’s Piceance Basin which is emerging as the largest oil and gas resource in North American and an investment of over 1.4 million acres in the -- this is a Indian name…

TRANSCRIPT SPONSOR

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Unidentified Audience Member

Athabasca

Gerry Scott

Athabasca and Thelon basins. I am part Abenaki Indian, I can say that, tribe to the world’s most recognized areas for Uranium deposits. With its headquarters in Vancouver, Canada the company’s proven management and technical team is focused on a clearly defined strategy finding high impact energy assets and accreting value for shareholders at every stage of the exploration process.

So without any further introduce, I would like to introduce Douglas Cannaday, President and Chief Operating Officer and Robert Hodgkinson, Chairman and CEO.

Robert Hodgkinson

Thank you, Gerry. Dejour Enterprise’s profile, small company, big land holdings, hot commodities, shareholder value -- building shareholder value by accelerating accretive investments. Our game plan is very simple. We want to be in the number one address. We are a discovery-based company. We are committed to high impact energy. We are well capitalized, well financed and very cognizant of the risks involved. We like to hedge those particular risks by getting it early, making large early stage acquisitions, thinking long term, adding technically efficient exploration, but continually realizing value through thoughtful exploitation, monetization, carried interest retention and ultimately production.

While I am talking I want you to think about this particular chart, we are currently siting with over 17 in cash and over what was originally 37 million but is now grown, okay, in shares of public traded company, oil and gas holdings, land holdings of over $16 million which really gives us a liquid asset value in today’s world of over $2 a share exactly where we are trading in.

And yet we have huge discovery potential that just now in the first quarter of 2007 is going to be unlocked and that is uranium exploration in Athabasca and Thelon basins. And oil and gas in Piceance-Uinta Basins of Western Colorado Eastern Utah and in the Peace Arch area of Northwest Alberta. We are a small company, 60 odd million shares outstanding and $120 million cap. We own over 28 odd percent of the company and we believe institutions have an equal or if not greater holding.

We trade on average about 300,000 shares a day between exchanges in Canada OTC here in the States and overseas, and we are continually upgrading those exchanges as our company builds.

From a map point of view, you can see the Athabasca basin and the Thelon basin, Peace, the Peace Arch area is here.

Who are we? Well, I made a presentation about this time in 1993 to analysts of Wall Street with a small company I had called Optima Petroleum. That company trades today on the New York Stock Exchange with the market capital over a $1 billion. When I made that presentation the market cap was something less than 20 million.

Doug Cannaday, my partner and the President is a gentleman I backed for years in the oil and gas business and made a fortune when I was an underwriter. Dr. Lloyd Clark, the mentor for Dejour’s efforts in the Athabasca basin, Head of Geology at McGill University and 16th Head of Exploration and Research for SMDC, now known as Chemical in the 70s and 80s and a significant part of the team that made the discovery of the McArthur mine, the world’s largest and richest uranium mine ever found.

Mark [Buston], Head of Geology at UBC, geologist, 50-50 partner in Calgary-based CBM Self Solutions, which is one of North America’s top consultancies for tight gas completions. Mark is a real impetus to the things that we are doing and have – and I are going to be doing in the oil and gas business in Dejour not the least of which is our Piceance basin project.

Uranium, why we invested there? Well, we invested here to make profits. This is a bull market. We began investment in lands in this particular cycle when the uranium was 16 going to $18 a pound, its now $75 a pound going north. There is a huge shortage going on. Analysts in the business feel that it should be well over 120 bucks a ton by this time next year. And all of the sudden there are unexpected accidents which are helping all of that happens such as the Cigar Lake flood at Chemicals, New mine in the Athabasca basin. So today, about 16% of the world's power is powered by nuclear power in the states here. So it's 22% or 23%. Globally, we think it will be 25% in the next 20 years and hopefully in North America, it will be sharply higher than that.

What's our history? In 2004, we permitted virtually a million acres in the Athabasca Basin. This was all done with the selection from data operated by Dr. Clark based on his 30 odd years of experience at that time in the Basin. We paid about $1 million. I don't think I know anyone that's actually acquired the kind of property there at a price under that.

Subsequently we executed about a $7 million exploration program advanced air, air borne and ground geophysics, and some drilling which you establish well over 250 kilometers of graphitic conductors, which is the host in environment for all of the existing uranium deposits in that Basin.

In the fall of 2006, we consummated a deal with publicly traded Titan Uranium, and then we sold the $7 million or $8 million worth of asset that we had at our cost. What was then $37 million worth of stock is now significantly higher. We also retained a 10% carried interest in all of our properties, and they also -- and an override, and by virtue this transaction, we expanded the opportunity to benefit from uranium discovery from 1 million of virtually 1.5 million acres.

The significant result of this Dejour/Titan Uranium asset combination was that we ended up with about 1.5 million acres overlying the six major conductive zones of the Southern Athabasca Basin and we also obtained key positional interest in the geologically similar Thelon Basin.

Titan is a very well balanced company with over $10 million in cash and is all set -- as a fact, and as -- is now currently in the early stages of executing its 2007 exploration program. The combined Titan/Dejour Uranium team has well over 100 years experience in the Basin. And the measure of that team is going to be fully taxed in trying to exploit the $20 million in exploration budgets that Titan expects to incur over the course of the next two years. We end up owning 37% of Titan, okay, 17.5 million shares and 3 million share purchase warrants and are very, very strong on the board.

Athabasca Basin. It's the world number one uranium address. Currently accounts for over a 3rd of the global production. Host of the Cameco's McArthur mine that I talked about. Average grade of that particular mine is almost 25%. Most of the mines in Athabasca are significantly north of 10%. The combined Dejour/Titan holdings 20 million in new and historical data, following up now with a $20 million exploration budget.

Thelon Basin. 350,000 k north of the Athabasca Basin. It hosts a huge deposit of 131 million pounds, which is just now being permitted into production. We now have exploited to over 165,000 acres of land there with the $5 million exploration budget, once again at no cost to Dejour. Globally we think it will be 25% in the next 20 years and hopefully in North America it will be sharply higher than that.

As the Athabasca Basin is the number one uranium address on earth the Piceance and Uinta Basin is the number one gas accumulation in North America. It's been there for a long time. It's been unexploited primarily because it's tight and the technologies to figure out how.

All of a sudden, every major industry player in North America is there from Exxon to Occidental to Marathon, Conoco, even Canada's EnCana. In fact, they are huge there. It's over 6,700 acres in the Piceance Basin, over 300 Tcf a gas -- as Tcf a gas in place. Why? Because as there was a 2,000-foot of Mesa Verde blanket sand there that's estimated to hold over 100 Bcf a gas per section. There's also significantly greater, deeper conventional prospectivity there as well.

In this particular Basin, the sands are tight. They are drilled on 10 acres basis. Long life wells, we're able to recover a 60% to 80% of the gas in the place. There's also a huge opportunity in the deep overthrust or subthrust oil plays, one of which has already yield and proven reserves of over 2 billion barrels.

Over the next five years in this Basin, we'll see over 43,000 new wells drilled by the industry. That's a lot of wells, over 25 billion in capital expenditures. And on top of that, there is an emerging oil shale technology, which today is worth about as much as the tar sands in Canada were 30 years ago. But by this time, 10 years from now could be worth of fortune. There's over 1 trillion barrels of oil in place.

We own basically 25% interest and 285,000 acres. We paid about $400 an acre. There is a huge pipeline infrastructure there. We believe there is multiple profit centers through this investment. Not only is there continual rising resource value through managed exploration, but there is rapidly rising land values from increasing competitive density. We're currently waiting on permits to drill our first 22 wells. And we are looking to establish a long-term relationship with this with a sizable private industry operating partner.

There are two independent engineering consultancy reports on the land holdings in which Dejour has an interest. Basically, they stated that their -- that these lands are highly prospective for over 5.5 trillion cubic feet of gas and 2 billion barrels of oil. These lands for the purpose of these reports were divided into 18 projects, and 14 of those were assigned resource potential. That will equate to over 1 trillion cubic feet of gas and 200 million barrels of oil for Dejour.

Recent discoveries in the Paradox Basin, which is the Southern part of the Uinta Basin by Delta Petroleum, would add significantly to the resource potential. We own 25% of over 25,000 acres in this particular area. Our initial drill program should be on the Barcus Creek prospects, Rio Blanco Deep project area in the Piceance basin.

This is the basic natural gas play. This is the basic oil play and this is the Rio Blanco project area. This is a lease map of that particular area, very existing. The yellow leases are ours. The star is the Rio Blanco -- sorry, is the Barcus federal prospect. The orange lands to the Southeast are owned by Exxon. It was also formed in on many others. To the east of Exxon is Bass operating, drilled a number of wells, which are currently going on stream that are maybe sort of 11,500 feet deep, delivered about 2.5 million cubic feet a day. And they’ll do that for years, years and years.

Exxon recently announced they were moving in 600 people, 14 drill rigs and planned to drill 1,000 wells on these leases over the course of the next 10 years. Now, I’ll tell you something about the resource potential on this particular area.

The land in pink is owned by Canada’s EnCana. And recently, they have executed a deal with ConoccoPhillips. And they sold basically 100,000 acres on a checkerboard basis for $400 million. That’s $14,000 an acre. I think that tells something about the upside of our particular land holdings here. We paid $400 an acre.

These explorations, we have now 285,000 acres of land. As you can see by this particular chart, the leases don’t materially begin to expire until 2013. We actually need to drill some 285 wells between now and then to hold them all we think. And we’re just now putting a plan in place to accomplish that.

Our third item, a small item but a very important and talks to the agility of our particular company. By virtue of the Titan transaction, we freed up $6 million in exploration funds that we had allocated for the Athabasca Basin.

Due to the current downturn in the Canadian oil and gas and particularly in the E&P business, we’ve had very advantageous to go back in the Alberta through our close associates, geophysicist, Charles Dove. And we have entered into six contracts to drill nine wells initially to earn into six projects, which could ultimately lead over to 30 wells in the development basis.

We should have on average between 25 and 35 per person of all of this. The target here is to establish a over 30 bcf of net reserves, which would give us a PV-10 of about $16 million with this project and flow over $1 million dollars a month cash flow net to Dejour. That would be average production risks 50%, 8 million a day using $6 gas preparations, significantly higher now.

And we are underway in that particular project, we think that’s a very good use of cap and capital. It’s totally focused, the first nine wells should be drilled by the end of June, You know exactly where we are going. And by that time we hope to have additional opportunities.

So in recap, the value proposition for Dejour is very simple. We have $17 million in cash. Actually, that’s going up. We have $3 million coming in for share purchase warrants here in the next month. We have $40-odd million in securities that we can lever or utilize any way we way would like it to advantage capital if we required.

We have over $64 million of land holdings. That’s our estimate based on what we know about values in the particular area. So we have $2 a share in really, really firm values. Over the next two months, we should get a very good indication of just what the potential value of the piece River Arch, Alberta joint venture is. On a PV-10 risk basis, I think it could add at least $1 dollar a share

The potential value of our Piceance/Uinta lands with a trillion cubic feet and 200 million barrels of oil using a benchmark of a dollar in the ground and $4 of barrel of oil in the ground. That can add well over 30 bucks a share. We have to go back and get it. But it’s there for us to take. And between a combination of thoughtful exploitation and maybe some astute land deals, I think we can get there

Now, what’s the value of a uranium discovery? While we’ve got both equity in Titan, and we’ve got a 10% carry in the interest, the average discovery in the Athabasca Basin has been 50 million pounds. The McArthur River deposit was 600 million pounds. That’s almost $50 billion. So the value of a discovery there, Blue Sky, but it’s huge.

In summary, we do have an independent research firm coming out with a report on us here over the course of the next month and two. And just based on a 5% [2P] success value basis, that’s over $750 a share in the next 8, 18 months if we are going accomplish our game plan.

So that’s where I think we are going with Dejour. And to my way of thinking, if I want to make an investment in the oil and gas business or in the energy business, this is about as exciting a deal that we have the opportunity to be involved with.

Thank you.

Question-and-Answer-Session

Unidentified Audience Member

That came in line with the current share prices?

Robert Hodgkinson

About $2.10.

Unidentified Audience Member

Really?

Robert Hodgkinson

Yeah, I think I have some time. Are there any questions?

Unidentified Audience Member

[Question Inaudible].

Robert Hodgkinson

Sorry, 67 square miles. That would be very appropriate. Is there no other questions, Jay? Thank you.

TRANSCRIPT SPONSOR

The Wall Street Analyst Forum, a leading conference host for public corporations to address analysts/portfolio managers and professional investors, sponsors four annual conferences in NYC for large, mid and small-cap companies. Seeking Alpha readers may attend Wall Street Analyst Forum conferences free of charge if you pre-register. See the full conference schedule and attendance information.

Read all Wall Street Analyst Forum conference presentation transcripts here.

To sponsor an investor conference presentation transcript please contact us.

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