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If they make the 8 milcfd that they now tout, are able to maintain that level of production for a reasonable period of time, with Ngas at $9 and with a multiple of 12-15, I would say that our price should be in the $3.50-4.50 range based on PRA alone.
Could be an interesting week. IF DEJ comes out with news as promised, we should have PRA production and proven reserves. This will change the nature of the company to an actual producer with postive cash flow and should eventually be reflected in our price. Hopefully, the data is at least somewhat consistent with the hype that they have provided - and hopefully this week - as they promised.
By the way, our new President of DEJ US owns a patent for difficult oil extraction and seems to have held some responible positions with what should be some very interesting experience. Probably should be encouraging that DEJ can attact that level of talent.....
Thanks, Thomas. I just have not had anything to say. Personally, I think that we are in pretty good shape here - on the assumption that we can trust recent company statements about PRA reserves and getting >10mmcfd of production by the end of March. I would think that, becoming a real producer, having proven reserves and having positive cash flow, would make DEJ a whole different kind of investment.
My only concern is that timeliness and accuracy have not been DEJ hallmarks over the last 6 months. Will take me a while to get over how they handled the Rio Blanco news. (I mean, if the news is not good, just tell us, don't string us along for 3 months and then let it dribble out (pun intended). That said, surely they would not make that kind of communication mistake again, would they?
Jagman,I am not smart enough to guess the market direction in the short term, but I understand your caution. I also don't doubt your's or Pickens' analysis of the short term energy sector.Would just point out, however, that we have had major shocks from an S&L meltdown to the LTCC debacle to the collapse of the Asian markets, etc and there have always been stocks that have done well in those markets.
The reason that I am holding DEJ, at the moment, is that I actually believe it to be a relatively safe place to be in the current market environment. The price is very cheap if we get anythng close to $20 million in earnings(And, of course, I got in substantially cheaper when the stock got pounded), we have a major structural change about to occur (becoming cash flow positive as well as a Producer), still have some nice potential upside on the speculative properties, are in a sector that will probably hold up well in almost anything short of a catastrophic market meltdown, etc. Plus, we should get a number of positive announcements in just the next few weeks and we seem to be launching a PR campaign of some type, to make sure that the market sees the above. So, at least in the short term, I dont think that either the stock market or the energy market are having or will have much affect on DEJ. For me, DEJ is up substantially this year. I will be surprised if it does not go up at least 20% more from here, bad market or not. If RH is giving us good info, and if the markets don't melt down, we should go up 150% from here just based on Peace River Arch.
I saw that, as well, Jagman, thanks. However, three things:
1) Pickens is a classic trader (and a good one) but he thinks most immediately in terms of the next 6 months or less, typically. Further, he is only talking about oil being down 10-15%, assume he sees the same for Ngas, which takes us back to ~$8 or so.
2) He is clearly only speaking to the short term - expects oil (and presumably Ngas) to be back around current prices by second half of '08 - as noted in the article that you provided.
3) The market always looks ahead. Sure, current earnings are important, but potential earnings and trends will be the major key that drives our stock price, I think. So, if the market ever believes that Ngas will go to $15 again (even 2 years from now), that will drive the DEJ price more than the current or near term Ngas price. Likewise, if they produce > 20milcfd, as an example, that is a much more significant price driver, in my view.
Finally, don't forget that we are theoretically about to see a major structural change in the way that the company is viewed from being an Exploration company to being an Exploration and PRODUCTION company, and from a net borrower to a company with positive cash flow. This should change the way that the stock is priced - assuming that RH can be believed, of course. But, since he is a very significant shareholder, I think that his interests and ours line up nicely... Bottom line, I don't know if this will ever be a $20 stock, but I think it must be cheap at $1.72 because even with low Ngas prices and conservative assumptions, this stock is arguably worth a minimum of $3.50-4.00 and that does not include a fair amount of upside (though, of course, very speculative) potential. So, I like owning a half price or less stock, with high speculative potential and I don't see how we can go seriously wrong, at this price and at this time - it is not like the rest of the market is doing anything, either.
Hope you don't end up regretting that, Timhyma. We seem to finally be getting some actual (and better than expected) results,with real revenue/cash flow just ahead and the promise of a fair amount of data in just the next 5 weeks or so. Plus, we were up nicely today on relatively light volume, which means that it would not take much of a spark to get us into the mid-2's.....
OTOH, you seem to bounce in and out every other week, so if you are playing for a .10-.15 drop from today, I suppose that it could happen between now and then. Might want to consider, however, whether the trading pattern of this stock is about to structurally change when this becomes a company with real earnings, real positive cash flow, real legal reserves, etc. while still having signficant potential for upside surprises if things break their way elsewhere. Would hate to see you miss out on a nice move over a play to get the stock a few centavos cheaper....
At these prices, and assuming that DEJ hits the >10 millioncfd target, we are looking at revenues nearer $30 million. With a 15X P/E (which would not be considering any of DEJ's other holdings/potential or the benefits of having cash to capitalize on those opportunities) that would suggest a fair price of $6.5/share.
Life does not usually work out that easily, but if we assume that DEJ actually achieves what it is targeting (and they now seem to be well on their way),then we can reasonably say that $1.45 defintely looks CHEAP. And, if ANYthing else starts going right or if the sector simply catches fire (which it might do if Ngas prices keep rising), then we could be looking at multiples nearer 30X.
May not sound like the musings of a pessimist, but I just try to deal with facts or reasonable speculation based on facts. Will take a lot to get to the above numbers, but this is not outside the realm of reasonable possibility - if the company performs and if the market breaks our way.
Certainly possible, hope you are right, ts. One other aspect of this business is that one good strike anywhere (elsewhere in Piceance, for example) can make up for a lot of misses.
Hard to reason with someone who is delusional. It is not about seeing a glass half full or half empty. With respect to Rio Blanco and the other things that I have mentioned - the glass clearly IS half empty. A point that you seem to be completely unable to grasp. Hopefully, Peace River Arch is half full - but, we have heard great promises before, we'll have to SEE.
Another point that pumpers like you miss - I am long this stock and have been the entire time that I posted. When I reduced my holdings because I anticipated bad news, I posted that. Now, I have the largest position that I have ever held in DEJ. Obviously, I want the glass to be as full as possible. But, when we get to the high two's or low 3's, I am going to have to take another hard look as to where I think these guys are really going - and then I will want facts, not mindless pumping from people like you.
So far, my approach has been money in the bank.....which is why I am here. I have to wonder why you are here - working for the company perhaps?
Helpful reply ts, thanks. I guess that part of my thinking here is that RH has repeatedly emphasized the 1 million acres that we have, through Titan, in Athabasca as a potentially very rich exploration area. Now, it looks more like 400K of those are not all that promising. They have also listed that acreage as adding $50 million to DEJ's value. Based on that 400K acres, the real value is definitely significantly less, possibly very much less.
Futrcash- wishing don't make it so and sticking your head in the sand does not make a problem go away. Just like you would not recognize that DEJ's delay in reporting Rio Blanco results was a likely indicator of poor news and came up with a number of wild theories to say why THAT was not so.
I am an investor, not a fan and, as an investor, I am trying to make sure that I sift through the baloney to figure out what we really have here. I am longer now than I have ever been before, so that tells you something. Though, part of that is because I reduced my position on the late Rio Blanco news, and bought more stock when the price dumped (as I a predicted it would do, btw - not that I am always right, by any means).
I think that I see why the market is not that excited about the Titan announcement. They gave away 50% of the rights to 400K acres for just $9 million, to a $7 billion corporation. That tells me two things, I think:
1) The $7 Billion Corporation does not see huge value in those 400K acres, because they are not willing to spend all that much to explore them and presumably Titan does not see great value there either, since they sold the rights pretty cheaply. The Japanese company has not even really committed $9 million, they can pull out at $3 or $6 million, if they don't like their intial results and they will take at least 3 years to complete their exploration, if they go the distance, so they see no urgency (presumably meaning no great potential). Further, if DEJ thought that this was a steal, they could have presumably done the deal themselves, if they are moving to a cash postive position. So, it appears that all parties may have concluded that there is something worth looking at further, but most probably nothing spectacular, in these 400K acres.
2) Titan can now only get 40 or 45% of whatever is there. What is unclear is whether DEJ's 10% royalties are also reduced in half. I am inclined to think not, based on the way that things are worded, but this is precisely the way that DEJ and TUE always word things - so that you never really know what the deal is for them. If DEJ retains its 10%, then this is not all that bad for them (though their 33.5% interest in that property thru Titan is now just 14% or so because of Titan's reduced stake.)but the low price may imply that the land is probably not terribly valuable, anyway.
So, my conclusion is that 400K of Titan's 1000K of land in Athabasca is largely being written off in terms of any hope for major finds, dropping our potential at Athabasca, by 40%. This also does not result in any cash infusion to Titan, but at least they can focus their remaining funds on the other property. Anyone have a good argument (not just pumping, but real logic) against this view?
Noted that RH made a point of saying that the Company's near term intention is to become "increasingly proactive" in the development of Piceance. You had alluded to something like this earlier, Sumisu. What do you think is meant by that? Are we to take that as also saying that they were not happy with the operator? And, if so, what can they really do about it?
My irritation was always that we did not get timely, clear news as to what was going on at Rio Blanco. I never blamed the company for the poor results, we all understand that results are the risk that you buy into with any exploration effort. So, even if DEJ is more proactive, I can see where they can keep their schedules and committments (a definite plus), but what substantive difference does that actually make in terms of production? Hopefully, RH can explain all of this when they make whatever changes seem to be in work.
Thanks, Sumisu. This does give some helpful background/perspective for Piceance. I hope that Peace River Arch works out as RH is projecting. If so, we will have nice earnings and those should also give the company plenty of cash for further exploration, acquisition, etc. All of which should make our stock much more valuable - eventually.
I also take comfort from the fact that our holdings and those of our largest-shareholder-CEO line up. He clearly has every interest in the success of the company.
IF he can pull those great moves that you mention, we may see some nice success sooner rather than later. But, if Peace River Arch is really as good as he says, it would seem to simply be a matter of time, one way or the other, before we see the kind of performance that we all hoped for. I have used this horrible recent price action to increase my position because I am convinced that we will get at least a double from here - and possibly much more. But, even if we only get a double, how many other stocks are doing that, right now?
I could not find anything, either. Perhaps some big players trading their positions...Normally, I would expect to see much more of a price jump when the volume moves up so dramatically. BTW, Titan sure dumped today, and on just slightly higher than average volume.
DEJ volume clearly a one-day phenomena, in any event. However, if RH is right about expectations on Peace River Arch, I would think that we should expect a dramatic move from here by the end of the next 7-8 weeks. Of course, none of us would have been happy, a year ago, if we thought that the stock would be at $2.50-3.00 by March-April, 2008. But, $2.50 does not look that bad from here.
Biggest problem is that I don't see any grand vision for the longer term, particularly with respect to Piceance Uinta. Just the long overdue announcement, then basically nothing useful. I think we'll have to hear a convincing plan from the Company for Piceance Uinta before we go above $3. Possibly, there simply is no plan and they are back on their heels a bit, trying to recover from the dissappointment of the recent results.
Hard to call it accumulation when 600K shares (5x recent averages)traded and we are only up $.08. That is a lot of people selling shares very cheap, in my view. Might have thought we would be up $.40 on such volume. Hopefully, the remaining weak hands are running out of stock to sell...
Still, have to wonder what caused today's volume - some newsletter perhaps? If the volume is high for the next few days, that may be it. Otherwise, could simply be a couple of big players adjusting their positions.
Don't get me wrong. If RH is right about Peace River Arch, and if they get the news out in an appropriate way, I will be surprised if we don't see at least $2.5 by end of March.
Good luck, Chisum. Too bad that this did not work out as we all had hoped that it would. I still think that we'll see $2.50 by end of March, if Peace River Arch works out like RH is saying, and I would remind you that a bunch of insider buying took place at around $1.82/sh. So, you probably don't have to be in a hurry to trim out at this precise moment. However, I know what you mean about other opportunities and those are hard to pass up. .
No one said that this is not a good stock, question is if it is a great stock. My point has been that all of this cheerleading that some of you do is not helpful. At the end of the day, it is what it is, not what someone spins it to be. All investors are better off to look at reality and then decide what to do.
In our case, IF DEJ comes through as they are now saying, Peace River Arch is about 2x expectations. I said that I think that could reasonably lead us to a $5-6 price, except that the Piceance Uninta results could blunt that. But, say we only get half, that is still $2.5-3.0, or at least a double from here - IF we get those Peace River Arch results, which are looking better every day.
Simple fact is that Rio Blanco is a disaster if it comes out at anywhere near 800 mmcfd. The wells may be "economic" but that is likely only in the sense that we may eventually (3-4 years) get our money back, which you may as well do having gone this far. As to whether you do any more drilling based on these results - I doubt it. So, it does not matter how many sites they have, they picked the one that they thought was the best and are getting very poor results. Hence my comment that we need to hear from the company as to what they intend to do from here. Certainly, these results seem to take us from a potential $40-50/sh stock (if Piceance Unita was very good and exploration proceeded at a fast pace) to more of an upper limit of $5-6/sh. Still good, but not the retirement maker that we all hoped for and some will not want to make nearly as large an investment for a potential 4 bagger as they would have for a 30 bagger.
We just need real facts in a timely manner and I would suggest that all of you need to be as upset as I was about the delay in the Rio Blanco results. What good did that delay do us? None. What harm - company's credibility really was damaged by the way that they handled it. You NEED credibility when the news is not good, and they dont have it when we all need it the most. Best they can do now is give us a very clear plan for PU going forward - and do so quickly.
Sometimes wonder if you guys really read this stuff or if you are just determined to cheer lead no matter what. The overall news is good, I think, but only in Peace River Arch. The news from Rio Blanco is terrible.
As I read it, they hope to net, for the company, as much as 10KMCF/day by end of March - or presently about $80K/day in revenue from Peace River Arch. That is very nice news from that part of our holdings and is about double what they were talking about there. That is about $28 mil annualized. Very nice, and with a multiple of just 15, would yield a stock price of around $5-6 if the market recognizes this. So, nothing not to like there though we have to wonder if the market will recognize and reward this stock because:
Piceance Uinta is only at .8KMCF/day and we only get 25% of that. So, if both wells produce at that rate, we are looking at just $3K in revenue per day or $1 mill per year. Not at all what we were hoping for - they were touting flow rates of 15KMCF/day in other fields. So NOT great news, but a rate that is only about 5% of what we might have hoped for at the top end. I think that we needed a minimum of 3KMCF per day to make this work only moderately well and we would have been in great shape with 7-8KMCF per day.
Hopefully, RH will come forward with the plans as to how we proceed from here in Piceance Uinta. Not the Company's fault that the findings are poor, but they were hanging a LOT on this "high profile" project and it is definitely a bust - as I predicted when the news was so late in coming out.
Titan does it again! Puts out an announcement at 2:20 on a Friday afternoon and then makes it a bunch of gibberish. Makes you wonder if they are doing it on purpose - I think that they must be.
Obviously, if there were good news, they would have done it at a good time (not when everyone has already shut down for the weekend) and written out the results in plain english. Appears that they only have one finding worth following up on about 1/4 million acres of land. Not a great start given all the money that they invested.
Given DEJ's almost total silence on Rio Blanco and a consistent pattern now of these "big" opportunities (i.e Mississippi two years ago, Rio Blanco now) not working out....have to wonder if I should re-think my view that this stock will be fine in the long run. After all, "potential" means that you ain't done it yet and DEJ has been long on potential for some time now.....
Looks like you almost made it today. So, $1.38 certainly seems like a reasonable expectation. I already have my position, but don't see a lot of urgency unless they do some sort of newsletter or analyst campaign, or something of that sort that could boost price/volume. Based on the last PR, I don't see anything else out there which is going to ignite this stock overnight. I still expect that this will be a nice investment, but it is apparently going to take a while.
Timhyma - you back in yet? Looks like you did not miss anything, after all.
Sooooo, let me get this straight. They are holding the Rio Blanco flow rate information closely, because they are in negotiation for nearby land and don't want the current owners to find out how valuable their land is but, simulataneously, both RH and the Berry report emphasize how valuable DEJ's Piceance/Unita land holdings are in their PUBLIC briefings and newsletters?!
Also, do you really think that Encana and others are supposedly paying $40,000-$100,000/acre but the nearby landowners know nothing about that?
Just a thought that I will toss out. It just does not seem likely, based on the way that things have played out, that Rio Blanco was the big hit that we all wanted. Possible, though unlikely, that great news could stay bottled up for so long. However, if you take a look at Titan, it seems especially cheap at the moment for a stock that is in a hot sector and controls a lot of land.
I know that their PR is even worse (much worse) than DEJ's, but it is hard to see how it goes much lower from here. They have cash, plus RH says that they have set up two JV's with majors and that he expects them to announce 2-3 more in January. This stock also seems to move quite rapidly. Can be bought now in the $.70's range, yet it was trading near $1.5 in early November and seems to spike on any kind of good news. It has been over $3 in the last 52 weeks.
So, my thinking is that it is much more likely that TUE goes to $1.50. than that DEJ goes to $3.50 in the next month or that TUE sees $3 before DEJ sees $6.50- $7.00/share. The DEJ prices that I mention are the equivalent percentage moves to the TUE pricing. IOW, TUE only has to go to $1.50 to have roughly doubled from here, whereas DEJ has to go over $3.50 to have done the same. if you really like the DEJ/TUE situation, may want to have a foot in both doors, rather than being all out in DEJ.
Today was a nice move but was clearly off of the newsletter hype from earlier today, Timhyma. Good to get it. But, these things tend to spike and then fall because people tend to react the first day that they see the reco. So, you will probably have another opportunity to think about re-entering a little bit later. This pop could last for a couple of more days and I will be thinking about selling some of my position if it looks spikey again.
It certainly seems that the short term key is going to be the Rio Blanco results, which are delayed yet again. Sorry to say, but it is almost never good news when there are delays. Note also Dr Berry says nothing about Rio Blanco results on the first two wells being immindent and that RH has gone from highlighting this as a "high profile" discovery, to talking about everything else that DEJ has instead. So, I think that he is trying to minimize the effect of probably dissappointing results at Rio Blanco. Does not mean that this is not a stock worth owning, but probably does mean that there is no reason to chase it right now.
Side subject - has always bothered me, a bit, that Dr Berry is on DEJ's board of advisors and yet recommends them in a newsletter as though he were completely independent. Would have no problem if he simply said - "I am a paid advisor to this company but think that it is so good that I want you to know about it" or something like that. But, all of the newsletter recos (i.e Gold Letter) they have gotten have been adverts paid for by the company or have been done by Dr Berry, who is on the company payroll, so we are not seeing anything that is truly independent in terms of recos. Also, I don't see where any of the newseletter recos have helped the stock price for anything beyond the very short term. All that will help is actual, proven and very good results. So far, all we have is potential, and it looks as though some of that potential must not have been realized in the first two Rio Blanco wells.
Nothing there, at the so-called fxpe research site. Even less than you see on Yahoo, why bother highlighting such a site?
Before you get too excited about Cramer, Chisum. Just note that his "stock of the year" for 2007 was NYX, reco'd at $98/sh with a one time target of $180. Boone Pickens, who may actually know something about this market, does not seem to think that we will see much price improvement in NGAS until late 2008 or even 2009.
Thanks, Thomas. The whole idea of a forum, in my view, is for us to think aloud together and to help one another to see the whole picture, with each contributor bringing his piece of this puzzle. I agree with most of what has been posted in the last couple of days. First, I think that you are right that this is going to take longer than most of of think. Second, I think that the company has good longer term prospects.
Patience can be very important with stocks like this one. Expecting too much too soon can wear you out and make you give up prematurely. Frankly, I had hoped and expected that we would see rapid positve results. But, it just has not worked out. If I were to ignore the remaining potential, I would simply dump and leave. But, there is still a lot of potential in DEJ. So, I may lighten my position some, but I have decided that I will stay around for a while longer.
Honestly, DEJ has nothing that is truly real, yet, it is ALL potential. And, potential simply does not work out, sometimes. They once had high hopes for Tinsley and that was a dissappointment a couple of years ago (though it may eventually do something) and I noted that RH did not give any indication that he expected something exciting from the first two wells at Rio Blanco, tbough that may eventually still be a great area for the company. All the company actually has (real not potential) is flow rate data from 3 test wells that suggest a posible annual revenue to the company of $3-5 million, which will basically cover general and admin expenses. They may still have to raise more money for future drilling, so that should not surprise us, if it happens. I hear the same optimism from RH on Peace River Arch, that we heard regarding Tinsley and the first two wells at Rio Blanco. He is just doing his job by being upbeat, but we probably need to take all of that with a grain of salt - until we have proven production.
I would also suggest that we need to ignore near term price action, unless someone is trying to trade the stock. Otherwise, who cares if it drops to $1.20, at this point? If we are looking for the long run, the short term price action is irrelevent. This is a story stock, a stock with potential - but only potential - at this point in time. If we don't have reasonable expectations or we if buy too much into the optimistic case, then we may lack the patience needed to get a payoff with this stock. Just my view...
Chisum, the confusion may be the difference between what I think and what I am guessing that the market may think. My view is that, even pessimistically, we'll see the mid-2's again. So, I am not worried about getting back above my entry point (in the lower $1.70's)...eventually. If the news at Rio Blanco is not perceived to be good, then I could see us retesting our lows or maybe even breaking through those lows to the low $1's for a short time.
But, it appears that Peace River Arch may have enough juice to support the $4 range eventually - even if we have to get past some dissappointment with Rio Blanco (Remember, though, that I suggested $4 IF PRA produces $20 mil/yr in revenue and RH is currently only suggesting $12 mil). We do have to allow for the possibility that all of us are overly optimistic about PRA because we have no real facts, yet. We are all, including RH, just guessing. Obviously, if the Rio Blanco news is good, then no problem - but my experience says that good news always comes out fast and that delays almost always end up in some degree of dissappointment. So, my guess is that the RB results are mediocre, and I don't know how the market will see that, could be negative.
My other point, is that because this is just a story stock at the moment (ie no real facts, yet)and since RB was supposed to be the big DEJ story for 2007, the market may not believe RH regarding PRA, either. Obviously, earlier in the year we heard some very optimistic possibilities for Rio Blanco. No problem with that, but if they did not pan out then you can understand skepticism regarding his current optimistic comments about Peace River Arch. So, I am guessing that the market may feel no compelling reason to buy now and some may even think that there is 20-30% risk left in the short term(at today's price) if the Rio Blanco news is even just perceived to be dissappointing. To me, that is the worst case, and I believe that even the worst case will eventually get us back to a place where I can make a modest profit. We may have to start seeing some real and good news before we see this stock do anything significant, the story may not be good enough to boost the stock, at this point. All just my opinion, of course.
Pricing action a bit dissappointing, actually, for what was a decent presentation. But, this is not a stock that bears watching day to day, in any event. As I think about it, seems likely that those with an interest in DEJ have not heard anything that they did not basically know before and will wait for the flow rates from Rio Blanco. I suppose that there is arguably no compelling reason to buy right now, and still a bit of risk until we know what happened at Rio Blanco.
To me, this is just typical of "story" stocks. At this point, they are (by nature)all story and no real data. So, when you have an indication that the story of the year, Rio Blanco, may have been Ok but less than spectacular, then it probably calls their optimism about Peace River Arch into question, as well. So, looks like we each have to decide if we think that the story is at least decent, longer term (I think we'll almost certainly see the mid -2's again)and then be patient if we think that it will eventually be a decent to good story when all the facts are out.
CC Redux
Not at lot new, but some emphasis points that could be helpful (all below summarized from RH comments):
Piceance - RH said that we have at least 160 ft that is currently productive at both wells. More that 160' has gas, but remaining "will be for later" (RH). Flow rates by end of year, production possible as early as Feb (this is new, have been saying 2Q). Also indicated that they have plans to drill additional wells there, which (along with production comments) indicates that there is at least "economic" gas, even if it is not a big home run. He offered no comments on expected flow rates other than to say that you can't always say all you would like to. (that was never an issue with me, the issue was that nothing meaningful was being said to give us any idea as to what was happening). My view is that we will get something from the first two wells but should have modest expectations (when considering the investment case) until we get the flow rates in a couple of weeks.
Peace River Arch - RH said "at least" $12 mil/yr from wells to be completed by 1Q 2008 - and "probably considerably more". So, this is a new emphasis. Could be an upside production surprise at Peace River Arch in 1Q, 2008. Also, pointed out that this still leaves 7 more wells to drill later, implying that we should see a good bit of revenure from Peace River Arch. Expect 30 million in proven reserves by end of 1Q. You can do your own math, but if we get as little as $20 mil/year from PRA, then my estimation is that the stock could be worth between $4-8/sh, based on PRA alone.
Emphasized land prices, said that land is everything, and indicated that interest in property where we are is continuing to spike. Cited some amounts paid by others that are many x higher than acquisition cost of DEJ land.
Overall, an upbeat presentation. Emphasized that they are fully bought in and are increasing their holdings, indicating insider belief in the story that they are telling. Think this is well worth a listen to anyone invested or thinking of investing in the Company
Useful. Hopefully will make some of the points a bit clearer tomorrow and even expand to talk about Titan's 3Q drilling. Talk of connecting to the pipeline implies that we got at least some value out of NBC, otherwise would not be worth the costs.
Just having some idea as to what is going on, helps a great deal. Looks like we may have a decent (if perhaps not spectacular) company, based on this release. Or, maybe even that spectacular has simply been delayed for a while....we should not underestimate the potential in Peace River Arch, even though most of the focus has been on Rio Blanco.
Also nice that they released this after the market close, rather than holding it until tomorrow a.m. Gives us some time to digest before the call.
Chisum, if the market is telling you anything, it is not telling you that it is excited about this upcoming call. DEJ was down virtually all day. So, unless the market is wrong (which means that DEJ and partners are all able to keep a big surprise secret - not likely), you should not get your hopes up for this call.
I note that futrcash is already rationalizing in anticipation of mediocre news. I don't think he is being negative, probably just realistic. I imagine that we will hear something just about like his post, from RH on Thursday. Had they been communicating even along those sorts of lines with us all along, then we would have the same end result as to whatever the wells are or are not producing, but much more confidence in the mgt. No reason that they could not have said essentially what futrcash said - in October. And no reason not to hold them to account for that, this is our company.
I agree. Would expect an announcement either Wednesday p.m. or Thursday a.m. before the call. The market does not seem to be expecting anything dramatically positive and companies usually cannot get good news out fast enough. So, I think that our expectations should be modest. Still, modest flow rates at Rio Blanco with continued expansion there, as well as at further production from Peace River Arch, could add up to good (if not thrilling) news, in total. The insiders did buy at $1.85 (US), so, we have some reason to feel that the news is probably not catestrophically bad. So, I am guessing something in the middle range.
Can't blame the company for whatever the news regarding Rio Blanco is, I am just not at all happy with how they handled it. They can go some way toward making up for that by being clear and forthcoming on Thursday - hopefully they will.
Finally! Thanks, Funkybunch. It will be great to finally get some news.....
Nice report, thanks for posting it Futrcash. But, it actually proves my point about DEJ. The estimate is merely within a 10% range, hardly that wildly speculative and certainly close enough to give us an idea as to where the company is. No one here is expecting precision, just want them to tell us which neighborhood we are in.
Couple of interesting points, since this land is near ours. First, their best well is producing only 1.2 mmcdf, whereas DEJ was pointing to nearby land producing 15 mmcdf. So, that kind of result would be very dissappointing for DEJ though not a complete disaster. Net to the company, per well, would be about $800K/year at current NGAS prices but that makes the ROI period stretch out and raises the question as to how many they would drill. Obviously, 160 wells at $800K each is $128 million in revenue per year, but the costs of drilling are probably about 1.5 years of revenue at that rate and we don't know how long we could expect payout. So, such production rates would be dissappointing. Of course, areas vary quite a bit, and we could well be somewhere between the 1.2 and 15 mmcdf rates. I would guess that 2.5 - 3.0 mmcdf is a minimally exploitable number for DEJ, given the costs of drilling, etc. If that is correct, a number above 3.0 is a decent number and anything above 7.0 or 8.0 would be getting into the very nice category. Now, all we need is some facts from the company. The delay in reporting and complete absense of meaningful updates, however, probably tells us that they have, at best, a marginal number.
Second point, is land values. Westhawk's land is valued at $6500/acre. So, DEJ would appear to be in great shape on land values, assuming that our land has similar value. Though, I have to note here that DEJ has been talking about neighboring land values in the range of $40K/acre, so a disconnect there by a factor of 6.
In any event, we just need the company to tell us what is going on. If it is dissappointing, so be it. But, the lack of clear communication is inexcusable and, unless some of you work for the company, I cannot understand why you would want to defend it. This is our company, we have a right to timely information.
Let's see, you cite old reports from BWN and old interviews from the CEO (you have to do that because there is no recent communication from the company) - but I'm doing the same old, same old? Then, comparing DEJ's news releases to an obscure candadian company trading for .18 as a model we are supposed to feel good about?
Verrrry convincing.....
Delays in reporting news almost always means bad news, in my experience, and DEJ has now had two delays without telling us anything at all. It is clear that the market sees this the same way. Otherwise, we wouldn't be under $100 mil market cap if the market felt that great news could supposedly come out almost any day now.
Let's read between the lines a bit, eh?
1) The Brown release is identical to DEJ's release on 10/26. The comment about flow rates being what the operator "expected", is not particularly helpful. There was undoubtedly a very wide range in the operator's expectations. It could easily have been on the very low end of their expectations, which would not be good news.
2) The Peace River Arch information is exactly the same as that by RH, in presentations going back to September. This is good news, if it turns out to be real. It means that DEJ will become a real producer and will have annual revenues of about $12 million. If that is all the Company has, it implies a stock price between $2.25 and $4.50/sh (P/E of 15-30).
It is the absense of updates from DEJ that is the most telling. The "stuff" about Halliburton checking "up-hole" zones etc is a deliberately obfuscacious bit of news. They are capable of much clearer communication than that, but they instead choose not to communicate clearly. Why is that? It is almost undoubtedly because the news is not very good. It also sounds like, reading between the lines, that the operator did NOT get the results they hoped for/expected, and they are trying to get as much as they can out of a relatively dissappointing drilling. That is good diligence on their part, but implies disappointing news.
Also, why is the operator taking so long? If the news were as good as the properties around Rio Blanco, then the operator would be moving as fast as possible to not only close out the results of these 2 wells but drill many more.
Now, is bad or just dissappointing news DEJ's fault? Of course not. It is what it is, they can only try to buy good properties and hope for the best. This is the risk that we shareholders accept in owning such a stock. What IS DEJ mgt's fault is not communicating clearly with its's shareholders and there is no excuse for this. Almost seems like they must think that their shareholders are stupid.
If we did not find what we hoped to find and are trying to maximize production on a dissappointing drilling, JUST SAY SO and tell us what the next steps will be. Had they simply done this a month ago, when the news was due and the stock was at $2.25, it would probably never have dropped into the $1.30's. But, by saying nothing, then reducing their option exercise prices (which always looks a bit sleazy) they have lost the one assett that would truly help this company to be successful, regardless of findings, and that it the ability to have confidence in the people running the Company.
So, what do we have reading between the lines? A stock that almost certainly will see $2.25 again, and may see $3 or $4/sh, eventually. There may also be success on other Piceance Uinta holdings - although Rio Blanco was a high profile holding - and possibly Titan may eventually find something. But, shorter term, $3 may be our upper limit for some time and we can no longer have confidence in our management because, when we needed them the most, they simply went silent or obfuscated. So, I am still confident that I will make a nice profit on this stock, by next March, but no longer see myself as a potentially long term holder of the stock because there are simply too many questions about whether our mgt can be trusted or not.
Bottom line, I accepted the risk of the findings, will undoubtedly get my money back with a "nice" profit, but I also bought this stock heavily because I thought we had a good mgt team and I feel that - being very fair to them, I believe - they have let us down badly, in the way that they have handled this matter. Just my personal opinion....
OK, Sumisu. Tell us what this means! Thanks
Thanks, futrcash. An excellent sort of "drilling for dummies". Of course, this indicates that we should have had results about 3 weeks after drilling was completed, so some questions definitely raised there.....Really cannot see a good reason why they are not telling us anything.
Thanks, Sumisu. I know that everyone shares my frustrations. Hopefully, they will listen and act. I was not actually reacting to your post, and should not have replied to it. My point is that, it is not really so hard for them to do the right things, and that we are not expecting too much of them. I am still convinced that this will eventually be a blip, but I think that we had the potential to be in the $5 range by March, if this critical announcement had been handled positively. Oh well....