Dejour Enterprises, Ltd. (DEJ) reported a loss of $0.03 Canadian (or CAD) per share for the quarter ended September 30, 2009, which was below our expectations of a loss of CAD 0.02 per share. The difference was primarily attributable to shut-in gas, which substantially exceeded our expectations.

Natural gas prices have recovered from their summer lows and now are in the range of US$4.00 to US$5.00 per Mcf. As a result, management is restoring a substantial portion of its productive capacity.

In the fourth quarter, with gas sales rebounding, the company’s results should improve substantially. We reaffirm our Neutral rating and 12-month price target of US$1.01, based on expected improvements in gas sales volumes and winter drilling for crude oil resources scheduled by the company in British Columbia.

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