EnerJex Presentation in Houston on July 10

[dan_s]

Robert Watson, Jr. spoke at our luncheon in Houston today. He did a great job and I am bullish on this micro-cap.

> The new pfd stock is rock solid. It is a $25 par with a 10% coupon rate. Dividends this year will be tax free return of capital and (based on my forecast) they should be tax free next year as well.

> The company is flush with capital after the pfd stock offering. They had hoped to raise $10 million, but the offering was 200% over-subscribed. Several of our members took part in the offering at $23.75/share (they owe me a nice Christmas card this year!). A heck of a deal since the price ran up over par shortly after going public. It closed today at $25.75. It is callable in three years, but I doubt the company will call it then. They may issue more pfd early next year.

> EnerJex will ramp up an aggressive capital program this quarter. They expect production to go from 547 boepd (81% crude oil) to 1,000 boepd (65% crude oil) within six months. The company has a clear path to 1,500 boepd by the end of 2015.

> The company will spend approximately $10 million on low risk workovers and drilling & completing ~20 new wells over the next six months. This activity should significantly increase PDP reserves and P2 reserves. The bank is likely to increase their credit line (only 3.5% interest rate).

> What they have in Kansas is low risk but the big upside is in Colorado. See slide 11 of their current presentation, which is now on their website at: http://www.enerjex.com/pdf/ENRJ-Present ... -10-14.pdf

> Several large-caps are testing deeper formations near their Adena Field that could significantly increase the value of the EnerJex acreage.

> Their 55,000 acre Niobrara Project area is primarily natural gas, but it has "good" economics at $4.00/mcf and "great" economics at $5.00/mcf. F&D cost is approximately $1.00/mcf. It is close to the Rocky Mountain Express and Trailblazer pipelines, so they can easily sell the gas at close to NYMEX prices. EnerJex has high quality 3D seismic over their acreage and they have identified more than 150 low-risk locations. See slide 15 for more details.

I feel much better about recommending the pfd stock in our High Yield Income Portfolio and the common stock is a strong candidate for our Small-Cap Growth Portfolio. EnerJex now has the capital and running room to justify a higher multiple. It may take the market a few quarters to figure this out, but the common stock looks cheap. My Fair Value Estimate is $9.50/share.

[dan_s]

An updated Net Income & Cash Flow Forecast model for ENRJ has been posted under our Watch List Tab.

You must log on to see it.

[wilmawatts]

Sweet. Thanks Dan

[bobs]

getting the pfd on the offering was great!

[mikelp]

Dan: you may have already covered this .... did ENRJ issue any warrants with the issuance of the preferred stock? I hadn't read anything on that. tia

[dan_s]

"The preferred stock is not convertible into common shares of EnerJex and no warrants were issued to the investors or underwriters in conjunction with the offering. The Company intends to use the net proceeds from the offering to accelerate the development of its oil and natural gas properties located in Kansas and Colorado, and for general corporate purposes, which may include temporary repayment of outstanding borrowings under its revolving credit facility."