---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

[   ]  REGISTRATION STATEMENT PURSUANT TO SECTION
12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedDecember 31, 2013

OR

[   ]  TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ______

OR

[   ]  SHELL COMPANY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

Commission file number:001-33491

DEJOUR
ENERGY INC.(Exact name of Registrant as specified in
its charter)

Province of British Columbia,
Canada
(Jurisdiction of incorporation or organization)

598 - 999 Canada PlaceVancouver, British
Columbia V6C 3E1(Address of principal executive offices)

David N. Matheson598 - 999 Canada PlaceVancouver, British Columbia V6C 3E1Tel: (604) 638-5050Facsimile: (604) 638-5051(Name, Telephone,
E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered pursuant to Section 12(b) of the Act:

|Title of Each Class              | Name of each exchange on which registered
|-------------------------------- | -----------------------------------------
|Common Shares, without par value | NYSE Amex Equities                       

Securities registered pursuant to Section 12(g) of the Act:
None

---

Securities for which there is a reporting obligation pursuant
to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the
Registrants classes of capital or common stock as of the close of the period
covered by the annual report: 163,753,874 common shares as at April 24,
2014

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
[  ]   No [X]

If this report is an annual or transition report, indicate by
check mark if the Registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934. Yes
[  ]     No [X]

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes
[X]     No [  ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes [X]      No [   ]

Indicate by check mark whether the Registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one)

Large accelerated filer     [  ]       Accelerated filer   
[  ]       Non-accelerated filer [X]

Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

|U.S. GAAP [   ] | International Financial Reporting
      Standards as issued | Other [X]
|--------------- | ----------------------------------------------------------- | ---------
|                | by the International Accounting
      Standards Board [   ] |          

If Other has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant
has elected to follow: Item 17 [  ]      Item 18 [  ]

If this is an annual report, indicate by check mark whether the
Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [  ]    No [X]

---

TABLE OF CONTENTS

|GENERAL INFORMATION                                                                            | 4 
|---------------------------------------------------------------------------------------------- | --
|CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS                                           | 4 
|CURRENCY AND EXCHANGE RATES                                                                    | 6 
|ABBREVIATIONS                                                                                  | 6 
|PART I                                                                                         | 8 
|ITEM 1.      IDENTITY OF
      DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.                      | 8 
|ITEM 2.      OFFER
      STATISTICS AND EXPECTED TIMETABLE                                     | 8 
|ITEM 3.      KEY INFORMATION                                                                   | 8 
|ITEM 4.     
      INFORMATION ON THE COMPANY                                                  | 20
|ITEM 4A.   UNRESOLVED STAFF COMMENTS                                                           | 40
|ITEM 5.     
      OPERATING AND FINANCIAL REVIEW AND PROSPECTS                                | 40
|ITEM 6.      DIRECTORS, SENIOR
      MANAGEMENT AND EMPLOYEES.                                 | 50
|ITEM 7.      MAJOR
      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.                          | 64
|ITEM 8.      FINANCIAL
      INFORMATION.                                                      | 67
|ITEM 9.      THE
      OFFER AND LISTING                                                       | 68
|ITEM 10.    ADDITIONAL INFORMATION                                                             | 70
|ITEM 11.    QUANTITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 87
|ITEM 12.    DESCRIPTION OF SECURITIES OTHER
      THAN EQUITY SECURITIES                       | 89
|PART II                                                                                        | 90
|ITEM 13.    DEFAULTS, DIVIDEND ARREARAGES
      AND DELINQUENCIES                              | 90
|ITEM 14.    MATERIAL
      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 90
|ITEM 15.    CONTROLS AND PROCEDURES                                                            | 90
|ITEM 16.    [RESERVED]                                                                         | 90
|ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT                                                     | 90
|ITEM 16B. CODE OF ETHICS                                                                       | 90
|ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                               | 91
|ITEM 16D. EXEMPTIONS FROM THE LISTING
      STANDARDS FOR AUDIT COMMITTEES                     | 91
|ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
      AFFILIATED PERSONS            | 92
|ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING
      ACCOUNTANT                                   | 92
|ITEM 16G. CORPORATE GOVERNANCE                                                                 | 92
|ITEM 16H. MINE SAFETY DISCLOSURE                                                               | 92
|PART III                                                                                       | 94
|ITEM 17.    FINANCIAL
      STATEMENTS                                                         | 94
|ITEM 18.    FINANCIAL STATEMENTS                                                               | 94
|ITEM 19.    EXHIBITS                                                                           | 95
|SIGNATURES                                                                                     | 96

---

GENERAL INFORMATION

All references in this annual report on Form 20-F to the terms
we, our, us, the Company and Dejour refer to Dejour Energy Inc.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 20-F and the documents incorporated
herein by reference contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements concern our anticipated results and developments in our operations in
future periods, planned exploration and, if warranted, development of our
properties, plans related to our business and other matters that may occur in
the future. These statements relate to analyses and other information that are
based on forecasts of future results, estimates of amounts not yet determinable
and assumptions of management.

Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always, using words
or phrases such as expects or does not expect, is expected, anticipates
or does not anticipate, plans, estimates or intends, or stating that
certain actions, events or results may, could, would, might or will be
taken, occur or be achieved) are not statements of historical fact and may be
forward-looking statements. The forward-looking statements contained in this
annual report on Form 20-F concern, among other things:

- drilling inventory, drilling plans and timing of drilling, re-completion
  and tie-in of wells;
- productive capacity of wells, anticipated or expected production rates and
  anticipated dates of commencement of production;
- drilling, completion and facilities costs;
- results of our various projects;
- ability to lower cost structure in certain of our projects;
- our growth expectations;
- timing of development of undeveloped reserves;
- the performance and characteristics of the Companys oil and natural gas
  properties;
- oil and natural gas production levels;
- the quantity of oil and natural gas reserves;
- capital expenditure programs;
- supply and demand for oil and natural gas and commodity prices;
- the impact of federal, provincial, and state governmental regulation on
  Dejour;
- expected levels of royalty rates, operating costs, general administrative
  costs, costs of services and other costs and expenses;
- expectations regarding our ability to raise capital and to continually add
  to reserves through acquisitions, exploration and development;
- treatment under governmental regulatory regimes and tax laws; and
- realization of the anticipated benefits of acquisitions and dispositions.

These statements relate to analyses and other information that
are based on forecasts of future results, estimates of amounts not yet
determinable and assumptions of our management.

4

---

Forward-looking statements are subject to a variety of known
and unknown risks, uncertainties and other factors that could cause actual
events or results to differ from those expressed or implied by the
forward-looking statements, including, without limitation:

- risks related to the marketability and price of oil and natural gas being
  affected by factors outside our control;
- risks related to world oil and natural gas prices being quoted in U.S.
  dollars and our production revenues being adversely affected by an
  appreciation in the Canadian dollar;
- risks related to our ability to execute projects being dependent on factors
  outside our control;
- risks related to oil and gas exploration having a high degree of risk and
  exploration efforts failing;
- risks related to cumulative unsuccessful exploration efforts;
- risks related to oil and natural gas operations involving hazards and
  operational risks;
- risks related to seasonal factors and unexpected weather;
- risks related to competition in the oil and gas industry;
- risks related to the fact that we do not control all of the assets that are
  used in the operation of our business;
- risks related to our ability to market oil and natural gas depending on its
  ability to transport the product to market;
- risks related to high demand for drilling equipment;
- risks related to title to our properties;
- risks related to our ability to continue to meet its oil and gas lease or
  license obligations;
- risks related to our anticipated substantial capital needs for future oil
  and gas exploration, development and acquisitions;
- risks related to our cash flow from reserves not being sufficient to fund
  its ongoing operations;
- risks related to covenants in issued debt restricting the ability to
  conduct future financings;
- risks related to renewal or refinancing;
- risks related to our being exposed to third party credit risks;
- risks related to our being able to find, acquire, develop and commercially
  produce oil and natural gas;
- risks related to our properties not producing as projected;
- risks related to our estimated reserves being based upon estimates;
- risks related to future oil and gas revenues not resulting in revenue
  increases;
- risks related to our managing growth;
- risks related to our being dependent on key personnel;
- risks related to our operations being subject to federal, state, local and
  other laws, controls and regulations;
- risks related to uncertainty regarding claims of title and right of
  aboriginal people;
- risks related to environmental laws and regulations;
- risks related to our facilities, operations and activities emitting
  greenhouse gases;
- risks related to our not having paid dividends to date;
- risks related to our stock price being volatile; and
- risks related to our being a foreign private issuer.

5

---

This list is not exhaustive of the factors that may affect any
of our forward-looking statements. Some of the important risks and uncertainties
that could affect forward-looking statements are described further under the
section heading Item 3. Key Information  D. Risk Factors below. If one or
more of these risks or uncertainties materializes, or if underlying assumptions
prove incorrect, our actual results may vary materially from those expected,
estimated or projected. Forward-looking statements in this document are not a
prediction of future events or circumstances, and those future events or
circumstances may not occur. Given these uncertainties, users of the information
included herein, including investors and prospective investors are cautioned not
to place undue reliance on such forward-looking statements. Investors should
consult our quarterly and annual filings with Canadian and U.S. securities
commissions for additional information on risks and uncertainties relating to
forward-looking statements. We do not assume responsibility for the accuracy and
completeness of these statements.

Forward-looking statements are based on our beliefs, opinions
and expectations at the time they are made, and we do not assume any obligation
to update our forward-looking statements if those beliefs, opinions, or
expectations, or other circumstances, should change, except as required by
applicable law.

We qualify all the forward-looking statements contained in
this annual report on Form 20-F by the foregoing cautionary statements.

CURRENCY AND EXCHANGE RATES

Canadian Dollars Per U.S. Dollar

Unless otherwise indicated, all references in this annual
report are to Canadian dollars ("$" or "Cdn$"). Certain numbers in this annual
report are rounded to the nearest thousands of Canadian dollars.

The following tables set forth the number of Canadian dollars
required to buy one United States dollar (US$) based on the average, high and
low nominal noon exchange rate as reported by the Bank of Canada for each of the
last five fiscal years and each of the last six months. The average rate means
the average of the exchange rates on the last day of each month during the
period.

Canadian Dollars Per One U.S. Dollar2013
    2012
    2011
    2010
    2009Average for the period
    1.0299
    0.9996
    0.9891
    1.0345
    1.1416


March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013High for the period
    1.1251
    1.1140
    1.1171
    1.0697
    1.0599
    1.0456Low for the period
    1.0966
    1.0953
    1.0614
    1.0577
    1.0415
    1.0284


Exchange rates are based on the Bank of Canada nominal noon
exchange rates. The nominal noon exchange rate on April 24, 2014 as reported by
the Bank of Canada for the conversion of United States dollars into Canadian
dollars was US$1.00 = Cdn$1.1027.

ABBREVIATIONS

|Oil and Natural Gas Liquids | Natural Gas                   |       
|--------------------------- | ----------------------------- | ------
|bbl                         | barrel                        | Mcf   
|bbls                        | barrels                       | MCFD  
|BOPD                        | barrels per day               | MMcf  
|Mbbls                       | thousand barrels              | MMcf/d
|Mmbtu                       | million British thermal units | Mcfe  

6

---

|Other |                                                                                                                                                                         
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|AECO  | Intra-Alberta Nova Inventory Transfer Price (NIT net
      price of natural gas).                                                                                       
|BOE   | Barrels of oil equivalent. A barrel of oil equivalent is
      determined by converting a volume of natural gas to barrels using the
      ratio of 6 Mcf to one barrel.
|BOE/D | Barrels of oil equivalent per day.                                                                                                                                      
|BCFE  | Billion cubic feet equivalent.                                                                                                                                          
|MBOE  | Thousand barrels of oil equivalent.                                                                                                                                     
|NYMEX | New York Mercantile Exchange.                                                                                                                                           
|WTI   | West Texas Intermediate, the reference price paid in U.S.
      dollars at Cushing Oklahoma for crude oil of standard grade.                                            

7

---

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISORS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

**A.**          
**Selected Financial Data**

Our selected financial data and the information in the
following tables for the years ended December 31, 2009 - 2013 was derived from
our audited consolidated financial statements. These audited consolidated
financial statements have been audited by BDO Canada LLP, Chartered Accountants,
for the years ended December 31, 2013, 2012, 2011 and 2010, and Dale Matheson
Carr-Hilton LaBonte LLP, Chartered Accountants, for the year ended December 31,
2009. Certain prior years comparative figures have been reclassified, if
necessary.

The information in the following table should be read in
conjunction with the information appearing under the heading Item 5. Operating
and Financial Review and Prospects and our audited consolidated financial
statements under the heading "Item 18. Financial Statements".

On January 1, 2011, the Company adopted International Financial
Reporting Standards (IFRS) for financial reporting purposes, using a
transition date of January 1, 2010. The Companys annual audited Consolidated
Financial Statements for the year ended December 31, 2011, including 2010
required comparative information, have been prepared in accordance with IFRS, as
issued by the International Accounting Standards Board (IASB) and
interpretations of the International Financial Reporting Interpretations
Committee (IFRIC). Financial statements prior to the fiscal year ended
December 31, 2010 were prepared in accordance with pre-changeover Canadian
generally accepted accounting principles (Canadian GAAP).

Financial information included in this annual report on Form
20-F for the years 2013, 2012, 2011 and 2010 is determined using IFRS, which
differ from U.S. GAAP and Canadian GAAP. Unless otherwise indicated, financial
information included in this annual report on Form 20-F prior to year 2010 were
in accordance with Canadian GAAP.

We have not declared any dividends since incorporation and do
not anticipate that we will do so in the foreseeable future. Our present policy
is to retain all available funds for use in our operations and the expansion of
our business.

8

---

The following table is a summary of selected audited
consolidated financial information of the Company for each of the four most
recently completed financial years. The information presented is presented in
accordance with IFRS:

(CA$ thousands, except per share data)
    Years Ended December 31,2013
    2012
    2011
    2010Gross Oil and Gas Revenue
    $9,317
    $6,882
    $8,824
    $8,086Net Loss for the Year
    ($2,577)
    ($11,753)
    ($11,043)
    ($5,124)Loss Per Share
    ($0.017)
    ($0.083)
    ($0.092)
    ($0.051)Dividends Per Share
    Nil
    Nil
    Nil
    NilWeighted Avg. Shares, basic (,000)
    148,916
    141,056
    120,300
    99,789Weighted Avg. Shares, diluted (,000)
    148,916
    141,056
    120,300
    99,789Year-end Shares (,000)
    148,916
    148,916
    126,892
    110,181Working Capital (Deficiency)
    ($8,908)
    ($8,557)
    ($7,756)
    ($3,264)Resource properties and equipment
    $23,667
    $25,033
    $25,043
    $24,432Long-term Liabilities
    $6,107
    $6,622
    $1,383
    $738Share Capital
    $90,274
    $90,274
    $85,076
    $79,386Retained Earnings (Deficit)
    ($90,839)
    ($88,262)
    ($76,510)
    ($65,467)Total Assets
    $25,499
    $27,573
    $29,438
    $30,413


The following table is a summary of selected audited
consolidated financial information of the Company for the fiscal year ended
December 31, 2009. The information presented is presented in accordance with
Canadian GAAP and is not comparable to the financial information presented in
accordance with IFRS.

(Cdn$ in 000, except per share data)
    Year Ended December 31,
      2009Revenue (Oil and natural gas)
    $6,471Net Loss for the Year
    ($12,807)Loss Per Share
    ($0.162)Dividends Per Share
    NilWeighted Avg. Shares, basic (,000)
    78,926Weighted Avg. Shares, diluted (,000)
    78,926Year-end Shares (,000)
    95,791Working Capital (Deficiency)
    ($20)Resource Properties
    $41,758Long-term Liabilities
    $2,594Share Capital
    $72,560Retained Earnings (Deficit)
    ($39,386)Total Assets
    $45,886


9

---

Canadian GAAP Adjusted to United States Generally
Accepted Accounting Principles

Under U.S. GAAP the following financial information would be
adjusted from Canadian GAAP, and certain prior years comparative figures have
been reclassified or restated, if necessary. The following table is a summary of
selected audited consolidated financial information of the Company for the
fiscal year ended December 31, 2009. The information presented is in accordance
with U.S. GAAP:

(Cdn$ in 000, except per share data)
    Year Ended December 31,
      2009Net Loss for the Year
    ($10,270)Loss Per Share
    ($0.13)Resource Properties
    $31,041Retained Earnings (Deficit)
    ($54,785)Total Assets
    $35,169


Exchange Rate History

See the disclosure under the heading "Currency and Exchange
Rates" above.

Recently Adopted Accounting Policies and Future
Accounting Pronouncements

IFRS

On January 1, 2011, we adopted IFRS and the accounting policies
have been applied in preparing the consolidated financial statements for the
years ended December 31, 2013, 2012 and 2011. The detail accounting policies in
accordance with IFRS were disclosed in Note 3 of the Companys audited
consolidated financial statements.

Future Accounting Pronouncements

Certain pronouncements were issued by the International
Accounting Standards Board (IASB) or the International Financial Reporting
Interpretations Committee (IFRIC) that are mandatory for accounting periods
beginning after January 1, 2014 or later periods.

The following new standards, amendments and interpretations,
have not been early adopted in these consolidated annual financial statements.
The Company is currently assessing the impact, if any, of this new guidance on
the Companys future results and financial position:

IFRS 9, Financial Instruments is part of the IASB's wider
project to replace IAS 39 Financial Instruments: Recognition and Measurement.
IFRS 9 retains but simplifies the mixed measurement model and establishes two
primary measurement categories for financial assets: amortized cost and fair
value. The basis of classification depends on the entity's business model and
the contractual cash flow characteristics of the financial asset. The amendments
to IFRS 9 will be effective as of January 1, 2018. The Company will continue to
monitor the changes to this standard as they arise and will be determined the
impact accordingly.

IAS 36, Impairment of Assets was amended in May 2013. This
standard reduces the circumstances in which the recoverable amount of CGUs is
required to be disclosed and clarify the disclosures required when an impairment
loss has been recognized or reversed in the period. The amendments to IAS 36 are
effective as of January 1, 2014.

**B.**          
**Capitalization and Indebtedness**

Not Applicable.

**C.**          
**Reasons for the Offer and Use of Proceeds**

Not Applicable.

**D.**          
**Risk Factors**

10

---

An investment in a company engaged in oil and gas exploration
involves an unusually high amount of risk, both unknown and known, present and
potential, including, but not limited to the risks enumerated below. An
investment in our common shares is highly speculative and subject to a number of
known and unknown risks. Only those persons who can bear the risk of the entire
loss of their investment should purchase our securities. An investor should
carefully consider the risks described below and the other information that we
file with the SEC and with Canadian securities regulators before investing in
our common shares. The risks described below are not the only ones faced.
Additional risks that we are not currently aware of or that we currently believe
are immaterial may become important factors that affect our business. The risk
factors set forth below and elsewhere in this annual report, and the risks
discussed in our other filings with the SEC and Canadian securities regulators,
may have a significant impact on our business, financial condition and/or
results of operations and could cause actual results to differ materially from
those projected in any forward-looking statements. See Cautionary Note
Regarding Forward-Looking Statements.

Our failure to successfully address the risks and uncertainties
described below would have a material adverse effect on our business, financial
condition and/or results of operations, and the trading price of our common
stock may decline and investors may lose all or part of their investment. We
cannot assure you that we will successfully address these risks or other unknown
risks that may affect our business.

Risks related to commodity price fluctuations

The marketability and price of oil and natural gas are
affected by numerous factors outside of our control. Material fluctuations in
oil and natural gas prices could adversely affect our net production revenue and
oil and natural gas operations.

Prices for oil and natural gas may fluctuate widely in response
to relatively minor changes in the supply of and demand for oil and natural gas,
market uncertainty and a variety of additional factors that are beyond our
control, such as:

- the domestic and foreign supply of and demand for oil and natural gas;
- the price and quantity of imports of crude oil and natural gas;
- overall domestic and global economic conditions;
- political and economic conditions in other oil and natural gas producing
  countries, including embargoes and continued hostilities in the Middle East
  and other sustained military campaigns, and acts of terrorism or sabotage;
- the ability of members of the Organization of Petroleum Exporting
  Countries to agree to and maintain oil price and production controls;
- the level of consumer product demand;
- weather conditions;
- the impact of the U.S. dollar exchange rates on oil and natural gas
  prices; and
- the price and availability of alternative fuels.

Our ability to market our oil and natural gas depends upon our
ability to acquire space on pipelines that deliver such commodities to
commercial markets. We are also affected by deliverability uncertainties related
to the proximity of our reserves to pipelines and processing and storage
facilities and operational problems affecting such pipelines and facilities, as
well as extensive governmental regulation relating to price, taxes, royalties,
land tenure, allowable production, the export of oil and natural gas and many
other aspects of the oil and natural gas business.

Both oil and natural gas prices are unstable and are subject to
fluctuation. Any material decline in prices could result in a reduction of our
net production revenue. The economics of producing from some wells may change as
a result of lower prices, which could result in reduced production of oil or
natural gas and a reduction in the volumes and net present value of our
reserves. We might also elect not to produce from certain wells at lower prices.
All of these factors could result in a material decrease in our net production
revenue and a reduction in our oil and natural gas acquisition, development and
exploration activities.

Because world oil and natural gas prices are quoted in
U.S. dollars, our production revenues could be adversely affected by an
appreciation of the Canadian dollar.

11

---

World oil and natural gas prices are quoted in U.S. dollars,
and the price received by Canadian producers, including us, is therefore
affected by the Canadian/U.S. dollar exchange rate, which will fluctuate over
time. In recent years, the Canadian dollar has increased materially in value
against the U.S. dollar, which may negatively affect our production revenues.
Further material increases in the value of the Canadian dollar would exacerbate
this potential negative effect and could have a material adverse effect on our
financial condition and results of operations. An increase in the exchange rate
for the Canadian dollar and future Canadian/U.S. exchange rates could also
negatively affect the future value of our reserves as determined by independent
petroleum reserve engineers.

Risks related to operating an exploration, development and
production company

Our ability to execute projects will depend on certain
factors outside of our control. If we are unable to execute projects on time, on
budget or at all, we may not be able to effectively market the oil and natural
gas that we produce.

We manage a variety of small and large projects in the conduct
of our business. Our ability to execute projects and market oil and natural gas
will depend upon numerous factors beyond our control, including:

- the availability of adequate financing;
- the availability of processing capacity;
- the availability and proximity of pipeline capacity;
- the availability of storage capacity;
- the supply of and demand for oil and natural gas;
- the availability of alternative fuel sources;
- the effects of inclement weather;
- the availability of drilling and related equipment;
- accidental events;
- currency fluctuations;
- changes in governmental regulations; and
- the availability and productivity of skilled labor.

Because of these factors, we could be unable to execute
projects on time, on budget or at all, and may not be able to effectively market
the oil and natural gas that we produce.

Oil and gas exploration has a high degree of risk and our
exploration efforts may be unsuccessful, which would have a negative effect on
our operations.

There is no certainty that the expenditures to be made by us in
the exploration of our current projects, or any additional project interests we
may acquire, will result in discoveries of recoverable oil and gas in commercial
quantities. An exploration project may not result in the discovery of
commercially recoverable reserves and the level of recovery of hydrocarbons from
a property may not be a commercially recoverable (or viable) reserve that can be
legally and economically exploited. If exploration is unsuccessful and no
commercially recoverable reserves are defined, we would be required to evaluate
and acquire additional projects that would require additional capital, or we
would have to cease operations altogether.

Cumulative unsuccessful exploration efforts could result
in us having to cease operations.

The expenditures to be made by us in the exploration of our
properties may not result in discoveries of oil and natural gas in commercial
quantities. Many exploration projects do not result in the discovery of
commercially recoverable oil and gas deposits, and this occurrence could
ultimately result in us having to cease operations.

Oil and natural gas operations involve many hazards and
operational risks, some of which may not be fully covered by insurance. If a
significant accident or event occurs for which we are not fully insured, our
business, financial condition, results of operations and prospects could be
adversely affected.

Our involvement in the oil and natural gas exploration,
development and production business subjects us to all of the risks and hazards
typically associated with those types of operations, including hazards such as
fire, explosion, blowouts, sour gas releases and spills, each of which could
result in substantial damage to oil and natural gas wells, production
facilities, other property and the environment or personal injury. In
particular, we may explore for and produce sour natural gas in certain areas. An unintentional leak of sour natural gas could
result in personal injury, loss of life or damage to property, and may
necessitate an evacuation of populated areas, all of which could result in
liability to us. In accordance with industry practice, we are not fully insured
against all of these risks. Although we maintain liability insurance in an
amount that we consider consistent with industry practice, the nature of these
risks is such that liabilities could exceed policy limits, in which event we
could incur significant costs that could have a material adverse effect upon our
business, financial condition, results of operations and prospects. In addition,
the risks we face are not, in all circumstances, insurable and, in certain
circumstances, we may elect not to obtain insurance to deal with specific risks
due to the high premiums associated with such insurance or other reasons. For
instance, we do not have insurance to protect against the risk from terrorism.
Oil and natural gas production operations are also subject to all of the risks
typically associated with those operations, including encountering unexpected
geologic formations or pressures, premature decline of reservoirs and the
invasion of water into producing formations. Losses resulting from the
occurrence of any of these risks could have a material adverse effect on our
business, financial condition, results of operations and prospects.

12

---

Seasonal factors and unexpected weather patterns may lead
to declines in exploration and production activity.

The level of activity in the Canadian oil and natural gas
industry is influenced by seasonal weather patterns. Oil and natural gas
development activities, including seismic and drilling programs in northern
Alberta and British Columbia, are restricted to those months of the year when
the ground is frozen. Wet weather and spring thaw may make the ground unstable.
Consequently, municipalities and provincial transportation departments enforce
road bans that restrict the movement of rigs and other heavy equipment, thereby
reducing activity levels. In addition, certain oil and natural gas producing
areas are located in areas that are inaccessible other than during the winter
months because the ground surrounding the sites in these areas consists of
swampy terrain, and additional seasonal weather variations will also affect
access to these areas. Seasonal factors and unexpected weather patterns may lead
to declines in exploration and production activity during certain parts of the
year.

The petroleum industry is highly competitive, and
increased competitive pressures could adversely affect our business, financial
condition, results of operations and prospects.

The petroleum industry is competitive in all of its phases. We
compete with numerous other organizations in the search for, and the acquisition
of, oil and natural gas properties and in the marketing of oil and natural gas.
Our competitors include oil and natural gas companies that have substantially
greater financial resources, staff and facilities than us. Our ability to
increase our reserves in the future will depend not only upon our ability to
explore and develop our present properties, but also upon our ability to select
and acquire other suitable producing properties or prospects for exploratory
drilling. Competitive factors in the distribution and marketing of oil and
natural gas include price and methods and reliability of delivery and storage.

We do not control all of the assets that are used in the
operation of our business and, therefore, cannot ensure that those assets will
be operated in a manner favorable to us.

Other companies operate some of the assets in which we have an
interest. As a result, we have a limited ability to exercise influence over the
operation of those assets or their associated costs, which could adversely
affect our financial performance. Our return on assets operated by others will
therefore depend upon a number of factors that may be outside of our control,
including the timing and amount of capital expenditures, the operator's
expertise and financial resources, the approval of other participants, the
selection of technology and risk management practices.

Our ability to market oil and natural gas depends on our
ability to transport our product to market. If we are unable to expand and
develop the infrastructure in the areas surrounding certain of our assets, we
may not be able to effectively market the oil and natural gas that we produce.

Due to the location of some of our assets, both in Canada and
the United States, there is minimal infrastructure currently available to
transport oil and natural gas from our existing and future wells to market. As a
result, even if we are able to engage in successful exploration and production
activities, we may not be able to effectively market the oil and natural gas
that we produce, which could adversely affect our business, financial condition,
results of operations and prospects.

Demand and competition for drilling equipment could delay
our exploration and production activities, which could adversely affect our
business, financial condition, results of operations and prospects.

13

---

Oil and natural gas exploration and development activities
depend upon the availability of drilling and related equipment (typically leased
from third parties) in the particular areas where such activities will be
conducted. Demand for such limited equipment or access restrictions may affect
the availability of such equipment to us and may delay exploration and
development activities. To the extent we are not the operator of our oil and
natural gas properties, we depend upon the operators of the properties for the
timing of activities related to the properties and are largely unable to direct
or control the activities of the operators.

Title to our oil and natural gas producing properties
cannot be guaranteed and may be subject to prior recorded or unrecorded
agreements, transfers, claims or other defects.

Although title reviews may be conducted prior to the purchase
of oil and natural gas producing properties or the commencement of drilling
wells, those reviews do not guarantee or certify that an unforeseen defect in
the chain of title will not arise to defeat our claim. Unregistered agreements
or transfers, or native land claims, may affect title. If title is disputed, we
will need to defend our ownership through the courts, which would likely be an
expensive and protracted process and have a negative effect on our operations
and financial condition. In the event of an adverse judgment, we would lose our
property rights. A defect in our title to any of our properties may have a
material adverse effect on our business, financial condition, results of
operations and prospects.

We may be unable to meet all of the obligations necessary
to successfully maintain each of the licenses and leases and working interests
in licenses and leases related to our properties, which could adversely affect
our business, financial condition, results of operations and prospects.

Our properties are held in the form of licenses and leases and
working interests in licenses and leases. If we or the holder of the license or
lease fails to meet the specific requirement of a license or lease, the license
or lease may terminate or expire. None of the obligations required to maintain
each license or lease may be met. The termination or expiration of our licenses
or leases or the working interests relating to a license or lease may have a
material adverse effect on our business, financial condition, results of
operations and prospects.

Risks related to financing continuing and future operations

We have a working capital deficiency and will be required
to raise capital through financings. We may not be able to obtain capital or
financing on satisfactory terms, or at all.

As of December 31, 2013, the Company had a working capital
deficiency of approximately $8.9 million. Excluding the non-cash warrant
liability of $0.3 million related to the fair value of US$ denominated warrants
issued in current and previous equity financings, the non-cash derivative
liability of $0.3 million related to the fair value of warrants issued in the
loan facility which closed in June 2013 and the non-current portion of financial
contract liability of $1.2 million, the working capital deficiency mainly
consists of a $2.9 million outstanding demand line of credit (maximum amount of
line - $3.5 million) and $2.9 million attributable to the outstanding loan
facility. We expect to incur general and administration expenses of
approximately $3.0 million over the next twelve months. Our loan facility in the
combined amount of $3.5 million is due and payable on December 22, 2014. We
cannot assure you that debt or equity financing will be available to us, and
even if debt or equity financing is available, it may not be on terms acceptable
to us. Our inability to access sufficient capital for our operations would have
a material adverse effect on our business, financial condition, results of
operations and prospects.

The Company's ability to continue as a going concern is
dependent upon attaining profitable operations and obtaining sufficient
financing to meet obligations and continue exploration and development
activities. Whether and when the Company can attain profitability is uncertain.
These uncertainties cast substantial doubt upon the Companys ability to
continue as going concern.

During the year ended December 31, 2013, the Company incurred a
loss of $2.6 million and has an accumulated deficit of $90.8 million. Whether
and when the Company can attain profitability is uncertain. The Company also has
a working capital deficiency of $8.9 million as at December 31, 2013. These
uncertainties cast substantial doubt upon the Companys ability to continue as
going concern in the next twelve months, because we will be required to obtain
additional capital in the future to continue our operations and there is no
assurance that we will be able to obtain such capital, through equity or debt
financing, or any combination thereof, or on satisfactory terms or at all. Our
independent auditors have included an explanatory paragraph in their report on
our consolidated financial statements for the year ended December 31, 2013 that
describes uncertainties that cast substantial doubt about our
ability to continue as a going concern. Our audited consolidated financial
statements have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board
applicable to a going concern, which implies we will continue to meet our
obligations and continue our operations for the next twelve months. Realization
values may be substantially different from carrying values as shown, and our
consolidated financial statements do not include any adjustments relating to the
recoverability or classification of recorded asset amounts or the amount and
classification of liabilities that might be necessary as a result of the going
concern uncertainty.

14

---

On November 21, 2013, the Company was advised by NYSE
Regulation representing NYSE MKT LLC (NYSE MKT or the Exchange) that a
review of the Companys Form 6K for the period ended September 30, 2013
indicates the Company is not in compliance with three of the Exchanges
continued listing standards relating to minimum stockholders equity thresholds,
consecutive annual net losses, and general going concern issues.

The Company has followed the procedures required by the
Exchange to resolve these issues and, on April 17, 2014, NYSE Regulation
reported that, in accordance with the NYSEs Company Guide, the Company has made
a reasonable demonstration of its ability to regain compliance with the
Exchanges going concern issues. The Company has committed to update NYSE
Regulation as to its financial progress until full compliance is achieved on or
before May 22, 2015, the target date for full compliance established by the
Exchange.

We anticipate making substantial capital expenditures for
future acquisition, exploration, development and production projects. We may not
be able to obtain capital or financing necessary to support these projects on
satisfactory terms, or at all.

We anticipate making substantial capital expenditures for the
acquisition, exploration, development and production of oil and natural gas
reserves in the future. If our revenues or reserves decline, we may not have
access to the capital necessary to undertake or complete future drilling
programs. Debt or equity financing, or cash generated by operations, may not be
available to us or may not be sufficient to meet our requirements for capital
expenditures or other corporate purposes. Even if debt or equity financing is
available, it may not be on terms acceptable to us. Our inability to access
sufficient capital for our operations could have a material adverse effect on
our business, financial condition, results of operations and prospects.

Our cash flow from our reserves may not be sufficient to
fund our ongoing activities at all times, thereby causing us to forfeit our
interest in certain properties, miss certain acquisition opportunities and
reduce or terminate our operations.

Our cash flow from our reserves may not be sufficient to fund
our ongoing activities at all times and we are currently utilizing our bank line
of credit to fund our working capital deficit. From time to time, we may require
additional financing in order to carry out our oil and gas acquisition,
exploration and development activities. Failure to obtain such financing on a
timely basis could cause us to forfeit its interest in certain properties, not
be able to take advantage of certain acquisition opportunities and reduce or
terminate our level of operations. If our revenues from our reserves decrease as
a result of lower oil and natural gas prices or otherwise, our ability to expend
the necessary capital to replace our reserves or to maintain our production will
be impaired. If our cash flow from operations is not sufficient to satisfy our
capital expenditure requirements, there can be no assurance that additional debt
or equity financing will be available to meet these requirements or, if
available, on favorable terms.

Debt that we incur in the future may limit our ability to
obtain financing and to pursue other business opportunities, which could
adversely affect our business, financial condition, results of operations and
prospects.

From time to time, we may enter into transactions to acquire
assets or equity of other organizations. These transactions may be financed in
whole or in part with debt, which may increase our debt levels above industry
standards for oil and natural gas companies of a similar size. Depending upon
future exploration and development plans, we may require additional equity
and/or debt financing that may not be available or, if available, may not be
available on acceptable terms. None of our organizational documents currently
limit the amount of indebtedness that we may incur. The level of our
indebtedness from time to time could impair our ability to obtain additional
financing on a timely basis to take advantage of business opportunities that may
arise.

We may be exposed to the credit risk of third parties
through certain of our business arrangements. Non-payment or non-performance by
any of these third parties could have an adverse effect on our financial
condition and results of operations.

15

---

We may be exposed to third-party credit risk through our
contractual arrangements with our current or future joint venture partners,
marketers of our petroleum and natural gas production and other parties. In the
event those entities fail to meet their contractual obligations to us, those
failures could have a material adverse effect on our financial condition and
results of operations. In addition, poor credit conditions in the industry and
of joint venture partners may affect a joint venture partner's willingness to
participate in our ongoing capital program, potentially delaying the program and
the results of the program until we find a suitable alternative partner.

Risks related to maintaining reserves and acquiring new
sources of oil and natural gas

Our success depends upon our ability to find, acquire,
develop and commercially produce oil and natural gas, which depends upon factors
outside of our control.

Oil and natural gas operations involve many risks that even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our long-term commercial success depends upon our ability to find,
acquire, develop and commercially produce oil and natural gas. We have only
recently commenced production of oil and natural gas. There is no assurance that
our other properties or future properties will achieve commercial production.
Without the continual addition of new reserves, our existing reserves and our
production will decline over time as our reserves are exploited. A future
increase in our reserves will depend not only upon our ability to explore and
develop any properties we may have from time to time, but also upon our ability
to select and acquire new suitable producing properties or prospects. No
assurance can be given that we will be able to locate satisfactory properties
for acquisition or participation. Moreover, if acquisitions or participations
are identified, we may determine that current market conditions, the terms of
any acquisition or participation arrangement, or pricing conditions, may make
the acquisitions or participations uneconomical, and further commercial
quantities of oil and natural gas may not be produced, discovered or acquired by
us, any of which could have a material adverse effect on our business, financial
condition, results of operations and prospects.

Properties that we acquire may not produce as projected,
and we may be unable to determine reserve potential, identify liabilities
associated with the properties or obtain protection from sellers against such
liabilities.

Our long-term commercial success depends upon our ability to
find, acquire, develop and commercially produce oil and natural gas reserves.
However, our review of acquired properties is inherently incomplete, as it
generally is not feasible to review in depth every individual property involved
in each acquisition. Even a detailed review of records and properties may not
necessarily reveal existing or potential problems, nor will it permit a buyer to
become sufficiently familiar with the properties to assess fully their
deficiencies and potential. Inspections may not always be performed on every
well, and environmental problems, such as ground water contamination, are not
necessarily observable even when an inspection is undertaken.

Our estimated reserves are based on many assumptions that
may prove to be inaccurate. Any material inaccuracies in the reserve estimates
or the underlying assumptions may adversely affect the quantities and present
value of our reserves.

There are numerous uncertainties inherent in estimating
quantities of oil, natural gas reserves and the future cash flows attributed to
the reserves. Our reserve and associated cash flow estimates are estimates only.
In general, estimates of economically recoverable oil and natural gas reserves
and the associated future net cash flows are based upon a number of variable
factors and assumptions, such as historical production from the properties,
production rates, ultimate reserve recovery, timing and amount of capital
expenditures, marketability of oil and gas, royalty rates, the assumed effects
of regulation by governmental agencies and future operating costs, all of which
may vary materially from actual results. All estimates are to some degree
speculative, and classifications of reserves are only attempts to define the
degree of speculation involved. For those reasons, estimates of the economically
recoverable oil and natural gas reserves attributable to any particular group of
properties, classification of such reserves based on risk of recovery and
estimates of future net revenues associated with reserves prepared by different
engineers, or by the same engineers at different times, may vary. Our actual
production, revenues, taxes and development and operating expenditures with
respect to our reserves will vary from our estimates of them, and those
variations could be material.

Estimates of proved reserves that may be developed and produced
in the future are often based upon volumetric calculations and upon analogy to
similar types of reserves rather than actual production history. Recovery
factors and drainage areas are estimated by experience and analogy to similar
producing pools. Estimates based on these methods are generally less reliable
than those based on actual production history. Subsequent evaluation of the same
reserves based upon production history and production practices will result in
variations in the estimated reserves, and those variations could be material.

16

---

Our future oil and natural gas production may not result
in revenue increases and may be adversely affected by operating conditions,
production delays, drilling hazards and environmental damages.

Future oil and natural gas exploration may involve unprofitable
efforts, not only from dry wells, but also from wells that are productive but do
not produce sufficient petroleum substances to return a profit after drilling,
operating and other costs. Completion of a well does not assure a profit on the
investment or recovery of drilling, completion and operating costs. In addition,
drilling hazards or environmental damage could greatly increase the cost of
operations, and various field operating conditions may adversely affect the
production from successful wells. These conditions include delays in obtaining
governmental approvals or consents, shut-ins of connected wells resulting from
extreme weather conditions, insufficient storage or transportation capacity or
other geological and mechanical conditions. While diligent well supervision and
effective maintenance operations can contribute to maximizing production rates
over time, production delays and declines from normal field operating conditions
cannot be eliminated and can be expected to adversely affect revenue and cash
flow levels to varying degrees.

Risks related to management of the Company

We may experience difficulty managing our anticipated
growth.

We may be subject to growth-related risks including capacity
constraints and pressure on our internal systems and controls. Our ability to
manage growth effectively will require us to continue to implement and improve
our operational and financial systems and to attract and retain qualified
management and technical personnel to meet the needs of our anticipated growth.
Our inability to deal with this growth could have a material adverse effect on
our business, financial condition, results of operations and prospects.

We depend upon key personnel and the absence of any of
these individuals could result in us having to cease operations.

Our ability to continue our operation business depends, in
large part, upon our ability to attract and maintain qualified key management
and technical personnel. Competition for such personnel is intense and we may
not be able to attract and retain such personnel.

Strategic relationships upon which we may rely are
subject to change, which may diminish our ability to conduct our operations.

Our ability to successfully acquire additional licenses, to
discover reserves, to participate in drilling opportunities and to identify and
enter into commercial arrangements depends on developing and maintaining close
working relationships with industry participants and government officials and on
our ability to select and evaluate suitable properties and to consummate
transactions in a highly competitive environment. We may not be able to
establish these strategic relationships, or if established, we may not be able
to maintain them. In addition, the dynamics of our relationships with strategic
partners may require us to incur expenses or undertake activities we would not
otherwise be inclined to undertake in order to fulfill our obligations to these
partners or maintain our relationships. If our strategic relationships are not
established or maintained, our business prospects may be limited, which could
diminish our ability to conduct our operations.

We cannot be certain that current expected expenditures
and any current or planned completion/testing programs will be realized.

We believe that the costs used to prepare internal budgets are
reasonable, however, there are assumptions, uncertainties, and risk that may
cause our allocated funds on a per well basis to change as a result of having to
alter certain activities from those originally proposed or programmed to reduce
and mitigate uncertainties and risks. These assumptions, uncertainties, and
risks are inherent in the completion and testing of wells and can include but
are not limited to: pipe failure, casing collapse, unusual or unexpected
formation pressure, environmental hazards, and other operating or production
risk intrinsic in oil and or gas activities. Any of the above may cause a delay
in any of our completion/testing programs or our ability to determine reserve
potential.

17

---

Risks related to federal, state, local and other laws,
controls and regulations

We are subject to complex federal, provincial, state,
local and other laws, controls and regulations that could adversely affect the
cost, manner and feasibility of conducting our oil and natural gas operations.

Oil and natural gas exploration, production, marketing and
transportation activities are subject to extensive controls and regulations
imposed by various levels of government, which may be amended from time to time.
Governments may regulate or intervene with respect to price, taxes, royalties
and the exportation of oil and natural gas. Regulations may be changed from time
to time in response to economic or political conditions. The implementation of
new regulations or the modification of existing regulations affecting the oil
and natural gas industry could reduce demand for crude oil and natural gas and
increase our costs, any of which may have a material adverse effect on our
business, financial condition, results of operations and prospects. In addition,
in order to conduct oil and natural gas operations, we require licenses from
various governmental authorities. We cannot assure you that we will be able to
obtain all of the licenses and permits that may be required to conduct
operations that we may desire to undertake.

There is uncertainty regarding claims of title and rights
of the aboriginal people to properties in certain portions of western Canada,
and such a claim, if made in respect of our property or assets, could adversely
affect our business, financial condition, results of operations and prospects.

Aboriginal peoples have claimed aboriginal title and rights to
a substantial portion of western Canada. We are not aware that any claims have
been made in respect of its property and assets. However, if a claim arose and
was successful it would have an adverse effect on our business, financial
condition, results of operations and prospects.

We are subject to stringent environmental laws and
regulations that may expose us to significant costs and liabilities, which could
adversely affect our business, financial condition, results of operations and
prospects.

All phases of the oil and natural gas business present
environmental risks and hazards and are subject to environmental regulation
under a variety of federal, provincial, state and local laws and regulations.
Environmental legislation provides for, among other things, restrictions and
prohibitions on spills, releases or emissions of various substances produced in
association with oil and natural gas operations. The legislation also requires
that wells and facility sites be operated, maintained, abandoned and reclaimed
to the satisfaction of applicable regulatory authorities. Compliance with
legislation can require significant expenditures, and a breach of applicable
environmental legislation may result in the imposition of fines and penalties,
some of which may be material. Environmental legislation is evolving in a manner
expected to result in stricter standards and enforcement, larger fines and
liability and potentially increased capital expenditures and operating costs.
The discharge of oil, natural gas or other pollutants into the air, soil or
water may give rise to liabilities to governments and third parties and may
require us to incur costs to remedy any discharge. Environmental laws may result
in a curtailment of production or a material increase in the costs of
production, development or exploration activities, or otherwise adversely affect
our business, financial condition, results of operations and prospects.

As a public company, our compliance costs and risks have
increased in recent years.

Legal, accounting and other expenses associated with public
company reporting requirements have increased significantly in the past few
years. We anticipate that general and administrative costs associated with
regulatory compliance will continue to increase with on-going compliance
requirements under the Sarbanes-Oxley Act of 2002, as well as any new rules
implemented by the SEC, Canadian Securities Administrators, the NYSE Amex
Equities and the Toronto Stock Exchange in the future. These rules and
regulations have significantly increased our legal and financial compliance
costs and made some activities more time-consuming and costly. We cannot assure
you that we will continue to effectively meet all of the requirements of these
regulations, including Section 404 of the Sarbanes-Oxley Act and National
Instrument 52-109 of the Canadian Securities Administrators. Any failure to
effectively implement internal controls, or to resolve difficulties encountered
in their implementation, could harm our operating results, cause us to fail to
meet reporting obligations, or result in our principal executive officer and
principal financial officer being required to give a qualified assessment of our
internal control over financial reporting. Any such result could cause investors
to lose confidence in our reported financial information, which could have a
material adverse effect on the trading price of our common shares and our
ability to raise capital. These rules and regulations have made it more
difficult and more expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced policy limits and coverage
or incur substantially higher costs to obtain the same or similar coverage in
the future. As a result, it may be more difficult for us to attract and retain
qualified individuals to serve on our board of directors or as executive
officers.

18

---

Risks Related to Our Being a Foreign Private Issuer

As a foreign private issuer, our shareholders may receive
less complete and timely data.

We are a foreign private issuer as defined in Rule 3b-4 under
the United States Securities Exchange Act of 1934. Our equity securities are
accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the
Exchange Act, pursuant to Rule 3a12-3 of the Exchange Act. Therefore, we are not
required to file a Schedule 14A proxy statement in relation to our annual
meetings of shareholders. The submission of proxy and annual meeting of
shareholder information on Form 6-K may result in shareholders having less
complete and timely information in connection with shareholder actions. The
exemption from Section 16 rules regarding reports of beneficial ownership and
purchases and sales of common shares by insiders and restrictions on insider
trading in our securities may result in shareholders having less data and there
being fewer restrictions on insiders activities in our securities.

It may be difficult to enforce judgments or bring actions
outside the United States against us and certain of our directors and officers.

It may be difficult to bring and enforce suits against us. We
are incorporated in British Columbia, Canada. Many of our directors and officers
are not residents of the United States and some of our assets are located
outside of the United States. As a result, it may be difficult for U.S. holders
of our common shares to effect service of process on these persons within the
United States or to enforce judgments obtained in the U.S. based on the civil
liability provisions of the U.S. federal securities laws against us or our
officers and directors. In addition, a shareholder should not assume that the
courts of Canada (i) would enforce judgments of U.S. courts obtained in actions
against us or our officers or directors predicated upon the civil liability
provisions of the U.S. federal securities laws or other laws of the United
States, or (ii) would enforce, in original actions, liabilities against us or
our officers or directors predicated upon the U.S. federal securities laws or
other laws of the United States.

Risks related to investing in our common shares

We have not paid any dividends on our common shares.
Consequently, your only opportunity currently to achieve a return on your
investment will be if the market price of our common shares appreciates above
the price that you pay for our common shares.

We have not declared or paid any dividends on our common shares
since our incorporation. Any decision to pay dividends on our common shares will
be made by our board of directors on the basis of our earnings, financial
requirements and other conditions existing at such future time. Consequently,
your only opportunity to achieve a return on your investment in our securities
will be if the market price of our common shares appreciates and you are able to
sell your common shares at a profit.

Our common share price has been volatile and your
investment in our common shares could suffer a decline in value. Our
common shares are traded on the Toronto Stock Exchange and the NYSE Amex
Equities. The market price of our common shares may fluctuate significantly in
response to a number of factors, some of which are beyond our control. These
factors include price fluctuations of precious metals, government regulations,
disputes regarding mining claims, broad stock market fluctuations and economic
conditions in the United States.

Dilution through officer, director, employee, consultant
or agent options could adversely affect our shareholders. Because our
success is highly dependent upon our officers, directors, employees, consultants
and agents, we have granted to some or all of our key officers, directors,
employees, consultants and agents options to purchase common shares as non-cash
incentives. To the extent that we grant significant numbers of options and those
options are exercised, the interests of our other shareholders may be
diluted.

The issuance of additional common shares may negatively
affect the trading price of our common shares.

We have issued equity securities in the past and may continue
to issue equity securities to finance our activities in the future, including to
finance future acquisitions, or as consideration for acquisitions of businesses
or assets. In addition, outstanding options and warrants to purchase our common
shares may be exercised, resulting in the issuance of additional common shares.
The issuance by us of additional common shares would result in dilution to our
shareholders, and even the perception that such an issuance may occur could have
a negative effect on the trading price of our common shares.

19

---

ITEM 4. INFORMATION ON THE COMPANY

**A.**          
**History and Development of the Company**

Introduction

Our executive office is located at:

598  999 Canada Place Vancouver, British Columbia, Canada
V6C 3E1 Telephone: (604) 638-5050 Facsimile: (604) 638-5051 Website:
www.dejour.comEmail: rhodgkinson@dejour.comor dmatheson@dejour.com

The contact person is: Mr. Robert L. Hodgkinson, Co-Chairman
and Chief Executive Officer or Mr. David Matheson, Chief Financial Officer.

Our common shares trade on the Toronto Stock Exchange and the
NYSE Amex Equities Stock Exchange under the symbol DEJ.

Our authorized capital consists of three classes of shares: an
unlimited number of common voting shares; an unlimited number of preferred
shares designated as First Preferred Shares, issuable in series; and an
unlimited number of preferred shares designated as Second Preferred Shares,
issuable in series. There are no indentures or agreements limiting the payment
of dividends and there are no conversion rights, special liquidation rights,
pre-emptive rights or subscription rights.

The First Preferred Shares have priority over the Common Shares
and the Second Preferred Shares with respect to the payment of dividends and in
the distribution of assets in the event of a winding up of Dejour. The Second
Preferred Shares have priority over the Common Shares with respect to dividends
and surplus assets in the event of a winding up of Dejour.

As of December 31, 2013, there were 148,916,374 common shares
issued and outstanding. As of December 31, 2013, there were no First Preferred
Shares and no Second Preferred Shares issued and outstanding.

Incorporation and Name Changes

Dejour Energy Inc. (formerly Dejour Enterprises Ltd.) is
incorporated under the laws of British Columbia, Canada. The Company was
originally incorporated as Dejour Mines Limited on March 29, 1968 under the
laws of the Province of Ontario. By articles of amendment dated October 30,
2001, the issued shares were consolidated on the basis of one (1) new for every
fifteen (15) old shares and the name of the Company was changed to Dejour
Enterprises Ltd. On June 6, 2003, the shareholders approved a resolution to
complete a one-for-three-share consolidation, which became effective on October
1, 2003. In 2005, the Company was continued in British Columbia under the
Business Corporations Act(British Columbia). On March 9, 2011, the
Company changed its name from Dejour Enterprises Ltd. to Dejour Energy Inc.

Financings

We have financed our operations through funds from loans,
public/private placements of common shares, common shares issued for property,
common shares issued in debt settlements, and shares issued upon exercise of
stock options and share purchase warrants. The following table summarizes our
financings for the past three fiscal years.

20

---

|Fiscal Year | Nature of Share Issuance |  | Number of Shares | Gross Proceeds
|----------- | ------------------------ |  | ---------------- | --------------
|            |                          |  |                  | (Cdn$)        
|Fiscal 2012 | Private Placement (1)    |  | 18,130,305       | 4,909,133     
|            | Exercise of Warrants     |  | 2,968,683        | 1,110,212     
|            | Exercise of Options      |  | 925,000          | 355,600       
|            |                          |  |                  |               
|Fiscal 2011 | Public Offering (2)      |  | 11,010,000       | 3,288,641     
|            | Exercise of Warrants     |  | 4,551,841        | 1,688,147     
|            | Exercise of Options      |  | 1,150,000        | 402,500       

|(1) | In June 2012, we completed a private placement of
      18,130,305 units at US $0.26 per unit. Each unit consists of one common
      share and 3/4 of one common share purchase warrant. Each whole warrant
      entitles the holder to acquire one additional common share of the Company
      at US$0.40 per common share beginning 6 months from the date of issuance
      until June 4, 2017. Gross proceeds raised were Cdn$4,909,133
      (US$4,713,879). In connection with this private placement, the Company
      paid finders fees of Cdn$294,655 (US$282,833) in cash and other related
      costs of Cdn$187,442 in cash.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | In February 2011, we completed a public offering of
      11,010,000 units at US $0.30 per unit. Each unit consists of one common
      share and one-half of one common share purchase warrant. Each whole
      warrant entitles the holder to acquire one additional common share of the
      Company at US$0.35 per common share on or before February 10, 2012. Gross
      proceeds raised were Cdn$3,288,641 (US$3,303,000). In connection with this
      private placement, the Company paid finders fees of Cdn$196,694
      (US$199,710) in cash and other related costs of Cdn$119,602 in
  cash.                              

Past Capital Expenditures

Fiscal Year
    Cash flows used for equipment and resource
      propertiesFiscal 2013
    Cdn$2,041,000 (1)Fiscal 2012
    Cdn$4,485,000 (2)Fiscal 2011
    Cdn$8,360,000 (3)


|(1) | $7,000 of these funds was spent on the purchase of
      corporate and other assets; and $2,034,000 was spent on our resource
      properties. (For a breakdown on the resource property expenditures, see
      Notes 5 and 6 to our audited consolidated financial statements for the
      fiscal year ended December 31, 2013, filed with this annual report on Form
      20-F.) 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                        
|(2) | $6,000 of these funds was spent on the purchase of
      corporate and other assets; and $4,479,000 was spent on our resource
      properties. (For a breakdown on the resource property expenditures, see
      Notes 5 and 6 to our audited consolidated financial statements for the
      fiscal year ended December 31, 2012, filed with this annual report on Form
      20-F.) 
|    |                                                                                                                                                                                                                                                                                                                                                                                        
|(3) | $29,000 of these funds was spent on the purchase of
      corporate and other assets; and $8,331,000 was spent on our resource
      properties. (For a breakdown on the resource property expenditures, see
      Notes 5 and 6 to our audited consolidated financial statements for the
      fiscal year ended December 31, 2011, filed with this annual report on Form
      20-F.)

Capital Expenditures

Dejour is committed to future growth through its strategy to
implement a full-cycle exploration and development program, augmented by
strategic acquisitions with exploitation upside.

During the year ended December 31, 2013, the Company drilled
three new wells to the Williams Fork formation at Kokopelli, the Companys core
operating area in the Piceance Basin of Colorado. The Company also completed
these wells and one other previously drilled well. The operations were primarily
funded by a U.S. based drilling fund.

During the year ended December 31, 2012, the Company incurred
$2.2 million on drilling and completion operations. Equipment and facility
expenditures were $1.4 million. The balance of $0.8 million was mostly related
to the capitalization of general and administrative costs and lease rentals on
its oil and gas interests.

21

---

Additions to property and equipment and exploration and
evaluation assets:

Year
      ended December 31, 2013
    
    
    Year
      ended December 31, 2012(CA$
      thousands)
    
    $
    
    
    % of
      total
    
    
    $
    
    
    % of
      total
    
    
    %
      changeLand acquisition and retention
    
    118
    
    
    5.8%
    
    
    265
    
    
    5.9%
    
    
    -55%Drilling and completion(1)
    
    1,014
    
    
    49.7%
    
    
    2,179
    
    
    48.6%
    
    
    -53%Facility and pipelines
    
    257
    
    
    12.6%
    
    
    1,388
    
    
    30.9%
    
    
    -81%Capitalized general and administrative
    
    645
    
    
    31.6%
    
    
    646
    
    
    14.4%
    
    
    0%Other assets
    
    7
    
    
    0.3%
    
    
    7
    
    
    0.2%
    
    
    0%2,041
    
    
    100.0%
    
    
    4,485
    
    
    100.0%
    
    
    -54%


(1)   excludes non-cash capital expenditures of
$443,000 (US$417,000) related to joint venture financing (see Financial
Contract Liability section of the MD&A for details)

Daily Production

|                                           |  | Three months ended December 31, |  |  | Year
      ended December 31, | 
|------------------------------------------ |  | ------------------------------- |  |  | ----------------------------- | 
|                                           |  | 2013                            |  |  | 2012                          | 
|By Product                                 |  |                                 |  |  |                               | 
|Oil and natural gas liquids
      (bbls/d) |  | 167                             |  |  | 193                           | 
|Natural gas (mcf/d)                        |  | 2,714                           |  |  | 755                           | 
|Total (boe/d)                              |  | 620                             |  |  | 319                           | 

The decrease in oil production for Q4 2013 was mainly the
result of the temporary curtailment of production associated with routine
repairs and maintenance at one of the main oil producing well at Woodrush.

The increase in natural gas production for the current year was
attributable to the commencement of production from the four new wells at
Kokopelli in the eastern portion of Piceance Basin of Colorado in August 2013.

**B.**          
**Business Overview**

General

The Company is in the business of acquiring, exploring and
developing energy projects with a focus on oil and gas exploration in Canada and
the United States.

The Company holds approximately 79,000 net acres of oil and gas
leases in the following regions:

| | The Peace River Arch of
      northeastern British Columbia and northwestern Alberta, Canada
|- | --------------------------------------------------------------------------------------------
| | The Piceance, Paradox and Uinta
      Basins in the US Rocky Mountains                      

Summary

22

---

Over the past few years, the Company has continued to develop
its Halfway oilfield in northeastern British Columbia, Canada while evaluating
its exploration prospects in the Piceance Basin with the intent of developing
drillable prospects of merit at the earliest possible opportunity. This process
involved several distinct steps:

| | Classification and prioritization of acreage based on
      economic promise, technical robustness, infrastructural and logistic
      advantage and commercial maturity
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Evaluation and development planning for top tier acreage
      positions                                                                                                
| | Developing partnerships within financial and industry
      circles to speed the exploitation process, and                                                              
| | Aggressively bringing production
      on line where feasible                                                                                                           

As a result of this process, the Companys assets in Canada and
the Piceance basin have moved to a higher weighting of lower risk development
projects as opposed to higher risk exploration projects.

Our business objective is to grow our oil and gas production
and generate sufficient cash flow to continue to expand company operations and
enhance shareholder value.

Specialized Skill and Knowledge:Exploration for and
development of petroleum and natural gas resources requires specialized skills
and knowledge including in the areas of petroleum engineering, geophysics,
geology and title. The Company and its subsidiaries have obtained personnel with
the required specialized skills and knowledge to carry out their respective
operations. While the current labour market in the industry is highly
competitive, the Company expects to be able to attract and maintain
appropriately qualified employees for fiscal 2014.

Cycles:All of the Company's operations in Canada are
affected by seasonal operating conditions. Dejour Energy (Alberta) Ltd. holds
properties in northwestern Alberta and northeastern British Columbia which are
accessible to heavy equipment in winter only when the ground is frozen,
typically between December to early April. For this reason drilling and pipeline
construction ceases over the remainder of the year, limiting growth to winter
only. Production operations continue year round in these areas once production
is established. The prices that the Company will receive for oil and gas
production in the future are weighted to world benchmark prices and may be
adversely affected by mild weather conditions. Following a significant increase
in oil prices in 2007 and the initial half of 2008, oil prices have been
relatively stable in the US$85.00 to US$100.00 range for the past 5 years. In
early December 2013, extreme cold weather from the polar vortex has resulted in
a sharp increase of about 25% to 30% in the price paid to producers for their
production of natural gas. It is expected that natural gas prices will remain
relatively firm at this higher level for most of 2014 as US storage facilities
are replenished following emergency withdrawals of natural gas to meet cold
weather demands.

Commodity price cycles are also affected by world industrial
supply and demand, domestic and international commodity transportation systems,
and political factors affecting construction of pipelines and exports of
controversial commodities like liquid natural gas. See "Risk Factors  Risks
related to operating an exploration, development and production company".

Environmental Protection:The Company's operations are
subject to environmental regulations (including regular environmental impact
assessments and permitting) in the jurisdictions in which it operates. Such
regulations cover a wide variety of matters, including, without limitation,
emission of greenhouse gases, prevention of waste, pollution and protection of
the environment, labour regulations and worker safety. Under such regulations
there are preventative obligations, clean-up costs and liabilities for toxic or
hazardous substances which may exist on or under any of its properties or which
may be produced as a result of its operations. Environmental legislation and
legislation relating to exploration and production of oil and natural gas will
require stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects
and a heightened degree of responsibility for companies and their directors and
employees. Such stricter standards could impact the Company's costs and have an
adverse effect on results of operations. The Company expects to incur
abandonment and site reclamation costs as existing oil and gas properties are
abandoned and reclaimed; however, the Company does not anticipate making
material expenditures beyond normal compliance with environmental regulations in
2014 and future years.

Employees:The Company had the equivalent of
approximately 10 full-time employees and consultants during 2013.

Social or Environmental Policies:The health and safety
of employees, contractors and the public, as well as the protection of the
environment, is of utmost importance to the Company. The Company endeavors to
conduct its operations in a manner that will minimize adverse effects of
emergency situations by:

23

---

| | complying with government regulations and standards;                                                                                   
|- | ---------------------------------------------------------------------------------------------------------------------------------------
| | following industry codes, practices and guidelines;                                                                                    
| | ensuring prompt, effective response and repair to
      emergency situations and environmental incidents; and                          
| | educating employees and contractors of the importance of
      compliance with corporate safety and environmental rules and procedures.

The Company believes that all Company personnel have a vital
role in achieving excellence in environmental, health and safety performance.
This is best achieved through careful planning and the support and active
participation of everyone involved.

Competitive Conditions: The Company operates in
geographical areas where there is strong competition by other companies for
reserve acquisitions, exploration leases, licences and concessions and skilled
industry personnel. The Companys competitors include major integrated oil and
natural gas companies and numerous other independent oil and natural gas
companies and individual producers and operators, many of whom have greater
financial and personnel resources than the Company. The Companys ability to
acquire additional property rights, to discover reserves, to participate in
drilling opportunities and to identify and enter into commercial arrangements
with customers is dependent upon developing and maintaining close working
relationships with its current industry partners and joint operators, and its
ability to select and evaluate suitable properties and to consummate
transactions in a highly competitive environment.

Three Year History

2013

During the year, the Company continued oil and gas production
operations at the Drake/Woodrush oilfield near Ft. St. John, British Columbia,
and commenced drilling operations at Kokopelli in the Piceance Basin of
Colorado.

The Company achieved the following operational and financial
objectives:

|1. | Completed the drilling and fracing of four new wells to
      the Williams Fork formation at Kokopelli in the eastern portion of
      Piceance Basin of Colorado. These wells are the initial four wells funded
      in the financing arrangement with a Denver-based drilling fund;
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                       
|2. | Closed a $3.5 million loan facility with a Canadian
      institutional lender and applied $1.65 million of the net proceeds to
      repay an amount owing to the Companys Canadian bank;                                                                                           
|   |                                                                                                                                                                                                                                                                                       
|3. | Extended the Companys existing $3.5 million revolving
      operating demand loan with its Canadian bank;                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                       
|4. | Increased production by 94% to 620 BOE/d for the three
      months ended December 31, 2013 from production of 319 BOE/d for the
      comparative period of 2012; and                                                                                                                
|   |                                                                                                                                                                                                                                                                                       
|5. | Increased gross revenues by 35% from $6.9 million for the
      year ended December 31, 2012 to $9.3 million for the year ended December
      31, 2013.                                                                                                                              

2012

In 2012, the Company continued its focus on production
optimization of the Drake/Woodrush oilfield in northeastern British Columbia,
Canada, while preparing for drilling and production activities in the Piceance
Basin.

During the year, the Company achieved the following objectives:

|1. | Executed a US$6.5 million financial contract with a
      private U.S. based oil and gas drilling fund whereby the parties agreed to
      form a partnership to complete the initial well in the Kokopelli Field and
      drill and complete three additional wells in early 2013. Total program
      cost was approximately US$10.4 million;                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                          
|2. | Executed a sale and farm-out agreement covering about
      7,450 acres of 100% owned western Piceance Basin lands to a listed U.S.
      oil and natural gas exploration and production company, for certain cash
      consideration and a commitment to carry the Company through the drilling
      and completion of three earning wells, with certain performance
      provisions;

24

---

|3. | Successfully tied in production at South Rangely from a
      discovery well drilled in 2011;                                                                                                                                                  
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                
|4. | Successfully raised gross proceeds of US$4.7 million in
      equity, allowing the Company to support exploration, development and
      acquisition activities of its oil and gas properties and provide for
      additional working capital;
|   |                                                                                                                                                                                                                                                
|5. | Added about 31,000 net acres to the Companys current
      landholdings in northwestern Colorado through a restructuring of its
      exploration joint venture with Brownstone Energy Inc., a joint venture
      partner;                   
|   |                                                                                                                                                                                                                                                
|6. | Successfully completed construction of the first drilling
      pad and drilled the initial well in the Kokopelli area of the Piceance
      Basin;                                                                                            
|   |                                                                                                                                                                                                                                                
|7. | Formation of a federal unit containing the leases
      adjacent to the lease on which the discovery well at South Rangely
      leasehold was drilled in 2011 in the Companys Piceance Basin area of
      operations; and                   
|   |                                                                                                                                                                                                                                                
|8. | Successfully completed and tied into production the 3rd
      oil well at the Companys Woodrush property, north of Fort St. John,
      British Columbia.                                                                                     

2011

In 2011, the Company optimized production at the Drake/Woodrush
property, and completed pre-drilling and lease curing activities at Kokopelli.
The Company also drilled a successful discovery well at South Rangely.

Key achievements were:

|1. | Successful implementation and expansion of the Halfway
      E oil pool waterflood on the Companys Woodrush property;                                                                                                  
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                           
|2. | Obtained a $7 million line of credit from a Canadian bank
      to refinance the bridge loan and to provide funds for general corporate
      purposes;                                                                   
|   |                                                                                                                                                                                                                           
|3. | Generated positive operating cash flow for the second
      half of the year;                                                                                                                                             
|   |                                                                                                                                                                                                                           
|4. | Completed all requirements for drilling on the Companys
      federal leases at Gibson Gulch, Piceance Basin, Colorado, resulting in the
      first drilling permits being issued in the fourth quarter of the year; and
|   |                                                                                                                                                                                                                           
|5. | Completed and tested a discovery well at South Rangely.
      After the well was successfully fractured and stimulated, the well flowed
      rich gas from the Mancos "B" Sand in commercial quantities.                 

United States vs. Foreign Sales/Assets

Gross Revenue for fiscal year ended:
    Canada
    United States(Cdn$ in 000)
    $
    $12/31/2011
    8,824
    --12/31/2012
    6,882
    --12/31/2013
    7,386
    1,931


Asset Location as of:
    Canada
    United States(Cdn$ in 000)
    $
    $12/31/2011
    20,622
    8,81612/31/2012
    12,118
    15,45512/31/2013
    7,695
    17,804


Commodity Price Environment

Generally, the demand for, and the price of, natural gas
increases during the colder winter months and decreases during the warmer summer
months. Pipelines, utilities, local distribution companies and industrial users
utilize natural gas storage facilities and purchase some of their anticipated
winter requirements during the summer, which can lessen seasonal demand
fluctuations. Crude oil and the demand for heating oil are also impacted by
seasonal factors, with generally higher prices in the winter. Seasonal
anomalies, such as mild winters, sometimes lessen these fluctuations.

25

---

Our results of operations and financial condition are
significantly affected by oil and natural gas commodity prices, which can
fluctuate dramatically. The market for oil and natural gas is beyond our control
and prices are difficult to predict. (See also Trend Information under item 5
Operating and Financial Review and Prospects)

Forward Contracts

The Company is not bound by an agreement (including any
transportation agreement) directly or through an aggregator, under which it may
be precluded from fully realizing, or may be protected from the full effect of,
future market prices for oil and gas. The Company had no commodity contracts in
place at December 31, 2013.

Additional Information Concerning Abandonment and
Reclamation Costs

For the Companys Canadian and US oil and gas interests, the
well abandonment costs for all wells with reserves have been included at the
property level. The Company estimated the total undiscounted amount of the cash
flows required to settle the decommissioning liabilities as at December 31, 2013
to be approximately $1,856,000. These obligations are expected to be settled
over the next 15 years with the majority of costs incurred between 2016 and
2028. Additional abandonment costs associated with non-reserves wells, lease
reclamation costs and facility abandonment and reclamation expenses have not
been included.

Government Regulations

Our oil and natural gas exploration, production and related
operations, when developed, are subject to extensive laws and regulations
promulgated by federal, state, tribal and local authorities and agencies. These
laws and regulations often require permits for drilling operations, drilling
bonds and reports concerning operations, and impose other requirements relating
to the exploration for and production of oil and natural gas. Many of the laws
and regulations govern the location of wells, the method of drilling and casing
wells, the plugging and abandoning of wells, the restoration of properties upon
which wells are drilled, temporary storage tank operations, air emissions from
flaring, compression, the construction and use of access roads, sour gas
management and the disposal of fluids used in connection with operations.

Our operations are subject to environmental regulations
(including regular environmental impact assessments and permitting) in the
jurisdictions in which it operates. Such regulations cover a wide variety of
matters, including, without limitation, emission of greenhouse gases, prevention
of waste, pollution and protection of the environment, labour regulations and
worker safety. Under such regulations there are preventative obligations,
clean-up costs and liabilities for toxic or hazardous substances which may exist
on or under any of its properties or which may be produced as a result of its
operations. Environmental legislation and legislation relating to exploration
and production of oil and natural gas will require stricter standards and
enforcement, increased fines and penalties for non-compliance, more stringent
environmental assessments of proposed projects and a heightened degree of
responsibility for companies and their directors and employees. Such stricter
standards could impact our costs and have an adverse effect on results of
operations.

The Comprehensive Environmental, Response, Compensation, and
Liability Act, or CERCLA, and comparable state statutes impose strict, joint and
several liability on owners and operators of sites and on persons who disposed
of or arranged for the disposal of "hazardous substances" found at such sites.
It is not uncommon for the government to file claims requiring cleanup actions,
demands for reimbursement for government-incurred cleanup costs, or natural
resource damages, or for neighboring landowners and other third parties to file
claims for personal injury and property damage allegedly caused by hazardous
substances released into the environment. The Federal Resource Conservation and
Recovery Act, or RCRA, and comparable state statutes govern the disposal of
"solid waste" and "hazardous waste" and authorize the imposition of substantial
fines and penalties for noncompliance, as well as requirements for corrective
actions. Although CERCLA currently excludes petroleum from its definition of
"hazardous substance," state laws affecting our operations may impose clean-up
liability relating to petroleum and petroleum-related products. In addition,
although RCRA classifies certain oil field wastes as "non-hazardous," such
exploration and production wastes could be reclassified as hazardous wastes
thereby making such wastes subject to more stringent handling and disposal
requirements. CERCLA, RCRA and comparable state statutes can impose liability
for clean-up of sites and disposal of substances found on drilling and
production sites long after operations on such sites have been completed. Other
statutes relating to the storage and handling of pollutants include the Oil
Pollution Act of 1990, or OPA, which requires certain owners and operators of
facilities that store or otherwise handle oil to prepare and implement spill
response plans relating to the potential discharge of oil into surface waters.
The OPA, contains numerous requirements relating to prevention of, reporting of,
and response to oil spills into waters of the United States. State laws mandate oil
cleanup programs with respect to contaminated soil. A failure to comply with
OPA's requirements or inadequate cooperation during a spill response action may
subject a responsible party to civil or criminal enforcement actions.

26

---

The Endangered Species Act, or ESA, seeks to ensure that
activities do not jeopardize endangered or threatened animal, fish and plant
species, or destroy or modify the critical habitat of such species. Under the
ESA, exploration and production operations, as well as actions by federal
agencies, may not significantly impair or jeopardize the species or its habitat.
The ESA has been used to prevent or delay drilling activities and provides for
criminal penalties for willful violations of its provisions. Other statutes that
provide protection to animal and plant species and that may apply to our
operations include, without limitation, the Fish and Wildlife Coordination Act,
the Fishery Conservation and Management Act, the Migratory Bird Treaty Act.
Although we believe that our operations are in substantial compliance with these
statutes, any change in these statutes or any reclassification of a species as
threatened or endangered or re-determination of the extent of "critical habit"
could subject us to significant expenses to modify our operations or could force
us to discontinue some operations altogether.

The National Environmental Policy Act, or NEPA, requires a
thorough review of the environmental impacts of "major federal actions" and a
determination of whether proposed actions on federal and certain Indian lands
would result in "significant impact." For purposes of NEPA, "major federal
action" can be something as basic as issuance of a required permit. For oil and
gas operations on federal and certain Indian lands or requiring federal permits,
NEPA review can increase the time for obtaining approval and impose additional
regulatory burdens on the natural gas and oil industry, thereby increasing our
costs of doing business and our profitability.

The Clean Water Act, or CWA, and comparable state statutes,
impose restrictions and controls on the discharge of pollutants, including
spills and leaks of oil and other substances, into waters of the United States.
The discharge of pollutants into regulated waters is prohibited, except in
accordance with the terms of a permit issued by the Environmental Protection
Agency (EPA) or an analogous state agency. The CWA regulates storm water run-off
from oil and natural gas facilities and requires a storm water discharge permit
for certain activities. Such a permit requires the regulated facility to monitor
and sample storm water run-off from its operations. The CWA and regulations
implemented thereunder also prohibit discharges of dredged and fill material in
wetlands and other waters of the United States unless authorized by an
appropriately issued permit. The CWA and comparable state statutes provide for
civil, criminal and administrative penalties for unauthorized discharges for oil
and other pollutants and impose liability on parties responsible for those
discharges for the costs of cleaning up any environmental damage caused by the
release and for natural resource damages resulting from the release.

The Safe Drinking Water Act, or SDWA, and the Underground
Injection Control (UIC) program promulgated thereunder, regulate the drilling
and operation of subsurface injection wells. EPA directly administers the UIC
program in some states and in others the responsibility for the program has been
delegated to the state. The program requires that a permit be obtained before
drilling a disposal well. Violation of these regulations and/or contamination of
groundwater by oil and natural gas drilling, production, and related operations
may result in fines, penalties, and remediation costs, among other sanctions and
liabilities under the SWDA and state laws. In addition, third party claims may
be filed by landowners and other parties claiming damages for alternative water
supplies, property damages, and bodily injury.

The Clean Air Act, as amended, restricts the emission of air
pollutants from many sources, including oil and gas operations. New facilities
may be required to obtain permits before work can begin, and existing facilities
may be required to incur capital costs in order to remain in compliance. In
addition, the EPA has promulgated more stringent regulations governing emissions
of toxic air pollutants from sources in the oil and gas industry, and these
regulations may increase the costs of compliance for some facilities.

Significant studies and research have been devoted to climate
change and global warming, and climate change has developed into a major
political issue in the United States and globally. Certain research suggests
that greenhouse gas emissions contribute to climate change and pose a threat to
the environment. Recent scientific research and political debate has focused in
part on carbon dioxide and methane incidental to oil and natural gas exploration
and production. Many state governments have enacted legislation directed at
controlling greenhouse gas emissions, and future state and federal legislation
and regulation could impose additional restrictions or requirements in
connection with our operations and favor use of alternative energy sources, which could increase
operating costs and demand for oil products. As such, our business could be
materially adversely affected by domestic and international legislation targeted
at controlling climate change.

27

---

We expect to incur abandonment and site reclamation costs as
existing oil and gas properties are abandoned and reclaimed; however, we do not
anticipate making material expenditures beyond normal compliance with
environmental regulations in 2014 and future years.

The health and safety of employees, contractors and the public,
as well as the protection of the environment, is of utmost importance to us. We
endeavour to conduct our operations in a manner that will minimize adverse
effects of emergency situations by:

- complying with government regulations and standards;
- following industry codes, practices and guidelines;
- ensuring prompt, effective response and repair to emergency situations and
  environmental incidents; and
- educating employees and contractors of the importance of compliance with
  corporate safety and environmental rules and procedures.

We believe that all of our personnel have a vital role in
achieving excellence in environmental, health and safety performance. This is
best achieved through careful planning and the support and active participation
of everyone involved.

Competition

We operate in geographical areas where there is strong
competition by other companies for reserve acquisitions, exploration leases,
licences and concessions and skilled industry personnel. Our competitors include
major integrated oil and natural gas companies and numerous other independent
oil and natural gas companies and individual producers and operators, many of
whom have greater financial and personnel resources than us. Our ability to
acquire additional property rights, to discover reserves, to participate in
drilling opportunities and to identify and enter into commercial arrangements
with customers is dependent upon developing and maintaining close working
relationships with its current industry partners and joint operators, and its
ability to select and evaluate suitable properties and to consummate
transactions in a highly competitive environment.

We compete with many companies possessing greater financial
resources and technical facilities for the acquisition of oil and gas
properties, exploration and production equipment, as well as for the recruitment
and retention of qualified employees.

Seasonality

All of our operations in Canada are affected by seasonal
operating conditions. Dejour Energy (Alberta) Ltd., our wholly owned subsidiary,
holds properties in northwestern Alberta and northeastern British Columbia which
are accessible to heavy equipment in winter only when the ground is frozen,
typically between December to early April. For this reason drilling and pipeline
construction ceases over the remainder of the year, limiting growth to winter
only. Production operations continue year round in these areas once production
is established. The prices that we will receive for oil and gas production in
the future are weighted to world benchmark prices and may be adversely affected
by mild weather conditions.

**C.**          
**Organizational Structure**

Dejour Energy Inc. (formerly Dejour Enterprises Ltd.) is
incorporated under the laws of British Columbia, Canada. The Company was
originally incorporated as Dejour Mines Limited on March 29, 1968 under the
laws of the Province of Ontario. By articles of amendment dated October 30,
2001, the issued shares were consolidated on the basis of one (1) new for every
fifteen (15) old shares and the name of the Company was changed to Dejour
Enterprises Ltd. On June 6, 2003, the shareholders approved a resolution to
complete a one-for-three-share consolidation, which became effective on October
1, 2003. In 2005, the Company was continued in British Columbia under the
Business Corporations Act(British Columbia). On March 9, 2011, the
Company changed its name from Dejour Enterprises Ltd. to Dejour Energy Inc.

28

---

Intercorporate Relationships

We have four 100% owned subsidiaries:

- Dejour Energy (USA) Corp. (Dejour USA), a Nevada corporation, holds
  Dejour's United States oil and gas interests,
- Dejour Energy (Alberta) Ltd. (DEAL), an Alberta corporation, holds its
  Canadian oil and gas interests in northwestern Alberta and northeastern
  British Columbia;
- Wild Horse Energy Ltd. (Wild Horse), an inactive Alberta corporation,
  and
- 0855524 B.C. Ltd. (0855524), a British Columbia Corporation,
  which is currently inactive.

**D.**          
**Property, Plant and Equipment**

Our executive offices are located in rented premises of
approximately 2,519 sq. ft. at 598  999 Canada Place, Vancouver, British
Columbia, V6C 3E1. We began occupying these facilities on July 1, 2009.

Resource Properties

Our current focus is on oil and gas properties located in the
United States and Canada and currently have oil and gas leases in the following
regions:

- The Piceance, Paradox and Uinta Basins in the US Rocky Mountains.
- The Peace River Arch of northeastern British Columbia and northwestern
  Alberta, Canada.

US Oil and Gas Interests

Kokopelli, Piceance Basin

During 2012, the Company drilled an initial well into the
Willams Fork natural gas formation at Kokopelli to hold its 2,200 gross acres
(1,571 net) of leasehold interests. The Company also entered into a financial
contract with an industry Drilling Fund to complete and tie-in the initial well
and drill, complete, and tie-in an additional 3 wells. The Drilling Funds
investment of US$7,000,000 (an initial investment of US$6,500,000 supplemented
with an additional US$500,000 for a total of US$7,000,000) represents about 67%
of the total program cost of US$10,400,000. The primary producing geological
horizons are the Williams Fork and Niobrara/Mancos zones at depths ranging from
9,000 to 10,500 ft. respectively.

The Companys 4-well drilling and completion program at
Kokopelli focused strictly on the Williams Fork formation and was completed in
September, 2013.

Dejour has a 72% working interest in 139 proved undeveloped
locations at the Kokopelli project. To date, the Company has delineated all
proved undeveloped (PUD) drilling locations on 10-acre spacing in the Williams
Fork. As at December 31, 2013, the total proved reserves, net to the Companys
working interest, are 18.6 million BOE having an NPV before tax, discounted at
10% of $90 million. WPX Energy, Rocky Mountain LLC, Inc. and Bill Barrett
Corporation are developing and producing the Williams Fork on adjacent acreage
to the east, west and north of the Companys acreage. Dejour has worked closely
with important constituents including local citizenry and the Bureau of Land
Management (BLM) in the US and the Colorado Division of Wildlife (Dept. of
Wildlife) to develop a mutually acceptable development plan for this
environmentally sensitive area.

The Company will base its future development plans for
Kokopelli for 2014 and 2015 on an assessment of (a) the NYMEX futures market for
natural gas, (b) the natural gas liquids markets at the Mt. Belvieu, Texas and
Conway, Kansas sales points, and (c) the ability to secure a joint venture
financing arrangement with a partner capable of financing up to a 75% working
interest in a 30-well Williams Fork development (Phase 1) followed closely by
a minimum of 20 wells in a Phase 2 program.

Roan Creek, Piceance Basin

29

---

On November 5, 2012, the Company entered into a Lease Purchase
and Farmout Agreement (the Agreement) with a US exploration and production
(E&P) company with respect to its Roan Creek acreage. Approximately 2,300
acres were sold for cash while the remaining 5,200 acres were included in a
Farmout Agreement (the Agreement) with the following terms and conditions:

|a) | The US E&P company will drill three (3) separate Test
      Wells on the three (3) lease tracts comprising the 5,200 acres and earn a
      100% working interest before payout after which Dejour will earn the right
      to back-in for a 20% working interest on a well-by-well basis;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                            
|b) | The wells must be drilled prior to the end of the
      expiration date of each lease which range from June 30, 2014 to September
      30, 2014, and                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                            
|c) | Future development of the separate tracts, if any, will
      be based upon the after-payout working interest earned by each party to
      the Agreement.                                                                                                                                 

During the third quarter of 2013, the Company was informed by
the E&P company that it would not drill the test wells and, per the
Agreement, would pay the Company a US$275,000 cash penalty on or before June 30,
2014. The penalty payment addresses the relinquishment of 3,240 of the 5,200
acres covered by the Agreement back to the Bureau of Land Management.

The Company is seeking joint venture partners to further
explore the remaining Roan Creek acreage of 1,960 acres.

Canadian Oil and Gas Interests

Drake/Woodrush, Ft. St. John, British Columbia

The Companys Drake/Woodrush oilfield is located about 110 km.
north of Ft. St. John, British Columbia, Canada. During 2013, the Company
produced approximately 75,000 BOE and 249,000 MMcf of natural gas from the 3 oil
wells and 5 natural gas wells producing from the Halfway geological formation.

The Company owns a 75% working interest in the Drake/Woodrush
oilfield and is the contractual Operator of the wells and related production
facilities and pipelines.

The Drake/Woodrush oilfield production is being enhanced by a
system of waterflood pressure maintenance which currently injects approximately
2,400 BOWD into the formation to maintain reservoir pressure. The Company
re-cycles the produced water and re-injects the water volumes back into the
reservoir.

The Company plans to further develop the natural gas potential
of the Drake/Woodrush oilfield via recompletions of existing wells and the
drilling of at least one new well. This program is dependent upon continued
stronger prices for natural gas in the Peace Arch area of northeastern British
Columbia.

30

---

Summary of Operational Highlights

|Year-to-date 2013
      vs. Year-to-date 2012    |  | Year
      Ended December 31 |  |  |       | 
|------------------------------------------------ |  | ---------------------------- |  |  | ----- | 
|(CA$ thousands,
      except as otherwise noted) |  | 2013                         |  |  | 2012  | 
|Production Volumes:                              |  |                              |  |  |       | 
|Oil and natural gas liquids (bbls/d)             |  | 215                          |  |  | 198   | 
|Natural gas
      (mcf/d)                        |  | 1,733                        |  |  | 1,040 | 
|Total (BOE/d)                                    |  | 504                          |  |  | 372   | 
|                                                 |  |                              |  |  |       | 
|Average realized prices:                         |  |                              |  |  |       | 
|Oil and natural gas liquids ($/bbl)              |  | 86.21                        |  |  | 81.37 | 
|Natural gas ($/mcf)                              |  | 4.06                         |  |  | 2.57  | 
|Total ($/BOE)                                    |  | 50.79                        |  |  | 50.59 | 
|                                                 |  |                              |  |  |       | 
|Revenue, before royalties:                       |  |                              |  |  |       | 
|Oil and natural gas liquids                      |  | 6,768                        |  |  | 5,905 | 
|Natural gas                                      |  | 2,549                        |  |  | 977   | 
|Total                                            |  | 9,317                        |  |  | 6,882 | 

For the year ended December 31, 2013 (fiscal 2013), total
revenue, before royalties, increased by $2,435,000 or, 35%, was due to a 35%
increase in oil and gas production over the year ended December 31, 2012
(fiscal 2012).

The increase in natural gas production for the current year was
attributable to the commencement of production from the four new wells at
Kokopelli in the eastern portion of Piceance Basin of Colorado in August 2013.

Oil Operations

The average price received for oil sales in fiscal 2013
increased in line with the Edmonton Par oil prices which averaged $93.24 per
barrel in fiscal 2013, compared to $86.53 per barrel received in fiscal 2012.

Average oil royalties paid for the year ended December 31, 2013
were consistent with those paid in the year ended December 31, 2012.

Operating and transportation expenses averaged $26.75 per
barrel in fiscal 2013. This represents a decrease of 29% from $37.57 per barrel
in fiscal 2012. The decrease in per unit operating and transportation expenses
in fiscal 2013 resulted from the non-recurring costs of major workovers on one
of the oil producing wells at Woodrush in 2012 and the allocation of fixed
operating costs over a higher oil production volume.

Natural Gas Operations

The average price received for gas sales increased by 58% for
fiscal 2013, relative to the corresponding period of the prior year. The
increase in Dejours average realized gas price for the current year reflected
higher benchmark prices.

Average gas royalties for fiscal 2013 were higher compared to
the corresponding period of the prior year. Initiation of gas production from
the four new wells at Kokopelli contributed to the increase in royalties in both
periods as the effective rate in Colorado is approximately 50% higher than the
lower royalty rates for marginal gas production in British Columbia.
Additionally, lower gas royalty rates in 2012 are a result of lower gas prices
and gas cost allowance credits under the province of British Columbia royalty
framework.

31

---

Operating and transportation expenses averaged $2.06 per mcf in
fiscal 2013. This represents a decrease of 24% from $2.72 per mcf in fiscal
2012. The decrease in per unit operating and transportation expenses is due to
the increase in lower-cost Colorado gas production as a percent of the Companys
total gas production.

Reserve Data

The standards of the SEC require that proved reserves be
estimated using existing economic conditions (constant pricing). Based on this
methodology, the Companys results have been calculated utilizing the 12-month
average price for each of the years presented.

The Company reports in Canadian currency and therefore the
Reserves Data set forth in the tables below has been converted to Canadian
dollars at the prevailing conversion rate at December 31, 2013. The conversion
rate used per Bank of Canada is 1.0636.

In 2013, GLJ Petroleum Consultants (GLJ), independent
petroleum engineering consultants based in Calgary, Alberta was retained by the
Company to evaluate the Canadian properties of the Company. Their report, titled
Third Party Report on Reserves, Dejour Energy (Alberta) Ltd., is dated
February 19, 2014 and has an effective date of December 31, 2013.

Gustavson Associates (Gustavson), an independent petroleum
engineering consultants based in Denver, Colorado were retained by the Company
to evaluate the US properties of the Company. Their report, titled Reserve
Estimate and Financial Forecast as to Dejours Interests in the Kokopelli Field
Area, Garfield County, Colorado is dated March 14, 2014 and has an effective
date of January 1, 2014.

The reserves data set forth below (the "Reserves Data"),
derived from GLJ and Gustavsons reports, summarizes our oil, liquids and
natural gas reserves.

The GLJ and Gustavson reports are based on certain factual data
supplied by the Company, and GLJ and Gustavson's opinion of reasonable practice
in the industry. The extent and character of ownership and all factual data
pertaining to the Companys petroleum properties and contracts (except for
certain information residing in the public domain) were supplied by the Company
to GLJ and Gustavson and accepted without any further investigation. GLJ and
Gustavson accepted this data as presented and neither title searches nor field
inspections were conducted. All statements relating to the activities of the
Company for the year ended December 31, 2013 include a full year of operating
data on the properties of the Company.

The reserve estimates of crude oil, natural gas liquids
and natural gas reserves provided herein are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual crude oil,
natural gas liquids and natural gas reserves may be greater than or less than
the estimates provided herein.

Controls Over Reserve Report Preparation

Our reserve estimates reports as of December 31, 2013 are
prepared by our independent qualified reserve evaluators, GLJ and Gustavson. To
ensure accuracy and completeness of the data prior to disclosure of reserve
estimates to the public, our reserves committee does the following: (1) reviews
our procedures for providing information to the independent qualified reserve
evaluators, (2) meets with the independent qualified reserves evaluators to
determine whether any restrictions affected the ability of the qualified
reserves evaluators to report without reservation, (3) reviews the reserves data
with management and the independent qualified reserves evaluator. If the reserve
committee is satisfied with results of its evaluation it will approve the
content of our reserve disclosure. If any concerns arise in the reserve
committees evaluation, the reserve committee will work with our management and
the independent qualified reserves evaluators to resolve the issues before
disclosure of reserves is made public.

As of December 31, 2013, the Companys reserve committee was
composed of: Craig Sturrock, Ross Gorrell and Ronnie Bozzer. Please see Item 6.
Directors, Senior Management and Employees, A. Directors and Senior Management
for biographical information on the members of the reserve committee.

32

---

Summary of Oil and Gas Reserves as of Fiscal Year-End Based
on Average Fiscal Year Prices

Net ReservesProved Reserves Category
    Oil (Mbbl)
    Condensate (MBO)
    Natural Gas (Mmcf)
    Natural Gas Liquids (Mbbl)DevelopedCanada
    114
    -
    466
    2United States
    -
    3
    367
    15UndevelopedCanada
    -
    -
    -
    -United States
    -
    587
    86,243
    3,580TOTAL PROVED
    114
    590
    87,076
    3,597


Given acceptable commodity prices, 100% of the Companys
undeveloped reserves are scheduled to be developed within the next four
years.

Canada  Increase in Total Proved Natural Gas Reserves of 551
MMcf:

During the year ended December 31, 2013, an expected increase
in natural gas reserves as there are more favorable decline curves and
additional solution gas from the proved undeveloped location. GLJ increased, by
way of a technical revision, the Companys total proved natural gas reserves by
551 MMcf.

United States  Increase in Total Proved Natural Gas Liquids
Reserves of 1,726 Mbbls and Natural Gas Reserves of 41,571 MMcf:

During the year ended December 31, 2013, an expected increase
in the natural gas reserves and natural gas liquids reserves as this resulted
from a successful 2013 drilling program which converted 47 probable drilling
locations at December 31, 2012 to proven as at December 31, 2013. Gustavson
increased, by way of an extension, the Companys total proved natural gas and
natural gas liquids by 41,571 MMcf and 1,726 Mbbls, respectively.

Total Proved Reserves

The table below compares our estimated proved reserves and
associated present value (discounted at an annual rate of 10%) of the estimated
future revenue before income tax.

December 31, 2013Canada (Proved Developed and UndevelopedReserves)
    Natural Gas
    Oil
    Natural GasLiquids
    Total
    PV-10(2)(Mmcf)
    (Mbbl)
    (Mbbl)
    (Mmcfe)
    (in thousandsCdn$)2012 12-month average prices (SEC) (1)
    466
    114
    2
    1,162
    $3,648


December 31, 2013United States (Proved Developed andUndeveloped
      Reserves)
    Natural Gas
    Condensate
    Natural GasLiquids
    Total
    PV-10(2)(Mmcf)
    (Mbbl)
    (Mbbl)
    (Mmcfe)
    (in thousandsCdn$)2013 12-month average prices (SEC) (1)
    86,610
    590
    3,595
    111,720
    $90,042


33

---

December 31, 2013Total (Proved Developed and Undeveloped
      Reserves)
    Natural Gas
    Oil
    Condensate
    Natural Gas
      Liquids
    Total
    PV-10(2)(Mmcf)
    (Mbbl)
    (Mbbl)
    (Mbbl)
    (Mmcfe)
    (in thousands Cdn$)2013 12-month average prices (SEC) (1)
    87,076
    114
    590
    3,597
    112,882
  $93,690


Reconciliation to Standardized Measure

|As at December 31, 2013                                                    |   |        |  |   |         |   |   |         |  
|-------------------------------------------------------------------------- | - | ------ |  | - | ------- | - | - | ------- | -
|(in thousands of Canadian dollars)                                         |   | Canada |  |   | USA     |   |   | Total   |  
|Present value of estimated future net cash flows before
      income taxes | $ | 3,648  |  | $ | 90,042  |   | $ | 93,690  |  
|Income taxes - discounted                                                  |   | -      |  |   | (29,123 | ) |   | (29,123 | )
|Standardized measure of discounted future net
      cash flow              | $ | 3,648  |  | $ | 60,919  |   | $ | 64,567  |  

Notes:

|(1) | The 12-month average prices (SEC) are calculated based on
      an average of market prices posted at or near the first of each month from
      January to December 2013, adjusted for pipeline transportation costs from
      the wellhead to the interstate pipeline prevailing at December 31, 2013.
      The 12-month average prices (SEC) used for Canadian properties were
      Cdn$86.12 per barrel of oil and Cdn$3.55 per Mcf of natural gas. The
      12-month average prices (SEC) used for US properties were US$86.58 per
      barrel of condensate, US$4.09 per Mcf of natural gas, and US$68.84 per
      barrel of NGLs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(2) | Present value of estimated future net cash flows before
      income taxes (PV-10) is considered a non-GAAP financial measure as defined
      by the SEC. We believe that our PV-10 presentation is relevant and useful
      to our investors because it presents the discounted future net cash flows
      attributable to our proved reserves before taking into account the related
      deferred income taxes, as such taxes may differ among various companies
      because of differences in the amounts and timing of deductible basis, net
      operating loss carryforwards and other factors. We believe investors and
      creditors use our PV-10, before tax, as a basis for comparison of the
      relative size and value of our proved reserves to the reserve estimates of
      other companies. PV-10 is not a measure of financial or operating
      performance under GAAP and is not intended to represent the current market
      value of our estimated oil and natural gas reserves. PV-10, before tax,
      should not be considered in isolation or as a substitute for the
      standardized measure of discounted future net cash flows as defined under
      GAAP.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(3) | US dollars are converted into Canadian dollars using the
      closing exchange rate on December 31, 2013, which is US$1.00 =
      Cdn$1.0636.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

***Oil and Gas Production, Production Prices and
Production Costs***

The following is our total net oil and gas production for the
fiscal years ended December 31, 2013, 2012 and 2011. Production came from our
Canadian and United States properties. Production from our United States
properties commenced in the fiscal year ended December 31, 2013.

ProductionFiscal Year Ended
    Oil and Natural Gas Liquids (bbls)
    Natural Gas (Mcf)
    Total (BOE)December 31, 2013
    78,566
    632,467
    183,977December 31, 2012
    72,567
    380,780
    136,031December 31, 2011
    81,468
    432,199
    153,501


34

---

The following table includes the average prices the Company
received for its production for the fiscal years ended December 31, 2013, 2012
and 2011.

|Average Sales Prices
|--------------------
|Fiscal Year Ended   
|December 31, 2013   
|December 31, 2012   
|December 31, 2011   

The following table includes the average production cost, not
including ad valorem and severance taxes, per unit of production for the fiscal
years ended December 31, 2013, 2012 and 2011.

Average Production CostsFiscal Year Ended
    Oil and Natural Gas Liquids ($/bbls)
    Natural Gas ($/Mcf)
    Total ($/BOE)December 31, 2013
    42.91
    2.83
    28.03December 31, 2012
    36.64
    2.80
    27.36December 31, 2011
    16.62
    2.60
    16.15


Drilling and Other Exploratory and Development Activities

During the fiscal year ended December 31, 2013, no wells were
drilled in Canada and we drilled the following wells in the United States:

Net Exploratory Wells
    Net Development WellsU.S.A
    Productive
    Dry
    Productive
    DryNatural Gas
    -
    -
    0.67
    -Total Wells
    -
    -
    0.67
    -


During the fiscal year ended December 31, 2012, no wells were
drilled in Canada and we drilled the following wells in the United States:

Net Exploratory Wells
    Net Development WellsU.S.A
    Productive
    Dry
    Productive
    DryNatural Gas
    -
    -
    0.20
    -Total Wells
    -
    -
    0.20
    -


35

---

During the fiscal year ended December 31, 2011, we drilled the
following wells:

Net Exploratory Wells
    **Net Development
      Wells**Canada
    Productive
    Dry
    Productive
    DryOil
    -
    -
    0.75
    -Service Wells
    1.50
    -
    2.25
    -Total Wells
    1.50
    -
    3.00
    -


Net Exploratory Wells
    **Net Development
      Wells**U.S.A
    Productive
    Dry
    Productive
    DryNatural Gas
    -
    -
    0.50
    -Total Wells
    -
    -
    0.50
    -


Delivery Commitments

We have no current delivery commitments for either oil or
natural gas.

Oil and Gas Properties and Wells

As of December 31, 2013, we had 11 gross (7.46 net) producing
or shut-in oil or natural gas wells.

Oil
    Natural GasCanada
    Gross
    Net
    Gross
    NetProducing
    3
    2.25
    5
    3.63Shut-In
    -
    -
    1
    0.75TOTAL
    3
    2.25
    6
    4.38


Oil
    **Natural Gas**U.S.A
    Gross
    Net
    Gross
    NetProducing
    -
    -
    4
    0.83TOTAL
    -
    -
    4
    0.83


As of December 31, 2012, we had 11 gross (7.33 net) producing
or shut-in oil or natural gas wells.

Oil
    Natural GasCanada
    Gross
    Net
    Gross
    NetProducing
    3
    2.25
    5
    3.63Shut-In
    -
    -
    1
    0.75TOTAL
    3
    2.25
    6
    4.38


Oil
    Natural GasU.S.A
    Gross
    Net
    Gross
    NetShut-In
    -
    -
    2
    0.70


36

---

TOTAL
    -
    -
    2
    0.70


As of December 31, 2011, we had 10 gross (7.13 net) producing
or shut-in oil or natural gas wells.

Oil
    Natural GasCanada
    Gross
    Net
    Gross
    NetProducing
    3
    2.25
    5
    3.63Shut-In
    -
    -
    1
    0.75TOTAL
    3
    2.25
    6
    4.38


Oil
    Natural GasU.S.A
    Gross
    Net
    Gross
    NetShut-In
    -
    -
    1
    0.50TOTAL
    -
    -
    1
    0.50


Interest in Oil and Gas Properties

The following table sets forth information for our interest in
oil and gas properties as of December 31, 2013 relating to our leasehold
acreage. Developed acres are acres spaced or assigned to productive wells
including undrilled acreage held-byproduction under the terms of a lease.
Undeveloped acres are acres on which wells have not been drilled or completed to
a point that would permit the production of commercial quantities of gas or oil,
regardless of whether such acreage contains proved reserves. Gross acres are the
total number of acres in which a working interest is owned. Net acres are the
sum of the fractional working interests owned in gross acres expressed as whole
numbers and fractions thereof.

As at December 31, 2013, the Companys developed and
undeveloped acres are as follows:

Developed Acreage
    Undeveloped Acreage
    TotalGross
    Net
    Gross
    Net
    Gross
    NetCanada
    9,640
    6,324
    4,780
    1,024
    14,420
    7,348U.S.A
    2,240
    1,611
    90,580
    70,064
    92,820
    71,675TOTAL
    11,880
    7,935
    95,360
    71,088
    107,240
    79,023


The Companys net undeveloped acres as of December 31, 2013,
together with expiries for the period from 2014 to 2016 and thereafter is as
follows.

37

---

Undeveloped AcreageAs of December 31, 2013
    Net
    2014 Expirations
    2015 Expirations
    2016 and thereafter
      ExpirationsCanada:Manning
    1,024
    -
    -
    1,024U.S.A:Ashley
    480
    -
    
    480Book Cliffs
    4,002
    3,682
    320
    -Dinosaur
    34,407
    7,765
    18,971
    7,670Gunnison
    753
    
    
    753North Rangely
    19,822
    14,912
    2,350
    2,560Pinyon Ridge
    2,237
    63
    
    2,174Plateau
    3,014
    -
    
    3,014Roan Creek
    5,180
    5,160
    20
    -San Juan
    169
    169
    
    -Subtotal:
    70,064
    31,751
    21,661
    16,651TOTAL:
    71,088
    31,751
    21,661
    17,675


38

---

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND
PROSPECTS

The following is a discussion of our consolidated operating
results and financial position, including all our wholly-owned subsidiaries. It
should be read in conjunction with our audited consolidated financial statements
and notes for the year ended December 31, 2013 and related notes included
therein under the heading "Item 18. Financial Statements" below.

The financial statements of the Company for the years ended
December 31, 2013, 2012 and 2011 are prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and interpretations of the International Financial
Reporting Interpretations Committee (IFRIC).

Certain forward-looking statements are discussed in this
Item 5 with respect to our activities and future financial results. These are
subject to risks and uncertainties that may cause projected results or events to
differ materially from actual results or events. Readers should also read the
"Cautionary Note Regarding Forward-Looking Statements" above and Item 3. Key
Information - Risk Factors.

CRITICAL ACCOUNTING ESTIMATES

The Company makes estimates and assumptions about the future
that affect the reported amounts of assets and liabilities. Estimates and
judgments are continually evaluated based on historical experience and other
factors, including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual experience may differ
from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized
prospectively by including it in profit or loss in the period of the change, if
the change affects that period only; or in the period of the change and future
periods, if the change affects both.

Information about critical judgments in applying accounting
policies that have the most significant risk of causing material adjustment to
the carrying amounts of assets and liabilities recognized in the consolidated
annual financial statements within the next financial year are discussed below:

Decommissioning liability

Decommissioning liabilities have been recognized based on the
Companys internal estimates. Assumptions, based on the current economic
environment, have been made which management believes are a reasonable basis
upon which to estimate the future liability. These estimates take into account
any material changes to the assumptions that occur when reviewed regularly by
management. Estimates are reviewed at least annually and are based on current
regulatory requirements. Significant changes in estimates of contamination and
restoration techniques will result in changes to provisions from period to
period. Actual decommissioning costs will ultimately depend on future market
prices for the decommissioning costs which will reflect the market conditions at
the time the decommissioning costs are actually incurred. The final cost of the
currently recognized decommissioning provisions may be higher or lower than
currently provided for.

Exploration and evaluation expenditure

The application of the Companys accounting policy for
exploration and evaluation expenditure requires judgment in determining whether
it is likely that future economic benefits will flow to the Company, which is
based on assumptions about future events or circumstances. Estimates and
assumptions made may change if new information becomes available. If, after the
expenditure is capitalized, information becomes available suggesting that the
recovery of the expenditure is unlikely, the amount capitalized is written off
in profit or loss in the period the new information becomes available.

Income taxes

39

---

The Company recognizes the net future tax benefit related to
deferred tax assets to the extent that it is probable that the deductible
temporary differences will reverse in the foreseeable future. Assessing the
recoverability of deferred tax assets requires the Company to make significant
estimates related to expectations of future taxable income. Estimates of future
taxable income are based on forecast cash flows from operations and the
application of existing tax laws in each jurisdiction. To the extent that future
cash flows and taxable income differ significantly from estimates, the ability
of the Company to realize the net deferred tax assets recorded at the reporting
date could be impacted. Additionally, future changes in tax laws in the
jurisdictions in which the Company operates could limit the ability of the
Company to obtain tax deductions in future periods. All tax filings are subject
to audit and potential reassessment. Accordingly, the actual income tax
liability may differ significantly from the estimated and recorded amounts.

Share-based payment transactions

The Company measures the cost of equity-settled transactions
with employees by reference to the fair value of the equity instruments at the
date at which they are granted. Estimating fair value for share-based payment
transactions requires determining the most appropriate valuation model, which is
dependent on the terms and conditions of the grant. This estimate also requires
determining the most appropriate inputs to the valuation model including the
expected life of the share option, volatility and dividend yield.

Financial contract liability

The application of the Companys accounting policy for
financial liabilities requires the Company to adjust the carrying amounts of the
financial liabilities in the event it revises its payments or receipts to
reflect actual and revised estimated cash flows. The Companys financial
contract liability was originally recognized at fair value using the effective
interest method which ensures that any interest expense over the period of
repayment is at a constant rate on the balance of the liability carried in the
balance sheet.

At December 31, 2013, the balance of the financial contract
liability was revised to reflect actual and revised estimated cash flows
resulting in a gain in financial contract liability of $1,268,000. The revisions
to the actual and revised cash flows resulted from i) downward revisions in
estimated future net revenue from the 2013 sale of ethane in Dejour USA due to
poor market conditions; ii) delays in the commencement of 2013 drilling
operations in Dejour USA, and iii) an industry-standard, interim natural gas
marketing contract in Dejour USA which failed to credit the Company with full
natural gas liquids recoveries for 2013.

Despite the reduction in the carrying value of the financial
contract liability at December 31, 2013, the corresponding asset on the
Companys balance sheet required no related charge for impairment. This resulted
from a successful 2013 drilling program which converted 47 probable drilling
locations at December 31, 2012 to proven as at December 31, 2013.

Impairment

A CGU is defined as the lowest grouping of integrated assets
that generate identifiable cash inflows that are largely independent of the cash
inflows of other assets or groups of assets. The allocation of assets into CGUs
requires significant judgment and interpretations with respect to the
integration between assets, the existence of active markets, similar exposure to
market risks, shared infrastructures, and the way in which management monitors
the operations. The recoverable amounts of CGUs and individual assets have been
determined based on the higher of fair value less costs to sell or value-in-use
calculations. The key assumptions the Company uses in estimating future cash
flows for recoverable amounts are anticipated future commodity prices, expected
production volumes and future operating and development costs. Changes to these
assumptions will affect the recoverable amounts of CGUs and individual assets
and may then require a material adjustment to their related carrying value. At
December 31, 2013, the Company has two CGUs in Canada (Drake/Woodrush and Saddle
Hills) and one CGU in the United States (Kokopelli).

Financial instrument

When estimating the fair value of financial instruments, the
Company uses third-party models and valuation methodologies that utilize
observable market data. In addition to market information, the Company
incorporates transaction specific details that market participants would utilize
in a fair value measurement, including the impact of non-performance risk.

40

---

Reserves

The estimate of reserves is used in forecasting the
recoverability and economic viability of the Companys oil and gas properties,
and in the depletion and impairment calculations. The process of estimating
reserves is complex and requires significant interpretation and judgment. It is
affected by economic conditions, production, operating and development
activities, and is performed using available geological, geophysical,
engineering, and economic data. Reserves are evaluated at least annually by the
Companys independent reserve evaluators and updates to those reserves, if any,
are estimated internally. Future development costs are estimated using
assumptions as to the number of wells required to produce the commercial
reserves, the cost of such wells and associated production facilities and other
capital costs.

FUTURE ACCOUNTING PRONOUNCEMENTS

Certain pronouncements were issued by the International
Accounting Standards Board (IASB) or the International Financial Reporting
Interpretations Committee (IFRIC) that are mandatory for accounting periods
beginning after January 1, 2014 or later periods.

The following new standards, amendments and interpretations,
have not been early adopted in these consolidated annual financial statements.
The Company is currently assessing the impact, if any, of this new guidance on
the Companys future results and financial position:

IFRS 9, Financial Instruments is part of the IASB's wider
project to replace IAS 39 Financial Instruments: Recognition and Measurement.
IFRS 9 retains but simplifies the mixed measurement model and establishes two
primary measurement categories for financial assets: amortized cost and fair
value. The basis of classification depends on the entity's business model and
the contractual cash flow characteristics of the financial asset. The amendments
to IFRS 9 will be effective as of January 1, 2018. The Company will continue to
monitor the changes to this standard as they arise and will determine the impact
accordingly.

IAS 36, Impairment of Assets was amended in May 2013. This
standard reduces the circumstances in which the recoverable amount of CGUs is
required to be disclosed and clarify the disclosures required when an impairment
loss has been recognized or reversed in the period. The amendments to IAS 36 are
effective as of January 1, 2014.

**A.**          
**Operating Results**

The Companys annual audited Consolidated Financial Statements
for the year ended December 31, 2013, including 2012 and 2011 required
comparative information, have been prepared in accordance with IFRS.

All financial information is stated in Canadian dollars, the
Companys presentation currency, unless otherwise noted.

Year ended December 31, 2013 compared to the year ended
December 31, 2012

**1.**          
**Revenues**

For the year ended December 31, 2013, total revenue, before
royalties, increased by $2,435,000 or, 35%, due to a 35% increase in oil and gas
production over the year ended December 31, 2012.

**2.**          
**Oil Operations**

The average price received for oil sales in fiscal 2013
increased in line with the Edmonton Par oil prices which averaged $93.24 per
barrel in fiscal 2013, compared to $86.53 per barrel received in fiscal 2012.

Average oil royalties paid for the year ended December 31, 2013
were consistent on a percentage basis with those paid in the year ended December
31, 2012.

41

---

Operating and transportation expenses averaged $26.75 per
barrel in fiscal 2013. This represents a decrease of 29% from $37.57 per barrel
in fiscal 2012. The decrease in per unit operating and transportation expenses
in fiscal 2013 resulted from the non-recurring costs of major workovers on one
of the oil producing wells at Woodrush in 2012 and the allocation of fixed
operating costs over a higher oil production volume.

3.           
Natural Gas Operations

The average price received for gas sales increased by 58% for
fiscal 2013, relative to the corresponding period of the prior year. The
increase in Dejours average realized gas price for the current year reflected
higher benchmark prices.

Average gas royalties for fiscal 2013 were higher compared to
the corresponding period of the prior year. Initiation of gas production from
the four new wells at Kokopelli contributed to the increase in royalties in both
periods as the effective rate in Colorado is approximately 50% higher than the
lower royalty rates for marginal gas production in British Columbia.
Additionally, lower gas royalty rates in 2012 are a result of lower gas prices
and gas cost allowance credits under the Province of British Columbia royalty
framework.

Operating and transportation expenses averaged $2.06 per mcf in
fiscal 2013. This represents a decrease of 24% from $2.72 per mcf in fiscal
2012. The decrease in per unit operating and transportation expenses is due to
the increase in lower-cost Colorado gas production as a percent of the Companys
total gas production.

4.           
General and Administrative Expenses

G&A expenses in fiscal 2013 were consistent with the amount
recorded for fiscal 2012. 2013 G&A includes the cost of a non-recurring
severance payment of approximately $280,000 to a former senior officer of the
Company. Adjusting for this payment results in a 12% reduction in G&A from
the year ended December 31, 2012 to the year ended December 31, 2013.

Year ended December 31, 2012 compared to the year ended
December 31, 2011

**1.**          
**Revenues**

For the year ended December 31, 2012 (fiscal 2012), the
Company recorded $6,882,000 in oil and natural gas sales as compared to
$8,824,000 in oil and natural gas sales for the year ended December 31, 2011
(fiscal 2011). The decrease in gross revenues was due to lower realized oil
and gas prices and lower oil and gas production.

**2.**          
**Oil Operations**

The average price received for oil sales in fiscal 2012
decreased in line with the Edmonton Par oil prices which averaged $86.53 per
barrel in fiscal 2012, compared to $97.87 per barrel received in fiscal 2011.

Average oil royalties paid for the year ended December 31, 2012
were consistent on a percentage basis with those paid in the year ended December
31, 2011.

Operating and transportation expenses averaged $37.57 per
barrel in fiscal 2012. This represents an increase of 103% from $18.49 per
barrel in fiscal 2012. The increase in per unit operating and transportation
expenses in fiscal 2012 resulted from the non-recurring costs of major workovers
on one of the oil producing wells at Woodrush in 2012 and higher waterflood
implementation expenses.

3.           
Natural Gas Operations

The average price received for gas sales decreased by 29% for
fiscal 2012, relative to the corresponding period of the prior year. The
decrease in Dejours average realized gas price for the current year reflected
lower benchmark prices.

Average gas royalties for fiscal 2012 were lower compared to
the corresponding period of the prior year. Substantial reduction in natural gas
prices in 2012 resulted in lower gas royalties.

42

---

Operating and transportation expenses averaged $2.72 per mcf in
fiscal 2012. This represents an increase of 20% from $2.26 per mcf in fiscal
2011. The increase in per unit operating and transportation expenses is due to
the allocation of fixed operating costs over a lower gas production volume.

4.           
General and Administrative Expenses

General and administrative expenses for fiscal 2012 decreased
to $3,433,000 from $4,042,000 for fiscal 2011. The Board and managements
decision to not pay a bonus to employees for the year ended December 31, 2012
and the inclusion of such a bonus in 2011 accounted for much of the difference.
Further, 2011 included non-recurring professional fees associated with the
required conversion to the International Financial Reporting Standards (IFRS).

Financial Instruments and Risk Management

The Companys financial instruments consist of cash and cash
equivalents, accounts receivable, bank line of credit, loan facility and
accounts payable and accrued liabilities. Management has determined that the
fair value of these financial instruments approximates their carrying values due
to their immediate or short-term maturity. Net smelter royalties and related
rights to earn or relinquish interests in mineral properties constitute
derivative instruments. No value or discounts have been assigned to such
instruments as there is no reliable basis to determine fair value until
properties are in development or production and reserves have been determined.

From time to time, the Company enters into derivative contracts
such as forwards, futures and swaps in an effort to mitigate the effects of
volatile commodity prices and protect cash flows to enable funding of its
exploration and development programs. Commodity prices can fluctuate due to
political events, meteorological conditions, disruptions in supply and changes
in demand.

The primary risks and how the Company mitigates them are
disclosed in Item 11  Quantitative and Qualitative Disclosures About Market
Risk, below.

43

---

**B.**          
**Liquidity and Capital Resources**

Going Concern, Bank Credit Facility and Loan
Facility

The financial statements were prepared on a going concern
basis. The going concern basis assumes that the Company will continue in
operation for the foreseeable future and will be able to realize its assets and
discharge its liabilities and commitments in the normal course of business. As
at December 31, 2013, the Company has a working capital deficiency of $8.9
million and accumulated deficit of $90.8 million. Of the $8.9 million
deficiency, only $1.24 million is represented by obligations due within one year
in the normal course of business. See WORKING CAPITAL POSITION herein.

On March 28, 2013, DEAL signed a new Commitment Letter with
the Bank to renew its $5.95 million (December 31, 2012 - $6.0 million) revolving
operating demand loan under the following terms and conditions:

|(a) | Credit Facility A  Revolving Operating Demand Loan -
      $3.7 million, to be used for general corporate purposes, ongoing
      operations, capital expenditures, and acquisition of additional petroleum
      and natural gas assets. Interest on Credit Facility A is at Prime + 1%
      payable monthly and all amounts outstanding are payable on demand any
      time, and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(b) | Credit Facility B  Non-Revolving Demand Loan - $2.25
      million. Interest on Credit Facility B was at Prime +3 1/2% payable
      monthly. Monthly principal payments of $200,000 were due and payable
      commencing March 26, 2013 with all amounts outstanding under Credit
      Facility B ($1.45 million) due and payable in full on June 30,
    2013.                

Collateral for Credit Facilities A and B (the Credit
Facilities) is provided by a $10.0 million first floating charge over all the
assets of DEAL, a general assignment of DEALs book debts, a $10.0 million
debenture with a first floating charge over all the assets of the Company and an
unlimited guarantee provided by Dejour USA. On June 5, 2013, DEAL renewed the
Credit Facilities with the Bank and the maximum amount of Credit Facility A
was reduced to $3.5 million. On June 19, 2013, Credit Facility B was repaid in
full. Further, on December 16, 2013 and February 18, 2014, DEAL renewed the
Credit Facility A with the Bank and contracted to utilize $600,000 of the $3.5
million to fund the proposed acquisition of certain producing natural gas
properties in Canada until March 31, 2014. The acquisition closed on March 26,
2014. Effective March 1, 2014, the Credit Facility reduces by $100,000 per
month. The next annual review is scheduled on or before May 1, 2014.

Under the terms of the Credit Facilities, DEAL is required to
maintain a working capital ratio of greater than 1:1 at all times. The working
capital ratio is defined as the ratio of (i) current assets (including any
undrawn and authorized availability under the Credit Facilities) less unrealized
hedging gains to (ii) current liabilities (excluding the current portion of
outstanding balances of the facility) less unrealized hedging losses. As at
December 31, 2013, DEAL was in compliance with its working capital ratio
requirement.

On June 19, 2013, the Company borrowed $3.5 million (Loan
Facility) from a Canadian institutional lender (Lender). The Loan Facility
bears interest at 14%, payable monthly, and matures on December 14, 2014. The
principal is repayable any time after December 18, 2013 without penalty.
Security for the Loan Facility is comprised of a First Deed of Trust on certain
of the Companys U.S. oil and gas interests, including a general security
agreement, a second mortgage on the Companys Canadian properties, and the
guaranty of the Company and Dejour USA.

As partial consideration for providing the Loan Facility, the
Company issued the Lender 7,291,667 Warrants. Each Warrant entitles the holder
to acquire one common share at a price of $0.24 per share any time prior to June
18, 2015. If the Company issues any common shares at a price per share less than
$0.24 (the Issue Price) any time until December 18, 2013, then the exercise
price of the Warrants would automatically be reduced to the higher of (i) the
Issue Price and (ii) $0.20. Shares acquired through the exercise of Warrants prior
to October 18, 2013 are restricted from sale through the facilities of the
Canadian stock exchange.

44

---

The Companys ability to continue as a going concern is
dependent upon attaining profitable operations and obtaining sufficient
financing to meet obligations and continue exploration and development
activities. There is no assurance that these activities will be successful.
These material uncertainties cast substantial doubt upon the Companys ability
to continue as a going concern. The related consolidated financial statements do
not reflect the adjustments to the carrying values of assets and liabilities,
the reported revenues and expenses, and the balance sheet classifications used
that would be necessary if the going concern assumptions were not appropriate.

Cash Balances

The Company had cash and cash equivalents of $505,000 as at
December 31, 2013.

Financial Contract

On December 31, 2012, Dejour USA entered into a financial
contract with a U.S. oil and gas drilling fund (Drilling Fund), that is
associated through a relationship with a former director of the Company, to
drill up to three wells and complete up to four wells (the Tranche 1 Wells) in
the State of Colorado. By agreement:

|(a) | Dejour USA contributed four natural gas well spacing
      units, including one drilled and cased well with a cost of US$1.1
      million;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(b) | The Drilling Fund contributed US$6.5 million cash
      directly to a drilling company, that is owned by a former consultant of
      Dejour USA, as prepaid drilling costs. During the year ended December 31,
      2013, the Drilling Fund also committed to invest a further US$500,000 in
      the four wells for a total of US$7.0 million. As at December 31, 2013,
      US$417,000 of the incremental US$500,000 has been invested for a total of
      US$6.9 million;                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(c) | Dejour USA will earn a before payout working interest
      of 10% to 14% and an after payout working interest of 28% to 39% in the
      net operating profits from the Tranche 1 Wells based on the actual cash
      invested in the drilling program. In September 2013, Dejour USA signed an
      amendment with the Drilling Fund and agreed to earn the revised before
      payout working interest of 15.88% to 22.23% and revised after payout
      working interest of 29.77% to 41.67% in the net operating profits from the
      Tranche 1 Wells based on the actual cash invested in the drilling
      program;                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(d) | The Drilling Fund has the right to require that Dejour
      USA purchase the Drilling Funds entire working interest in the Tranche 1
      Wells 36 months after the commencement of production from the initial
      Tranche 1 Well. In the event the Drilling Fund exercises its right, the
      purchase price to be paid by Dejour USA will equal 75% of the Drilling
      Funds actual investment less 75% of the Drilling Funds share of working
      interest net profits from the Tranche 1 Wells, if any, for the 36-month
      period, plus a top-up amount so that the Drilling Fund earns a minimum
      8% return, compounded annually and applied on a monthly basis, on 75% of
      its original investment over the 36-month period; and
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(e) | The Drilling Fund has the right to require Dejour USA to
      purchase all of the Drilling Funds interest in the Tranche 1 Wells if at
      any time Dejour USA plans to divest of greater than 51% of its Working
      Interest in the Tranche 1 Wells and resigns as Operator (a Change of
      Control Event). The purchase price is equal to the future net profit from
      the Proven and Probable Reserves attributable to the Drilling Funds
      working interest in the Tranche 1 Wells, discounted at 12%, as determined
      by a third party evaluator acceptable to both
parties.                                                                                                                                                          

45

---

Dejour USA considers the transaction to be a financial contract
liability as the risks and rewards of ownership have not been substantially
transferred at the Agreement date. On the Drilling Fund financing advance, the
Company increased property and equipment and financial contract liability by
$6.5 million (US$6.5 million). During the year ended December 31, 2013, the
Company increased property and equipment and financial contract liability by
$443,000 (US$417,000) of the incremental US$500,000 advance received in the
year. On initial recognition, the Company imputed its borrowing cost of 8.4%
based on the estimated timing and amount of operating profit using the
independent reserve engineers estimated future cash flows for the Drilling
Funds working interest in the Tranche 1 Wells. Subsequent to initial measurement
the financial contract liability will be increased by the imputed interest
expense and decreased by the Drilling Funds net operating profit from the
Tranche 1 Wells. Any changes in the estimated timing and amount of the net
operating profit cash flows will be discounted at the initial imputed interest
rate with any change in the recognized liability recognized as a gain (loss) in
the period of change. The Company has estimated the current portion of the
obligation based on the expected net operating profit to be paid to the Drilling
Fund in the next twelve months.

|(CA$ thousands)                                                      |  | $      |  
|-------------------------------------------------------------------- |  | ------ | -
|Loan advance at December 31, 2012
      (US$6,500)                   |  | 6,467  |  
|Loan advance during the year (US$417)                                |  | 443    |  
|Accretion expense (US$471)                                           |  | 486    |  
|Foreign exchange
      loss                                          |  | 461    |  
|                                                                     |  | 7,857  |  
|Less:                                                                |  |        |  
|(a) Net operating income (US$441 paid in
      2013)                 |  | (468   | )
|(b) Gain on
      financial contract liability (US$1,192)            |  | (1,268 | )
|Balance at December 31, 2013 (US$5,755)                              |  | 6,121  |  
|Current portion of
      financial contract liability (US$1,173)     |  | (1,248 | )
|Non-current portion of financial contract liability
      (US$4,582) |  | 4,873  |  

The estimated reduction in the financial contract liability is
estimated to be:

|(CA$ thousands) |  | US$   |  |  | CAD$  | 
|--------------- |  | ----- |  |  | ----- | 
|2014            |  | 1,173 |  |  | 1,248 | 
|2015            |  | 412   |  |  | 438   | 
|2016            |  | 4,170 |  |  | 4,435 | 

Working Capital Position

|As at December 31, 2013 (CA$ thousands)                                          |  | $      |  
|-------------------------------------------------------------------------------- |  | ------ | -
|Working capital deficit                                                          |  | (8,908 | )
|Non-cash warrant liability                                                       |  | 324    |  
|Non-cash derivative liability                                                    |  | 287    |  
|Current portion of
      financial contract liability                            |  | 1,248  |  
|Adjusted working capital deficit                                                 |  | (7,049 | )
|Add: Bank line of credit                                                         |  | 2,900  |  
|Add: Loan facility                                                               |  | 2,911  |  
|Adjusted working
      capital (excluding bank line of credit and loan facility) |  | (1,248 | )

Working capital is defined as current assets less current
liabilities.

As at December 31, 2013, the Company had a working capital
deficit of $8.9 million. Excluding the non-cash warrant liability of $0.3
million related to the fair value of US$ denominated warrants issued in previous
equity financings, the non-cash derivative liability of $0.3 million related to
the fair value of warrants issued in loan facility closed in June 2013 and the
current portion of financial contract liability of $1.2 million, the adjusted
working capital deficit was $7.0 million. The majority of the working capital deficit relates to the $2.9
million outstanding bank line of credit, with a $0.6 million credit limit
remaining and the $2.9 million outstanding loan facility.

46

---

The bank line of credit is classified as current liabilities
because it is a demand loan, subject to periodic review by the lender. At
December 31, 2013, Dejour USA was in default of its working capital ratio
covenant with the Canadian institutional lender (Lender) who provided the loan
facility. As a result, the loan facility is due upon demand and classified as
current liabilities. The Lender has not demanded repayment as at December 31,
2013.

The Company expects to fund future capital requirements and
expenditures through the use of a combination of cash provided by operating
activities and bank debt supplemented by new equity or debt offerings, as
required.

Capital Resources

a)Canada

During 2013, the Company incurred $31,000 of its consolidated
capital expenditures of $2 million at Drake/Woodrush in northeastern British
Columbia. These capital expenditures were funded by cash on hand and an
operating line of credit of $3,500,000 provided by DEALs Canadian bank.

The Company has developed a capital budget of $2,500,000 to
further develop the natural gas potential of its Drake/Woodrush properties. It
is expected this program, if implemented, will be funded by one, or a
combination, of the following sources:

|i)   | Existing bank operating line of credit;                                             
|---- | ------------------------------------------------------------------------------------
|     |                                                                                     
|ii)  | Proceeds of a private placement or public offering of the
      Companys shares, or
|     |                                                                                     
|iii) | A joint venture financing arrangement with an industry
      participant.           

b)United States

The Company and partners drilled and completed 4 Williams Fork
formation wells at the Companys core Kokopelli natural gas property in the
Piceance Basin in 2013. This drilling program increased the number of proved
undeveloped drilling locations from 92 locations to 139 locations, as
determined by the Companys independent reservoir engineers in a report dated
January 1, 2014.

The Company has monitored production from the 4 initial wells
since the fourth well was placed on production in September 2013. The Company is
now seeking a joint venture partner to purchase an interest in Kokopelli,
provide a negotiated amount of financing to further develop Phase II of
Kokopelli, and, initially pay for the Companys share of drilling and completion
costs up to a predetermined contractual maximum. Following completion of this
initial capital expenditure, the Company will be responsible for its working
interest share of remaining capital costs to fully develop Kokopelli.

2012

On December 31, 2012, the Company closed a US$6,500,000
financing with a Denver-based drilling fund to partially fund the initial
development of the Companys Kokopelli project in the eastern portion of the
Piceance Basin. The Drilling Fund also committed to invest a further US$500,000
in the four wells for a total of US$7.0 million. As at December 31, 2013,
US$417,000 of the incremental US$500,000 has been invested for a total of US$6.9
million. Under the terms of the industry-standard agreement, the Company will
earn a before-payout (BPO) working interest of 10% to 14% and an after
payout (APO) working interest of 28% to 39%. In September 2013, Dejour USA
signed an amendment with the Drilling Fund and agreed to earn the revised
before payout working interest of 15.88% to 22.23% and revised after payout working interest of 29.77% to 41.67% in the net
operating profits from the Tranche 1 Wells based on the actual cash invested in
the drilling program.

47

---

The agreement with the Drilling Fund provides for an additional
two tranches of drilling under the following terms and conditions:

| | The Drilling Fund will have the right until August 2015,
      but not the obligation, to invest up to an additional US$8.5 million for a
      total of US$15.5 million in two additional tranches;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Tranche 3 estimated between US$4 million to US$5 million,
      can only be initiated within two years after committing to the full US$4
      million to US$5 million in Tranche 2;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Dejour will receive a 10% BPO carried interest in all
      wells or partial wells drilled by the Drilling Fund, reverting to a 32.5%
      APO working interest. Payout to the Drilling Fund is defined as 125% of
      the capital investment amount on a tranche by tranche basis. In September
      2013, Dejour USA signed an amendment with the Drilling Fund and will
      receive a revised BPO working interest of 15.88% to 22.23% in all wells or
      partial wells drilled by the Drilling Fund, reverting to a revised APO
      working interest of 29.77% to 41.67%. Payout to the Drilling Fund is
      defined as 150% of the capital investment amount on a tranche by tranche
      basis;
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | Tranche 2 and 3 wells will be funded only in conjunction
      with Dejours plans for development of Kokopelli. If, for example, no
      development is planned, the Drilling Funds option will remain in effect
      until Dejour presents a drilling plan to the Drilling Fund; and                                                                                                                                                                                                                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | The Drilling Fund does not earn the right to put its
      Tranche 2 and 3 working interests back to the Company under any
      circumstances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

**C.**          
**Research and Development, Patents and Licenses, etc.**

None.

**D.**           **Trend Information**

During mid-December, 2013, the polar vortex resulted in
record low temperatures for most of Canada and 2/3rds of the United States. High
demand for natural gas drew working gas in storage in the U.S. down to well
under the five year average. At the end of Q1 2014, working gas in storage was
approximately 826 Bcf, roughly 849 Bcf less than the same period in 2013 and 997
Bcf off the five-year average.

The need to replenish the shortfall of natural gas in storage
will likely contribute to a strong demand for natural gas for most of the
remainder of 2014, extending into 2015. This supports the NYMEX futures prices
for natural gas at the end of Q1 2014 which show strong prices in excess of
US$4.50 per Mcf through June, 2015.

**E.**          
**Off-Balance Sheet Arrangements**

The Company has no material undisclosed off-balance sheet
arrangements that have or are reasonably likely to have, a current or future
effect on our results of operations or financial condition at December 31, 2013.

**F.**          
**Tabular Disclosure of Contractual Obligations**

As of December 31, 2013, and in the normal course of business
we have obligations to make future payments, representing contracts and other
commitments that are known and committed.

48

---

|(CA$ thousands)                       |  | 2014  |  |  | 2015 |  |  | 2016  |  |  | 2017 |  |  | 2018 |  |  | Thereafter |  |  | Total  | 
|------------------------------------- |  | ----- |  |  | ---- |  |  | ----- |  |  | ---- |  |  | ---- |  |  | ---------- |  |  | ------ | 
|                                      |  | $     |  |  | $    |  |  | $     |  |  | $    |  |  | $    |  |  | $          |  |  | $      | 
|Operating lease obligations           |  | 187   |  |  | 52   |  |  | -     |  |  | -    |  |  | -    |  |  | Nil        |  |  | 239    | 
|Bank credit facility                  |  | 2,900 |  |  | -    |  |  | -     |  |  | -    |  |  | -    |  |  | Nil        |  |  | 2,900  | 
|Loan facility                         |  | 3,500 |  |  | -    |  |  | -     |  |  | -    |  |  | -    |  |  | Nil        |  |  | 3,500  | 
|Financial contract
      liability(1) |  | 1,248 |  |  | 438  |  |  | 4,435 |  |  | -    |  |  | -    |  |  | Nil        |  |  | 6,121  | 
|Total                                 |  | 7,835 |  |  | 490  |  |  | 4,435 |  |  | -    |  |  |      |  |  | Nil        |  |  | 12,760 | 

|(1) | This represents the Companys obligations over the
      36-month put option period until it expires. See Note 12 to the
      consolidated financial statements for
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                     
|(2) | An estimate of interest on the debt cannot be made at
      this time.                                                                                              

G. Safe Harbor

The Company seeks safe harbor for our forward-looking
statements contained in Items 5.E and F. See the heading Cautionary Note
Regarding Forward-Looking Statements above.

ITEM 6.    DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES

**A.**          **Directors and Senior Management**

The following table sets forth all current directors and
executive officers of Dejour as of the date of this annual report on Form 20-F,
with each position and office held by them in the Company and the period of
service as such.

Name, Jurisdictionof Residence
      andPosition(1)
    Principal occupation oremployment during the past5 years
    Number of Dejour
      CommonShares beneficially owned,directly or
      indirectly, orcontrolled or directed(2)
    Percentage of DejourCommon Sharesbeneficially owned, directlyor indirectly, or controlledor directed(2)
    DirectorSinceRobert L.HodgkinsonBritish Columbia, Canada Director, Chairman and Chief
      Executive Officer (Age: 64)
    President of a private company, Hodgkinson Equities
      Corporation, which provides consulting services to emerging businesses in
      the petroleum resource industry. Formerly a director of Titan Uranium
      (TSX-V: TUE).
    8,000,000
    4.89%
    May 18, 2004Dr. A. Gorrell(4)(5)British Columbia, Canada Director (Age: 69)
    Dr. Gorrell has over 30 years experience with both
      private and public oil and gas property exploration and development in
      Western Canada and China. Dr. Gorrell has served as director, officer and
      controlling principal of several oil and gas ventures listed on the
      Toronto Stock Exchange. Currently, Dr. Gorrell is a director,
      President/CEO and Co-Chairman of Petromin Resources Ltd.
    -
    -
    December 14, 2012Richard Kennedy(3)(5)Alberta, Canada Director (Age: 58)
    Mr. Kennedy is a prominent barrister, solicitor and
      partner at Kennedy Agrios LLP, an Edmonton, Alberta based law firm
      focusing on commercial real estate, administrative and regulatory law.
    294,900
    0.18%
    December 14, 2012


49

---

Name, Jurisdictionof Residence
      andPosition (1)
    Principal occupation oremployment during the past5 years
    Number of Dejour CommonShares beneficially owned,directly or indirectly,
      orcontrolled or directed(2)
    Percentage of DejourCommon Sharesbeneficially owned, directlyor indirectly, or controlledor directed
      (2)
    DirectorSinceCraig Sturrock(3)(4)(5)British Columbia, Canada Director (Age: 70)
    Tax lawyer since 1971. Currently, he is a partner at
      Thorsteinssons LLP, and his practice focuses primarily on civil and
      criminal tax litigation.
    650,000
    0.40%
    August 22, 2005Ronnie Bozzer(3)(4)British Columbia, Canada Director (Age: 64)
    Mr. Bozzer has extensive years of legal practice
      encompassing mergers and acquisitions, banking and finance transactions,
      public private partnerships, syndications and securitizations.
    450,000
    0.28%
    January 15, 2014David MathesonBritish Columbia,
      Canada Chief Financial Officer (Age: 64)
    Mr. Matheson has over 30 years of executive experience in
      the oil and gas industry in both operations and finance. He previously
      served as CFO and then as President of Equatorial Energy Ltd., a public
      Canadian oil and gas exploration & production company with operations
      in Canada and Indonesia. Mr. Matheson was admitted to the Institute of
      Chartered Accountants in British Columbia, the Northwest Territories, and
      Canada in 1975.
    -
    -
    N/A


50

---

Name, Jurisdictionof Residence
      andPosition (1)
    Principal occupation oremployment during the past5 years
    Number of Dejour CommonShares beneficially owned,directly or indirectly,
      orcontrolled or directed(2)
    Percentage of DejourCommon Sharesbeneficially owned, directlyor indirectly, or controlledor directed
      (2)
    DirectorSincePhillip Bretzloff, BA,LLBBritish Columbia, Canada Vice President and General
      Counsel (Age: 64)
    Mr. Bretzloff has acted for oil, gas and energy
      companies, including extensive work for Canadian and offshore private and
      public corporations. Between 1980 and 1995, he was Senior Counsel for
      Petro-Canada. Subsequently, he was a Partner for 8 years with Cumming
      Blackett Bretzloff Todesco, Gowlings, and Baker & McKenzie, where his
      clients included PetroChina, Shell, Exxon Mobil, GazProm and Veba Oil and
      Gas.
    59,500
    0.04%
    N/ANeyeska MutEVP Operations,
      Dejour Energy (USA) Corp. (Age: 56)
    Engineer. Since 2000, she has been President of Nycon
      Energy Consulting working as an advisor to two major oil companies. Prior
      to forming Nycon Energy Consulting Mrs. Mut pursued international
      opportunities with Atlantic Richfield Corporation. Ms. Mut has been with
      Dejour since 2008.
    50,001
    0.03%
    N/A


|(1) | Each director will serve until the next annual general
      meeting of the Company or until a successor is duly elected or appointed
      in accordance with the Notice of Articles and Articles of the Company and
      the Business Corporations Act(British Columbia).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The number of common shares beneficially owned, directly
      or indirectly, or over which control or direction is exercised is based
      upon information furnished to the Company by individual directors and
      executive officers.                                
|(3) | Member of audit committee.                                                                                                                                                                                                                                                  
|(4) | Member of reserves committee.                                                                                                                                                                                                                                               
|(5) | Member of compensation and corporate governance
      committee.                                                                                                                                                                                                            

Directors and Executive Officers

Brief biographies for Dejour's directors and executive officers
are set forth below:

Robert L. Hodgkinson:Mr. Hodgkinson was the founder and
Chairman of Optima Petroleum, which drilled wells in Alberta and the Gulf of
Mexico before merging to form Petroquest Energy, a NASDAQ traded company.
Subsequently, he founded and was CEO of Australian Oil Fields, which would later
merge to become Resolute Energy/Cardero Energy Inc. Mr. Hodgkinson was also a
Vice-President and partner of Canaccord Capital Corporation, and an early stage
investor and original lease financier in Synenco Energy's Northern Lights
Project in the Alberta oil sands.

Dr. A. Gorrell:Dr. Gorrell has over 30 years
experience with both private and public oil and gas property exploration and
development in Western Canada and China. Dr. Gorrell has served as director,
officer and controlling principal of several oil and gas ventures listed on the
Toronto Stock Exchange. Currently, Dr. Gorrell is a director, President/CEO and
Co-Chairman of Petromin Resources Ltd.

Richard Kennedy:Mr. Kennedy is a prominent barrister,
solicitor and partner at Kennedy Agrios LLP, an Edmonton, Alberta based law firm
focusing on commercial real estate, administrative and regulatory law.

51

---

Craig Sturrock:Mr. Sturrock has served as a director
and founding member of various public and private companies. Admitted to the
British Columbia Bar in 1969, he joined Thorsteinssons LLP, tax lawyers in 1971.
He served for 15 years as a tax lawyer and partner at Birnie, Sturrock &
Company returning to Thorsteinssons as a partner in 1989. He is an author and
speaker for the Canadian and British Columbia Bar Associations, the Continuing
Legal Education Society of British Columbia and the Canadian Tax Foundation. He
is also a former member of the Board of Governors of the Canadian Tax
Foundation.

Ronnie Bozzer:Mr. Bozzer's legal practice encompasses
mergers and acquisitions, banking and finance transactions, public private
partnerships, syndications and securitizations. His honours include recieving
the highest peer review rating by Martindale Hubbell, becoming Chairman of
Canada's International Finance Centre and recognition by "2010 Best Lawyers in
Canada" in the specialty of Banking Law. Mr Bozzer is also listed as Candian
Leading Lawyer in the field of Corporate Law by "Law Day".

David Matheson: Mr. Matheson has over 30 years of
executive experience in the oil and gas industry in both operations and finance.
He previously served as CFO and then as President of Equatorial Energy Ltd., a
public Canadian oil and gas exploration & production company with operations
in Canada and Indonesia. Mr. Matheson was admitted to the Institute of Chartered
Accountants in British Columbia, the Northwest Territories, and Canada in
1975.

Phillip Bretzloff: Mr. Bretzloff has acted for oil, gas
and energy companies, including extensive work for Canadian and offshore private
and public corporations. Between 1980 and 1995, he was Senior Counsel for
Petro-Canada. Subsequently, he was a Partner for 8 years with Cumming Blackett
Bretzloff Todesco, Gowlings, and Baker & McKenzie, where his clients
included PetroChina, Shell, Exxon Mobil, GazProm and Veba Oil and Gas.

Neyeska Mut: Since 2000, Ms. Mut has been President of
Nycon Energy Consulting working as an advisor to two major oil companies. Prior
to forming Nycon Energy Consulting, Ms. Mut pursued international opportunities
with Atlantic Richfield Corporation. Ms. Mut has been with Dejour since 2008.

Family Relationships

There are no family relationships between any directors or
executive officers of the Company.

Arrangements

There are no known arrangements or understandings with any
major shareholders, customers, suppliers or others, pursuant to which any of the
Companys officers or directors was selected as an officer or director of the
Company, other than indicated immediately above and at Item 7. Major
Shareholders and Related Party Transactions - Related Party Transactions.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

52

---

To the knowledge of the Company, no director or executive
officer of the Company is, or has been in the last ten years, a director, chief
executive officer or chief financial officer of an issuer that, while that
person was acting in that capacity, (a) was the subject of a cease trade order
or similar order or an order that denied the issuer access to any exemptions
under Canadian securities legislation, for a period of more than 30 consecutive
days, or (b) was subject to an event that resulted, after that person ceased to
be a director, chief executive officer or chief financial officer, in the issuer
being the subject of a cease trade or similar order or an order that denied the
issuer access to any exemption under Canadian securities legislation, for a
period of more than 30 consecutive days. To the knowledge of the Company, no
director or executive officer of the Company, or a shareholder holding a
sufficient number of securities in the Company to affect materially the control
of the Company, is or has been in the last ten years, a director or executive
officer of an issuer that, while or acting in that capacity within a year of
that person ceasing to act in that capacity, became bankrupt, made a proposal
under any legislation relating to bankruptcy or insolvency or was subject to or
instituted any proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its assets. To the
knowledge of the Company, in the past ten years, no such person has become
bankrupt, made a proposal under any legislation related to bankruptcy or
insolvency, or was subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold their assets.

Conflicts of Interest

Certain of the Company's directors and officers serve or may
agree to serve as directors or officers of other reporting companies or have
significant shareholdings in other reporting companies and, to the extent that
such other companies may participate in ventures in which the Company may
participate, the directors of the Company may have a conflict of interest in
negotiating and concluding terms respecting the extent of such participation. In
the event that such a conflict of interest arises at a meeting of the Company's
directors, a director who has such a conflict will abstain from voting for or
against the approval of such participation or such terms and such director will
not participate in negotiating and concluding terms of any proposed transaction.
From time to time, several companies may participate in the acquisition,
exploration and development of natural resource properties thereby allowing for
their participation in larger programs, permitting involvement in a greater
number of programs and reducing financial exposure in respect of any one
program. It may also occur that a particular company will assign all or a
portion of its interest in a particular program to another of these companies
due to the financial position of the company making the assignment. Under the
laws of the Province of British Columbia, the directors of the Company are
required to act honestly, in good faith and in the best interests of the
Company. In determining whether or not the Company will participate in a
particular program and the interest therein to be acquired by it, the directors
will primarily consider the degree of risk to which the Company may be exposed
and its financial position at that time. See also "Description of the Business 
Risk Factors".

**B.**          **Compensation**

Basis of Compensation for Executive Officers

The Company compensates its executive officers through a
combination of base compensation, bonuses and Common Stock options. The base
compensation provides an immediate cash incentive for the executive officers.
Bonuses encourage and reward exceptional performance over the financial year.
Common Stock options ensure that the executive officers are motivated to achieve
long term growth of the Company and continuing increases in shareholder value.
In terms of relative emphasis, the Company places more importance on Common
Stock options as long term incentives. Bonuses are related to performance and
may form a greater or lesser part of the entire compensation package in any
given year. Each of these means of compensation is briefly reviewed in the
following sections.

Base Compensation

Base compensation, including that of the Chief Executive
Officer, are set by the Compensation Committee and approved by the Board of
Directors on the basis of the applicable executive officers responsibilities,
experience and past performance. The compensation program is intended to provide
a base compensation competitive among companies of a comparable size and
character in the oil and gas industry. In making such an assessment, the Board
considers the objectives set forth in the Companys business plan and the
performance of executive officers and employees in executing the plan in
combination with the overall result of the activities undertaken.

53

---

Common Stock Options

The Company provides long term incentive compensation to its
executive officers through the Common Stock Option Plan, which is considered an
integral part of the Companys compensation program. Upon the recommendation of
management and approval by the Board of Directors, stock options are granted
under the Companys Option Plan to new directors, officers and key employees,
usually upon their commencement of employment with the Company. The Board
approves the granting of additional stock options from time to time based on its
assessment of the appropriateness of doing so in light of the long term
strategic objectives of the Company, its current stage of development, the need
to retain or attract key technical and managerial personnel in a competitive
industry environment, the number of stock options already outstanding, overall
market conditions, and the individuals level of responsibility and performance
within the Company.

The Board views the granting of stock options as a means of
promoting the success of the Company and creating and enhancing returns to its
shareholders. As such, the Board does not grant stock options in excessively
dilutive numbers. Total options outstanding are presently limited to 10% of the
total number of shares outstanding under the rules of the TSX. Grant sizes are,
therefore, determined by various factors including the number of eligible
individuals currently under the Option Plan and future hiring plans of the
Company.

The Board granted a total of 3,750,000 stock options to the
executive officers in 2013.

Summary Compensation Table

The following table provides a summary of the compensation
earned during the fiscal year ended December 31, 2013 for the Named Executive
Officers and Directors listed in the table below.

54

---

|                                                                         |                                             | Annual Compensation | Long Term Compensation  |                  
|------------------------------------------------------------------------ | ------------------------------------------- | ------------------- | ----------------------- | -----------------
|Name andprincipalposition                                                | Year                                        |                     | Salary($)               |                  
|SecuritiesUnderOption/SAR'sGranted(#)                                    | Shares/UnitsSubject toResaleRestrictions($)
|Robert Hodgkinson, Director, Chairman and Chief
      Executive Officer  | 2013 2012 2011                              |                     | 78,000 78,000 78,000    |                  
|Harrison Blacker, Director and President of
      Dejour Energy (USA)(1) | 2013 2012 2011                              | US$
      US$ US$   | 310,000 326,688 295,000 |                  
|Stephen Mut, Director and Co-Chairman(3)                                 | 2013 2012 2011                              |                     | Nil Nil Nil             | US$
      US$ US$
|Craig Sturrock, Director                                                 | 2013 2012 2011                              |                     | Nil Nil Nil             |                  
|Darren Devine, Director (4)                                              | 2013 2012 2011                              |                     | Nil Nil Nil             |                  
|Richard Bachmann Director(5)                                             | 2013 2012                                   |                     | Nil Nil                 |                  
|Dr. A. Gorrell Director                                                  | 2013 2012                                   |                     | Nil Nil                 |                  
|Richard Kennedy Director                                                 | 2013 2012                                   |                     | Nil Nil                 |                  
|David Matheson, Chief Financial Officer(6)                               | 2013                                        |                     | 188,141                 |                  
|Mathew Wong, Chief Financial Officer(7)                                  | 2013 2012 2011                              |                     | 5,650 78,000 78,000     |                  
|Neyeska Mut, EVP Operations of Dejour Energy
      (USA)                 | 2013 2012 2011                              | US$
      US$ US$   | 200,470 200,470 200,470 |                  
|Phil Bretzloff, VP and General Counsel                                   | 2013 2012 2011                              |                     | Nil Nil Nil             |                  

|(1) | Mr. Blacker was the President of Dejour Energy (USA)
      Corp. until January 15, 2014, when he departed the Corporation. He ceased
      to be an executive officer and director of the Corporation effective that
      date.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | US$58,000 was paid for relocation expenses
      reimbursement.                                                                                                                                                                 
|(3) | Mr. Mut resigned from the Board on January 15,
    2014.                                                                                                                                                                        
|(4) | Mr. Devine resigned from the Board on April 10,
    2013.                                                                                                                                                                       
|(5) | Mr. Bachmann resigned from the Board on January 15,
      2014.                                                                                                                                                                 
|(6) | On January 28, 2013, Mr. Matheson was appointed Chief
      Financial Officer of the Corporation.                                                                                                                               

55

---

|(7) | On January 28, 2013, Mr. Wong resigned from his position
      as Chief Financial Officer and ceased to be an executive officer of the
      Corporation on the date of his resignation. Amount represents Mr. Wongs
      remuneration from January 1, 2013 to January 28, 2013 of $31,702 in his
      capacity as Chief Financial Officer.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock Option Grants

Name
    Number of Options Granted
    Exercise Price per Share
    Grant Date
    Expiration DateRobert Hodgkinson
    775,000
    $0.18
    April 4, 2013
    April 3, 2016Harrison Blacker
    775,000
    $0.18
    April 4, 2013
    April 3, 2016Stephen Mut
    325,000
    $0.18
    April 4, 2013
    April 3, 2016Craig Sturrock
    250,000
    $0.18
    April 4, 2013
    April 3, 2016Darren Devine
    200,000
    $0.18
    April 4, 2013
    April 3, 2016David Matheson
    500,000
    $0.20
    February 12, 2013
    February 11, 2016David Matheson
    250,000
    $0.18
    April 4, 2013
    April 3, 2016Neyeska Mut
    450,000
    $0.18
    April 4, 2013
    April 3, 2016Phil Bretzloff
    225,000
    $0.18
    April 4, 2013
    April 3, 2016


Director Compensation

The Company has compensation agreements for its Directors who
are not executive officers. Under the agreements, Directors receive $2,500 per
meeting for the first 4 meetings each year, and $1,500 for each meeting
thereafter. The Board of Directors may award special remuneration to any
Director undertaking any special services on behalf of the Company other than
services ordinarily required of a Director. Per an amendment to the agreements
approved by the Board of Directors, effective January 1, 2010, the Directors
received $1,000 per quarter plus $500 for each meeting.

Long Term Incentive Plan Awards

Long term incentive plan awards ("LTIP") means any plan
providing compensation intended to serve as an incentive for performance to
occur over a period longer than one financial year, whether the performance is
measured by reference to financial performance of the Company or an affiliate of
the Company, the price of the Company's shares, or any other measure, but does
not include option or stock appreciation rights plans or plans for compensation
through restricted shares or units. The Company did not award any LTIPs to any
executive officer during the most recently completed financial year ended
December 31, 2013. There are no pension plan benefits in place for the executive
officers.

Stock Appreciation Rights

Stock appreciation rights ("SARs") means a right,
granted by the Company or any of its subsidiaries as compensation for services
rendered or in connection with office or employment, to receive a payment of
cash or an issue or transfer of securities based wholly or in part on changes in
the trading price of the Company's shares. No SARs were granted to, or exercised
by, any executive officer of the Company during the most recently completed
financial year ended December 31, 2013.

Bonus/Profit Sharing/Non-Cash Compensation

The Board adopted a bonus plan for eligible executives, which
include the senior executives of the Company or any subsidiary of the Company,
including but not limited to the CEO, President, Executive Vice-President and
CFO who, by the nature of their positions are, in the opinion of the Committee,
in a senior position to contribute to the success of the Company.

The bonus plan includes both non-discretionary and
discretionary portions.

| | A) | Executives Non-Discretionary;                                          
| | -- | -----------------------------------------------------------------------
| |    |                                                                        
| |    | Each Eligible Executives will receive a USD$100,000 award
      should:

56

---

| | i)  | Total Shareholder Return % exceeds Total XEG Return % by
      a minimum of 10% and in addition. For purposes of the bonus plan,
      XEG is defined as the iShares CDN Energy Sector Index Fund,
      trading under the symbol XEG on the TSX. Total Shareholder Return and
      Total XEG Return are based on the 20 days average closing shares price of
      Dejour shares and XEG on the TSX at the end of each fiscal
year.;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ii) | Total Shareholder Return is positive (the share price of
      Dejour shares is higher at the end of the year, in comparison to, the
      price of the shares at the beginning of the
year).                                                                                                                                                                                                                                              

| |    | For example, for fiscal 2011, if Total Shareholder Return
      % is 20%, while Total XEG Return is 5%, then Dejours stock outperformed
      the XEG by 15% and a USD$100,000 award is payable to each executives.
      However, this award would only be payable in the event that during the
      same period shareholder return is positive.                                                                                                                                                                                                                                                                                       
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | B) | Executives Discretionary;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | The Compensation Committee, upon the recommendation of
      the CEO, shall review (i) performance goals and objectives (Performance
      Targets') for the Company and the subsidiaries for such period and (ii)
      target awards (Target Awards') for each Participant which shall be based
      on, up to 30% of the Participant's base compensation, provided however,
      the Performance Targets for each Executive Participants shall be exactly
      the same during each year, calculated based on the same percentage of each
      Participants base compensation, unless otherwise agreed by the
      Participants.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    | Such Performance Targets shall include but not be limited
      to the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |  | Increase in oil & gas production;                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Achievement of financial stability and working capital
      position including compliance with the Company loan covenants;                                  
| |  | Increase in Proved Developed Production (PDP) Reserves;                                                                                                      
| |  | Increase in Proved and Probable (2P) reserves;                                                                                                               
| |  | Creating significant positive impact on the Company
      business as demonstrated by significant accomplishments not in the base
      budget/business plan;
| |  | Increase in Operating Cash flow and Adjusted EBITDA;                                                                                                         
| |  | Reduce operation costs;                                                                                                                                      
| |  | Reducing overhead costs;                                                                                                                                     
| |  | Other factors or extraordinary success, that in the
      opinion of the Committee, enhance shareholder value.                                               

Pension/Retirement Benefits

No funds were set aside or accrued by the Company during fiscal
2013 to provide pension, retirement or similar benefits for Directors or Senior
Management.

**C.**          **Board Practices**

Compensation and Corporate Governance Committee

The Company has a Compensation and Corporate Governance
Committee composed of three Directors, Richard Kennedy, Dr. A. Gorrell and Craig
Sturrock.

Role of the Compensation and Corporate Governance
Committee

The Compensation and Corporate Governance Committee exercises
general responsibility regarding overall executive compensation. The Board sets
the annual compensation, bonus, options and other benefits of the Chief
Executive Officer and approves compensation for all other executive officers of
the Corporation after considering the recommendations of the Compensation and Corporate Governance Committee. Each or the
members of the Compensation and Corporate Governance Committee has extensive
experience in management and compensation procedures.

57

---

The members of the Compensation and Corporate Governance
Committee do not have fixed terms and are appointed and replaced from time to
time by resolution of the Board of Directors.

Audit Committee

The Companys Board of Directors has a separately-designated
standing Audit Committee established for the purpose of overseeing the
accounting and financial reporting processes of the Company and audits of the
Companys annual financial statements in accordance with Section 3(a)(58)(A) of
the Exchange Act. As of the date of this annual report on Form 20-F, the
Companys Audit Committee is comprised of Richard Kennedy, Craig Sturrock and
Ronnie Bozzer.

In the opinion of the Companys Board of Directors, all the
members of the Audit Committee are independent (as determined under Rule 10A-3
of the Exchange Act and Section 803A of the NYSE Amex Company Guide). The Audit
Committee meets the composition requirements set forth by Section 803B(2) of the
NYSE Amex Company Guide. All two members of the Audit Committee are financially
literate, meaning they are able to read and understand the Companys financial
statements and to understand the breadth and level of complexity of the issues
that can reasonably be expected to be raised by the Companys financial
statements.

The members of the Audit Committee do not have fixed terms and
are appointed and replaced from time to time by resolution of the Board of
Directors.

Terms of Reference for the Audit Committee

Audit Committee Mandate

The primary function of the audit committee is to assist the
Board in fulfilling its financial oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company to
regulatory authorities and Shareholders, the Companys systems of internal
controls regarding finance and accounting and the Companys auditing, accounting
and financial reporting processes. Consistent with this function, the audit
committee will encourage continuous improvement of, and should foster adherence
to, the Companys policies, procedures and practices at all levels. The audit
committees primary duties and responsibilities are to:

- Serve as an independent and objective party to monitor the Companys
  financial reporting and internal control system and review the Companys
  financial statements;
- Review and appraise the performance of the Companys external auditors;
  and
- Provide an open avenue of communication among the Companys auditors,
  financial and senior management and the Board.

Composition

The audit committee shall be comprised of three Directors as
determined by the Board, the majority of whom shall be free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the audit committee.

At least one member of the audit committee shall have
accounting or related financial management expertise. All members of the audit
committee that are not financially literate will work towards becoming
financially literate to obtain a working familiarity with basic finance and
accounting practices. For the purposes of the Company's Charter, the definition
of financially literate is the ability to read and understand a set of
financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of
the issues that can presumably be expected to be raised by the Company's
financial statements.

The members of the audit committee shall be elected by the
Board at its first meeting following the annual Shareholders meeting. Unless a
Chair is elected by the full Board, the members of the audit committee may
designate a Chair by a majority vote of the full audit committee membership.

58

---

Meetings

The audit committee shall meet a least twice annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the audit committee will meet at least annually with the Chief
Financial Officer and the external auditors in separate sessions.

Responsibilities and Duties

To fulfill its responsibilities and duties, the audit committee
shall:

Documents/Reports Review

|(a) | Review and update this Charter annually.                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Review the Company's financial statements, MD&A and
      any annual and interim earnings, press releases before the Company
      publicly discloses this information and any reports or other financial
      information (including quarterly financial statements), which are
      submitted to any governmental body, or to the public, including any
      certification, report, opinion, or review rendered by the external
      auditors.
|(c) | Approve, on behalf of the Board, the Corporations
      interim financial statements to be filed pursuant to section 4.3 of NI
      51-102, before the Corporation publicly discloses such
  information.                                                                                                                                                                                                                                         

External Auditors

|(a) | Review annually, the performance of the external auditors
      who shall be ultimately accountable to the Board and the audit committee
      as representatives of the Shareholders of the Company.                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Obtain annually, a formal written statement of external
      auditors setting forth all relationships between the external auditors and
      the Company, consistent with Independence Standards Board Standard
    1.                                                                                        
|(c) | Review and discuss with the external auditors any
      disclosed relationships or services that may impact the objectivity and
      independence of the external auditors.                                                                                                                                    
|(d) | Take, or recommend that the full Board take, appropriate
      action to oversee the independence of the external auditors.                                                                                                                                                                                     
|(e) | Recommend to the Board the selection and, where
      applicable, the replacement of the external auditors nominated annually
      for Shareholder approval.                                                                                                                                                   
|(f) | At each meeting, consult with the external auditors,
      without the presence of management, about the quality of the Companys
      accounting principles, internal controls and the completeness and accuracy
      of the Company's financial statements.                                                 
|(g) | Review and approve the Company's hiring policies
      regarding partners, employees and former partners and employees of the
      present and former external auditors of the Company.                                                                                                                        
|(h) | Review with management and the external auditors the
      audit plan for the year-end financial statements and intended template for
      such statements.                                                                                                                                                    
|(i) | Review and pre-approve all audit and audit-related
      services and the fees and other compensation related thereto, and any
      non-audit services, provided by the Companys external auditors. The
      pre-approval requirement is waived with respect to the provision of
      non-audit services if:

| | i.   | the aggregate amount of all such non-audit services
      provided to the Company constitutes not more than five percent of the
      total amount of revenues paid by the Company to its external auditors
      during the fiscal year in which the non-audit services are
  provided;                                                                     
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii.  | such services were not recognized by the Company at the
      time of the engagement to be non-audit services; and                                                                                                                                                                                                                                           
| | iii. | such services are promptly brought to the attention of
      the audit committee by the Company and approved prior to the completion of
      the audit by the audit committee or by one or more members of the audit
      committee who are members of the Board to whom authority to grant such
      approvals has been delegated by the audit
committee.

Provided the pre-approval of the non-audit services is
presented to the audit committee's first scheduled meeting following such
approval such authority may be delegated by the audit committee to one or more
independent members of the audit committee.

59

---

Financial Reporting Processes

|(a) | In consultation with the external auditors, review with
      management the integrity of the Company's financial reporting process,
      both internal and external.                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Consider the external auditors judgments about the
      quality and appropriateness of the Companys accounting principles as
      applied in its financial reporting.                                                                                                            
|(c) | Consider and approve, if appropriate, changes to the
      Companys auditing and accounting principles and practices as suggested by
      the external auditors and management.                                                                                                    
|(d) | Review significant judgments made by management in the
      preparation of the financial statements and the view of the external
      auditors as to appropriateness of such judgments.                                                                                            
|(e) | Following completion of the annual audit, review
      separately with management and the external auditors any significant
      difficulties encountered during the course of the audit, including any
      restrictions on the scope of work or access to required
  information.
|(f) | Review any significant disagreement among management and
      the external auditors in connection with the preparation of the financial
      statements.                                                                                                                           
|(g) | Review with the external auditors and management the
      extent to which changes and improvements in financial or accounting
      practices have been implemented.                                                                                                                
|(h) | Review any complaints or concerns about any questionable
      accounting, internal accounting controls or auditing matters.                                                                                                                                                         
|(i) | Review certification process.                                                                                                                                                                                                                                                        
|(j) | Establish a procedure for the confidential, anonymous
      submission by employees of the Company of concerns regarding questionable
      accounting or auditing matters.                                                                                                          

Other

Review any related-party transactions

Audit Committee Oversight

At no time since the commencement of the Companys most
recently completed financial year was a recommendation of the audit committee to
nominate or compensate an external auditor not adopted by the Board of
Directors.

**D.**          **Employees**

The Company had the equivalent of approximately 10 full-time
employees and consultants during 2013 (Canada: 6 and United States: 4).

**E.**          **Share Ownership**

Directors and Officer Beneficial Ownership

The following table discloses as of April 24, 2014, Directors
and Senior Management who beneficially own the Company's voting securities,
consisting solely of common shares, and the amount of the Company's voting
securities owned by the Directors and Senior Management as a group.

60

---

Shareholdings of Directors and Senior Management as of April
24, 2014

Title of Class
    Name of Beneficial Owner
    Note
    Amount and Nature of Beneficial
      Ownership
    Percent of ClassCommon
    Robert L. Hodgkinson
    (1)
    11,456,818
    7.01%Common
    Dr. A. Gorrell
    (2)
    350,000
    0.21%Common
    Richard Kennedy
    (3)
    794,900
    0.49%Common
    Craig Sturrock
    (4)
    1,650,000
    1.01%Common
    Ronnie Bozzer
    (5)
    950,000
    0.58%Common
    David Matheson
    (6)
    1,700,000
    1.04%Common
    Neyeska Mut
    (7)
    1,775,001
    1.09%Common
    Phillip Bretzloff
    (8)
    784,500
    0.48%Total Directors/Management
    
    19,461,219
    11.91%


|(1) | Of these shares, 8,000,000 are represented by common
      shares, 56,250 are represented by vested stock options and 681,818 are
      represented by currently exercisable share purchase warrants. 1,500,000 of
      these shares are owned by 7804 Yukon Inc., a private company owned by
      Robert Hodgkinson. A further 2,718,750 stock options have been granted but
      not yet vested.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Of these shares, 231,250 are represented by vested stock
      options. A further 118,750 stock options have been granted but not yet
      vested.                                                                                                                                                                                                                                                  
|(3) | Of these shares, 294,900 are represented by common shares
      and 37,500 are represented by vested stock options. A further 462,500
      stock options have been granted but not yet vested.                                                                                                                                                                                                      
|(4) | Of these shares, 650,000 are represented by common
      shares, 12,500 are represented by vested stock options and 150,000 are
      represented by currently exercisable share purchase warrants. A further
      837,500 stock options have been granted but not yet vested.                                                                                                                      
|(5) | Of these shares, 450,000 are represented by common shares
      and 50,000 are represented by vested stock options. A further 450,000
      stock options have been granted but not yet vested.                                                                                                                                                                                                      
|(6) | Of these shares, 181,250 are represented by vested stock
      options. A further 1,518,750 stock options have been granted but not yet
      vested.                                                                                                                                                                                                                                                
|(7) | Of these shares, 50,001 are represented by common shares
      and 56,250 are represented by vested stock options. A further 1,668,750
      stock options have been granted but not yet vested.                                                                                                                                                                                                     
|(8) | Of these shares, 59,500 are represented by common shares
      and 6,250 are represented by vested stock options. A further 718,750 stock
      options have been granted but not yet vested.                                                                                                                                                                                                        

|All percentages based on 163,753,874 shares outstanding as
      of April 24, 2014.
|-----------------------------------------------------------------------------------
|                                                                                   

61

---

Stock Option Plan

We have a Stock Option Plan (the Option Plan), the principal
purposes of which is to (i) advance our interests by aiding us, and our
subsidiaries, in motivating, attracting and retaining key employees and
directors capable of assuring the future success of the Company; and (ii) secure
for us and our shareholders the benefits inherent in the ownership of our common
shares by key employees and directors of the Company and our subsidiaries. We
also have a United States stock incentive sub-plan that was initially approved
in 2009 and amended in 2012 (the Sub-Plan) and forms a part of the Option
Plan. Any option granted under the Sub-Plan is also subject to the terms and
conditions of the Option Plan. Where there is a conflict between the terms and
conditions of the Sub-Plan and the terms and conditions of the Option Plan, the
terms and conditions of the Option Plan govern.

Directors, officers, employees and other insiders of us or any
of our subsidiaries, as well as any person or corporation engaged to provide
services for us or for any entity controlled by us for an initial, renewable or
extended period of twelve months or more (or a lesser period of time if approved
by the committee that administers the Option Plan and acceptable to the Toronto
Stock Exchange (the TSX) (including individuals employed by such person or
corporation), are eligible to participate in the Option Plan. Eligible
participants who are natural persons resident in the United States, United
States citizens, or are otherwise subject to United States tax law may
participate in the Sub-Plan.

At the time of grant of any option, the aggregate number of
common shares reserved for issuance under the Option Plan (which includes the
Sub-Plan) that may be made subject to options any time and from time to time,
together with common shares reserved for issuance at that time under any of our
other share compensation arrangements, may not exceed 10% of the total number of
issued and outstanding common shares, on a non-diluted basis, on the date of
grant of the option. Of this 10%, the number of common shares reserved for
issuance to any one participant pursuant to the Sub-Plan in any year may not
exceed 5% of our total outstanding common shares on a non-diluted basis. Common
shares subject to any option (or portion thereof) under the Option Plan that has
been cancelled or otherwise terminated prior to the issuance or transfer of such
common shares will again be available for options under the Option Plan. The
number of common shares authorized under the Option Plan may be increased,
decreased or fixed by the Board of Directors. Subject to adjustment in
accordance with the Sub-Plan, a maximum of 18,500,000 common shares, less those
common shares issued under the Option Plan, may be issued pursuant to stock
options issued under the Sub-Plan. To clarify this rule, notwithstanding the
number of options permitted under the US Sub-Plan to a total of 18.5 million,
the Company is still bound by its Option Plan whereby the maximum number of
shares that can be awarded as options is still 10%, but within the 10% as
permitted, up to 18,500,000 can be allocated to the US Sub-Plan. If a stock
option terminates, is forfeited or is cancelled without the issuance of any
common shares, or any common shares covered by a stock option or to which a
stock option relates are not issued for any other reason, then the number of
common shares counted against the aggregate number of common shares available
under the Sub-Plan with respect to such stock option, to the extent of any such
termination, forfeiture, cancellation or other event, will again be available
for granting stock options under the Sub-Plan.

The option exercise price will be determined by the committee
that administers the Option Plan or the Sub-Plan administrator, as applicable.
The exercise price may not be less than the last closing price per common share
on the TSX on the trading day immediately preceding the day the options are
granted, or if the common shares are not listed on the TSX, on the most senior
of any other exchange on which the common shares are then traded, on the last
trading day immediately preceding the date of grant of such options.

The Option Plan may be terminated by the committee that
administers the Option Plan at any time. The Sub-Plan terminates at midnight on
January 5, 2022, unless it is terminated before then by our Board of Directors.
Any option outstanding under the Option Plan or Sub-Plan at the time of
termination shall remain in effect until such option has been exercised, has
expired, has been surrendered to us or has been terminated.

A copy of the Option Plan and Sub-Plan is incorporated by
reference into this Form 20-F as Exhibits 4.17 and 4.18, respectively.

Stock Options Outstanding

The names and titles of the Directors/Executive Officers of the
Company to whom outstanding stock options have been granted and the number of
common shares subject to such options is set forth in the following table as of
April 25, 2013:

62

---

Stock Options Outstanding as of April 24, 2014

Name
    Number of Options
    Number of
    Exercise Price
    Grant Date
    Expiration DateHeld
    Options
    per OptionVestedRobert Hodgkinson
    450,000
    56,250
    $0.20
    1/31/2014
    1/30/20192,325,000
    0
    $0.26
    4/9/2014
    4/8/2017Dr. A. Gorrell
    300,000
    225,000
    $0.20
    12/18/2012
    12/17/201550,000
    6,250
    $0.20
    1/31/2014
    1/30/2019Richard Kennedy
    100,000
    25,000
    $0.20
    12/18/2012
    12/17/2015100,000
    12,500
    $0.20
    1/31/2014
    1/30/2019300,000
    0
    $0.26
    4/9/2014
    4/8/2017Craig Sturrock
    100,000
    12,500
    $0.20
    1/31/2014
    1/30/2019750,000
    0
    $0.26
    4/9/2014
    4/8/2017Ronnie Bozzer
    400,000
    50,000
    $0.20
    1/31/2014
    1/30/2019100,000
    0
    $0.26
    4/9/2014
    4/8/2017David Matheson
    250,000
    62,500
    $0.20
    2/12/2013
    2/11/2016100,000
    25,000
    $0.18
    4/4//2013
    4/3/2013750,000
    93,750
    $0.20
    1/31/2014
    1/30/2019600,000
    0
    $0.26
    4/9/2014
    4/8/2017Neyeska Mut
    450,000
    56,250
    $0.20
    1/31/2014
    1/30/20191,275,000
    0
    $0.26
    4/9/2014
    4/8/2017Phillip Bretzloff
    50,000
    6,250
    $0.20
    1/31/2014
    1/30/2019675,000
    0
    $0.26
    4/9/2014
    4/8/2017Total Officers/Directors
    9,125,000
    631,250


63

---

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS.

**A.**          **Major Shareholders**

Shareholders

The Company is aware of one person who each beneficially own 5%
or more of the Registrant's voting securities. The following table lists as of
April 24, 2014 persons and/or companies holding 5% or more beneficial interest
in the Companys outstanding common stock.

5% or Greater Shareholders as of April 24, 2014

Title of Class
    Name of Owner
    Amount and Nature of Beneficial Ownership
    Percent of ClassCommon
    Robert L. Hodgkinson (1)
    11,456,818
    7.01%


|(1) | Of these shares, 8,000,000 are represented by common
      shares, 56,250 are represented by vested stock options and 681,818 are
      represented by currently exercisable share purchase warrants. 1,500,000 of
      these shares are owned by 7804 Yukon Inc., a private company owned by
      Robert Hodgkinson. A further 2,718,750 stock options have been granted but
      not yet vested.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|All percentages
      based on 163,753,874 shares outstanding as of April 24, 2014.
|-----------------------------------------------------------------------------------

Changes in ownership by major shareholders

To the best of the Companys knowledge there have been no
changes in the ownership of the Companys shares other than disclosed
herein.

Voting Rights

The Companys major shareholders do not have different voting
rights.

Shares Held in the United States

As of April 24, 2014, there were approximately 7,228 registered
holders of the Companys shares in the United States, with combined holdings of
118,494,052 common shares.

Change of Control

As of the date of this annual report, there were no
arrangements known to the Company which may, at a subsequent date, result in a
change of control of the Company.

Control by Others

To the best of the Companys knowledge, the Company is not
directly or indirectly owned or controlled by another corporation, any foreign
government, or any other natural or legal person, severally or jointly.

**B.**          **Related Party Transactions**

During the years ended December 31, 2013 and 2012, the Company
entered into the following transactions with related parties:

|(a) | Compensation awarded to key management included a total
      of salaries and consulting fees of $1,173,000 (2012 - $1,194,000) and
      non-cash stock-based compensation of $302,000 (2012 - $412,000). Key
      management includes the Companys officers and directors. The salaries and
      consulting fees are included in general and administrative
  expenses.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

64

---

|(b) | Included in interest and other income is $21,200 (2012 -
      $30,000) received from the companies controlled by officers of the Company
      for rental income.                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(c) | In December 2009, a company controlled by the CEO of the
      Company (HEC) became a 5% working interest partner in the Woodrush
      property. Included in accounts payable and accrued liabilities at December
      31, 2013 is $4,000 (December 31, 2012 - $20,000) owing to HEC.                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(d) | In January 2012, directors and officers of the Company
      exercised 750,000 warrants with an exercise price of US$0.35 each that
      were issued in February 2011.                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(e) | On December 31, 2012, Dejour USA entered into a financial
      contract with a U.S. oil and gas drilling fund (Drilling Fund) whereby
      the parties agreed to form an industry-standard drilling partnership for
      purposes of drilling three wells and completing four wells in the State of
      Colorado. A director of the Company provides investment advice for a fee
      to the Drilling Fund. The director abstained from voting when the Board of
      Directors approved the Company signing a financial contract with the
      Drilling Fund.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(f) | In December 2013, Dejour USA sold its working interests
      in certain non-core oil and gas leases in the area of Colorado to a
      related U.S. oil and gas corporation for gross proceeds of $477,000
      (US$450,000). A director of the Company is the President of the U.S. oil
      and gas corporation. The sale price represented the higher of two
      competing offers to purchase the oil and gas leases in Colorado and the
      director of the Company abstained from voting to approve the Companys
      sale of the leases.                 

**C.**          **Interests of Experts and Counsel**

Not Applicable.

65

---

ITEM 8. FINANCIAL INFORMATION.

**A.**          **Consolidated Statements and Other Financial Information**

Financial Statements

|Description                                                                                  | Page      
|-------------------------------------------------------------------------------------------- | ----------
|                                                                                             |           
|Consolidated Financial Statements for the
      Years Ended December 31, 2013, 2012 and 2011 | F-1 - F-41

Supplementary Oil and Gas Reserve Estimation and Disclosures
(Unaudited) for the years ending December 31, 2013 and 2012

Legal Proceedings

The Directors and the management of the Company do not know of
any material, active or pending, legal proceedings against them; nor is the
Company involved as a plaintiff in any material proceeding or pending
litigation.

The Directors and the management of the Company know of no
active or pending proceedings against anyone that might materially adversely
affect an interest of the Company.

Dividend Policy

The Company has not paid any dividends on its common shares.
Any decision to pay dividends on common shares in the future will be made by the
board of directors on the basis of the earnings, financial requirements and
other conditions existing at such time.

**B.**          **Significant Changes**

None.

66

---

ITEM 9. THE OFFER AND LISTING

**A.**          **Offering and Listing Details**

The Companys common shares are traded on the Toronto Stock
Exchange and on the NYSE Amex, in both cases under the symbol DEJ. The
following tables set forth for the periods indicated, the high and low closing
prices in Canadian dollars of our common shares traded on the Toronto Stock
Exchange and in United States dollars on the NYSE Amex. The Company traded on
the Toronto Stock Exchange Venture Exchange in Vancouver, British Columbia,
Canada, until November 20, 2008 when it began trading on the Toronto Stock
Exchange. The Company changed its symbol to DEJ after a one for three share
consolidation effective October 1, 2003. The Company changed its Toronto Stock
Exchange trading symbol on May 23, 2007 to DEJ to coincide with its listing on
the American Stock Exchange (now NYSE Amex) on the same day under the symbol
DEJ.

The following table contains the annual high and low market
prices for the five most recent fiscal years:

Toronto Stock Exchange (Cdn$)

High
    Low2013
    $0.25
    $0.102012
    $0.59
    $0.122011
    $0.61
    $0.242010
    $0.48
    $0.292009
    $0.76
    $0.23


NYSE Amex (US$)

High
    Low2013
    $0.25
    $0.092012
    $0.57
    $0.122011
    $0.61
    $0.212010
    $0.50
    $0.262009
    $0.67
    $0.12


The following table contains the high and low market prices for
our common shares on the Toronto Stock Exchange and the NYSE Amex for each
fiscal quarter for the two most recent fiscal years and any subsequent period:

Toronto Stock Exchange (Cdn$)

High
    Low2014Q1
    $0.32
    $0.132013Q4
    $0.20
    $0.10Q3
    $0.23
    $0.18Q2
    $0.23
    $0.16Q1
    $0.25
    $0.172012Q4
    $0.24
    $0.16Q3
    $0.26
    $0.12Q2
    $0.38
    $0.23Q1
    $0.59
    $0.35


NYSE Amex (US$)

High
    Low2014


67

---

Q1
    $0.29
    $0.112013Q4
    $0.19
    $0.09Q3
    $0.24
    $0.18Q2
    $0.24
    $0.17Q1
    $0.25
    $0.162012Q4
    $0.25
    $0.16Q3
    $0.26
    $0.12Q2
    $0.39
    $0.21Q1
    $0.57
    $0.34


The following table contains the high and low market prices for
our common shares on the Toronto Stock Exchange and the NYSE Amex for each of
the most recent six months:

Toronto Stock Exchange (Cdn$)

High
    LowMarch, 2014
    $0.32
    $0.15February, 2014
    $0.22
    $0.15January, 2014
    $0.23
    $0.13December, 2013
    $0.16
    $0.10November, 2013
    $0.20
    $0.11October, 2013
    $0.19
    $0.16


NYSE Amex (US$)

High
    LowMarch, 2014
    $0.29
    $0.14February, 2014
    $0.21
    $0.14January, 2014
    $0.21
    $0.11December, 2013
    $0.16
    $0.09November, 2013
    $0.19
    $0.11October, 2013
    $0.19
    $0.17


On April 24, 2014, the closing price of our common shares on
the TSX was Cdn $0.26 per common share and on the NYSE was US $0.24 per common
share.

**B.**          **Plan of Distribution**

Not Applicable.

**C.**          **Markets**

Our common shares, no par value, are traded on the TSX under
the symbol DEJ and are traded on the NYSE Amex under the symbol "DEJ".

**D.**          **Selling Shareholders**

Not Applicable.

**E.**          **Dilution**

68

---

Not Applicable.

**F.**          **Expenses of the Issue**

Not Applicable.

ITEM 10. ADDITIONAL INFORMATION

**A.**          **Share Capital**

Not Applicable.

**B.**          **Memorandum and Articles of Association**

Dejour Energy Inc. (formerly Dejour Enterprises Ltd.) is
incorporated under the laws of British Columbia, Canada. The Company was
originally incorporated as Dejour Mines Limited on March 29, 1968 under the
laws of the Province of Ontario. By articles of amendment dated October 30,
2001, the issued shares were consolidated on the basis of one (1) new for every
fifteen (15) old shares and the name of the Company was changed to Dejour
Enterprises Ltd. On June 6, 2003, the shareholders approved a resolution to
complete a one-for-three-share consolidation, which became effective on October
1, 2003. In 2005, the Company was continued in British Columbia under the
Business Corporations Act (British Columbia) (the Act). Effective March 9,
2011, the Company changed its name from Dejour Enterprises Ltd. to Dejour Energy
Inc.

There are no restrictions on what business the Company may
carry on in the Articles of Incorporation.

Under Article 17 of the Companys Articles and under Part 5,
Division 3 of the Act, a director must declare its interest in any existing or
proposed contract or transaction with the Company and is not allowed to vote on
any transaction or contract with the Company in which has a disclosable
interest, unless all directors have a disclosable interest in that contract or
transaction, in which case any or all of those directors may vote on such
resolution. A director may hold any office or place of profit with the Company
in conjunction with the office of director, and no director shall be
disqualified by his office from contracting with the Company. A director or his
firm may act in a professional capacity for the Company and he or his firm shall
be entitled to remuneration for professional services. A director may become a
director or other officer or employee of, or otherwise interested in, any
corporation or firm in whom the Company may be interested as a shareholder or
otherwise. The director shall not be accountable to the Company for any
remuneration or other benefits received by him from such other corporation or
firm subject to the provisions of the Act.

Article 16 of the Companys Articles addresses the powers and
duties of the directors. Directors must, subject to the Act, manage or supervise
the management of the business and affairs of the Company and have the authority
to exercise all such powers which are not required to be exercised by the
shareholders as governed by the Act. Article 19 of the Companys Articles
addresses Committees of the Board of Directors. Directors may, by resolution,
create and appoint an executive committee consisting of the director or
directors that they deem appropriate. This executive committee has, during the
intervals between meetings of the Board, all of the directors powers, except
the power to fill vacancies in the Board, the power to remove a Director, the
power to change the membership of, or fill vacancies in, any committee of the
Board and any such other powers as may be set out in the resolution or any
subsequent directors resolution. Directors may also by resolution appoint one
or more committees other than the executive committee.

These committees may be delegated any of the directors powers
except the power to fill vacancies on the board of directors, the power to
remove a director, the power to change the membership or fill vacancies on any
committee of the directors, and the power to appoint or remove officers
appointed by the directors. Article 18 of the Companys Articles details the
proceedings of directors. A director may, and the Secretary or Assistant
Secretary, if any, on the request of a director must call a meeting of the
directors at any time. The quorum necessary for the transaction of the business
of the directors may be fixed by the directors and if not so fixed shall be
deemed to a majority of the directors. If the number of directors is set at one,
it quorum is deemed to be one director.

69

---

Article 8 of the Companys Articles details the borrowing
powers of the directors. They may, on behalf of the Company:

- Borrow money in a manner and amount, on any security, from any source and
  upon any terms and conditions as they deem appropriate;
- Issue bonds, debentures, and other debt obligations either outright or as
  security for any liability or obligation of the Company or any other person at
  such discounts or premiums and on such other terms as they consider
  appropriate;
- Guarantee the repayment of money by any other person or the performance of
  any obligation of any other person; and
- Mortgage, charge, or grant a security in or give other security on, the
  whole or any part of the present or future assets and undertaking of the
  Company.

A director need not be a shareholder of the Company, and there
are no age limit requirements pertaining to the retirement or non-retirement of
directors. The directors are entitled to the remuneration for acting as
directors, if any, as the directors may from time to time determine. If the
directors so decide, the remuneration of directors, if any, will be determined
by the shareholders. The remuneration may be in addition to any salary or other
remuneration paid to any officer or employee of the Company as such who is also
a director. The Company must reimburse each director for the reasonable expenses
that he or she may incur in and about the business of the Company. If any
director performs any professional or other services for the Company that in the
opinion of the directors are outside the ordinary duties of a director, or if
any director is otherwise specially occupied in or about the Companys business,
he or she may be paid remuneration fixed by the directors, or, at the option of
that director, fixed by ordinary resolution and such remuneration may be either
in addition to, or in substitution for, any other remuneration that he or she
may be entitled to receive. Unless other determined by ordinary resolution, the
directors on behalf of the Company may pay a gratuity or pension or allowance on
retirement to any director who has held any salaried office or place of profit
with the Company or to his or her spouse or dependents and may make
contributions to any fund and pay premiums for the purchase or provision of any
such gratuity, pension or allowance.

Article 21 of the Companys Articles provides for the mandatory
indemnification of directors, former directors, and alternate directors, as well
as his or hers heirs and legal personal representatives, or any other person, to
the greatest extent permitted by the Act. The indemnification includes the
mandatory payment of expenses actually and reasonably incurred by such person in
respect of that proceeding. The failure of a director, alternate director, or
officer of the Company to comply with the Act or the Companys Articles does not
invalidate any indemnity to which he or she is entitled. The directors may cause
the Company to purchase and maintain insurance for the benefit of eligible
parties who:

|(a) | is or was a director, alternate director, officer,
      employee or agent of the Company;                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                             
|(b) | is or was a director, alternate director, officer
      employee or agent of a corporation at a time when the corporation is or
      was an affiliate of the Company;                                      
|    |                                                                                                                                                                                                             
|(c) | at the request of the Company, is or was a director,
      alternate director, officer, employee or agent of a corporation or of a
      partnership, trust, joint venture or other unincorporated
entity;  
|    |                                                                                                                                                                                                             
|(d) | at the request of the Company, holds or held a position
      equivalent to that of a director, alternate director or officer of a
      partnership, trust, joint venture or other unincorporated
  entity;

against any liability incurred by him or her as such director,
alternate director, officer, employee or agent or person who holds or held such
equivalent position

Under Article 9 of the Companys Articles and subject to the
Act, the Company may alter its authorized share structure by directors
resolution or ordinary resolution, in each case determined by the directors, to:

70

---

|(a) | create one or more classes or series of shares or, if
      none of the shares of a series of a class or series of shares are allotted
      or issued, eliminate that class or series of shares;                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                          
|(b) | increase, reduce or eliminate the maximum number of
      shares that the Company is authorized to issue out of any class or series
      of shares or establish a maximum number of shares that the company is
      authorized to issue out of any class or series of shares for which no
      maximum is established;
|    |                                                                                                                                                                                                                                                                                                                          
|(c) | subdivide or consolidate all or any of its unissued, or
      fully paid issued, shares;                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                          
|(d) | if the Company is authorized to issue shares of a class
      or shares with par value;                                                                                                                                                                                                                                  

| | (i)  | decrease the par value of those shares; or                                                                           
| | ---- | ---------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                      
| | (ii) | if none of the shares of that class of shares are
      allotted or issued, increase the par value of those
  shares;

|(e) | change all or any of its unissued, or fully paid issued,
      shares with par value into shares without par value or any of its unissued
      shares without par value into shares with par value;
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                     
|(f) | alter the identifying name of any of its shares;
  or                                                                                                                                               

by ordinary resolution otherwise alter its share or authorized
share structure.

Subject to Section9.2 of the Companys Articles and the Act,
the Company may:

|(1) | by directors resolution or ordinary resolution, in each
      case determined by the directors, create special rights or restrictions
      for, and attach those special rights or restrictions to, the shares of any
      class or series of shares, if none of those shares have been issued, or
      vary or delete any special rights or restrictions attached to the shares
      of any class or series of shares, if none of those shares have been
      issued; and
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | by special resolution of the shareholders of the class or
      series affected, do any of the acts in Section 9.1 of the Companys
      Articles if any of the shares of the class or series of shares has been
      issued.                                                                                                                                                                                                                                                 

The Company may by resolution of its directors or by ordinary
resolution, in each case as determined by the directors, authorize an alteration
of its Notice of Articles in order to change its name.

The directors may, whenever they think fit, call a meeting of
shareholders. An annual general meeting shall be held once every calendar year
at such time (not being more than 15 months after holding the last preceding
annual meeting) and place as may be determined by the Directors.

There are no limitations upon the rights to own securities.

There is no special ownership threshold above which an
ownership position must be disclosed. However, any ownership level above 10%
must be disclosed to the TSX and all applicable Canadian Securities
Commission.

Description of Share Capital

The Company is authorized to issue an unlimited number of
common shares, preferred shares and series 1 preferred shares of which, as of
April 24, 2014, 163,753,874 common shares, are issued and outstanding. The
rights, preferences and restrictions attaching to each class of the Companys
shares are as follows:

Common Shares

All the common shares of the Company are of the same class and,
once issued, rank equally as to dividends, voting powers, and participation in
assets. All common shareholders are entitled to receive notice of, attend and be
heard at any meeting of shareholders of the Company, excepting a meeting of the holders
of shares of another class, as such, and excepting a meeting of the holders of a
particular series, as such. Holders of shares of common stock are entitled to
one vote for each share held of record on all matters to be acted upon by the
shareholders, including the election of directors. Except as otherwise required
by law the holders of the Companys common shares will possess all voting power.
Generally, all matters to be voted on by shareholders must be approved by a
majority (or, in the case of election of directors, by a plurality) of the votes
entitled to be cast by all common shares that are present in person or
represented by proxy. Subject to the special rights and restrictions attached to
the shares of any class or series of classes, one holder of common shares
issued, outstanding and entitled to vote, represented in person or by proxy, is
necessary to constitute a quorum at any meeting of our shareholders.

71

---

Upon liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, or other disposition of the property or assets
of the Company, holders of shares of common stock are entitled to receive pro
rata the assets of Company, if any, remaining after payments of all debts and
liabilities to the holders of preferred shares or any other shares ranking
senior to shares of common stock. No shares have been issued subject to call or
assessment. There are no preemptive or conversion rights and no provisions for
redemption or purchase for cancellation, surrender, or sinking or purchase
funds.

The holders of the Companys common shares will be entitled to
such cash dividends as may be declared from time to time by our Board of
Directors but such dividend will rank junior to the holders of preferred shares
and series 1 preferred shares.

In the event of any merger or consolidation with or into
another company in connection with which the Companys common shares are
converted into or exchangeable for shares, other securities or property
(including cash), all holders of the Companys common shares will be entitled to
receive the same kind and amount of shares and other securities and property
(including cash).

There are no indentures or agreements limiting the payment of
dividends on the Companys common shares and there are no special liquidation
rights or subscription rights attaching to the Companys common shares.

Preferred Shares

Preferred shares may, at any time and from time to time, be
issued in one or more series and the Company may, by directors resolution or
ordinary resolution, do one or more of the following:

- determine the maximum number of shares of any of those series of preferred
  shares that the Company is authorized to issue, determine that there is no
  maximum number or alter any determination made or otherwise, in relation to a
  maximum number of those shares, and authorize the alteration of the Notice of
  Articles accordingly;
- alter the Articles of the Company, and authorize the alteration of the
  Notice of Articles, to create an identifying name by which the shares of any
  of those series of preferred shares may be identified or to alter any
  identifying name created for those shares; and
- alter the Articles of the Company, and authorize the alteration of the
  Notice of Articles, to attach special rights or restrictions to the shares of
  any of those series of preferred shares or to alter any special rights or
  restrictions attached to those shares, subject to the special rights and
  restrictions attached to the preferred shares.

If the alterations, determinations or authorizations
contemplated above are to be made in relation to a series of shares of which
there are issued shares, those alterations, determinations or authorizations may
be made by ordinary resolution. However, no special rights or restrictions
attached to a series of preferred shares shall confer on the series of preferred
shares priority over another series of preferred shares respecting (i) dividends
or (ii) return of capital on the dissolution of the Company or on the occurrence
of any event that entitles the shareholders holding the shares of all series of
preferred shares to a return of capital.

All holders of preferred shares shall not be entitled to
receive notice of, attend and be heard at any meeting of or vote at any meeting
of shareholders of the Company, except any specific meeting of the holders of
preferred shares.

72

---

The holders of the Companys preferred shares will be entitled
to such cash dividends as may be declared from time to time by our Board of
Directors and shall rank senior to the holders of our common shares and any
other shares of the Company ranking junior to the preferred shares.

Upon liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, or other disposition of the property or assets
of the Company, holders of the holders of the Preferred Shares, including the
Series 1 Preferred Shares, shall be entitled to receive, for each preferred
share held, from the property and assets of the Company, a sum equivalent to the
amount paid up thereon together with the premium (if any) thereon and any
dividends declared thereon before any amount shall be paid or any property or
asset of the Company is distributed to the holders of the common shares or any
other shares ranking junior to the preferred shares with respect to repayment of
capital. After payment to the holders of the preferred shares of the amount so
payable to them, the holders of the preferred shares shall not be entitled to
share in any further distribution of the property or assets of the Company
except as specifically provided in special rights and restrictions attached to
any particular series of preferred shares

Series 1 Preferred Shares

The Company may, at any time and from time to time, issue
series 1 preferred shares. The Company may, by directors resolution or ordinary
resolution passed before the issue of any series 1 preferred shares, in each
case as determined by the directors or, if there are issued series 1 preferred
shares, by ordinary resolution, do one or more of the following:

- determine the maximum number of the series 1 preferred shares that the
  Company is authorized to issue, determine that there is no maximum number or
  alter any determination made in relation to a maximum number of those shares,
  and authorize the alteration of the Notice of Articles accordingly;
- alter the Articles of the Company, and authorize the alteration of the
  Notice of Articles, to alter the name of the series 1 preferred shares; and
- alter the Articles of the Company, and authorize the alteration of the
  Notice of Articles, to attach special rights or restrictions to the series 1
  preferred shares or to alter any special rights or restrictions attached to
  those shares, subject to the special rights and restrictions attached to the
  preferred shares.

The special rights and restrictions that may be attached to the
series 1 preferred shares may include, without in any way limiting or
restricting the generality of such paragraph, rights and restrictions respecting
the following:

- the rate or amount of dividends, whether cumulative, non-cumulative or
  partially cumulative and the dates, places and currencies of payment thereof;
- the consideration for, and the terms and conditions of, any purchase for
  cancellation or redemption thereof, including redemption after a fixed term or
  at a premium, conversion or exchange rights;
- the terms and conditions of any share purchase plan or sinking fund;
- the restrictions respecting the payment of dividends on, or the repayment
  of capital in respect of, any other shares of the Company;
- voting rights; and
- the issuance of any shares of any other class or series of shares of the
  Company or any evidences of indebtedness or any other securities convertible
  into or exchangeable for such shares

No special rights or restrictions attached to the series 1
preferred shares confers on the series 1 preferred shares priority over another
series of preferred shares respecting (i) dividends or (ii) return of capital on
the dissolution of the Company or on the occurrence of any event that entitles
the shareholders holding the shares of all series of preferred shares to a
return of capital.

73

---

All holders of series 1 preferred shares are not entitled to
receive notice of, attend and be heard at any meeting of or vote at any meeting
of shareholders of the Company, except any specific meeting of the holders of
series 1 preferred shares.

The holders of the Companys series 1 preferred shares will be
entitled to such cash dividends as may be declared from time to time by the
Companys Board of Directors and will rank senior to the holders of the
Companys common shares and any other shares of the Company ranking junior to
the preferred shares.

Dividend Record

The Company has not paid any dividends on its common shares and
has no policy with respect to the payment of dividends.

Ownership of Securities and Change of Control

There are no limitations on the rights to own securities,
including the rights of non-resident or foreign shareholders to hold or exercise
voting rights on the securities imposed by foreign law or by the constituent
documents of the Company.

Any person who beneficially owns, directly or indirectly, or
exercises control or direction over more than 10% of the Companys voting shares
is considered an insider, and must file an insider report with the Canadian
regulatory commissions within ten days of becoming an insider, disclosing any
direct or indirect beneficial ownership of, or control or direction over
securities of the Company. In addition, if the Company itself holds any of its
own securities, the Company must disclose such ownership.

There are no provisions in the Companys Articles or Notice of
Articles that would have an effect of delaying, deferring or preventing a change
in control of the Company operating only with respect to a merger, acquisition
or corporate restructuring involving the Company or its subsidiaries.

Differences from Requirements in the United States

Except for the Companys quorum requirements, certain
requirements related to related party transactions and the requirement for
notice of shareholder meetings, discussed above, there are no significant
differences in the law applicable to the Company, in the areas outlined above,
in Canada versus the United States. In most states in the United States, a
quorum must consist of a majority of the shares entitled to vote. Some states
allow for a reduction of the quorum requirements to less than a majority of the
shares entitled to vote. Having a lower quorum threshold may allow a minority of
the shareholders to make decisions about the Company, its management and
operations. In addition, most states in the United States require that a notice
of meeting be mailed to shareholders prior to the meeting date. Additionally, in
the United States, a director may not be able to vote on the approval of any
transaction in which the director has an interest.

**C.**          **Material Contracts**

The following are material contracts to which the Company is a
party:

Financial Contract with a U.S. Oil and Gas Drilling Fund

On December 31, 2012, Dejour USA entered into a financial
contract with a U.S. oil and gas drilling fund (Drilling Fund), that is
associated through a relationship with a former director of the Company, to
drill up to three wells and complete up to four wells (the Tranche 1 Wells) in
the State of Colorado. By agreement:

|(a) | Dejour USA contributed four natural gas well spacing
      units, including one drilled and cased well with a cost of US$1.1
      million;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | The Drilling Fund contributed US$6.5 million cash
      directly to a drilling company, that is owned by a former consultant of
      Dejour USA, as prepaid drilling costs. During the year ended December 31,
      2013, the Drilling Fund also committed to invest a further US$500,000 in
      the four wells for a total of US$7.0 million. As at December 31, 2013,
      US$417,000 of the incremental US$500,000 has been invested for a total of
      US$6.9 million;                                                                                                                                                
|(c) | Dejour USA will earn a before payout working interest
      of 10% to 14% and an after payout working interest of 28% to 39% in the
      net operating profits from the Tranche 1 Wells based on the actual cash
      invested in the drilling program. In September 2013, Dejour USA signed an
      amendment with the Drilling Fund and agreed to earn
the revised before payout working interest of 15.88% to
      22.23% and revised after payout working interest of 29.77% to 41.67% in
      the net operating profits from the Tranche 1 Wells based on the actual
  cash invested in the drilling program;

74

---

|(d) | The Drilling Fund has the right to require that Dejour
      USA purchase the Drilling Funds entire working interest in the Tranche 1
      Wells 36 months after the commencement of production from the initial
      Tranche 1 Well. In the event the Drilling Fund exercises its right, the
      purchase price to be paid by Dejour USA will equal 75% of the Drilling
      Funds actual investment less 75% of the Drilling Funds share of working
      interest net profits from the Tranche 1 Wells, if any, for the 36-month
      period, plus a top-up amount so that the Drilling Fund earns a minimum
      8% return, compounded annually and applied on a monthly basis, on 75% of
      its original investment over the 36-month period; and
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(e) | The Drilling Fund has the right to require Dejour USA to
      purchase all of the Drilling Funds interest in the Tranche 1 Wells if at
      any time Dejour USA plans to divest itself of greater than 51% of its
      Working Interest in the Tranche 1 Wells and resigns as Operator (a Change
      of Control Event). The purchase price is equal to the future net profit
      from the Proven and Probable Reserves attributable to the Drilling Funds
      working interest in the Tranche 1 Wells, discounted at 12%, as determined
      by a third party evaluator acceptable to both
parties.                                                                                                                                                   

Dejour USA considers the transaction to be a financial contract
liability as the risks and rewards of ownership have not been substantially
transferred at the Agreement date. On the Drilling Fund financing advance, the
Company increased property and equipment and financial contract liability by
$6.5 million (US$6.5 million). During the year ended December 31, 2013, the
Company increased property and equipment and financial contract liability by
$443,000 (US$417,000) of the incremental US$500,000 advance received in the
year. On initial recognition, the Company imputed its borrowing cost of 8.4%
based on the estimated timing and amount of operating profit using the
independent reserve engineers estimated future cash flows for the Drilling
Funds working interest in the Tranche 1 Wells. Subsequent to initial measurement
the financial contract liability will be increased by the imputed interest
expense and decreased by the Drilling Funds net operating profit from the
Tranche 1 Wells. Any changes in the estimated timing and amount of the net
operating profit cash flows will be discounted at the initial imputed interest
rate with any change in the recognized liability recognized as a gain (loss) in
the period of change. The Company has estimated the current portion of the
obligation based on the expected net operating profit to be paid to the Drilling
Fund in the next twelve months.

Bank Line of Credit

On March 28, 2013, DEAL signed a new Commitment Letter with
the Bank to renew its $5.95 million (December 31, 2012 - $6.0 million) revolving
operating demand loan under the following terms and conditions:

|(a) | Credit Facility A  Revolving Operating Demand Loan -
      $3.7 million to be used for general corporate purposes, ongoing
      operations, capital expenditures, and acquisition of additional petroleum
      and natural gas assets. Interest on Credit Facility A is at Prime + 1%
      payable monthly and all amounts outstanding are payable on demand any
      time, and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Credit Facility B  Non-Revolving Demand Loan - $2.25
      million. Interest on Credit Facility B is at Prime + 3 1/2% payable
      monthly. Monthly principal payments of $200,000 are due and payable
      commencing March 26, 2013 with all amounts outstanding under Credit
      Facility B ($1,450,000) due and payable in full on June 30,
  2013.                      

Collateral for Credit Facilities A and B (the Credit
Facilities) is provided by a $10.0 million first floating charge over all the
assets of DEAL, a general assignment of DEALs book debts, a $10.0 million
debenture with a first floating charge over all the assets of the Company and an
unlimited guarantee provided by Dejour USA. On June 5, 2013, DEAL renewed the
Credit Facilities with the Bank and the maximum amount of Credit Facility A
was reduced to $3.5 million. On June 19, 2013, Credit Facility B was repaid in
full. Further, on December 16, 2013 and amended on February 18, 2014, DEAL
renewed the Credit Facility A with the Bank and contracted to utilize $600,000
of the $3.5 million to fund the proposed acquisition of certain producing
natural gas properties in Canada until March 31, 2014. The acquisition closed on
March 26, 2014. Effective March 1, 2014, Credit Facility A reduces by $100,000
per month. The next annual review is scheduled on or before May 1, 2014.

Under the terms of the Credit Facilities, DEAL is required to
maintain a working capital ratio of greater than 1:1 at all times. The working
capital ratio is defined as the ratio of (i) current assets (including any
undrawn and authorized availability under the Credit Facilities) less unrealized
hedging gains to (ii) current liabilities (excluding the current portion of outstanding balances of the facility) less unrealized
hedging losses. As at December 31, 2013, DEAL was in compliance with its working
capital ratio requirement.

75

---

Loan Facility

On June 19, 2013, the Company borrowed $3.5 million (Loan
Facility) from a Canadian institutional lender (Lender). The Loan Facility
bears interest at 14%, payable monthly, and matures on December 14, 2014. The
principal is repayable any time after December 18, 2013 without penalty. Certain
incentive share purchase warrants (Warrant or Warrants) issued to the
Lender. Security for the Loan Facility is comprised of a First Deed of Trust on
certain of the Companys U.S. oil and gas interests, including a general
security agreement, a second mortgage on the Companys Canadian properties, and
the guaranty of the Company and Dejour USA.

As partial consideration for providing the Loan Facility, the
Company issued the Lender 7,291,667 Warrants. Each Warrant entitles the holder
to acquire one common share at a price of $0.24 per share any time prior to June
18, 2015. If the Company issues any common shares at a price per share less than
$0.24 (the Issue Price) any time until December 18, 2013, then the exercise
price of the Warrants would automatically be reduced to the higher of (i) the
Issue Price and (ii) $0.20. Shares acquired through the exercise of Warrants
prior to October 18, 2013 are restricted from sale through the facilities of the
Canadian stock exchange.

Other terms and conditions of the Loan Facility are:

|(a) | Commencing September 30, 2013, Dejour USA is required to
      maintain a working capital ratio of greater than 1:1, as defined, at all
      times. The working capital ratio is defined as the ratio of (i) current
      assets to (ii) current liabilities (excluding any liability pursuant to
      the Drilling Fund);
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Restrictions on borrowings; and                                                                                                                                                                                                                                                                                              
|(c) | No changes to the Companys senior management team
      without the Lenders written consent.                                                                                                                                                                                                                               

At December 31, 2013, Dejour USA was in default of its working
capital ratio covenant. As a result, the loan facility is due upon demand and
classified as current liabilities. The Lender has not demanded repayment as at
December 31, 2013.

D. Exchange Controls

There are no governmental laws, decrees, or regulations in
Canada relating to restrictions on the export or import of capital, or affecting
the remittance of interest, dividends, or other payments to non-resident holders
of the Companys common stock. Any remittances of dividends to United States
residents are, however, subject to a 15% withholding tax (10% if the shareholder
is a corporation owning at least 10% of the outstanding Common Stock of the
Company) pursuant to Article X of the reciprocal tax treaty between Canada and
the United States.

Except as provided in the Investment Canada Act (the ICA),
there are no limitations specific to the rights of non-Canadians to hold or vote
the common shares of the Company under the laws of Canada or the Province of
British Columbia or in the charter documents of the Company.

Management of the Company considers that the following general
summary is materially complete and fairly describes those provisions of the ICA
pertinent to an investment by an American investor in the Company.

The ICA requires a non-Canadian making an investment which
would result in the acquisition of control of a Canadian business, the gross
value of the assets of which exceed certain threshold levels or the business
activity of which is related to Canadas cultural heritage or national identity,
to either notify, or file an application for review with, Investment Canada, the
federal agency created by the ICA.

The notification procedure involves a brief statement of
information about the investment of a prescribed form which is required to be
filed with Investment Canada by the investor at any time up to 30 days following
implementation of the investment. It is intended that investments requiring only
notification will proceed without government intervention unless the investment
is in a specific type of business activity related to Canadas cultural heritage
and national identity.

76

---

If an investment is reviewable under the ICA, an application
for review in the form prescribed is normally required to be filed with
Investment Canada prior to the investment taking place and the investment may
not be implemented until the review has been completed and the Minister
responsible for Investment Canada is satisfied that the investment is likely to
be of net benefit to Canada. If the Minister is not satisfied that the
investment is likely to be of net benefit to Canada, the non-Canadian must not
implement the investment or, if the investment has been implemented, may be
required to divest himself of control of the business that is the subject of the
investment.

The following investments by non-Canadians are subject to
notification under the ICA:

|(a) | an investment to establish a new Canadian business;
      and                                            
|--- | ---------------------------------------------------------------------------------------------------------
|    |                                                                                                          
|(b) | an investment to acquire control of a Canadian business
      that is not reviewable pursuant to the ICA.

An investment is reviewable under the ICA if there is an
acquisition by a non-Canadian of a Canadian business and the asset value of the
Canadian business being acquired equals or exceeds the following thresholds:

|(a) | for non-WTO Investors, the threshold is $5,000,000 for a
      direct acquisition and over $50,000,000 for an indirect acquisition. The
      $5,000,000 threshold will apply however for an indirect acquisition if the
      asset value of the Canadian business being acquired exceeds 50% of the
      asset value of the global transaction;
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                   
|(b) | except as specified in paragraph (c) below, a threshold
      is calculated annually for reviewable direct acquisitions by or from WTO
      Investors. The threshold for 2012 is $330,000,000. Pursuant to Canadas
      international commitments, indirect acquisitions by or from WTO Investors
      are not reviewable; and                
|    |                                                                                                                                                                                                                                                                                                                                                   
|(c) | the limits set out in paragraph (a) apply to all
      investors for acquisitions of a Canadian business that is a cultural
      business.:                                                                                                                                                                                                      

WTO Investor as defined in the ICA means:

|(a) | an individual, other than a Canadian, who is a national
      of a WTO Member or who has the right of permanent residence in relation to
      that WTO Member;
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                
|(b) | a government of a WTO Member, whether federal, state or
      local, or an agency thereof;                                                                     
|    |                                                                                                                                                                
|    | an entity that is not a Canadian-controlled entity, and
      that is a WTO investor-controlled entity, as determined in accordance with
      the ICA;        
|    |                                                                                                                                                                
|(c) | a corporation or limited
partnership:                                                                                                                          

| | (i)   | that is not a Canadian-controlled entity, as determined
      pursuant to the ICA;                                                                                                               
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | that is not a WTO investor within the meaning of the
      ICA;                                                                                                                                  
| | (iii) | of which less than a majority of its voting interests are
      owned by WTO investors;                                                                                                          
| | (iv)  | that is not controlled in fact through the ownership of
      its voting interests; and                                                                                                          
| | (v)   | of which two thirds of the members of its board of
      directors, or of which two thirds of its general partners, as the case may
      be, are any combination of Canadians and WTO
investors;

|(d) | a trust:
|--- | --------

| | (i)   | that is not a Canadian-controlled entity, as determined
      pursuant to the ICA;              
| | ----- | ------------------------------------------------------------------------------------------------
| | (ii)  | that is not a WTO investor within the meaning of the
      ICA;                                 
| | (iii) | that is not controlled in fact through the ownership of
      its voting interests, and         
| | (iv)  | of which two thirds of its trustees are any combination
      of Canadians and WTO investors, or

|(e) | any other form of business organization specified by the
      regulations that is controlled by a WTO investor.
|--- | ----------------------------------------------------------------------------------------------------------------

WTO Member as defined in the ICA means a member of the World
Trade Organization.

77

---

Generally, an acquisition is direct if it involves the
acquisition of control of the Canadian business or of its Canadian parent or
grandparent and an acquisition is indirect if it involves the acquisition of
control of a non-Canadian parent or grandparent of an entity carrying on the
Canadian business. Control may be acquired through the acquisition of actual or
de jure voting control of a Canadian corporation or through the acquisition of
substantially all of the assets of the Canadian business. No change of voting
control will be deemed to have occurred if less than one-third of the voting
control of a Canadian corporation is acquired by an investor.

The ICA specifically exempts certain transactions from either
notification or review. Included among the category of transactions is the
acquisition of voting shares or other voting interests by any person in the
ordinary course of that persons business as a trader or dealer in securities.

**E.**          **Taxation**

CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following summary describes the principal Canadian federal
income tax considerations generally applicable to a holder who is the beneficial
holder of common shares of the Company and who, at all relevant times, for the
purposes of the application of the Income Tax Act(Canada) and the Income
Tax Regulations (collectively, the Canada Tax Act) (i) deals at arms
length with the Company, (ii) is not affiliated with the Company, (iii) holds
the common shares as capital property, and (iv) who, for the purposes of the
Canada Tax Act and the Canada  United States Income Tax Convention (the
Treaty), is at all relevant times resident in and only in the United
States, is a qualifying person entitled to all of the benefits of the Treaty,
and (v) does not use or hold and is not deemed to use or hold the shares in
carrying on a business in Canada (a U.S. Holder). Special rules, which
are not discussed below, may apply to a U.S. Holder that is an insurer or
authorized foreign bank that carries on business in Canada and elsewhere.

This summary is based on the current provisions of the Canada
Tax Act and the current published administrative policies and assessing
practices of the Canada Revenue Agency (CRA) published in writing prior
to the date hereof. This summary also takes into account all specific proposals
to amend the Canada Tax Act and Regulations publicly announced by the Minister
of Finance (Canada) prior to the date hereof (collectively, the Tax
Proposals) and assumes all Tax Proposals will be enacted in the form
proposed. There is no certainty that the Tax Proposals will be enacted in the
form proposed, if at all. This summary does not otherwise take into account or
anticipate any changes in laws or administrative policy or assessing practice
whether by judicial, regulatory, administrative or legislative decision or
action nor does it take into account provincial, territorial or foreign income
tax legislation or considerations.

This summary is of a general nature only and is not, and is not
intended to be, nor should it be construed to be, legal or tax advice to any
particular purchaser of Units. This summary is not exhaustive of all Canadian
federal income tax considerations. Accordingly, purchasers should consult their
own tax advisors regarding the income tax consequences of purchasing Units based
on their particular circumstances.

Dividends

Dividends paid or credited or deemed to be paid or credited to
a U.S. Holder by the Company will be subject to Canadian withholding tax at the
rate of 25% under the Canada Tax Act, subject to any reduction in the rate of
withholding to which the U.S. Holder is entitled under the Treaty. For example,
if the U.S. Holder is entitled to benefits under the Treaty and is the
beneficial owner of the dividends, the applicable rate of Canadian withholding
tax is generally reduced to 15%. The rate of Canadian withholding tax for such
U.S. Holder will generally be further reduced under the Treaty to 5% if such
holder is a corporation that beneficially owns at least 10% of the voting shares
of the Company, and may be further reduced to nil if such holder is a qualifying
pension fund or charity.

Dispositions

A U.S. Holder will not be subject to tax under the Canada Tax
Act on any capital gain realized on a disposition of a common share (including a
deemed disposition on death), unless the common share is or is deemed to be
taxable Canadian property to the U.S. Holder for the purposes of the Canada Tax
Act and the U.S. Holder is not entitled to relief under the Treaty.

78

---

Generally, provided the Shares are listed on a designated
stock exchange as defined in the Canada Tax Act (which includes the TSX) at the
time of disposition, the Shares will not constitute taxable Canadian property of
a U.S. Holder, unless at any time during the 60-month period immediately
preceding the disposition, the U.S. Holder, persons with whom the U.S. Holder
did not deal at arms length, or the U.S. Holder together with all such persons,
owned 25% or more of the issued shares of any class of shares of the Company and
more than 50% of the fair market value of those shares was derived directly or
indirectly from any one or combination of (i) real or immovable property
situated in Canada,(ii) Canadian resource properties, (iii) timber resource
properties, and (iv) options in respect of, or interests in, or for civil rights
law rights in, property described in any of (i) to (iii), whether or not that
property exists.

U.S. Holders whose common shares may constitute taxable
Canadian property should consult with their own tax advisors.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

The following is a general summary of certain material U.S.
federal income tax considerations applicable to a U.S. Holder (as defined below)
arising from and relating to the acquisition, ownership, and disposition of
common shares of the Company.

This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential U.S. federal
income tax considerations that may apply to a U.S. Holder arising from and
relating to the acquisition, ownership, and disposition of common shares. In
addition, this summary does not take into account the individual facts and
circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences to such U.S. Holder, including specific tax consequences
to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is
not intended to be, and should not be construed as, legal or U.S. federal income
tax advice with respect to any U.S. Holder. Each U.S. Holder should consult its
own tax advisor regarding the U.S. federal, U.S. federal alternative minimum,
U.S. federal estate and gift, U.S. state and local, and foreign tax consequences
relating to the acquisition, ownership and disposition of common shares.

No legal opinion from U.S. legal counsel or ruling from the
Internal Revenue Service (the IRS) has been requested, or will be obtained,
regarding the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of common shares. This summary is not binding on the
IRS, and the IRS is not precluded from taking a position that is different from,
and contrary to, the positions taken in this summary. In addition, because the
authorities on which this summary is based are subject to various
interpretations, the IRS and the U.S. courts could disagree with one or more of
the positions taken in this summary.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations (whether final, temporary, or
proposed), published rulings of the IRS, published administrative positions of
the IRS, U.S. court decisions, the Convention Between Canada and the United
States of America with Respect to Taxes on Income and on Capital, signed
September 26, 1980, as amended (the Treaty), and U.S. court decisions that are
applicable and, in each case, as in effect and available, as of the date of this
document. Any of the authorities on which this summary is based could be changed
in a material and adverse manner at any time, and any such change could be
applied on a retroactive or prospective basis which could affect the U.S.
federal income tax considerations described in this summary. This summary does
not discuss the potential effects, whether adverse or beneficial, of any
proposed legislation that, if enacted, could be applied on a retroactive or
prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a
beneficial owner of common shares that is for U.S. federal income tax purposes:

79

---

- an individual who is a citizen or resident of the U.S.;
- a corporation (or other entity taxable as a corporation for U.S. federal
  income tax purposes) organized under the laws of the U.S., any state thereof
  or the District of Columbia;
- an estate whose income is subject to U.S. federal income taxation
  regardless of its source; or
- a trust that (a) is subject to the primary supervision of a court within
  the U.S. and the control of one or more U.S. persons for all substantial
  decisions or (b) has a valid election in effect under applicable Treasury
  regulations to be treated as a U.S. person.

Non-U.S. Holders

For purposes of this summary, a non-U.S. Holder is a
beneficial owner of common shares that is not a U.S. Holder. This summary does
not address the U.S. federal income tax consequences to non-U.S. Holders arising
from and relating to the acquisition, ownership, and disposition of common
shares. Accordingly, a non-U.S. Holder should consult its own tax advisor
regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal
estate and gift, U.S. state and local, and foreign tax consequences (including
the potential application of and operation of any income tax treaties) relating
to the acquisition, ownership, and disposition of common shares.

U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed

This summary does not address the U.S. federal income tax
considerations applicable to U.S. Holders that are subject to special provisions
under the Code, including the following U.S. Holders: (a) U.S. Holders that are
tax-exempt organizations, qualified retirement plans, individual retirement
accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial
institutions, underwriters, insurance companies, real estate investment trusts,
or regulated investment companies; (c) U.S. Holders that are dealers in
securities or currencies or U.S. Holders that are traders in securities that
elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a
functional currency other than the U.S. dollar; (e) U.S. Holders that own
common shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (f) U.S. Holders that acquired common shares in connection with the
exercise of employee stock options or otherwise as compensation for services;
(g) U.S. Holders that hold common shares other than as a capital asset within
the meaning of Section 1221 of the Code (generally, property held for investment
purposes); (h) partnerships and other pass-through entities (and investors in
such partnerships and entities); or (i) U.S. Holders that own or have owned
(directly, indirectly, or by attribution) 10% or more of the total combined
voting power of the outstanding shares of the Company. This summary also does
not address the U.S. federal income tax considerations applicable to U.S.
Holders who are: (a) U.S. expatriates or former long-term residents of the U.S.
subject to Section 877 of the Code; (b) persons that have been, are, or will be
a resident or deemed to be a resident in Canada for purposes of the Act; (c)
persons that use or hold, will use or hold, or that are or will be deemed to use
or hold common shares in connection with carrying on a business in Canada; (d)
persons whose common shares constitute taxable Canadian property under the
Act; or (e) persons that have a permanent establishment in Canada for the
purposes of the Treaty. U.S. Holders that are subject to special provisions
under the Code, including U.S. Holders described immediately above, should
consult their own tax advisor regarding the U.S. federal, U.S. federal
alternative minimum, U.S. federal estate and gift, U.S. state and local, and
foreign tax consequences relating to the acquisition, ownership and disposition
of common shares.

If an entity that is classified as a partnership (or
pass-through entity) for U.S. federal income tax purposes holds common shares,
the U.S. federal income tax consequences to such partnership and the partners of
such partnership generally will depend on the activities of the partnership and
the status of such partners. Partners of entities that are classified as
partnerships for U.S. federal income tax purposes should consult their own tax
advisor regarding the U.S. federal income tax consequences arising from and
relating to the acquisition, ownership, and disposition of common shares.

Tax Consequences Not Addressed

This summary does not address the U.S. federal, U.S. federal
alternative minimum, U.S. federal estate and gift, U.S. state and local, and
foreign tax consequences to U.S. Holders of the acquisition, ownership, and
disposition of common shares. Each U.S. Holder should consult its own tax
advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S.
federal estate and gift, U.S. state and local, and foreign tax consequences of
the acquisition, ownership, and disposition of common shares.

80

---

U.S. Federal Income Tax Consequences of the Acquisition,
Ownership, and Disposition of Common Shares

If the Company is not considered a passive foreign investment
company (a PFIC, as defined below) at any time during a U.S. Holders holding
period, the following sections will generally describe the U.S. federal income
tax consequences to U.S. Holders of the acquisition, ownership, and disposition
of the Companys common shares.

Distributions on Common Shares

A U.S. Holder that receives a distribution, including a
constructive distribution, with respect to a common share will be required to
include the amount of such distribution in gross income as a dividend (without
reduction for any Canadian income tax withheld from such distribution) to the
extent of the current or accumulated earnings and profits of the Company, as
computed for U.S. federal income tax purposes. A dividend generally will be
taxed to a U.S. Holder at ordinary income tax rates. To the extent that a
distribution exceeds the current and accumulated earnings and profits of the
Company, such distribution will be treated first as a tax-free return of capital
to the extent of a U.S. Holders tax basis in the common shares and thereafter
as gain from the sale or exchange of such common shares (see Sale or Other
Taxable Disposition of Common Shares below). However, the Company does not
intend to maintain the calculations of earnings and profits in accordance with
U.S. federal income tax principles, and each U.S. Holder should therefore assume
that any distribution by the Company with respect to the common shares will
constitute ordinary dividend income. Dividends received on common shares
generally will not be eligible for the dividends received deduction.

Dividends paid by the Company generally will be taxed at the
preferential tax rates applicable to long-term capital gains if (a) the Company
is a qualified foreign corporation (as defined below), (b) the U.S. Holder
receiving such dividend is an individual, estate, or trust, and (c) certain
holding period requirements are met. The Company generally will be a qualified
foreign corporation under Section 1(h)(11) of the Code (a QFC) if (a) the
Company is eligible for the benefits of the Treaty, or (b) common shares of the
Company are readily tradable on an established securities market in the U.S.
However, even if the Company satisfies one or more of such requirements, the
Company will not be treated as a QFC if the Company is a PFIC for the taxable
year during which the Company pays a dividend or for the preceding taxable year.
(See the section below under the heading "Passive Foreign Investment Company
Rules").

If the Company is a QFC, but a U.S. Holder otherwise fails to
qualify for the preferential tax rate applicable to dividends discussed above, a
dividend paid by the Company to a U.S. Holder, including a U.S. Holder that is
an individual, estate, or trust, generally will be taxed at ordinary income tax
rates (and not at the preferential tax rates applicable to long-term capital
gains). The dividend rules are complex, and each U.S. Holder should consult its
own tax advisor regarding the dividend rules.

Sale or Other Taxable Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other
taxable disposition of common shares in an amount equal to the difference, if
any, between (a) the amount of cash plus the fair market value of any property
received and (b) such U.S. Holders tax basis in such common shares sold or
otherwise disposed of. Subject to the PFIC rules discussed below, any such gain
or loss generally will be capital gain or loss, which will be long-term capital
gain or loss if, at the time of the sale or other disposition, such common
shares are held for more than one year.

Gain or loss recognized by a U.S. Holder on the sale or other
taxable disposition of common shares generally will be treated as U.S. source
for purposes of applying the U.S. foreign tax credit rules unless the gain is
subject to tax in Canada and is sourced as foreign source under the Treaty and
such U.S. Holder elects to treat such gain or loss as foreign source.

Preferential tax rates apply to long-term capital gains of a
U.S. Holder that is an individual, estate, or trust. There are currently no
preferential tax rates for long-term capital gains of a U.S. Holder that is a
corporation. Deductions for capital losses are subject to significant
limitations under the Code.

Receipt of Foreign Currency

81

---

The amount of any distribution paid in foreign currency to a
U.S. Holder in connection with the ownership of common shares, or on the sale,
exchange or other taxable disposition of common shares, generally will be equal
to the U.S. dollar value of such foreign currency based on the exchange rate
applicable on the date of receipt (regardless of whether such foreign currency
is converted into U.S. dollars at that time). A U.S. Holder that receives
foreign currency and converts such foreign currency into U.S. dollars at a
conversion rate other than the rate in effect on the date of receipt may have a
foreign currency exchange gain or loss, which generally would be treated as U.S.
source ordinary income or loss. If the foreign currency received is not
converted into U.S. dollars on the date of receipt, a U.S. Holder will have a
basis in the foreign currency equal to its U.S. dollar value on the date of
receipt. Any U.S. Holder who receives payment in foreign currency and engages in
a subsequent conversion or other disposition of the foreign currency may have a
foreign currency exchange gain or loss that would be treated as ordinary income
or loss, and generally will be U.S. source income or loss for foreign tax credit
purposes. Each U.S. Holder should consult its own U.S. tax advisor regarding the
U.S. federal income tax consequences of receiving, owning, and disposing of
foreign currency.

Foreign Tax Credit

A U.S. Holder who pays (whether directly or through
withholding) Canadian income tax with respect to dividends paid on common shares
generally will be entitled, at the election of such U.S. Holder, to receive
either a deduction or a credit for such Canadian income tax paid. Generally, a
credit will reduce a U.S. Holders U.S. federal income tax liability on a
dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holders income
subject to U.S. federal income tax. This election is made on a year-by-year
basis and applies to all foreign taxes paid (whether directly or through
withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including
the general limitation that the credit cannot exceed the proportionate share of
a U.S. Holders U.S. federal income tax liability that such U.S. Holders
foreign source taxable income bears to such U.S. Holders worldwide taxable
income. In applying this limitation, a U.S. Holders various items of income and
deduction must be classified, under complex rules, as either foreign source or
U.S. source. Generally, dividends paid by a foreign corporation should be
treated as foreign source for this purpose, and gains recognized on the sale of
stock of a foreign corporation by a U.S. Holder should be treated as U.S. source
for this purpose, except as otherwise provided in an applicable income tax
treaty, and if an election is properly made under the Code. However, the amount
of a distribution with respect to the common shares that is treated as a
dividend may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced foreign tax credit
allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. Dividends paid by the
Company generally will constitute foreign source income and generally will be
categorized as passive income.

The foreign tax credit rules are complex, and each U.S. Holder
should consult its own tax advisor regarding the foreign tax credit rules.

Additional Tax on Passive Income

For tax years beginning after December 31, 2012, certain
individuals, estates and trusts whose income exceeds certain thresholds will be
required to pay a 3.8% Medicare surtax on net investment income including,
among other things, dividends and net gain from disposition of property (other
than property held in a trade or business). U.S. Holders should consult with
their own tax advisors regarding the effect, if any, of this tax on their
ownership and disposition of common shares.

Information Reporting; Backup Withholding Tax For Certain
Payments

Under U.S. federal income tax law and regulations, certain
categories of U.S. Holders must file information returns with respect to their
investment in, or involvement in, a foreign corporation. For example, recently
enacted legislation generally imposes new U.S. return disclosure obligations
(and related penalties) on U.S. Holders that hold certain specified foreign
financial assets in excess of $50,000. The definition of specified foreign
financial assets includes not only financial accounts maintained in foreign
financial institutions, but also, unless held in accounts maintained by a
financial institution, any stock or security issued by a non-U.S. person, any
financial instrument or contract held for investment that has an issuer or
counterparty other than a U.S. person and any interest in a foreign entity. U.
S. Holders may be subject to these reporting requirements unless their common
shares are held in an account at a domestic financial institution. Penalties for
failure to file certain of these information returns are
substantial. U.S. Holders of common shares should consult with their own tax
advisors regarding the requirements of filing information returns, these rules,
including the requirement to file an IRS Form 8938.

82

---

Payments made within the U.S., or by a U.S. payor or U.S.
middleman, of dividends on, and proceeds arising from the sale or other taxable
disposition of, common shares generally will be subject to information reporting
and backup withholding tax, at the rate of 28% (and increasing to 31% for
payments made after December 31, 2012), if a U.S. Holder (a) fails to furnish
such U.S. Holders correct U.S. taxpayer identification number (generally on
Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c)
is notified by the IRS that such U.S. Holder has previously failed to properly
report items subject to backup withholding tax, or (d) fails to certify, under
penalty of perjury, that such U.S. Holder has furnished its correct U.S.
taxpayer identification number and that the IRS has not notified such U.S.
Holder that it is subject to backup withholding tax. However, certain exempt
persons, such as corporations, generally are excluded from these information
reporting and backup withholding tax rules. Any amounts withheld under the U.S.
backup withholding tax rules will be allowed as a credit against a U.S. Holders
U.S. federal income tax liability, if any, or will be refunded, if such U.S.
Holder furnishes required information to the IRS in a timely manner. Each U.S.
Holder should consult its own tax advisor regarding the information reporting
and backup withholding rules.

Passive Foreign Investment Company Rules

If the Company were to constitute a PFIC (as defined below) for
any year during a U.S. Holders holding period, then certain different and
potentially adverse tax consequences would apply to such U.S. Holders
acquisition, ownership and disposition of common shares.

The Company generally will be a PFIC under Section 1297 of the
Code if, for a tax year, (a) 75% or more of the gross income of the Company for
such tax year is passive income (the income test) or (b) 50% or more of the
value of its average quarterly assets held by the Company either produce passive
income or are held for the production of passive income, based on the fair
market value of such assets (the asset test). Gross income generally
includes all revenues less the cost of goods sold, plus income from investments
and from incidental or outside operations or sources, and passive income
includes, for example, dividends, interest, certain rents and royalties, certain
gains from the sale of stock and securities, and certain gains from commodities
transactions. Active business gains arising from the sale of commodities
generally are excluded from passive income if substantially all (85% or more) of
a foreign corporations commodities are (a) stock in trade of such foreign
corporation or other property of a kind which would properly be included in
inventory of such foreign corporation, or property held by such foreign
corporation primarily for sale to customers in the ordinary course of business,
(b) property used in the trade or business of such foreign corporation that
would be subject to the allowance for depreciation under Section 167 of the
Code, or (c) supplies of a type regularly used or consumed by such foreign
corporation in the ordinary course of its trade or business, and certain other
requirements are satisfied.

In addition, for purposes of the PFIC income test and asset
test described above, if the Company owns, directly or indirectly, 25% or more
of the total value of the outstanding shares of another foreign corporation, the
Company will be treated as if it (a) held a proportionate share of the assets of
such other foreign corporation and (b) received directly a proportionate share
of the income of such other foreign corporation. In addition, for purposes of
the PFIC income test and asset test described above, passive income does not
include any interest, dividends, rents, or royalties that are received or
accrued by the Company from a related person (as defined in Section 954(d)(3)
of the Code), to the extent such items are properly allocable to the income of
such related person that is not passive income.

Under certain attribution rules, if the Company is a PFIC, U.S.
Holders will be deemed to own their proportionate share of any subsidiary of the
Company which is also a PFIC (a Subsidiary PFIC), and will be subject to
U.S. federal income tax on (i) a distribution on the shares of a Subsidiary PFIC
or (ii) a disposition of shares of a Subsidiary PFIC, both as if the holder
directly held the shares of such Subsidiary PFIC.

The Company does not believe that it was a PFIC during the tax
year ending December 31, 2012. However, PFIC classification is fundamentally
factual in nature, generally cannot be determined until the close of the tax
year in question, and is determined annually. Additionally, the analysis
depends, in part, on the application of complex U.S. federal income tax rules,
which are subject to differing interpretations. Furthermore, if for any given
year the Company reaches either of the test standards (i.e., income test and
asset test), it remains a PFIC forever, no matter how active it becomes in the
future. Consequently, there can be no assurance that the
Company has never been and will not become a PFIC for any tax year during which
U.S. Holders hold common shares.

83

---

If the Company were a PFIC in any tax year and a U.S. Holder
held common shares, such holder generally would be subject to special rules with
respect to excess distributions made by the Company on the common shares and
with respect to gain from the disposition of common shares. An excess
distribution generally is defined as the excess of distributions with respect
to the common shares received by a U.S Holder in any tax year over 125% of the
average annual distributions such U.S. Holder has received from the Company
during the shorter of the three preceding tax years, or such U.S. Holders
holding period for the common shares. Generally, a U.S. Holder would be required
to allocate any excess distribution or gain from the disposition of the common
shares ratably over its holding period for the common shares. Such amounts
allocated to the year of the disposition or excess distribution would be taxed
as ordinary income, and amounts allocated to prior tax years would be taxed as
ordinary income at the highest tax rate in effect for each such year and an
interest charge at a rate applicable to underpayments of tax would apply.

While there are U.S. federal income tax elections that
sometimes can be made to mitigate these adverse tax consequences (including,
without limitation, the QEF Election and the Mark-to-Market Election), such
elections are available in limited circumstances and must be made in a timely
manner. U.S. Holders should be aware that, for each tax year, if any, that the
Company is a PFIC, the Company can provide no assurances that it will satisfy
the record keeping requirements of a PFIC, or that it will make available to
U.S. Holders the information such U.S. Holders require to make a QEF Election
under Section 1295 of the Code with respect of the Company or any Subsidiary
PFIC. U.S. Holders are urged to consult their own tax advisers regarding the
potential application of the PFIC rules to the ownership and disposition of
common shares, and the availability of certain U.S. tax elections under the PFIC
rules.

**F.**          **Dividends and Paying Agents**

Not Applicable.

**G.**          **Statements by Experts**

Not Applicable.

**H.**          **Documents on Display**

We are subject to the informational requirements of the
Exchange Act and file reports and other information with the SEC. You may read
and copy any of our reports and other information at, and obtain copies upon
payment of prescribed fees from, the Public Reference Room maintained by the SEC
at 100 F Street, N.E., Washington, D.C. 20549. In addition, the SEC maintains a
Website that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC at
http://www.sec.gov. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330.

We are required to file reports and other information with the
securities commissions in Canada. You are invited to read and copy any reports,
statements or other information, other than confidential filings, that we file
with the provincial securities commissions. These filings are also
electronically available from the Canadian System for Electronic Document
Analysis and Retrieval (SEDAR) (http://www.sedar.com), the Canadian equivalent
of the SECs electronic document gathering and retrieval system.

We incorporate by reference information that we file with the
SEC, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this Form 20-F and more recent information automatically
updates and supersedes more dated information contained or incorporated by
reference in this Form 20-F.

As a foreign private issuer, we are exempt from the rules under
the Exchange Act prescribing the furnishing and content of proxy statements to
shareholders.

We will provide without charge to each person, including any
beneficial owner, to whom a copy of this annual report has been delivered, on
the written or oral request of such person, a copy of any or all documents
referred to above which have been or may be incorporated by reference in this annual report
(not including exhibits to such incorporated information that are not
specifically incorporated by reference into such information). Requests for such
copies should be directed to us at the following address: 598  999 Canada
Place, Vancouver, British Columbia, Canada V6C 3E1, Telephone: (604) 638-5050,
Facsimile: (604) 638-5051.

84

---

**I.**          **Subsidiary Information**

Not applicable.

85

---

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

The Company is engaged primarily in mineral and oil and gas
exploration and production and manages related industry risk issues directly.
The Company may be at risk for environmental issues and fluctuations in
commodity pricing. Management is not aware of and does not anticipate any
significant environmental remediation costs or liabilities in respect of its
current operations.

The Companys functional currency is the Canadian dollar. The
Company operates in foreign jurisdictions, giving rise to significant exposure
to market risks from changes in foreign currency rates. The financial risk is
the risk to the Companys operations that arises from fluctuations in foreign
exchange rates and the degree of volatility of these rates. Currently, the
Company does not use derivative instruments to reduce its exposure to foreign
currency risk.

The Company also has exposure to a number of risks from its use
of financial instruments including: credit risk, liquidity risk, and market
risk. This note presents information about the Companys exposure to each of
these risks and the Companys objectives, policies and processes for measuring
and managing risk, and the Companys management of capital.

The Board of Directors has overall responsibility for the
establishment and oversight of the Companys risk management framework. The
Board has implemented and monitors compliance with risk management policies. The
Companys risk management policies are established to identify and analyze the
risks faced by the Company, to set appropriate risk limits and controls, and to
monitor risks and adherence to market conditions and the Companys activities.

(a)Credit Risk

Credit risk arises from credit exposure to receivables due from
joint venture partners and marketers included in accounts receivable. The
maximum exposure to credit risk is equal to the carrying value of the financial
assets.

The Company is exposed to third party credit risk through its
contractual arrangements with its current or future joint venture partners,
marketers of its petroleum and natural gas production and other parties. In the
event such entities fail to meet their contractual obligations to the Company,
such failures may have a material adverse effect on the Companys business,
financial condition, and results of operations.

The objective of managing the third party credit risk is to
minimize losses in financial assets. The Company assesses the credit quality of
the partners, taking into account their financial position, past experience, and
other factors. The Company mitigates the risk of non-collection of certain
amounts by obtaining the joint venture partners share of capital expenditures
in advance of a project and by monitoring accounts receivable on a regular
basis. As at December 31, 2013 and 2012, no accounts receivable has been deemed
uncollectible or written off during the year.

As at December 31, 2013, the Companys receivables consist of
$4,000 (2012 - $30,000) from joint interest partners, $760,000 (2012 - $494,000)
from oil and natural gas marketers and $67,000 (2012 - $25,000) from other trade
receivables.

The Company considers all amounts outstanding for more than 90
days as past due. Currently, there is no indication that amounts are
non-collectable; thus an allowance for doubtful accounts has not been set up. As
at December 31, 2013, $Nil (2012 - $Nil) of accounts receivable are past due.

(b)Liquidity Risk

Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they are due. The nature of the oil and gas
industry is capital intensive and the Company maintains and monitors a certain
level of cash flow to finance operating and capital expenditures.

The Companys ongoing liquidity and cash flow are impacted by
various events and conditions. These events and conditions include but are not
limited to commodity price fluctuations, general credit and market conditions,
operation and regulatory factors, such as government permits, the availability
of drilling and other equipment, lands and pipeline access, weather, and
reservoir quality.

To mitigate the liquidity risk, the Company closely monitors
its credit facility, production level and capital expenditures to ensure that it has adequate liquidity to satisfy its financial
obligations.

86

---

The following are the contractual maturities of financial
liabilities as at December 31, 2013:

|(CA$ thousands)                          |  | Carrying amount |  |  | 2014  | 
|---------------------------------------- |  | --------------- |  |  | ----- | 
|                                         |  |                 |  |  |       | 
|Accounts payable and accrued liabilities |  | 2,623           |  |  | 2,623 | 
|Bank line of credit                      |  | 2,900           |  |  | 2,900 | 
|Loan facility                            |  | 2,911           |  |  | 3,500 | 
|                                         |  | 8,434           |  |  | 9,023 | 

For the contractual maturities of financial contract liability
as at December 31, 2013, see note 12 to the 2013 consolidated financial
statements for details.

(c)Market Risk

Market risk is the risk that changes in market prices, such as
foreign exchange rates, commodity prices, and interest rates will affect the
Companys net earnings. The objective of market risk management is to manage and
control market risk exposures within acceptable limits, while maximizing
returns. The Company utilizes financial derivatives to manage certain market
risks. All such transactions are conducted in accordance with the risk
management policy that has been approved by the Board of Directors.

(i)Foreign
Currency Exchange Risk

Foreign currency exchange rate risk is the risk that the fair
value of financial instruments or future cash flows will fluctuate as a result
of changes in foreign exchange rates. Although substantially all of the
Companys oil and natural gas sales are denominated in Canadian dollars, the
underlying market prices in Canada for oil and natural gas are impacted by
changes in the exchange rate between the Canadian and United States dollars.
Given that changes in exchange rate have an indirect influence, the impact of
changing exchange rates cannot be accurately quantified. The Company had no
forward exchange rate contracts in place as at or during the year ended December
31, 2013 and 2012.

The Company was exposed to the following foreign currency risk
at December 31:

|(CA$
      thousands)                    |  | 2013   |   |  | 2012  |  
|---------------------------------------- |  | ------ | - |  | ----- | -
|Expressed in
      foreign currencies    |  | CND$   |   |  | CND$  |  
|Cash and cash equivalents                |  | 376    |   |  | 1,031 |  
|Accounts receivable                      |  | 421    |   |  | 30    |  
|Accounts payable and accrued liabilities |  | (1,613 | ) |  | (869  | )
|Balance sheet
      exposure             |  | (816   | ) |  | 192   |  

The following foreign exchange rates applied for the year ended
and as at December 31:

|                                 |  | 2013   |  |  | 2012   | 
|-------------------------------- |  | ------ |  |  | ------ | 
|December 31, reporting date rate |  | 1.0636 |  |  | 0.9949 | 
|YTD average USD
      to CAD     |  | 1.0301 |  |  | 0.9999 | 

The Company has performed a sensitivity analysis on its foreign
currency denominated financial instruments. Based on the Companys foreign
currency exposure noted above and assuming that all other variables remain
constant, a 10% appreciation of the US dollar against the Canadian dollar would
result in the increase of net loss of $82,000 at December 31, 2013 (2012 -
$19,000 decrease of net loss). For a 10% depreciation of the above foreign
currencies against the Canadian dollar, assuming all other variables remain
constant, there would be an equal and opposite impact on net loss.

87

---

(ii)    Interest Rate Risk

Interest rate risk is the risk that future cash flows will
fluctuate as a result of changes in market interest rates. At December 31, 2013,
the Company was exposed to interest rate fluctuations on its bank credit
facility which bore a floating rate of interest. Assuming all other variables
remain constant, an increase or decrease of 1% in market interest rate at
December 31, 2013 would have increased or decreased net loss by $41,000. The
Company had no interest rate swaps or financial contracts in place at or during
the year ended December 31, 2013 and 2012.

(iii)   Commodity Price Risk

Revenues and consequently cash flows fluctuate with commodity
prices and the US/Canadian dollar exchange rate. Commodity prices are determined
on a global basis and circumstances that occur in various parts of the world are
outside of the control of the Company. The Company may protect itself from
fluctuations in prices by using the financial derivative sales contracts. The
Company may enter into commodity price contracts to manage the risks associated
with price volatility and thereby protect its cash flows used to fund its
capital program. Assuming all other variables remain constant, an increase or
decrease of oil price of $1 per bbl and gas price of $0.01 per mcf at December
31, 2013 would have decreased or increased net loss by $85,000. The Company had
no commodity contracts in place at December 31, 2013.

(d)Capital Management
Strategy

The Companys policy on capital management is to maintain a
prudent capital structure so as to maintain financial flexibility, preserve
access to capital markets, maintain investor, creditor and market confidence,
and to allow the Company to fund future developments. The Company considers its
capital structure to include share capital, cash and cash equivalents, bank line
of credit, and working capital. In order to maintain or adjust capital
structure, the Company may from time to time issue shares or enter into debt
agreements and adjust its capital spending to manage current and projected
operating cash flows and debt levels.

The Companys current borrowing capacity is based on the
lenders review of the Companys oil and gas reserves. The Company is also
subject to various covenants. Compliance with these covenants is monitored on a
regular basis and at December 31, 2013, the Company is in compliance with the
covenant for its bank credit facility and is in default of the covenant for its
loan facility.

The Companys share capital is not subject to any external
restrictions. The Company has not paid or declared any dividends, nor are any
contemplated in the foreseeable future. There have been no changes to the
Companys capital management strategy during the year ended December 31, 2013.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY
SECURITIES

A.-C.

Not applicable.

D.    American Depositary Receipts

The Company does not have securities registered as American
Depositary Receipts.

88

---

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
HOLDERS AND USE OF PROCEEDS

A.  D.

None.

**E.**          **Use of Proceeds**

Not Applicable.

ITEM 15. CONTROLS AND PROCEDURES

**A.**          **Disclosure Controls and Procedures**

As of the end of the fiscal year ended December 31, 2013, an
evaluation of the effectiveness of the Companys disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (the Exchange Act), was performed
by the Companys management, under the supervision and with the participation of
the Companys Chief Executive Officer and Chief Financial Officer. Based on that
evaluation, the Companys CEO and CFO have concluded that the Companys
disclosure controls and procedures were effective to give reasonable assurance
that the information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is (i) recorded, processed, summarized
and reported, within the time periods specified in the SECs rules and forms,
and (ii) accumulated and communicated to management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.

Our management concluded that our disclosure controls and
procedures were effective. The applicable information was filed on a timely
basis with the Canadian securities regulators on SEDAR and was publicly
accessible on www.SEDAR.com and on the Companys website, but was not
timely furnished on Edgar on Form 6-K. We have taken steps designed to ensure
that future information required to be furnished on Form 6-K will be so
furnished on a timely basis.

**B.**          **Managements Report on Internal Control over Financial Reporting**

The Companys management, including the Companys Chief
Executive Officer and the Companys Chief Financial Officer, is responsible for
establishing and maintaining adequate internal control over the Companys
internal control over financial reporting, as such term is defined in Rule
13a-15(f) under the Exchange Act. The Companys internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation and fair presentation of
financial statements for external purposes in accordance with International
Financial Reporting Standards. It should be noted that a control system, no
matter how well conceived or operated, can only provide reasonable assurance,
not absolute assurance, that the objectives of the control system are met. Also,
projections of any evaluation of effectiveness to future periods are subject to
the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with policies and procedures may deteriorate.

The Companys management, (with the participation of the
Companys Chief Executive Officer and the Companys Chief Financial Officer),
conducted an evaluation of the effectiveness of the Companys internal control
over financial reporting as of December 31, 2013. This evaluation was based on
the criteria set forth in Internal Control-Integrated Framework (1992) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. Based on
its assessment, management has concluded that, as of December 31, 2013, the
Companys internal control over financial reporting was effective and
managements assessment did not identify material weaknesses.

89

---

**C.**          **Attestation Report of the Registered Public Accounting Firm**

Because the Company is not an accelerated filer or large
accelerated filer within the meaning of such terms under the Exchange Act, this
Annual Report is not required to include an attestation report of the Companys
independent auditors regarding the Companys internal control over financial
reporting.

**D.**          **Changes in Internal Control Over Financial Reporting**

There were no amendments to the Companys system of internal
control over financial reporting during the year ended December 31, 2013 and the
Company is not aware of any amendments to its system of internal control that
should be implemented to strengthen its system of internal control over
financial reporting.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

The Company does not have a financial expert, as defined by the
US Securities and Exchange Commission, serving on the Companys Audit
Committee. In 2011, the Company adopted International Financial Reporting
Standards (IFRS) to comply with Canadian public company reporting standards.
The Audit Committee members do not, as yet, have sufficient experience and
in-depth understanding of IFRS to qualify as experts.

ITEM 16B. CODE OF ETHICS

The Board of Directors of the Company has adopted a Code of
Conduct and Ethics that outlines the Companys values and its commitment to
ethical business practices in every business transaction. This code applies to
all directors, officers, and employees of the Company and its subsidiaries and
affiliates. A copy of the Companys Code of Business Conduct and Ethics is
available on the Companys website at www.dejour.com.

Reporting Unethical and Illegal Conduct/Ethics Questions

The Company is committed to taking prompt action against
violations of the Code of Conduct and Ethics and it is the responsibility of all
directors, officers and employees to comply with the Code and to report
violations or suspected violations to the Companys Compliance Officer.
Employees may also discuss their concerns with their supervisor who will then
report suspected violations to the Compliance Officer.

The Compliance Officer is appointed by the Board of Directors
and is responsible for investigating and resolving all reported complaints and
allegations and shall advise the President and CEO, the CFO and/or the Audit
Committee.

During the fiscal year ended December 31, 2013, the Company did
not substantially amend, waive, or implicitly waive any provision of the Code
with respect to any of the directors, executive officers or employees subject to
it.

90

---

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets out the fees billed to the Company by
BDO Canada LLP for professional services rendered during fiscal years ended
December 31, 2013 and December 31, 2012. During these years, BDO Canada LLP was
our external auditors.

Year ended December 31,
      2013 $
    Year ended December 31,
      2012 $Audit Services (1)
    201,762
    229,950Audit Related Services (2)
    29,700
    100,430Tax Services (3)
    8,500
    11,210All Other Fees (4)
    16,235
  27,850


NOTES:

|(1) | Audit fees consist of fees for the audit of the Companys
      annual financial statements and review of the Companys quarterly
      financial statements, or services that are normally provided in connection
      with statutory and regulatory filings or engagements.                                                                                                                                          
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                         
|(2) | Audit-related fees consist of fees for assurance and
      related services that are reasonably related to the performance of the
      audit or review of the Companys financial statements and are not reported
      as Audit fees. During fiscal 2013 and 2012, the services provided in this
      category included consultation on accounting and audit-related matters and
      review of reserves disclosure.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                         
|(3) | Tax fees consist of fees for tax compliance services, tax
      advice and tax planning. During fiscal 2013 and 2012, the services
      provided in this category included assistance and advice in relation to
      the preparation of corporate income tax returns.                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                         
|(4) | During fiscal 2013 and 2012, the aggregate fees in this
      category consist of Canadian Public Accountability Board (CPAB) fees and
      administration costs.                                                                                                                                                                                                                                                    

Pre-Approval Policies and Procedures

Generally, in the past, prior to engaging the Companys
auditors to perform a particular service, the Companys audit committee has,
when possible, obtained an estimate for the services to be performed. The audit
committee in accordance with procedures for the Company approved all of the
services described above.

In relation to the pre-approval of all audit and audit-related
services and fees the Companys audit committee charter provides that the audit
committee shall:

Review and pre-approve all audit and audit-related services and
the fees and other compensation related thereto, and any non-audit services,
provided by the Companys external auditors. The pre-approval requirement is
waived with respect to the provision of non-audit services if:

|i.   | the aggregate amount of all such non-audit services
      provided to the Company constitutes not more than five percent of the
      total amount of revenues paid by the Company to its external auditors
      during the fiscal year in which the non-audit services are
  provided;                                             
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ii.  | such services were not recognized by the Company at the
      time of the engagement to be non-audit services; and                                                                                                                                                                                                                   
|iii. | such services are promptly brought to the attention of
      the Committee by the Company and approved prior to the completion of the
      audit by the Committee or by one or more members of the Committee who are
      members of the Board to whom authority to grant such approvals has been
      delegated by the Committee.

Provided the pre-approval of the non-audit services is
presented to the Committees first scheduled meeting following such approval
such authority may be delegated by the Committee to one or more independent
members of the Committee.

We did not rely on the de minimus exemption provided by Section
(c)(7)(i)(C) of Rule 2-01 of SEC Regulation S-X in 2013.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES

None.

91

---

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
AFFILIATED PERSONS

The Company did not repurchase any common shares in the fiscal
year ended December 31, 2013.

ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE

The Companys common shares are listed on the NYSE Amex.
Section 110 of the NYSE Amex Company Guide permits the NYSE Amex to consider the
laws, customs and practices of foreign issuers in relaxing certain NYSE Amex
listing criteria, and to grant exemptions from NYSE Amex listing criteria based
on these considerations. A company seeking relief under these provisions is
required to provide written certification from independent local counsel that
the non-complying practice is not prohibited by home country law. A description
of the significant ways in which the Companys governance practices differ from
those followed by domestic companies pursuant to NYSE Amex standards is as
follows:

Shareholder Meeting Quorum
Requirement: The NYSE Amex minimum quorum requirement for a shareholder
meeting is one-third of the outstanding shares of common stock. In addition, a
company listed on NYSE Amex is required to state its quorum requirement in its
bylaws. The Companys quorum requirement is set forth in its Articles and
bylaws. A quorum for a meeting of members of the Company is one holder of common
shares issued, outstanding and entitled to vote, represented in person or by
proxy.

Proxy Delivery Requirement: NYSE
Amex requires the solicitation of proxies and delivery of proxy statements for
all shareholder meetings, and requires that these proxies shall be solicited
pursuant to a proxy statement that conforms to SEC proxy rules. The Company is a
foreign private issuer as defined in Rule 3b-4 under the Exchange Act, and the
equity securities of the Company are accordingly exempt from the proxy rules set
forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act. The Company
solicits proxies in accordance with applicable rules and regulations in Canada.

Shareholder Approval Requirement:The Company will follow Toronto Stock Exchange rules for shareholder
approval of new issuances of its common shares. Following Toronto Stock Exchange
rules, shareholder approval is required for certain issuances of shares that:
(i) materially affect control of the Company; or (ii) provide consideration to
insiders in aggregate of 10% or greater of the market capitalization of the
listed issuer and have not been negotiated at arms length. Shareholder approval
is also required, pursuant to TSX rules, in the case of private placements: (x)
for an aggregate number of listed securities issuable greater than 25% of the
number of securities of the listed issuer which are outstanding, on a
non-diluted basis, prior to the date of closing of the transaction if the price
per security is less than the market price; or (y) that during any six month
period are to insiders for listed securities or options, rights or other
entitlements to listed securities greater than 10% of the number of securities
of the listed issuer which are outstanding, on a non-diluted basis, prior to the
date of the closing of the first private placement to an insider during the six
month period.

The foregoing is consistent with the laws, customs and
practices in Canada.

In addition, the Company may from time-to-time seek relief from
NYSE Amex corporate governance requirements on specific transactions under
Section 110 of the NYSE Amex Company Guide by providing written certification
from independent local counsel that the non-complying practice is not prohibited
by our home country law, in which case, the Company shall make the disclosure of
such transactions available on the Companys website at www.dejour.com.
Information contained on its website is not part of this annual report.

ITEM 16H  MINE SAFETY DISCLOSURE

Not Applicable.

92

---

PART III

ITEM 17. FINANCIAL STATEMENTS

The Company has provided financial statements pursuant to Item
18.

ITEM 18. FINANCIAL STATEMENTS

|Report of Independent Registered Chartered
      Accountants, dated March 18, 2014                                                  
|------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                    
|Consolidated Balance Sheets at December 31,
      2013 and 2013                                                                     
|                                                                                                                                    
|Consolidated Statements of Comprehensive
      Loss for the years ending December 31, 2013, 2012 and 2011.                          
|                                                                                                                                    
|Consolidated Statements of Changes in
      Shareholders Equity for the years ended December 31, 2013, 2012 and 2011.              
|                                                                                                                                    
|Consolidated Statements of Cash Flows for
      the years ended December 31, 2013, 2012 and 2011.                                   
|                                                                                                                                    
|Notes to the Consolidated Financial
      Statements                                                                                
|                                                                                                                                    
|Supplementary Oil and Gas Reserve
      Estimation and Disclosures (Unaudited) for the years ending December 31,
      2013 and 2012

93

---

ITEM 19. EXHIBITS

Financial Statements

|Description                                                                                   | Page      
|--------------------------------------------------------------------------------------------- | ----------
|                                                                                              |           
|Consolidated Financial Statements for the
      Years Ended December 31, 2013, 2012 and 2011. | F-1 - F-41

Supplementary Oil and Gas Reserve Estimation and Disclosures
(Unaudited) for the years ending December 31, 2013 and 2012

|EXHIBIT |                                                                                                                                                   
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------
|NUMBER  | DESCRIPTION                                                                                                                                       
|        |                                                                                                                                                   
|1.1     | Articles (1)                                                                                                                                      
|        |                                                                                                                                                   
|1.2     | Notice of Articles (1)                                                                                                                            
|        |                                                                                                                                                   
|1.3     | Certificate of Continuation (1)                                                                                                                   
|        |                                                                                                                                                   
|1.4     | Notice of Alteration (1)                                                                                                                          
|        |                                                                                                                                                   
|1.5     | Certificate of Name Change (1)                                                                                                                    
|        |                                                                                                                                                   
|1.6     | Amendment to Articles to Include Special Rights (1)                                                                                               
|        |                                                                                                                                                   
|4.1     | Participation Agreement between the Registrant, Retamco
      Operating, Inc. and Brownstone Ventures (US) dated July 14, 2006(3)                 
|        |                                                                                                                                                   
|4.2     | Purchase and Sale Agreement between the Registrant,
      Retamco Operating, Inc., and Brownstone Ventures (US) Inc. dated June 17,
      2008 (4)
|        |                                                                                                                                                   
|4.3     | Loan Agreement between DEAL and HEC dated May 15, 2008
      (5)                                                                                  
|        |                                                                                                                                                   
|4.4     | Loan Agreement between the Company and HEC dated August
      11, 2008 (5)                                                                        
|        |                                                                                                                                                   
|4.5     | Loan Agreement between the Company and HEC dated June 22,
      2009 (5)                                                                          
|        |                                                                                                                                                   
|4.6     | Loan Agreement between the Company and Brownstone
      Ventures (US) Inc. dated June 22, 2009 (5)                                                
|        |                                                                                                                                                   
|4.7     | Purchase and Sale Agreement between the Registrant and
      Pengrowth Corporation dated April 17, 2009 (5)                                       
|        |                                                                                                                                                   
|4.8     | Purchase and Sale Agreement between the Registrant and
      John James Robinson dated June 10, 2009 (5)                                          
|        |                                                                                                                                                   
|4.9     | Purchase and Sale Agreement between the Registrant and
      C.U. YourOilRig Corp. dated June 15, 2009 (5)                                        
|        |                                                                                                                                                   
|4.10    | Purchase and Sale Agreement between the Registrant and
      Woodrush Energy Partners LLC dated July 8, 2009 (5)                                  
|        |                                                                                                                                                   
|4.11    | Purchase and Sale Agreement between the Registrant and
      RockBridge Energy Inc. dated July 31, 2009 (5)                                       
|        |                                                                                                                                                   
|4.12    | Purchase and Sale Agreement between the Registrant and
      HEC dated December 31, 2009 (5)                                                      
|        |                                                                                                                                                   
|4.13    | Loan Agreement between the Registrant and Toscana Capital
      Corporation dated February 19, 2010 (6)                                           
|        |                                                                                                                                                   
|4.14    | Amended Loan Agreement between the Registrant and Toscana
      Capital Corporation dated September 1, 2010 (6)                                   
|        |                                                                                                                                                   
|4.15    | Credit Facility Agreement between DEAL and Canadian
      Western Bank dated August 3, 2011 (7)                                                   
|        |                                                                                                                                                   
|4.16    | Credit Facility Renewal Letter between DEAL and Canadian
      Western Bank dated December 29, 2011 (7)                                           

94

---

|EXHIBIT |                                                                                                                                                                                            
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NUMBER  | DESCRIPTION                                                                                                                                                                                
|        |                                                                                                                                                                                            
|4.17    | Option Plan (1)                                                                                                                                                                            
|        |                                                                                                                                                                                            
|4.18    | Option Plan
      (Sub-Plan) (1)                                                                                                                                                           
|        |                                                                                                                                                                                            
|4.19    | Credit Facility Renewal Letter between DEAL and Canadian
      Western Bank dated May 11, 2012 (7)                                                                                         
|        |                                                                                                                                                                                            
|4.20    | Credit Facility Renewal Letter between DEAL and Canadian
      Western Bank dated October 3, 2012 (7)                                                                                      
|        |                                                                                                                                                                                            
|4.21    | Financial Contract with Bakken Drilling Fund III, LP
      dated December 31, 2012 (7)                                                                                                     
|        |                                                                                                                                                                                            
|4.22    | Credit Facility Renewal Letter between DEAL and Canadian
      Western Bank dated March 25, 2013 (7)                                                                                       
|        |                                                                                                                                                                                            
|4.23    | Credit Facility Renewal Letter between DEAL and Canadian
    Western Bank dated June 5, 2013*                                                                                              
|        |                                                                                                                                                                                            
|4.24    | Commitment Letter between the Registrant and Invico
      Performance Yield Fund Limited Partnership dated June 11, 2013*                                                                  
|        |                                                                                                                                                                                            
|4.25    | Amendment to Financial Contract with Bakken Drilling Fund
      III, LP dated September 10, 2013*                                                                                          
|        |                                                                                                                                                                                            
|4.26    | Credit Facility Renewal Letter between DEAL and Canadian
      Western Bank dated December 16, 2013*                                                                                       
|        |                                                                                                                                                                                            
|4.27    | Credit Facility Renewal Letter between DEAL and Canadian
      Western Bank dated February 18, 2014*                                                                                       
|        |                                                                                                                                                                                            
|8.1     | List of Subsidiaries (7)                                                                                                                                                                   
|        |                                                                                                                                                                                            
|12.1    | Certification of CEO Pursuant to Rule 13a-14(a)*                                                                                                                                           
|        |                                                                                                                                                                                            
|12.2    | Certification of CFO Pursuant to Rule 13a-14(a)*                                                                                                                                           
|        |                                                                                                                                                                                            
|13.1    | Certification of CEO Pursuant to 18 U.S.C. Section 1350*                                                                                                                                   
|        |                                                                                                                                                                                            
|13.2    | Certification of CFO Pursuant to 18 U.S.C. Section 1350*                                                                                                                                   
|        |                                                                                                                                                                                            
|15.1    | Consent of BDO Canada LLP*                                                                                                                                                                 
|        |                                                                                                                                                                                            
|15.2    | Consent Letter from GLJ Petroleum Consultants*                                                                                                                                             
|        |                                                                                                                                                                                            
|15.3    | Consent Letter from Deloitte LLP*                                                                                                                                                          
|        |                                                                                                                                                                                            
|15.4    | Consent Letter from Gustavson Associates*                                                                                                                                                  
|        |                                                                                                                                                                                            
|99.1    | Third Party Report on Reserves Prepared by GLJ Petroleum
      Consultants, Effective December 31, 2013*                                                                                   
|        |                                                                                                                                                                                            
|99.2    | Reserve Estimate and Financial Forecast as to Dejours
      Interests in the Kokopelli Field Area, Garfield County, Colorado, Prepared
by Gustavson Associates, Effective January 1, 2014*

|(1) | Incorporated by reference to the Registrants
      registration statement on Form S-8, filed with the commission on February
      16, 2012.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Incorporated by reference to the Registrants annual
      report on Form 20-F, filed July 14, 2006.                                         
|(3) | Incorporated by reference to the Registrants annual
      report on Form 20-F/A amendment no. 2, filed December 7, 2007.                    
|(4) | Incorporated by reference to the Registrants annual
      report on Form 20-F, filed on June 30, 2009.                                      
|(5) | Incorporated by reference to the Registrants annual
      report on Form 20-F, filed on June 30, 2010.                                      
|(6) | Incorporated by reference to the Registrants annual
      report on Form 20-F, filed on June 30, 2011.                                      
|(7) | Previously Filed.                                                                                                                            
|*   | Filed herewith                                                                                                                               

95

---

SIGNATURES

The registrant hereby certifies that it meets all of the
requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.

|       |                      |  | DEJOUR Energy Inc.      
|------ | -------------------- |  | ------------------------
|       |                      |  |                         
|       |                      |  |                         
|       |                      |  |                         
|Dated: | April
      24, 2014 |  | /s/ Robert L. Hodgkinson
|       |                      |  | Robert L. Hodgkinson    
|       |                      |  | Chairman & CEO          

96

---



CONSOLIDATED FINANCIAL STATEMENTS (AUDITED)

December 31, 2013

F-1

---



F-2

---



F-3

---

DEJOUR ENERGY INC.CONSOLIDATED BALANCE SHEETS
  (Expressed in Canadian Dollars)

|                                                    |  |       |  |  | December 31, |   |  | December 31, |  
|--------------------------------------------------- |  | ----- |  |  | ------------ | - |  | ------------ | -
|(CA$
      thousands)                               |  | Notes |  |  | 2013         |   |  | 2012         |  
|                                                    |  |       |  |  | $            |   |  | $            |  
|ASSETS                                              |  |       |  |  |              |   |  |              |  
|Current                                             |  |       |  |  |              |   |  |              |  
|Cash and cash
      equivalents                     |  |       |  |  | 505          |   |  | 1,508        |  
|Accounts receivable                                 |  |       |  |  | 831          |   |  | 549          |  
|Prepaids and deposits                               |  |       |  |  | 49           |   |  | 92           |  
|Current Assets                                      |  |       |  |  | 1,385        |   |  | 2,149        |  
|Non-current                                         |  |       |  |  |              |   |  |              |  
|Deposits                                            |  |       |  |  | 447          |   |  | 392          |  
|Exploration and
      evaluation assets             |  | 5     |  |  | 3,281        |   |  | 3,890        |  
|Property and equipment                              |  | 6     |  |  | 20,386       |   |  | 21,144       |  
|Total Assets                                        |  |       |  |  | 25,499       |   |  | 27,575       |  
|                                                    |  |       |  |  |              |   |  |              |  
|LIABILITIES                                         |  |       |  |  |              |   |  |              |  
|Current                                             |  |       |  |  |              |   |  |              |  
|Bank credit
      facilities                        |  | 8     |  |  | 2,900        |   |  | 5,957        |  
|Loan facility                                       |  | 10    |  |  | 2,911        |   |  | -            |  
|Accounts payable
      and accrued liabilities      |  |       |  |  | 2,623        |   |  | 2,019        |  
|Warrant liability                                   |  | 9     |  |  | 324          |   |  | 1,425        |  
|Derivative
      liability                          |  | 10    |  |  | 287          |   |  | -            |  
|Current portion of financial contract liability     |  | 12    |  |  | 1,248        |   |  | 1,305        |  
|Current Liabilities                                 |  |       |  |  | 10,293       |   |  | 10,706       |  
|Non-current                                         |  |       |  |  |              |   |  |              |  
|Decommissioning
      liability                     |  | 11    |  |  | 1,212        |   |  | 1,429        |  
|Other liabilities                                   |  |       |  |  | 22           |   |  | 32           |  
|Financial contract liability                        |  | 12    |  |  | 4,873        |   |  | 5,162        |  
|Total
      Liabilities                             |  |       |  |  | 16,400       |   |  | 17,329       |  
|SHAREHOLDERS' EQUITY                                |  |       |  |  |              |   |  |              |  
|Share capital                                       |  | 13    |  |  | 90,274       |   |  | 90,274       |  
|Contributed
      surplus                           |  | 15    |  |  | 9,150        |   |  | 8,802        |  
|Deficit                                             |  |       |  |  | (90,839      | ) |  | (88,262      | )
|Accumulated other comprehensive
      income (loss) |  |       |  |  | 514          |   |  | (568         | )
|Total
      Shareholders' Equity                    |  |       |  |  | 9,099        |   |  | 10,246       |  
|Total Liabilities and Shareholders' Equity          |  |       |  |  | 25,499       |   |  | 27,575       |  

|Approved on behalf of the Board: |  |                          
|-------------------------------- |  | -------------------------
|                                 |  |                          
|                                 |  |                          
|"signed
      Robert Hodgkinson" |  | "signed Craig Sturrock"  
|Robert Hodgkinson - Director     |  | Craig Sturrock - Director

|The accompanying notes are an integral part of these
      consolidated financial statements. | F-4
|--------------------------------------------------------------------------------------------- | ---

---

DEJOUR ENERGY INC.CONSOLIDATED STATEMENTS OF
      COMPREHENSIVE LOSS
  (Expressed in Canadian Dollars)

|                                                    |  |       |  |  | Year ended December 31 |  
|--------------------------------------------------- |  | ----- |  |  | ---------------------- | -
|(CA$ thousands,
      except per share amounts)     |  | Notes |  |  | 2013                   |  
|                                                    |  |       |  |  | $                      |  
|REVENUES                                            |  |       |  |  |                        |  
|Gross revenues                                      |  |       |  |  | 9,317                  |  
|Royalties                                           |  |       |  |  | (1,811                 | )
|Total Revenues,
      net of royalties              |  | 21    |  |  | 7,506                  |  
|                                                    |  |       |  |  |                        |  
|EXPENSES                                            |  |       |  |  |                        |  
|Operating and transportation                        |  |       |  |  | 3,398                  |  
|General and
      administrative                    |  |       |  |  | 3,384                  |  
|Financing expenses                                  |  |       |  |  | 1,182                  |  
|Stock based
      compensation                      |  | 15    |  |  | 348                    |  
|Foreign exchange loss (gain)                        |  |       |  |  | 505                    |  
|(Gain) loss on disposal
      of E&E assets         |  | 5     |  |  | 185                    |  
|Loss on disposal of property and
      equipment    |  | 6     |  |  | 107                    |  
|Amortization, depletion
      and impairment losses |  | 7     |  |  | 3,630                  |  
|Change in fair value of warrant
      liability     |  | 9     |  |  | (1,101                 | )
|Change in fair value of
      derivative liability  |  | 10    |  |  | (264                   | )
|Gain on financial contract liability                |  | 12    |  |  | (1,268                 | )
|Total Expenses                                      |  |       |  |  | 10,106                 |  
|                                                    |  |       |  |  |                        |  
|Loss before other items                             |  |       |  |  | (2,600                 | )
|Financial instrument loss                           |  |       |  |  | -                      |  
|Other income                                        |  |       |  |  | 23                     |  
|                                                    |  |       |  |  |                        |  
|Loss before income taxes                            |  |       |  |  | (2,577                 | )
|Deferred tax recovery                               |  |       |  |  | -                      |  
|                                                    |  |       |  |  |                        |  
|Loss for the year                                   |  |       |  |  | (2,577                 | )
|Foreign currency translation adjustment             |  |       |  |  | 1,082                  |  
|                                                    |  |       |  |  |                        |  
|Comprehensive loss                                  |  |       |  |  | (1,495                 | )
|                                                    |  |       |  |  |                        |  
|Loss per common share - basic and diluted           |  | 16    |  |  | (0.02                  | )

|The accompanying notes are an integral part of these
      consolidated financial statements. | F-5
|--------------------------------------------------------------------------------------------- | ---

---

DEJOUR ENERGY INC.CONSOLIDATED STATEMENTS OF
      CHANGES IN SHAREHOLDERS EQUITY
  (Expressed in Canadian Dollars)

Number
      
      
      Share
      
      
      Contributed(CA$ thousands,
        except number of shares)
      
      Notes
      
      
      of
        Shares
      
      
      Capital
      
      
      Surplus
      
      
      Deficit
      
      
      AOCI(L)*
      
      
      Total$
      
      
      $
      
      
      $
      
      
      $
      
      
      $Balance as at January 1, 2013
      
      
      
      
      148,916,374
      
      
      90,274
      
      
      8,802
      
      
      (88,262
      )
      
      (568
      )
      
      10,246Stock-based compensation
      
      15
      
      
      
      
      
      
      
      
      348
      
      
      
      
      
      
      
      
      348Net loss
      
      
      
      
      
      
      
      
      
      
      
      
      
      (2,577
      )
      
      
      
      
      (2,577
      )Foreign currency translation adjustment
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      1,082
      
      
      1,082Balance as at December 31, 2013
      
      
      
      
      148,916,374
      
      
      90,274
      
      
      9,150
      
      
      (90,839
      )
      
      514
      
      
      9,099Balance as at January 1, 2012
      
      
      
      
      126,892,386
      
      
      85,076
      
      
      8,134
      
      
      (76,510
      )
      
      (393
      )
      
      16,307Shares issued via private placements, net of
        issuance costs
      
      
      
      
      18,130,305
      
      
      3,248
      
      
      
      
      
      
      
      
      
      
      
      3,248Issue of shares on exercise of
        warrants and options
      
      
      
      
      3,893,683
      
      
      1,466
      
      
      
      
      
      
      
      
      
      
      
      1,466Warrant liability reallocated on exercise of
        warrants
      
      
      
      
      
      
      
      286
      
      
      
      
      
      
      
      
      
      
      
      286Contributed surplus
        reallocated on exercise of options
      
      13
      
      
      
      
      
      198
      
      
      (198
      )
      
      
      
      
      
      
      
      -Stock-based compensation
      
      
      
      
      
      
      
      
      
      
      866
      
      
      
      
      
      
      
      
      866Net loss
      
      
      
      
      
      
      
      
      
      
      
      
      
      (11,752
      )
      
      
      
      
      (11,752
      )Foreign currency translation adjustment
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      (175
      )
      
      (175
      )Balance as at December 31, 2012
      
      
      
      
      148,916,374
      
      
      90,274
      
      
      8,802
      
      
      (88,262
      )
      
      (568
      )
      
      10,246Balance as at January 1, 2011
      
      
      
      
      110,180,545
      
      
      79,386
      
      
      7,639
      
      
      (65,467
      )
      
      (685
      )
      
      20,873Shares issued via private placements, net of
        issuance costs
      
      
      
      
      11,010,000
      
      
      2,694
      
      
      
      
      
      
      
      
      
      
      
      2,694Issue of shares on exercise of
        warrants and options
      
      
      
      
      5,701,841
      
      
      2,091
      
      
      
      
      
      
      
      
      
      
      
      2,091Warrant liability reallocated on exercise of
        warrants
      
      
      
      
      
      
      
      738
      
      
      
      
      
      
      
      
      
      
      
      738Contributed surplus
        reallocated on exercise of options
      
      13
      
      
      
      
      
      167
      
      
      (167
      )
      
      
      
      
      
      
      
      -Stock-based compensation
      
      
      
      
      
      
      
      
      
      
      662
      
      
      
      
      
      
      
      
      662Net loss
      
      
      
      
      
      
      
      
      
      
      
      
      
      (11,043
      )
      
      
      
      
      (11,043
      )Foreign currency translation adjustment
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      292
      
      
      292Balance as at December 31, 2011
      
      
      
      
      126,892,386
      
      
      85,076
      
      
      8,134
      
      
      (76,510
      )
      
      (393
      )
      
      16,307


* Accumulated other comprehensive income (loss)

|The accompanying notes are an integral part of these
      consolidated financial statements. | F-6
|--------------------------------------------------------------------------------------------- | ---

---

DEJOUR ENERGY INC.CONSOLIDATED STATEMENTS OF CASH
      FLOWS
  (Expressed in Canadian Dollars)

|                                                                            |  |       |  |  | Year ended December 31 |  
|--------------------------------------------------------------------------- |  | ----- |  |  | ---------------------- | -
|(CA$
      thousands)                                                       |  | Notes |  |  | 2013                   |  
|                                                                            |  |       |  |  | $                      |  
|CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES                              |  |       |  |  |                        |  
|Net loss for the year                                                       |  |       |  |  | (2,577                 | )
|Adjustment for items not affecting
      cash:                              |  |       |  |  |                        |  
|Amortization, depletion and impairment losses                               |  |       |  |  | 3,630                  |  
|Stock based compensation                                                    |  |       |  |  | 348                    |  
|Non-cash
      financing expenses                                           |  |       |  |  | 1,012                  |  
|Non-cash foreign exchange
      on financial contract liability             |  |       |  |  | 462                    |  
|Loss on
      settlement of decommissioning liability                       |  |       |  |  | -                      |  
|(Gain) loss on disposal
      of E&E assets                                 |  |       |  |  | 185                    |  
|Loss on
      disposal of property and equipment                            |  |       |  |  | 107                    |  
|Gain on financial
      contract liability                                  |  |       |  |  | (1,268                 | )
|Deferred
      tax recovery                                                 |  |       |  |  | -                      |  
|Change in fair value of
      derivative liability                          |  |       |  |  | (264                   | )
|Change in
      fair value of warrant liability                             |  |       |  |  | (1,101                 | )
|Amortization of deferred
      leasehold inducement                         |  |       |  |  | (12                    | )
|Changes in operating working capital                                        |  | 16    |  |  | 440                    |  
|Total Cash Flows from (used in) Operating
        Activities                |  |       |  |  | 962                    |  
|CASH FLOWS FROM (USED IN) INVESTING
      ACTIVITIES                        |  |       |  |  |                        |  
|Deposits                                                                    |  |       |  |  | (55                    | )
|E&E expenditures                                                            |  |       |  |  | (249                   | )
|Additions to property and equipment                                         |  |       |  |  | (1,792                 | )
|Proceeds from sale of
      E&E assets                                      |  |       |  |  | 284                    |  
|Proceeds from sale of property and
      equipment                          |  |       |  |  | 477                    |  
|Changes in investing working capital                                        |  | 16    |  |  | (76                    | )
|Total Cash Flows from (used in) Investing
        Activities                |  |       |  |  | (1,411                 | )
|CASH FLOWS FROM (USED IN) FINANCING
      ACTIVITIES                        |  |       |  |  |                        |  
|Advance (repayment) of bank credit
      facilities                         |  |       |  |  | (3,057                 | )
|Advance (repayment) of
      bridge loan                                    |  |       |  |  | -                      |  
|Advance (repayment) of loan facility                                        |  |       |  |  | 2,971                  |  
|Advance (repayment) of
      financial contract liability                   |  |       |  |  | (468                   | )
|Advance (repayment) of loans from
      related parties & other liabilities |  |       |  |  | -                      |  
|Shares issued on
      exercise of warrants and options                     |  |       |  |  | -                      |  
|Shares issued for cash, net of share
      issue costs                      |  |       |  |  | -                      |  
|Changes in financing working capital                                        |  | 16    |  |  | -                      |  
|Total Cash Flows from (used in) Financing
        Activities                |  |       |  |  | (554                   | )
|                                                                            |  |       |  |  |                        |  
|CHANGE IN CASH AND CASH EQUIVALENTS                                         |  |       |  |  | (1,003                 | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                |  |       |  |  | 1,508                  |  
|                                                                            |  |       |  |  |                        |  
|CASH AND CASH EQUIVALENTS, END OF YEAR                                      |  |       |  |  | 505                    |  

Supplemental cash flow information - Note 16

|The accompanying notes are an integral part of these
      consolidated financial statements. | F-7
|--------------------------------------------------------------------------------------------- | ---

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 1  CORPORATE INFORMATION

Dejour Energy Inc. (the Company) is a public company trading
  on the New York Stock Exchange AMEX (NYSE-AMEX) and the Toronto Stock Exchange
  (TSX), under the symbol DEJ. The Company is in the business of exploring and
  developing energy projects with a focus on oil and gas in North America. On
  March 9, 2011, the Company changed its name from Dejour Enterprises Ltd. to
  Dejour Energy Inc. The address of its registered office is 598  999 Canada
  Place, Vancouver, British Columbia.

The consolidated financial statements include the accounts of
  the Company and its wholly-owned subsidiaries, Dejour Energy (USA) Corp.
  (Dejour USA), incorporated in Nevada, Dejour Energy (Alberta) Ltd. (DEAL),
  incorporated in Alberta, Wild Horse Energy Ltd. (Wild Horse), incorporated in
  Alberta, and 0855524 B.C. Ltd., incorporated in British Columbia. All
  intercompany transactions are eliminated upon consolidation.

The consolidated financial statements are presented in Canadian
  dollars, which is also the functional currency of the parent company. These
  consolidated financial statements were authorized and approved for issuance by
  the Board of Directors on March 18, 2014.

NOTE 2  BASIS OF PRESENTATION

(a)Basis of presentation

The consolidated financial statements (the financial
  statements) are presented under International Financial Reporting Standards
  (IFRS) as issued by the International Accounting Standards Board and
  interpretations of the Internal Financial Reporting Interpretations Committee
  (IFRIC) and adopted by the Canadian Institute of Chartered Accountants
  (CICA). A summary of the Companys significant accounting policies under IFRS
  is presented in note 3.

(b)Going concern

The financial statements were prepared on a going concern
  basis. The going concern basis assumes that the Company will continue in
  operation for the foreseeable future and will be able to realize its assets and
  discharge its liabilities and commitments in the normal course of business. The
  Company has a working capital deficiency of $8.9 million and accumulated deficit
  of $90.8 million. Working capital includes non-cash warrant liability and
  non-cash derivative liability.

On June 19, 2013, the Company, through Dejour USA, borrowed
  under a $3.5 million loan facility (Loan Facility) from a Canadian
  institutional lender (Lender). At December 31, 2013, Dejour USA was in default
  of its working capital ratio covenant. As a result, the loan facility is due
  upon demand and classified as current liabilities. The Lender has not demanded
  repayment as at December 31, 2013.

Subsequent to December 31, 2013, DEAL renewed its Credit
  Facilities with a Canadian Bank and contracted to utilize $600,000 of the $3.5
  million to fund the proposed acquisition of certain producing natural gas
  properties in Canada until March 31, 2014. If the proposed acquisition fails to
  close for whatever reason by March 31, 2014, the maximum amount will be reduced
  by $300,000 effective April 1, 2014. Monthly principal payments of $100,000 are
  still due and payable commencing March 1, 2014.

The Companys ability to continue as a going concern is
  dependent upon attaining profitable operations and obtaining sufficient
  financing to meet obligations and continue exploration and development
  activities. There is no assurance that these activities will be successful.
  These material uncertainties cast substantial doubt upon the Companys ability
  to continue as a going concern. These consolidated financial statements do not
  reflect the adjustments to the carrying values of assets and liabilities, the
  reported revenues and expenses, and the balance sheet classifications used that
  would be necessary if the going concern assumptions were not appropriate.

F-8

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 2  BASIS OF PRESENTATION (continued)

(c)Basis of measurement

The consolidated annual financial statements have been prepared
  on the historical cost basis except for the revaluation of certain financial
  assets and liabilities to fair value as explained in the accounting policies in
  note 3.

(d)Use of estimates and
  judgments

The preparation of consolidated annual financial statements in
  compliance with IFRS requires management to make certain critical accounting
  estimates. It also requires management to exercise judgment in applying the
  Companys accounting policies. The areas involving a higher degree of judgment
  or complexity, or areas where assumptions and estimates are significant to the
  financial statements are disclosed in note 4.

(e)Functional and
  presentation currency

Subsidiaries measure items using the currency of the primary
  economic environment in which the entity operates with entities having a
  functional currency different from the parent company, translated into Canadian
  dollars.

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied
  consistently to all periods presented in these consolidated annual financial
  statements and have been applied consistently by the Companys entities.

(a)Basis of consolidation

The consolidated annual financial statements include the
  financial statements of the Company and subsidiaries controlled by the Company.
  Subsidiaries are fully consolidated from the date of acquisition, being the date
  on which the Company obtains control, and continue to be consolidated until the
  date that such control ceases. All intra-group balances, transactions, income
  and expenses are eliminated in full on consolidation.

The financial statements of the subsidiaries are prepared using
  the same reporting period as the parent company, using consistent accounting
  policies.

Exploration, development, and production activities may be
  conducted jointly with others and accordingly, the Company accounts for the
  assets, liabilities, revenues and expenses related to its interest in the joint
  operations from the date that joint control commences until the date that it
  ceases.

(b)Foreign currency

Items included in the financial statements of each consolidated
  entity in the group are measured using the currency of the primary economic
  environment in which the entity operates (the functional currency).

The financial statements of entities within the consolidated
  group that have a functional currency different from that of the Company
  (foreign operations) are translated into Canadian dollars as follows: assets
  and liabilities  at the closing rate as at the balance sheet date, and income
  and expenses  at the average rate of the period (as this is considered a
  reasonable approximation to actual rates). All resulting changes are recognized
  in other comprehensive income (loss) as cumulative translation differences.

F-9

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(b)    Foreign currency (continued)

When the Company disposes of its entire interests in a foreign
  operation, or loses control, joint control, or significant influence over a
  foreign operation, the foreign currency gains or losses accumulated in other
  comprehensive income (loss) related to the foreign operation are recognized in
  profit or loss. If an entity disposes of part of an interest in a foreign
  operation which remains a subsidiary, a proportionate amount of foreign currency
  gains or losses accumulated in other comprehensive income related to the
  subsidiary are reallocated between controlling and non-controlling
  interests.

Transactions in foreign currencies are translated into the
  functional currency at exchange rates at the date of the transactions. Foreign
  currency differences arising on translation are recognized in profit or loss.
  Foreign currency monetary assets and liabilities are translated at the
  functional currency exchange rate at the balance sheet date. Non- monetary items
  that are measured at historical cost in a foreign currency are translated using
  the exchange rates as at the dates of the initial transactions. Non-monetary
  items measured at fair value in a foreign currency are translated using the
  exchange rates at the date when the fair value was determined.

Exchange differences recognized in the profit or loss statement
  of the Companys entities separate financial statements on the translation of
  monetary items forming part of the Companys net investment in the foreign
  operation are reclassified to foreign exchange reserve on consolidation.

(c)Cash and cash
  equivalents

Cash and cash equivalents consist of cash and highly liquid
  investments having maturity dates of three months or less from the date of
  acquisition that are readily convertible to cash.

(d)Resource properties

Exploration and evaluation (E&E) costs

Pre-license costs are expensed in the period in which they are
  incurred.

E&E costs are initially capitalized as either tangible or
  intangible E&E assets according to the nature of the assets acquired.
  Intangible E&E assets may include costs of license acquisition, technical
  services and studies, seismic acquisition, exploration drilling and testing, and
  directly attributable overhead and administration expenses. The costs are
  accumulated in cost centers by well, field or exploration area pending
  determination of technical feasibility and commercial viability.

E&E assets are assessed for impairment if sufficient data
  exists to determine technical feasibility and commercial viability or facts and
  circumstances suggest that the carrying amount exceeds the recoverable amount.
  For purposes of impairment testing, E&E assets are assessed at the
  individual asset level. If it is not possible to estimate the recoverable amount
  of the individual asset, exploration and evaluation assets are allocated to
  cash-generating units (CGUs). Such CGUs are not larger than an operating
  segment.

Exploration assets are not depleted and are carried forward
  until technical feasibility and commercial viability of extracting a mineral
  resource is considered to be determinable or sufficient/continued progress is
  made in assessing the commercial viability of the E&E assets. The technical
  feasibility and commercial viability of extracting a mineral resource is
  considered to be determinable when proven reserves are determined to exist. A
  review of each exploration license or field is carried out, at least annually,
  to confirm whether the Company intends further appraisal activity or to
  otherwise extract value from the property. When this is no longer the case, the
  costs are written off. Upon determination of proven reserves, E&E assets
  attributable to those reserves are first tested for impairment and then
  reclassified from E&E assets to oil and natural gas properties.

F-10

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(d)    Resource properties (continued)

The Company may occasionally enter into arrangements, whereby
  the Company will transfer part of an oil and gas interest, as consideration, for
  an agreement by the transferee to meet certain E&E expenditures which would
  have otherwise been undertaken by the Company. The Company does not record any
  expenditures made by the transferee. Any cash consideration received from the
  agreement is credited against the costs previously capitalized to the oil and
  gas interest given up by the Company, with any excess cash accounted for as a
  gain on disposal.

Oil and gas properties and other property and equipment
  costs

Items of property and equipment, which include oil and gas
  development and production assets, are measured at cost less accumulated
  depletion and depreciation and accumulated impairment losses.

The initial cost of an asset comprises its purchase price or
  construction cost, any costs directly attributable to bringing the asset into
  operation, the initial estimate of the decommissioning obligation and, for
  qualifying assets, borrowing costs. The purchase price or construction cost is
  the aggregate amount paid and the fair value of any other consideration given to
  acquire the asset.

When significant parts of an item of property and equipment,
  including oil and natural gas interests, have different useful lives, they are
  accounted for as separate items (major components).

Depletion and Depreciation

Oil and gas development and production assets are depreciated,
  by significant component, on a unit-of-production basis over proved and probable
  reserve volumes, taking into account estimated future development costs
  necessary to bring those reserves into production. Future development costs are
  estimated by taking into account the level of development required to produce
  the reserves. These estimates are reviewed by independent reserve engineers at
  least annually. Changes in reserve estimates are dealt with prospectively.
  Proved and probable reserves are estimated using independent reserve engineer
  reports and represent the estimated quantities of oil, natural gas and gas
  liquids.

Other property and equipment are depreciated based on a
  declining balance basis, which approximates the estimated useful lives of the
  asset, at the following rates:

|Office furniture and equipment | 20%          
|------------------------------ | -------------
|Computer equipment             | 45%          
|Vehicle                        | 30%          
|Leasehold improvements         | term of lease

Depreciation methods, useful lives and residual values are
  reviewed at each reporting date. Other property and equipment are allocated to
  each of the Companys primary cash-generating units, based on estimated future
  net revenue, consistent with the recoverable values applied in the most recent
  impairment test.

Derecognition

The carrying amount of an item of property and equipment is
  derecognized on disposal, when no beneficial interest is retained, or when no
  future economic benefits are expected from its use or disposal. The gain or loss
  arising from derecognition is included in profit or loss when the item is
  derecognized and is measured as the difference between the net disposal
  proceeds, if any, and the carrying amount of the item. The date of disposal is
  the date when the Company is no longer subject to the risks of ownership and is
  no longer the beneficiary of the rewards of ownership. Where the asset is
  derecognized, the date of disposal coincides with the date the revenue from the
  sale of the asset is recognized.

On the disposition of an undivided interest in a property,
  where an economic benefit remains, the Company recognizes the farm out only on
  the receipt of consideration by reducing the carrying amount of the related
  property with any excess recognized in profit or loss of the period.

F-11

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(d)    Resource properties (continued)

Major maintenance and repairs

The costs of day-to-day servicing are expensed as incurred.
  These primarily include the costs of labor, consumables and small parts.
  Material costs of replaced parts, turnarounds and major inspections are
  capitalized as it is probable that future economic benefits will be received.
  The carrying value of a replaced part is derecognized in accordance with the
  derecognition principles above.

Jointly controlled assets and operations

The Company has certain exploration and production activities
  that are conducted under joint operating agreements whereby two or more parties
  jointly control the assets. These financial statements reflect the Companys
  assets, including its share of any assets held jointly; its liabilities,
  including its share of any liabilities incurred jointly; and, once production
  commences, its revenue from the sale of its share of the output arising from the
  joint operation; and its expenses, including its share of any expenses incurred
  jointly.

(e)Provisions

A provision is recognized if, as a result of a past event, the
  Company has a present legal or constructive obligation that can be estimated
  reliably and it is probable that an outflow of economic benefits will be
  required to settle the obligation. Provisions are determined by discounting the
  expected future cash flows at a pre-tax rate that reflects current market
  assessments of the time value of money and the risk specific to the
  liability.

Decommissioning liability

A decommissioning liability is recognized when the Company has
  a present legal or constructive obligation as a result of past events, it is
  probable that an outflow of resources will be required to settle the obligation,
  and a reliable estimate of the amount of obligation can be made. A corresponding
  amount equivalent to the provision is also recognized as part of the cost of the
  related asset. The amount recognized is managements estimated cost of
  decommissioning, discounted to its present value using a risk free rate. Changes
  in the estimated timing of decommissioning or decommissioning cost estimates are
  dealt with prospectively by recording an adjustment to the provision and a
  corresponding adjustment to the related asset unless the change arises from
  production. The unwinding of the discount on the decommissioning provision is
  included as a finance cost. Actual costs incurred upon settlement of the
  decommissioning liability are charged against the provision to the extent the
  provision was established.

(f)Earnings (loss) per
  share

Basic earnings (loss) per share figures have been calculated
  using the weighted average number of common shares outstanding during the
  respective periods.

Diluted earnings (loss) per common share is calculated by
  dividing the profit or loss applicable to common shares by the sum of the
  weighted average number of common shares issued and outstanding and all
  additional common shares that would have been outstanding if potentially
  dilutive instruments were converted. The diluted earnings (loss) per share
  figure is equal to that of basic earnings (loss) per share since the effects of
  options and warrants have been excluded as they are anti-dilutive.

F-12

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(g)Share based payments

Where equity-settled share options are awarded to employees,
  the fair value of the options at the date of grant is charged to profit or loss
  over the vesting period. Performance vesting conditions are taken into account
  by adjusting the number of equity instruments expected to vest at each reporting
  date so that, ultimately, the cumulative amount recognized over the vesting
  period is based on the number of options that will eventually vest. Where equity
  instruments are granted to employees, they are recorded at the instruments grant
  date fair value.

Where the terms and conditions of options are modified before
  they vest, the increase in the fair value of the options, measured immediately
  before and after the modification, is also charged to profit or loss over the
  remaining vesting period.

Where equity instruments are granted to non-employees, they are
  recorded at the fair value of the goods or services received in profit or loss,
  unless they are related to the issuance of shares. Amounts related to the
  issuance of shares are recorded as a reduction of share capital.

When the value of goods or services received in exchange for
  the share-based payment to non-employees cannot be reliably estimated, the fair
  value of the share-based payment is measured by use of a valuation model to
  measure the value of the equity instruments issued. The expected life used in
  the model is adjusted, based on managements best estimate, for the effects of
  non-transferability, exercise restrictions, and behavioural considerations.

All equity-settled share based payments are reflected in
  contributed surplus, until exercised. Upon exercise, shares are issued from
  treasury and the amount reflected in contributed surplus is credited to share
  capital along with any consideration received.

Where a grant of options is cancelled or settled during the
  vesting period, excluding forfeitures when vesting conditions are not satisfied,
  the Company immediately accounts for the cancellation as an acceleration of
  vesting and recognizes the amount that otherwise would have been recognized for
  services received over the remainder of the vesting period. Any payment made to
  the employee on the cancellation is accounted for as the repurchase of an equity
  interest except to the extent the payment exceeds the fair value of the equity
  instrument granted, measured at the repurchase date. Any such excess is
  recognized as an expense.

(h)Revenue recognition

Revenue from the sale of oil and petroleum products is
  recognized when the significant risks and rewards of ownership have been
  transferred, which is when title passes to the customer. This generally occurs
  when the product is physically transferred into a vessel, pipe or other delivery
  mechanism. Revenue is stated after deducting sales taxes, excise duties and
  similar levies.

Revenue from the production of oil and natural gas in which the
  Company has an interest with other producers is recognized based on the
  Companys working interest and the terms of the relevant production sharing
  contracts.

(i)Financial
  instruments

Financial assets

Financial assets are classified as one of the following
  categories. All transactions related to financial instruments are recorded on a
  trade date basis. The Company's accounting policy for each category is as
  follows:

F-13

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(i)    Financial instruments (continued)

Loans and receivables

These assets are non-derivative financial assets resulting from
  the delivery of cash or other assets by a lender to a borrower in return for a
  promise to repay on a specified date or dates, or on demand. They are initially
  recognized at fair value plus transaction costs that are directly attributable
  to their acquisition or issue and subsequently carried at amortized cost, using
  the effective interest rate method, less any impairment losses. Amortized cost
  is calculated taking into account any discount or premium on acquisition and
  includes fees that are an integral part of the effective interest rate and
  transaction costs. Gains and losses are recognized in profit or loss when the
  loans and receivables are derecognized or impaired, as well as through the
  amortization process. The Companys loans and receivables comprise cash and cash
  equivalents and accounts and other receivables.

Held-to-maturity investments

Held to maturity investments are initially measured at fair
  value and are subsequently measured at amortized cost using the effective
  interest rate method, less any impairment losses. The Company does not currently
  have any held-to-maturity investments.

Available-for-sale assets

Available-for-sale assets are measured at fair value, with
  unrealized gains and losses recorded in other comprehensive income (loss) until
  the asset is realized or impairment is viewed as other than temporary, at which
  time they will be recorded in profit or loss. The Company does not currently
  have any available-for-sale assets.

Financial assets at fair value through profit or loss

An instrument is classified at fair value through profit or
  loss if it is held for trading or is designated as such upon initial
  recognition. Financial instruments are designated at fair value through profit
  or loss if the Company manages such investments and makes purchase and sale
  decisions based on their fair value in accordance with the Companys risk
  management or investment strategy. Upon initial recognition, attributable
  transaction costs are recognized in profit or loss when incurred. Financial
  instruments at fair value through profit or loss are measured at fair value, and
  changes therein are recognized in profit or loss. The Company does not have any
  financial assets at fair value through profit or loss.

Financial liabilities

Financial liabilities are classified as either fair value
  through profit or loss or other financial liabilities, based on the purpose for
  which the liability was incurred.

The Companys other financial liabilities comprise accounts
  payable and accrued liabilities, line of credit and financial contract
  liabilities. These liabilities are initially recognized at fair value, net of
  any transaction costs directly attributable to the issuance of the instrument
  and subsequently carried at amortized cost using the effective interest rate
  method, which ensures that any interest expense over the period of repayment is
  at a constant rate on the balance of the liability carried in the balance sheet.
  Interest expense in this context includes initial transaction costs and premiums
  payable on redemption, as well as any interest or coupon payable while the
  liability is outstanding. Any revision to the amount or timing of cash flows
  related to an instrument is reflected in its carrying amount by computing the
  present value of the revised cash flows at the instruments initial effective
  interest rate. The change in carrying amount is reflected in profit or loss of
  the period. Accounts payable represent liabilities for goods and services
  provided to the Company prior to the end of the period which are unpaid. Trade
  payable amounts are unsecured and are usually paid within 30 days from receipt
  of invoice.

Financial liabilities are classified as held-for-trading if
  they are acquired for the purpose of selling in the near term. Derivatives are
  also categorized as held for trading unless they are designated as hedges.

F-14

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(i)    Financial instruments
  (continued)

The Company has derivative financial instruments in the form of
  warrants issued in US dollars and contracts entered into to manage its exposure
  to volatility in commodity prices. Commodity contracts are not used for trading
  or other speculative purposes. Such derivative financial instruments are
  initially recognized at fair value at the date at which the derivatives are
  issued and are subsequently re-measured at fair value. These derivatives do not
  qualify for hedge accounting and changes in fair value are recognized
  immediately in profit and loss.

For outstanding warrants at each reporting period, the
  liability change between reporting periods is recorded in the consolidated
  statement of comprehensive income (loss). As warrants are exercised, immediately
  before exercise, the liability on these exercised warrants is re-measured and
  the valuation change is recorded in the consolidated statement of comprehensive
  income (loss). Upon exercise, the re-measured warrant liability on these
  exercised warrants is eliminated and there is an offsetting entry to share
  capital.

Financial instrument measurement

If the market value for a financial instrument is not an active
  market the Company establishes fair value by using a valuation technique.
  Valuation techniques include using recent arms length market transaction
  between knowledgeable, willing parties, if available, reference to the current
  fair value of another instrument that is substantially the same, discounted cash
  flow analysis and option pricing models. The fair value of a financial
  instrument will be based on one or more factors that may include the time value
  of money, credit risk, commodity prices, equity prices, volatility, servicing
  costs and other factors.

(j)    Impairment

Impairment of financial assets

At each reporting date, the Company assesses whether there is
  objective evidence that a financial asset is impaired. If such evidence exists,
  the Company recognizes an impairment loss, as follows:

Financial assets carried at amortized cost: The loss is the
  difference between the amortized cost of the loan or receivable and the present
  value of the estimated future cash flows, discounted using the instruments
  original effective interest rate. The carrying amount of the asset is reduced by
  this amount either directly or indirectly through the use of an allowance
  account.

Impairment losses on financial assets carried at amortized cost
  are reversed in subsequent periods if the amount of the loss decreases and the
  decrease can be related objectively to an event occurring after the impairment
  was recognized.

Non-financial assets

For the purpose of impairment testing, assets are grouped
  together in CGUs, which are the smallest group of assets that generates cash
  inflows from continuing use that are largely independent of the cash inflows of
  other assets or groups of assets. The carrying value of long-term assets is
  reviewed at each period for indicators that the carrying value of an asset or a
  CGU may not be recoverable. The Company uses geographical proximity, geological
  similarities, analysis of shared infrastructure, commodity type, assessment of
  exposure to market risks and materiality to define its CGUs. If indicators of
  impairment exist, the recoverable amount of the asset or CGU is estimated. If
  the carrying value of the asset or CGU exceeds the recoverable amount, the asset
  or CGU is written down with an impairment recognized in profit or loss.

The recoverable amount of an asset or CGU is the greater of its
  value in use and its fair value less costs to sell. Fair value is determined to
  be the amount for which the asset could be sold in an arms length transaction.
  For resource properties, fair value less costs to sell may be determined by
  using discounted future net cash flows of proved and probable reserves using
  forecast prices and costs. Value in use is determined by estimating the net
  present value of future net cash flows expected from the continued use of the
  asset or CGU. Refer to note 3(d) for more details.

F-15

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(j)    Impairment (continued)

Impairment losses recognized in prior years are assessed at
  each reporting date for any indication that the loss has decreased or no longer
  exists. An impairment loss is reversed if there has been a change in the
  estimate used to determine the recoverable amount. An impairment loss is
  reversed only to the extent that the assets carrying amount does not exceed the
  carrying amount that would have been determined, net of depletion and
  depreciation, if no impairment loss had been recognized.

(k)    Taxes

Income taxes

Income tax expense comprises current and deferred tax. Income
  tax expense is recognized in profit or loss except to the extent that it relates
  to items recognized directly in equity, in which case it is recognized in
  equity.

Current tax is the expected tax payable on the taxable income
  for the year, using tax rates enacted or substantively enacted at the reporting
  date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized for temporary differences between
  the carrying amounts of assets and liabilities for financial reporting purposes
  and the amounts used for taxation purposes. Deferred tax is not recognized on
  temporary differences on the initial recognition of assets or liabilities in a
  transaction that is not a business combination and affects neither accounting
  profit nor taxable profit. In addition, deferred tax is not recognized for
  taxable temporary differences arising on the initial recognition of goodwill.
  Deferred tax is measured at the tax rates that are expected to be applied to
  temporary differences when the asset is realized or the liability is settled,
  based on the laws that have been enacted or substantively enacted by the
  reporting date. Deferred tax assets and liabilities are offset if there is a
  legally enforceable right to offset, and they relate to income taxes levied by
  the same tax authority on the same taxable entity, or on different tax entities,
  when they intend to settle current tax liabilities and assets on a net basis or
  their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is
  probable that future taxable profits will be available against which the
  temporary difference can be utilized. Deferred tax assets are reviewed at each
  reporting date and are reduced to the extent that it is no longer probable that
  the related tax benefit will be realized.

Production taxes

Royalties, resource rent taxes and revenue-based taxes are
  accounted for under International Accounting Standards (IAS) 12 when they have
  characteristics of an income tax. This is considered to be the case when they
  are imposed under Government authority and the amount is payable based on
  taxable income, rather than based on quantity produced or as a percentage of
  revenue, after adjustment for temporary differences. For such arrangements,
  current and deferred tax is provided on the same basis as described above for
  other forms of taxation. Obligations arising from royalty arrangements that do
  not satisfy these criteria are recognized as a reduction of revenues.

(l)    Share capital

The Companys common shares, stock options, share purchase
  warrants and flow-through shares are classified as equity instruments only to
  the extent that they do not meet the definition of a financial liability or
  financial asset. Incremental costs directly attributable to the issue of equity
  instruments are shown in equity as a deduction, net of tax, from the proceeds.

F-16

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(m)    Flow-through shares

The Company will from time to time, issue flow-through common
  shares to finance a significant portion of its exploration program. Pursuant to
  the terms of the flow-through share agreements, these shares transfer the tax
  deductibility of qualifying resource expenditures to investors. On issuance, the
  Company separates the flow-through share into i) a flow-through share premium,
  equal to the estimated premium, if any, investors pay for the flow-through
  feature, which is recognized as a liability and; ii) share capital. Upon
  expenditures being incurred, the Company derecognizes the liability and
  recognizes a deferred tax liability for the amount of tax reduction renounced to
  the shareholders. The premium is recognized as deferred income tax recovery and
  the related deferred tax is recognized as a tax provision. To the extent that
  the Company has available tax pools for which the benefit has not been
  previously recognized, that are probable to be utilized, a deferred income tax
  recovery is recognized at the time of renunciation of the tax pools. The Company
  may also be subject to a Part XII.6 tax on flow-through proceeds renounced under
  the Look-back Rule, in accordance with Government of Canada flow-through
  regulations. When applicable, this tax is accrued as a financial expense until
  paid.

(n)    Borrowing costs

Borrowing costs directly associated with the acquisition,
  construction or production of a qualifying asset are capitalized when a
  substantial period of time is required to make the asset ready for its intended
  use. To the extent general borrowings are used for the purpose of obtaining a
  qualifying asset, the related costs are capitalized based on the weighted
  average of the borrowing costs applicable to the total outstanding borrowings in
  the period other than those made specifically for the purpose of the
  acquisition, construction or production of a qualifying asset. All other
  borrowing costs are recognized as an expense in the period in which they are
  incurred.

(o)    Changes in accounting policies

The Company has adopted the following new and revised
  standards, along with all consequential amendments, effective January 1, 2013.
  These changes are made in accordance with the applicable transitional
  provisions.

IFRS 10, Consolidated Financial Statements, replaces the
  guidance on control and consolidation in IAS 27, Consolidated and Separate
  Financial Statements, and SIC12, Consolidation  Special Purpose Entities. The
  new standard eliminates the current risk and rewards approach and establishes
  control as the single basis for determining the consolidation of an entity. The
  Corporation assessed its consolidation conclusions on January 1, 2013 and
  determined that the adoption of IFRS 10 did not result in any change in the
  consolidation status of its whollyowned subsidiaries, Dejour USA, DEAL, Wild
  Horse, and 0855524 B.C. Ltd.

IFRS 11, Joint Arrangements, supersedes IAS 31, Interests in
  Joint Ventures, and requires joint arrangements to be classified either as joint
  operations or joint ventures depending on the contractual rights and obligations
  of each investor that jointly controls the arrangement. For joint operations, a
  company recognizes its share of assets, liabilities, revenues and expenses of
  the joint operation. An investment in a joint venture is accounted for using the
  equity method as set out in IAS 28, Investments in Associates and Joint Ventures
  (amended in 2011). The other amendments to IAS 28 did not affect the Company.
  The Company classified its joint arrangements in accordance with IFRS 11 on
  January 1, 2013 and concluded that the adoption of the standard did not result
  in any changes in the accounting for its joint arrangements.

IFRS 12, Disclosure of Interests in Other Entities, combines in
  a single standard the disclosure requirements for subsidiaries, associates and
  joint arrangements, as well as unconsolidated structured entities. The adoption
  of the standard did not impact the disclosures in the Companys financial
  statements.

IFRS 13, Fair Value Measurement, provides a consistent
  definition of fair value and introduces consistent requirements for disclosures
  related to fair value measurement. There has been no change to the Companys
  methodology for determining the fair value for its financial assets and
  liabilities and, as such, the adoption of IFRS 13 did not result in any
  measurement adjustments as at January 1, 2013.

F-17

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  (continued)

(p)    Future accounting pronouncements

Certain pronouncements were issued by IASB or IFRIC that
  are mandatory for accounting periods beginning after January 1, 2014 or later
  periods.

The following new standards, amendments and interpretations,
  have not been early adopted in these consolidated annual financial statements.
  The Company is currently assessing the impact, if any, of this new guidance on
  the Companys future results and financial position:

IFRS 9, Financial Instruments is part of the IASB's wider
  project to replace IAS 39 Financial Instruments: Recognition and Measurement.
  IFRS 9 retains but simplifies the mixed measurement model and establishes two
  primary measurement categories for financial assets: amortized cost and fair
  value. The basis of classification depends on the entity's business model and
  the contractual cash flow characteristics of the financial asset. The amendments
  to IFRS 9 will be effective as of January 1, 2018. The Company will continue to
  monitor the changes to this standard as they arise and will determine the impact
  accordingly.

IAS 36, Impairment of Assets was amended in May 2013. This
  standard reduces the circumstances in which the recoverable amount of CGUs is
  required to be disclosed and clarify the disclosures required when an impairment
  loss has been recognized or reversed in the period. The amendments to IAS 36 are
  effective as of January 1, 2014.

NOTE 4 - CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The Company makes estimates and assumptions about the future
  that affect the reported amounts of assets and liabilities. Estimates and
  judgments are continually evaluated based on historical experience and other
  factors, including expectations of future events that are believed to be
  reasonable under the circumstances. In the future, actual experience may differ
  from these estimates and assumptions.

The effect of a change in an accounting estimate is recognized
  prospectively by including it in profit or loss in the period of the change, if
  the change affects that period only; or in the period of the change and future
  periods, if the change affects both.

Information about critical judgments in applying accounting
  policies that have the most significant risk of causing material adjustment to
  the carrying amounts of assets and liabilities recognized in the consolidated
  annual financial statements within the next financial year are discussed below:

Decommissioning liability

Decommissioning liabilities have been recognized based on the
  Companys internal estimates. Assumptions, based on the current economic
  environment, have been made which management believes are a reasonable basis
  upon which to estimate the future liability. These estimates take into account
  any material changes to the assumptions that occur when reviewed regularly by
  management. Estimates are reviewed at least annually and are based on current
  regulatory requirements. Significant changes in estimates of contamination and
  restoration techniques will result in changes to provisions from period to
  period. Actual decommissioning costs will ultimately depend on future market
  prices for the decommissioning costs which will reflect the market conditions at
  the time the decommissioning costs are actually incurred. The final cost of the
  currently recognized decommissioning provisions may be higher or lower than
  currently provided for.

F-18

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 4 - CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
  (continued)

Exploration and evaluation expenditure

The application of the Companys accounting policy for
  exploration and evaluation expenditure requires judgment in determining whether
  it is likely that future economic benefits will flow to the Company, which is
  based on assumptions about future events or circumstances. Estimates and
  assumptions made may change if new information becomes available. If, after the
  expenditure is capitalized, information becomes available suggesting that the
  recovery of the expenditure is unlikely, the amount capitalized is written off
  in profit or loss in the period the new information becomes available.

Income taxes

The Company recognizes the net future tax benefit related to
  deferred tax assets to the extent that it is probable that the deductible
  temporary differences will reverse in the foreseeable future. Assessing the
  recoverability of deferred tax assets requires the Company to make significant
  estimates related to expectations of future taxable income. Estimates of future
  taxable income are based on forecast cash flows from operations and the
  application of existing tax laws in each jurisdiction. To the extent that future
  cash flows and taxable income differ significantly from estimates, the ability
  of the Company to realize the net deferred tax assets recorded at the reporting
  date could be impacted. Additionally, future changes in tax laws in the
  jurisdictions in which the Company operates could limit the ability of the
  Company to obtain tax deductions in future periods. All tax filings are subject
  to audit and potential reassessment. Accordingly, the actual income tax
  liability may differ significantly from the estimated and recorded amounts.

Share-based payment transactions

The Company measures the cost of equity-settled transactions
  with employees by reference to the fair value of the equity instruments at the
  date at which they are granted. Estimating fair value for share-based payment
  transactions requires determining the most appropriate valuation model, which is
  dependent on the terms and conditions of the grant. This estimate also requires
  determining the most appropriate inputs to the valuation model including the
  expected life of the share option, volatility and dividend yield.

Financial contract liability

The application of the Companys accounting policy for
  financial liabilities requires the Company to adjust the carrying amounts of the
  financial liabilities in the event it revises its payments or receipts to
  reflect actual and revised estimated cash flows. The Companys financial
  contract liability was originally recognized at fair value using the effective
  interest method which ensures that any interest expense over the period of
  repayment is at a constant rate on the balance of the liability carried in the
  balance sheet.

At December 31, 2013, the balance of the financial contract
  liability was revised to reflect actual and revised estimated cash flows
  resulting in a gain in financial contract liability of $1,268,000. The revisions
  to the actual and revised cash flows resulted from i) downward revisions in
  estimated future net revenue from the 2013 sale of ethane in Dejour USA due to
  poor market conditions; ii) delays in the commencement of 2013 drilling
  operations in Dejour USA, and iii) an industry-standard, interim natural gas
  marketing contract in Dejour USA which failed to credit the Company with full
  natural gas liquids recoveries for 2013.

Despite the reduction in the carrying value of the financial
  contract liability at December 31, 2013, the corresponding asset on the
  Companys balance sheet required no related charge for impairment. This resulted
  from a successful 2013 drilling program which converted 47 probable drilling
  locations at December 31, 2012 to proven as at December 31, 2013  Note 12.

F-19

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 4 - CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
  (continued)

Impairment

A CGU is defined as the lowest grouping of integrated assets
  that generate identifiable cash inflows that are largely independent of the cash
  inflows of other assets or groups of assets. The allocation of assets into CGUs
  requires significant judgment and interpretations with respect to the
  integration between assets, the existence of active markets, similar exposure to
  market risks, shared infrastructures, and the way in which management monitors
  the operations. The recoverable amounts of CGUs and individual assets have been
  determined based on the higher of fair value less costs to sell or value-in-use
  calculations. The key assumptions the Company uses in estimating future cash
  flows for recoverable amounts are anticipated future commodity prices, expected
  production volumes and future operating and development costs. Changes to these
  assumptions will affect the recoverable amounts of CGUs and individual assets
  and may then require a material adjustment to their related carrying value. At
  December 31, 2013, the Company has two CGUs in Canada (Drake/Woodrush and Saddle
  Hills) and one CGU in the United States (Kokopelli)  Note 6.

Financial instrument

When estimating the fair value of financial instruments, the
  Company uses third-party models and valuation methodologies that utilize
  observable market data. In addition to market information, the Company
  incorporates transaction specific details that market participants would utilize
  in a fair value measurement, including the impact of non-performance risk.

Reserves

The estimate of reserves is used in forecasting the
  recoverability and economic viability of the Companys oil and gas properties,
  and in the depletion and impairment calculations. The process of estimating
  reserves is complex and requires significant interpretation and judgment. It is
  affected by economic conditions, production, operating and development
  activities, and is performed using available geological, geophysical,
  engineering, and economic data. Reserves are evaluated at least annually by the
  Companys independent reserve evaluators and updates to those reserves, if any,
  are estimated internally. Future development costs are estimated using
  assumptions as to the number of wells required to produce the commercial
  reserves, the cost of such wells and associated production facilities and other
  capital costs.

NOTE 5  EXPLORATION AND EVALUATION (E&E) ASSETS

|                                             |  | Canadian   |   |  | Canadian Oil |   |  | United States |   |  |        |  
|-------------------------------------------- |  | ---------- | - |  | ------------ | - |  | ------------- | - |  | ------ | -
|                                             |  | Uranium    |   |  | and Gas      |   |  | Oil and Gas   |   |  |        |  
|                                             |  | Properties |   |  | Interests    |   |  | Interests     |   |  | Total  |  
|                                             |  | $          |   |  | $            |   |  | $             |   |  | $      |  
|Cost:                                        |  |            |   |  |              |   |  |               |   |  |        |  
|Balance at January 1, 2012                   |  | 533        |   |  | 72           |   |  | 27,772        |   |  | 28,377 |  
|Additions                                    |  | -          |   |  | 2            |   |  | 315           |   |  | 317    |  
|Change in decommissioning provision          |  | -          |   |  | (23          | ) |  | -             |   |  | (23    | )
|Disposals                                    |  | -          |   |  | -            |   |  | (2,132        | ) |  | (2,132 | )
|Foreign currency translation and other       |  | -          |   |  | (28          | ) |  | (492          | ) |  | (520   | )
|Balance at December 31, 2012                 |  | 533        |   |  | 23           |   |  | 25,463        |   |  | 26,019 |  
|Additions                                    |  | -          |   |  | 10           |   |  | 134           |   |  | 144    |  
|Change in decommissioning provision          |  | -          |   |  | 37           |   |  | -             |   |  | 37     |  
|Disposals                                    |  | (533       | ) |  | -            |   |  | (8,930        | ) |  | (9,463 | )
|Foreign currency
      translation and other |  | -          |   |  | -            |   |  | 1,631         |   |  | 1,631  |  
|Balance at December 31, 2013                 |  | -          |   |  | 70           |   |  | 18,298        |   |  | 18,368 |  

F-20

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 5  EXPLORATION AND EVALUATION (E&E)ASSETS (continued)

|                                             |  | Canadian   |   |  | Canadian Oil |  |  | United States |   |  |         |  
|-------------------------------------------- |  | ---------- | - |  | ------------ |  |  | ------------- | - |  | ------- | -
|                                             |  | Uranium    |   |  | and Gas      |  |  | Oil and Gas   |   |  |         |  
|                                             |  | Properties |   |  | Interests    |  |  | Interests     |   |  | Total   |  
|                                             |  | $          |   |  | $            |  |  | $             |   |  | $       |  
|Accumulated impairment losses:               |  |            |   |  |              |  |  |               |   |  |         |  
|Balance at January 1, 2012                   |  | (10        | ) |  | -            |  |  | (23,084       | ) |  | (23,094 | )
|Impairment losses                            |  | (261       | ) |  | -            |  |  | (1,245        | ) |  | (1,506  | )
|Disposals                                    |  | -          |   |  | -            |  |  | 2,083         |   |  | 2,083   |  
|Foreign currency
      translation and other |  | -          |   |  | -            |  |  | 388           |   |  | 388     |  
|Balance at December 31, 2012                 |  | (271       | ) |  | -            |  |  | (21,858       | ) |  | (22,129 | )
|Impairment losses (Note 7)                   |  | (132       | ) |  | -            |  |  | (415          | ) |  | (547    | )
|Disposals                                    |  | 403        |   |  | -            |  |  | 8,557         |   |  | 8,960   |  
|Foreign currency
      translation and other |  | -          |   |  | -            |  |  | (1,371        | ) |  | (1,371  | )
|Balance at December 31, 2013                 |  | -          |   |  | -            |  |  | (15,087       | ) |  | (15,087 | )

|                     |  | Canadian   |  |  | Canadian Oil |  |  | United States |  |  |       | 
|-------------------- |  | ---------- |  |  | ------------ |  |  | ------------- |  |  | ----- | 
|                     |  | Uranium    |  |  | and Gas      |  |  | Oil and Gas   |  |  |       | 
|                     |  | Properties |  |  | Interests    |  |  | Interests     |  |  | Total | 
|                     |  | $          |  |  | $            |  |  | $             |  |  | $     | 
|Carrying amounts:    |  |            |  |  |              |  |  |               |  |  |       | 
|At December 31, 2012 |  | 262        |  |  | 23           |  |  | 3,605         |  |  | 3,890 | 
|At December 31, 2013 |  | -          |  |  | 70           |  |  | 3,211         |  |  | 3,281 | 

Exploration and evaluation (E&E) assets consist of the
  Companys exploration projects which are pending the determination of proven
  reserves.

During the year ended December 31, 2013, the Company sold its
  interests in all uranium exploration leases to unrelated third parties for gross
  proceeds of $150,000.

United States Exploration and Evaluation
  Properties

As at December 31, 2013, the Company holds oil and gas leases
  in the Piceance, Paradox and Uinta Basins in the US Rocky Mountains, of which a
  portion was classified as E&E assets.

During the year ended December 31, 2013, the Company sold its
  working interests in certain oil and gas leases in the areas of Colorado and
  Utah to unrelated third parties for gross proceeds of $134,000 (US$129,000).

During the year ended December 31, 2013, the Company
  capitalized $79,000 (December 31, 2012  $104,000) of general and administrative
  costs related to its US oil and gas interests.

The E&E asset impairment is $415,000, $1,245,000 and
  $4,886,000 for the year ended December 31, 2013, December 31, 2012 and December
  31 2011, respectively. The impairment was recognized upon a review of each
  exploration license or field, carried out, at least annually, to confirm whether
  the Company intends further appraisal activity or to otherwise extract value
  from the property. The impairment was recognized based on the difference between
  the carrying value of the assets and their recoverable amounts. The recoverable
  amount was the higher of fair value less costs to sell or value in use. The fair
  value was estimated based on comparable market prices for which the asset could
  be sold in an arms length transaction less estimated costs to sell. There was
  no recoverable amount on expired leases.

F-21

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 6  PROPERTY AND EQUIPMENT

|                                             |  | Canadian Oil |   |  | United States |   |  |               |   |  |        |  
|-------------------------------------------- |  | ------------ | - |  | ------------- | - |  | ------------- | - |  | ------ | -
|                                             |  | and Gas      |   |  | Oil and Gas   |   |  | Corporate and |   |  |        |  
|                                             |  | Interests    |   |  | Interests     |   |  | Other Assets  |   |  | Total  |  
|                                             |  | $            |   |  | $             |   |  | $             |   |  | $      |  
|Cost:                                        |  |              |   |  |               |   |  |               |   |  |        |  
|Balance at January 1, 2012                   |  | 23,149       |   |  | 4,076         |   |  | 326           |   |  | 27,551 |  
|Additions                                    |  | 1,420        |   |  | 9,075         |   |  | 7             |   |  | 10,502 |  
|Change in decommissioning provision          |  | 131          |   |  | (1            | ) |  | -             |   |  | 130    |  
|Disposals                                    |  | -            |   |  | -             |   |  | (17           | ) |  | (17    | )
|Foreign currency translation and other       |  | -            |   |  | (74           | ) |  | (2            | ) |  | (76    | )
|Balance at December 31, 2012                 |  | 24,700       |   |  | 13,076        |   |  | 314           |   |  | 38,090 |  
|Additions                                    |  | 21           |   |  | 2,206         |   |  | 7             |   |  | 2,234  |  
|Change in decommissioning provision          |  | (171         | ) |  | 23            |   |  | -             |   |  | (148   | )
|Disposals                                    |  | -            |   |  | (1,902        | ) |  | -             |   |  | (1,902 | )
|Foreign currency
      translation and other |  | -            |   |  | 876           |   |  | 4             |   |  | 880    |  
|Balance at December 31, 2013                 |  | 24,550       |   |  | 14,279        |   |  | 325           |   |  | 39,154 |  

|                                                         |  | Canadian Oil |   |  | United States |   |  |               |   |  |         |  
|-------------------------------------------------------- |  | ------------ | - |  | ------------- | - |  | ------------- | - |  | ------- | -
|                                                         |  | and Gas      |   |  | Oil and Gas   |   |  | Corporate and |   |  |         |  
|                                                         |  | Interests    |   |  | Interests     |   |  | Other Assets  |   |  | Total   |  
|                                                         |  | $            |   |  | $             |   |  | $             |   |  | $       |  
|Accumulated amortization, depletion and
      impairment |  |              |   |  |               |   |  |               |   |  |         |  
|losses:                                                  |  |              |   |  |               |   |  |               |   |  |         |  
|Balance at January 1, 2012                               |  | (7,118       | ) |  | (440          | ) |  | (233          | ) |  | (7,791  | )
|Amortization and depletion                               |  | (2,737       | ) |  | -             |   |  | (29           | ) |  | (2,766  | )
|Impairment losses                                        |  | (4,913       | ) |  | (1,491        | ) |  | -             |   |  | (6,404  | )
|Disposals                                                |  | -            |   |  | -             |   |  | 10            |   |  | 10      |  
|Foreign currency translation and other                   |  | -            |   |  | 4             |   |  | 1             |   |  | 5       |  
|Balance at December 31, 2012                             |  | (14,768      | ) |  | (1,927        | ) |  | (251          | ) |  | (16,946 | )
|Amortization and depletion (Note 7)                      |  | (2,036       | ) |  | (493          | ) |  | (25           | ) |  | (2,554  | )
|Impairment losses (Note 7)                               |  | (529         | ) |  | -             |   |  | -             |   |  | (529    | )
|Disposals                                                |  | -            |   |  | 1,318         |   |  | -             |   |  | 1,318   |  
|Foreign currency
      translation and other             |  | -            |   |  | (55           | ) |  | (2            | ) |  | (57     | )
|Balance at December 31, 2013                             |  | (17,333      | ) |  | (1,157        | ) |  | (278          | ) |  | (18,768 | )

|                     |  | Canadian Oil |  |  | United States |  |  |               |  |  |        | 
|-------------------- |  | ------------ |  |  | ------------- |  |  | ------------- |  |  | ------ | 
|                     |  | and Gas      |  |  | Oil and Gas   |  |  | Corporate and |  |  |        | 
|                     |  | Interests    |  |  | Interests     |  |  | Other Assets  |  |  | Total  | 
|                     |  | $            |  |  | $             |  |  | $             |  |  | $      | 
|Carrying amounts:    |  |              |  |  |               |  |  |               |  |  |        | 
|At December 31, 2012 |  | 9,932        |  |  | 11,149        |  |  | 63            |  |  | 21,144 | 
|At December 31, 2013 |  | 7,217        |  |  | 13,122        |  |  | 47            |  |  | 20,386 | 

F-22

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 6  PROPERTY AND EQUIPMENT (continued)

Canadian Oil and Gas Interests

At December 31, 2013, the Company had 5 property leases held on
  its behalf by a third party.

Amortization and depletion is computed using the unit of
  production method by reference to the total production for the CGU over the
  estimated net proved and probable reserves of oil and gas for the CGU determined
  by independent consultants. The calculation of amortization and depletion for
  the year ended December 31, 2013 included estimated future development costs of
  $899,000 (December 31, 2012 - $Nil; December 31, 2011 - $Nil) associated with
  the development of proved undeveloped reserves.

During the year ended December 31, 2013, the Company
  capitalized $Nil (December 31, 2012  $2,000) of general and administrative
  costs related to its Canadian oil and gas interests.

At December 31, 2013, the Company performed an impairment test
  on certain oil and gas interests to assess the recoverable value of these
  properties when indicators of impairment were present.

The Developed and Proved (D&P) asset impairment is
  $529,000, $4,913,000 and $938,000 for the year ended December 31, 2013, December
  31, 2012 and December 31, 2011, respectively. The impairment was recognized
  because the carrying value of certain CGU exceeded the recoverable amount. The
  impairment was recognized based on the difference between the carrying value of
  cash generating unit and their recoverable amounts. The recoverable amount was
  the higher of fair value less costs to sell or value in use. The fair value was
  estimated based on observable market prices for which the asset could be sold in
  a comparable arms length transaction, less estimated costs to sell. Recoverable
  amount was the fair value less costs to sell determined using cash flows
  attributed to the proved and probable reserves, discounted at 10%, adjusted for
  assumptions that an independent market participant may take into account (Note
  23).

The benchmark prices on which the December 31, 2013 impairment
  indicators were assessed are as follows:

|                                                                                          | Natural gas         | Condensate               | Crude
      oil  
|----------------------------------------------------------------------------------------- | ------------------- | ------------------------ | -----------------
|                                                                                          | (AECO)              | (Edmonton Pentanes Plus) | (Edmonton Par)   
|                                                                                          | Cdn
      $ / mmbtu | Cdn
      $ / bbl        | Cdn
      $ / bbl
|2014                                                                                      | 4.03                | 105.20                   | 92.76            
|2015                                                                                      | 4.26                | 107.11                   | 97.37            
|2016                                                                                      | 4.50                | 107.00                   | 100.00           
|2017                                                                                      | 4.74                | 107.00                   | 100.00           
|2018                                                                                      | 4.97                | 107.00                   | 100.00           
|2019                                                                                      | 5.21                | 107.00                   | 100.00           
|2020                                                                                      | 5.33                | 107.82                   | 100.77           
|2021                                                                                      | 5.44                | 109.97                   | 102.78           
|2022                                                                                      | 5.55                | 112.17                   | 104.83           
|2023                                                                                      | 5.66                | 114.41                   | 106.93           
|Each benchmark price increased on average approximately 2% from
      2014 and thereafter |                    

United States Oil and Gas Interests

Amortization and depletion is computed using the unit of
  production method by reference to the total production for the CGU over the
  estimated net proved and probable reserves of oil and gas for the CGU determined
  by independent consultants. The calculation of amortization and depletion for
  the year ended December 31, 2013 included estimated future development costs of
  $258.8 million (December 31, 2012 - $326.9 million) associated with the
  development of proved undeveloped reserves. During fiscal 2012, the Company did
  not have any production from its US oil and gas interests and accordingly did
  not deplete any of its US oil and gas interests.

F-23

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 6  PROPERTY AND EQUIPMENT (continued)

During the year ended December 31, 2013, the Company sold its
  working interests in certain oil and gas leases in the area of Colorado to a
  related third party for gross proceeds of $477,000 (US$450,000)  Note
  17(f).

During the year ended December 31, 2013, the Company
  capitalized $520,000 (December 31, 2012  $539,000) of general and
  administrative costs related to its US oil and gas interests.

The D&P asset impairment is $Nil, $1,491,000 and $424,000
  for the year ended December 31, 2013, December 31, 2012 and December 31, 2011,
  respectively. Of the $1.5 million impairment recorded for the year ended
  December 31, 2012, $1.3 million was related to South Rangely property that was
  disposed in December 2013. The impairment was recognized upon a review of each
  exploration license or field, carried out, at least annually, to confirm whether
  the Company intends further appraisal activity or to otherwise extract value
  from the property. The impairment was recognized based on the difference between
  the carrying value of the assets and their recoverable amounts. The recoverable
  amount was the higher of fair value less costs to sell or value in use.
  Recoverable amount was the fair value less costs to sell determined using cash
  flows attributed to the proved and probable reserves, discounted at 10%,
  adjusted for assumptions that an independent market participant may take into
  account (Note 23).

The benchmark prices on which the December 31, 2013 impairment
  indicators were assessed are as follows:

|                    | Natural gas
|------------------- | -----------
|                    | (Henry Hub)
|                    | US$ / mmbtu
|2014                | 4.38       
|2015                | 4.15       
|2016                | 4.00       
|2017                | 3.98       
|2018                | 4.20       
|2019                | 4.32       
|2020                | 4.49       
|2021                | 4.63       
|2022                | 4.77       
|2023                | 4.91       
|2024                | 5.06       
|2025                | 5.25       
|2026 and thereafter | 5.49       

* At December 31, 2013, the US$ to CAD$ exchange rate was
  1.0636.

NOTE 7  AMORTIZATION, DEPLETION AND IMPAIRMENT
  LOSSES

|                                                       |  | Year ended December 31 | 
|------------------------------------------------------ |  | ---------------------- | 
|                                                       |  | 2013                   | 
|                                                       |  | $                      | 
|Exploration and Evaluation Assets (E
      & E assets) |  |                        | 
|Impairment losses (Note 5)                             |  | 547                    | 
|                                                       |  |                        | 
|Property and Equipment (D & P assets)                  |  |                        | 
|Amortization and
      depletion (Note 6)              |  | 2,554                  | 
|Impairment losses (Note 6)                             |  | 529                    | 
|                                                       |  | 3,630                  | 

F-24

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 8  BANK LINE OF CREDIT

On March 28, 2013, DEAL signed a new agreement with the Bank to
  renew its $5.95 million (December 31, 2012 - $6.0 million) revolving operating
  demand loan under the following terms and conditions:

|(a) | Credit Facility A  Revolving Operating Demand Loan -
      $3.7 million, to be used for general corporate purposes, ongoing
      operations, capital expenditures, and acquisition of additional petroleum
      and natural gas assets. Interest on Credit Facility A is at Prime + 1%
      payable monthly and all amounts outstanding are payable on demand any
      time, and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(b) | Credit Facility B  Non-Revolving Demand Loan - $2.25
      million. Interest on Credit Facility B is at Prime + 3 1/2% payable
      monthly. Monthly principal payments of $200,000 are due and payable
      commencing March 26, 2013 with all amounts outstanding under Credit
      Facility B ($1.45 million) due and payable in full on June 30,
      2013.               

Collateral for Credit Facilities A and B (the Credit
  Facilities) is provided by a $10.0 million first floating charge over all the
  assets of DEAL, a general assignment of DEALs book debts, a $10.0 million
  debenture with a first floating charge over all the assets of the Company and an
  unlimited guarantee provided by Dejour USA. On June 5, 2013, DEAL renewed the
  Credit Facilities with the Bank and the maximum amount of Credit Facility A
  was reduced to $3.5 million. On June 19, 2013, Credit Facility B was repaid in
  full (note 10). Further, on December 16, 2013 and amended on February 18, 2014,
  DEAL renewed the Credit Facility A with the Bank and contracted to utilize
  $600,000 of the $3.5 million to fund the proposed acquisition of certain
  producing natural gas properties in Canada until March 31, 2014. If the proposed
  acquisition fails to close for whatever reason by March 31, 2014, the maximum
  amount of Credit Facility A will be reduced by $300,000 effective April 1,
  2014. Monthly principal payments of $100,000 are still due and payable
  commencing March 1, 2014. The next annual review is scheduled on or before May
  1, 2014.

Under the terms of the Credit Facilities, DEAL is required to
  maintain a working capital ratio of greater than 1:1 at all times. The working
  capital ratio is defined as the ratio of (i) current assets (including any
  undrawn and authorized availability under the Credit Facilities) less unrealized
  hedging gains to (ii) current liabilities (excluding the current portion of
  outstanding balances of the facility) less unrealized hedging losses. As at
  December 31, 2013, DEAL was in compliance with its working capital ratio
  requirement.

NOTE 9  WARRANT LIABILITY

Warrants that have their exercise prices denominated in
  currencies other than the Companys functional currency of Canadian dollars,
  other than agents warrants, are accounted for as derivative financial
  liabilities. These warrants are recorded at the fair value at each reporting
  date with the change in fair value for the period recorded in profit orloss for
  the period.

|                                          |  | #          |   |  | $      |  
|----------------------------------------- |  | ---------- | - |  | ------ | -
|                                          |  |            |   |  |        |  
|Balance at January 1, 2011                |  | 8,075,000  |   |  | 1,093  |  
|Granted, investor warrants                |  | 5,505,002  |   |  | 311    |  
|Exercise of warrants  value reallocation |  | (3,460,418 | ) |  | (739   | )
|Change in fair
      value                |  | -          |   |  | 1,580  |  
|Balance at December 31, 2011              |  | 10,119,584 |   |  | 2,245  |  
|Granted, investor warrants                |  | 13,597,729 |   |  | 1,308  |  
|Exercise of warrants  value reallocation |  | (2,419,584 | ) |  | (286   | )
|Change in fair
      value                |  | -          |   |  | (1,842 | )
|Balance at December 31, 2012              |  | 21,297,729 |   |  | 1,425  |  
|Change in fair
      value                |  | -          |   |  | (1,101 | )
|Balance at December 31, 2013              |  | 21,297,729 |   |  | 324    |  

F-25

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 9  WARRANT LIABILITY (continued)

In June 2012, the Company issued 13,597,729 investor warrants
  each of which entitles the holder to purchase one common share of the Company at
  an exercise price of US$0.40 beginning 6 months from the date of issuance until
  June 4, 2017. The fair value of these granted investor warrants were estimated
  using the Hull-White Trinomial option pricing model under the following weighted
  average inputs:

December 31,
      
      
      December 31,As at
      
      2013
      
      
      2012
      
      
      June 4, 2012Exercise price
      
      US$
      
      
      0.40
      
      
      US$
      
      
      0.40
      
      
      US$
      
      
      0.40Share price
      
      US$
      
      
      0.12
      
      
      US$
      
      
      0.22
      
      
      US$
      
      
      0.24Expected volatility
      
      
      
      
      70%
      
      
      
      
      
      85%
      
      
      
      
      
      91%Expected life
      
      
      
      
      2.55 years
      
      
      
      
      
      3.55 years
      
      
      
      
      
      5 yearDividends
      
      
      
      
      0.0%
      
      
      
      
      
      0.0%
      
      
      
      
      
      0.0%Risk-free
        interest rate
      
      
      
      
      0.7%
      
      
      
      
      
      0.5%
      
      
      
      
      
      0.7%


During the year ended December 31, 2013, none of the US$
  warrants were exercised (December 31, 2012  2,419,584).

NOTE 10  LOAN FACILITY

On June 19, 2013, the Company borrowed $3.5 million (Loan
  Facility) from a Canadian institutional lender (Lender). The Loan Facility
  bears interest at 14%, payable monthly, and matures on December 14, 2014. The
  principal is repayable any time after December 18, 2013 without penalty. Related
  financing costs of $348,000 have been deducted in determining the fair value of
  the Loan Facility and certain incentive share purchase warrants (Warrant or
  Warrants) issued to the Lender. Security for the Loan Facility is comprised of
  a First Deed of Trust on certain of the Companys U.S. oil and gas interests,
  including a general security agreement, a second mortgage on the Companys
  Canadian properties, and the guaranty of the Company and Dejour USA.

As partial consideration for providing the Loan Facility, the
  Company issued the Lender 7,291,667 Warrants. Each Warrant entitles the holder
  to acquire one common share at a price of $0.24 per share any time prior to June
  18, 2015. If the Company issues any common shares at a price per share less than
  $0.24 (the Issue Price) any time until December 18, 2013, then the exercise
  price of the Warrants would automatically be reduced to the higher of (i) the
  Issue Price and (ii) $0.20. Shares acquired through the exercise of Warrants
  prior to October 18, 2013 are restricted from sale through the facilities of the
  Canadian stock exchange.

The Company has determined the Loan Facility as being a
  financial liability with an embedded derivative liability. Therefore, the
  embedded derivative liability is measured first and the residual value is
  assigned to the financial liability. On initial recognition, the fair value of
  the derivative liability of $551,000 was estimated using an option pricing
  model.

The residual value assigned to the financial liability of
  $2,949,000 at initial recognition was the fair value of the entire transaction
  ($3.5 million) less the value assigned to the embedded derivative liability
  ($551,000). Related financing costs of $348,000 were apportioned to the
  financial liability and the embedded derivative liability. The portion
  attributed to the embedded derivative of $54,000 was expensed immediately and
  the remainder of the costs were deducted from the carrying amount of the
  financial liability and will be amortized over the term of the liability.

F-26

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 10  LOAN FACILITY (continued)

At initial recognition, the carrying value of the financial
  liability was as follows:

|                     |  | Fair Value |  |  | Financing Costs |   |  | Carrying Value | 
|-------------------- |  | ---------- |  |  | --------------- | - |  | -------------- | 
|                     |  | $          |  |  | $               |   |  | $              | 
|Financial liability  |  | 2,949      |  |  | (294            | ) |  | 2,655          | 
|Derivative liability |  | 551        |  |  |                |   |  | 551            | 
|                     |  | 3,500      |  |  | (294            | ) |  | 3,206          | 

The derivative liability is carried at fair value through
  profit and loss and the instrument is re-measured at each reporting date using
  an option pricing model. For the year ended December 31, 2013, the Company
  recorded an unrealized gain on the derivative liability of $264,000 (year ended
  December 31, 2012 - $Nil). The following key inputs to obtain the valuation:

|As at                   |   | December 31, 2013 |  |   | June 18, 2013 | 
|----------------------- | - | ----------------- |  | - | ------------- | 
|Exercise price          | $ | 0.24              |  | $ | 0.24          | 
|Share price             | $ | 0.15              |  | $ | 0.20          | 
|Expected volatility     |   | 84%               |  |   | 79%           | 
|Expected life           |   | 1.5 years         |  |   | 2 years       | 
|Dividends               |   | 0.0%              |  |   | 0.0%          | 
|Risk-free interest rate |   | 1.1%              |  |   | 1.1%          | 

As at December 31, 2013, the carrying value of the financial
  liability is:

|                                       |  | December 31, |   |  | December 31, | 
|-------------------------------------- |  | ------------ | - |  | ------------ | 
|                                       |  | 2013         |   |  | 2012         | 
|                                       |  | $            |   |  | $            | 
|Balance upon initial
      recognition |  | 2,655        |   |  | -            | 
|Accretion expense                      |  | 494          |   |  | -            | 
|Interest paid                          |  | (238         | ) |  | -            | 
|Balance at December 31, 2013           |  | 2,911        |   |  | -            | 

Accretion expense of $494,000 (year ended December 31, 2012 
  $Nil) is included in financing expenses. Other terms and conditions of the Loan
  Facility are:

|(a) | Commencing September 30, 2013, Dejour USA is required to
      maintain a working capital ratio of greater than 1:1, as defined, at all
      times. The working capital ratio is defined as the ratio of (i) current
      assets to (ii) current liabilities (excluding any liability pursuant to
      the Drilling Fund  Note 12);
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Restrictions on borrowings; and                                                                                                                                                                                                                                                                                                        
|(c) | No changes to the Companys senior management team
      without the Lenders written consent.                                                                                                                                                                                                                                         

At December 31, 2013, Dejour USA was in default of its working
  capital ratio covenant. As a result, the loan facility is due upon demand and
  classified as current liabilities. The Lender has not demanded repayment as at
  December 31, 2013.

F-27

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 11  DECOMMISSIONING LIABILITY

|                                      |  | Canadian       |   |  | United
      States |   |  |       |  
|------------------------------------- |  | -------------- | - |  | ------------------- | - |  | ----- | -
|                                      |  | Oil and Gas    |   |  | Oil and Gas         |   |  |       |  
|                                      |  | Properties (1) |   |  | Properties (1)      |   |  | Total |  
|                                      |  | $              |   |  | $                   |   |  | $     |  
|Balance at January 1, 2012            |  | 1,217          |   |  | 122                 |   |  | 1,339 |  
|Change in estimated future cash flows |  | 107            |   |  | -                   |   |  | 107   |  
|Disposals                             |  | (34            | ) |  | -                   |   |  | (34   | )
|Actual costs incurred and other       |  | (4             | ) |  | (3                  | ) |  | (7    | )
|Unwinding of discount                 |  | 22             |   |  | 2                   |   |  | 24    |  
|Balance at December 31, 2012          |  | 1,308          |   |  | 121                 |   |  | 1,429 |  
|Change in estimated future cash flows |  | (134           | ) |  | 23                  |   |  | (111  | )
|Disposals                             |  | -              |   |  | (35                 | ) |  | (35   | )
|Actual costs incurred                 |  | (112           | ) |  | 8                   |   |  | (104  | )
|Unwinding of
      discount           |  | 30             |   |  | 3                   |   |  | 33    |  
|Balance at December 31, 2013          |  | 1,092          |   |  | 120                 |   |  | 1,212 |  

(1)relates to property and equipment (note 6)

The present value of the decommissioning liability was
  calculated using the following weighted average inputs:

|                         | Canadian Oil | United
      States
|------------------------ | ------------ | -------------------
|                         | and Gas      | Oil and Gas        
|                         | Properties   | Properties         
|As at December 31, 2013: |              |                    
|Discount rate            | 2.55%        | 2.72%              
|Inflation rate           | 2.00%        | 2.00%              
|                         |              |                    
|As at December 31, 2012: |              |                    
|Discount rate            | 1.72%        | 1.82%              
|Inflation rate           | 2.50%        | 2.50%              

NOTE 12  FINANCIAL CONTRACT LIABILITY

On December 31, 2012, Dejour USA entered into a financial
  contract with a U.S. oil and gas drilling fund (Drilling Fund), that is
  associated through a relationship with a former director of the Company, to
  drill up to three wells and complete up to four wells (the Tranche 1 Wells) in
  the State of Colorado. By agreement:

|(a) | Dejour USA contributed four natural gas well spacing
      units, including one drilled and cased well with a cost of US$1.1
      million;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(b) | The Drilling Fund contributed US$6.5 million cash
      directly to a drilling company, that is owned by a former consultant of
      Dejour USA, as prepaid drilling costs; during the year ended December 31,
      2013, the Drilling Fund also committed to invest a further US$500,000 in
      the four wells for a total of US$7.0 million. As at December 31, 2013,
      US$417,000 of the incremental US$500,000 has been invested for a total of
      US$6.9 million;                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|(c) | Dejour USA will earn a before payout working interest
      of 10% to 14% and an after payout working interest of 28% to 39% in the
      net operating profits from the Tranche 1 Wells based on the actual cash
      invested in the drilling program; in September 2013, Dejour USA signed an
      amendment with the Drilling Fund and agreed to earn the revised before
      payout working interest of 15.88% to 22.23% and revised after payout
      working interest of 29.77% to 41.67% in the net operating profits from the
      Tranche 1 Wells based on the actual cash invested in the drilling
      program;

F-28

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 12  FINANCIAL CONTRACT LIABILITY (continued)

|(d) | The Drilling Fund has the right to require that Dejour
      USA purchase the Drilling Funds entire working interest in the Tranche 1
      Wells 36 months after the commencement of production from the initial
      Tranche 1 Wells. In the event the Drilling Fund exercises its right, the
      purchase price to be paid by Dejour USA will equal 75% of the Drilling
      Funds actual investment less 75% of the Drilling Funds share of working
      interest net profits from the Tranche 1 Wells, if any, for the 36-month
      period, plus a top-up amount so that the Drilling Fund earns a minimum
      8% return, compounded annually and applied on a monthly basis, on 75% of
      its original investment over the 36-month period; and
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(e) | The Drilling Fund has the right to require Dejour USA to
      purchase all of the Drilling Funds interest in the Tranche 1 Wells if at
      any time Dejour USA plans to divest itself of greater than 51% of its
      Working Interest in the Tranche 1 Wells and resigns as Operator (a Change
      of Control Event). The purchase price is equal to the future net profit
      from the Proven and Probable Reserves attributable to the Drilling Funds
      working interest in the Tranche 1 Wells, discounted at 12%, as determined
      by a third party evaluator acceptable to both
      parties.                                                                                                                                              

Dejour USA considers the transaction to be a financial contract
  liability as the risks and rewards of ownership have not been substantially
  transferred at the Agreement date. On the Drilling Fund financing advance, the
  Company increased property and equipment and financial contract liability by
  $6.5 million (US$6.5 million). During the year ended December 31, 2013, the
  Company increased property and equipment and financial contract liability by
  $443,000 (US$417,000) of the incremental US$500,000 advance received in the
  year. On initial recognition, the Company imputed its borrowing cost of 8.4%
  based on the estimated timing and amount of operating profit using the
  independent reserve engineers estimated future cash flows for the Drilling
  Funds working interest in the Tranche 1 Wells. Subsequent to initial measurement
  the financial contract liability will be increased by the imputed interest
  expense and decreased by the Drilling Funds net operating profit from the
  Tranche 1 Wells. Any changes in the estimated timing and amount of the net
  operating profit cash flows will be discounted at the initial imputed interest
  rate with any change in the recognized liability recognized as a gain (loss) in
  the period of change  Note 4. The Company has estimated the current portion of
  the obligation based on the expected net operating profit to be paid to the
  Drilling Fund in the next twelve months.

|                                                                     |  | $      |  
|-------------------------------------------------------------------- |  | ------ | -
|Loan advance at December 31, 2012
      (US$6,500)                   |  | 6,467  |  
|Loan advance during the year (US$417)                                |  | 443    |  
|Accretion expense (US$471)                                           |  | 486    |  
|Foreign exchange
      loss                                          |  | 461    |  
|                                                                     |  | 7,857  |  
|Less:                                                                |  |        |  
|(a)    Net operating income
      (US$441 paid in 2013)              |  | (468   | )
|(b)    Gain on financial contract liability
      (US$1,192)         |  | (1,268 | )
|Balance at December 31, 2013 (US$5,755)                              |  | 6,121  |  
|Current portion of
      financial contract liability (US$1,173)     |  | (1,248 | )
|Non-current portion of financial contract liability
      (US$4,582) |  | 4,873  |  

The reduction in the financial contract liability is estimated
  to be:

|     |  | US$   |  |  | CAD$  | 
|---- |  | ----- |  |  | ----- | 
|2014 |  | 1,173 |  |  | 1,248 | 
|2015 |  | 412   |  |  | 438   | 
|2016 |  | 4,170 |  |  | 4,435 | 

F-29

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 13  SHARE CAPITAL

Authorized

The Company is authorized to issue an unlimited number of
  common voting shares, an unlimited number of first preferred shares issuable in
  series, and an unlimited number of second preferred shares issuable in
  series.No preferred shares have been issued and the terms of preferred
  shares have not been defined.

Issued and outstanding

|                                                                  |  |                   |  |  | $value
      of | 
|----------------------------------------------------------------- |  | ----------------- |  |  | --------------- | 
|                                                                  |  | # of
      shares |  |  | shares          | 
|Balance at January 1, 2011                                        |  | 110,180,545       |  |  | 79,386          | 
|Issue of shares on exercise of warrants and options               |  | 4,751,841         |  |  | 1,574           | 
|Warrant liability reallocated on exercise
      of warrants       |  | -                 |  |  | 739             | 
|Contributed surplus reallocated on exercise of options            |  | -                 |  |  | 167             | 
|Shares issued via private placements, net
      of issuance costs |  | 11,010,000        |  |  | 2,694           | 
|Subscriptions
      receivable on exercise of options             |  | 950,000           |  |  | 516             | 
|Balance at December 31, 2011                                      |  | 126,892,386       |  |  | 85,076          | 
|Issue of shares on exercise of warrants and options               |  | 3,893,683         |  |  | 1,466           | 
|Warrant liability reallocated on exercise
      of warrants       |  | -                 |  |  | 286             | 
|Contributed surplus reallocated on exercise of options            |  | -                 |  |  | 198             | 
|Shares issued via private placements, net of issuance
      costs |  | 18,130,305        |  |  | 3,248           | 
|Balance at
      December 31, 2012 and 2013                       |  | 148,916,374       |  |  | 90,274          | 

During the year ended December 31, 2012, the Company
  completed the following:

In June 2012, the Company completed a private placement of
  18,130,305 units at US$0.26 per unit. Each unit consists of one common share and
  3/4 of one common share purchase warrant. Each whole warrant entitles the holder
  to acquire one additional common share of the Company at US$0.40 per common
  share beginning 6 months from the date of issuance until June 4, 2017. Gross
  proceeds raised were $4,909,000 (US$4,714,000). In connection with this private
  placement, the Company paid finders fees of $295,000 (US$283,000) and other
  related costs of $187,000. The grant date fair value of the warrants, estimated
  to be $1,308,000, has been recognized as a derivative financial liability (Note
  10). Issue costs of $129,000 related to the warrants were expensed.

During the year ended December 31, 2012, 2,968,683 warrants
  denominated in US dollars (including 549,099 agents warrants) were exercised
  with an average common share market price of US$0.47 and 925,000 stock options
  were exercised with an average common share market price of $0.51.

During the year ended December 31, 2011, the Company
  completed the following:

At December 31, 2011 the Company had subscriptions receivable
  in the amount of $516,000. The subscriptions receivable balance was received in
  full in January 2012.

In February 2011, the Company completed a private placement of
  11,010,000 units at US$0.30 per unit. Each unit consists of one common share and
  one-half of one common share purchase warrant. Each whole warrant entitles the
  holder to acquire one additional common share of the Company at US$0.35 per
  common share on or before February 10, 2012. Gross proceeds raised were
  $3,289,000 (US$3,303,000). In connection with this private placement, the
  Company paid finders fees of $197,000 (US$200,000) and other related costs of
  $120,000. The grant date fair value of the warrants, estimated to be $311,000,
  has been recognized as a derivative financial liability (Note 9). Issue costs of
  $32,000 related to the warrants were expensed. Directors and Officers of the
  Company purchased 2,000,000 units of this offering.

In January 2011, the Company renounced $889,000 flow-through
  funds to investors, using the look-back rule. The flow-through funds had been
  fully spent by February 28, 2011. As a result of the renunciation, a deferred
  income tax recovery of $187,000 was recognized on settlement of the flow-through
  share liability.

F-30

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 14  STOCK OPTIONS AND SHARE PURCHASE WARRANTS

(a)Stock Options

The Stock Option Plan (the Plan) is a 10% rolling plan
  pursuant to which the number of common shares reserved for issuance is 10% of
  the Companys issued and outstanding common shares as constituted on the date of
  any grant of options.

The Plan provides for the grant of options to purchase common
  shares to eligible directors, senior officers, employees and consultants of the
  Company (Participants). The exercise periods and vesting periods of options
  granted under the Plan are to be determined by the Company with approval from
  the Board of Directors. The expiration of any option will be accelerated if the
  participants employment or other relationship with the Company terminates. The
  exercise price of an option is to be set by the Company at the time of grant but
  shall not be lower than the market price (as defined in the Plan) at the time of
  grant.

The following table summarizes information about outstanding
  stock option transactions:

|                                   |  | Number
      of |   |  | Weighted average | 
|---------------------------------- |  | --------------- | - |  | ---------------- | 
|                                   |  | options         |   |  | exercise price   | 
|                                   |  |                 |   |  | $                | 
|Balance at January 1, 2011         |  | 6,946,500       |   |  | 0.40             | 
|Options granted                    |  | 3,212,500       |   |  | 0.35             | 
|Options exercised                  |  | (1,150,000      | ) |  | 0.35             | 
|Options forfeited                  |  | (200,000        | ) |  | 0.40             | 
|Options expired                    |  | (305,000        | ) |  | 0.45             | 
|Balance at
      December 31, 2011 |  | 8,504,000       |   |  | 0.39             | 
|Options granted                    |  | 9,660,002       |   |  | 0.25             | 
|Options exercised (Note 13)        |  | (925,000        | ) |  | 0.38             | 
|Options cancelled                  |  | (2,335,001      | ) |  | 0.43             | 
|Options forfeited                  |  | (514,375        | ) |  | 0.42             | 
|Balance at December 31, 2012       |  | 14,389,626      |   |  | 0.29             | 
|Options granted                    |  | 3,750,000       |   |  | 0.18             | 
|Options cancelled                  |  | (5,919,000      | ) |  | 0.39             | 
|Options forfeited                  |  | (1,598,125      | ) |  | 0.30             | 
|Balance at December 31, 2013       |  | 10,622,501      |   |  | 0.20             | 

Details of the outstanding and exercisable stock options as
  at December 31, 2013 are as follows:

|      |  | Outstanding      |  |  | Exercisable      | 
|----- |  | ---------------- |  |  | ---------------- | 
|      |  |                  |  |  | Weighted average | 
|      |  | Number           |  |  | exercise         | 
|      |  | of
      options |  |  | price            | 
|      |  |                  |  |  | $                | 
|$0.18 |  | 3,050,000        |  |  | 0.18             | 
|$0.20 |  | 7,522,501        |  |  | 0.20             | 
|$0.45 |  | 50,000           |  |  | 0.45             | 
|      |  | 10,622,501       |  |  | 0.20             | 

F-31

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 14  STOCK OPTIONS AND SHARE PURCHASE WARRANTS
  (continued)

(a)Stock Options
  (continued)

The fair value of the options issued during the period was
  estimated using the Black Scholes option pricing model with the following
  weighted average inputs:

|For the year ended December 31 |   | 2013       |  |   | 2012       |  |   | 2011       | 
|------------------------------ | - | ---------- |  | - | ---------- |  | - | ---------- | 
|                               |   |            |  |   |            |  |   |            | 
|Fair value at grant date       | $ | 0.07       |  | $ | 0.08       |  | $ | 0.15       | 
|Exercise price                 | $ | 0.18       |  | $ | 0.25       |  | $ | 0.35       | 
|Share price                    | $ | 0.18       |  | $ | 0.25       |  | $ | 0.36       | 
|Expected volatility            |   | 81.18%     |  |   | 82.70%     |  |   | 74.33%     | 
|Expected option life           |   | 1.42 years |  |   | 1.59 years |  |   | 2.10 years | 
|Dividends                      |   | 0.0%       |  |   | 0.0%       |  |   | 0.0%       | 
|Risk-free interest rate        |   | 1.01%      |  |   | 1.12%      |  |   | 1.65%      | 

Expected volatility is based on historical volatility and
  average weekly stock prices were used to calculate volatility. Management
  believes that the annualized weekly average of volatility is the best measure of
  expected volatility. A weighted average forfeiture rate of 6.48% (2012  5.90%
  and 2011  9.92%) is used when recording stock based compensation.

(b)Share Purchase Warrants

The following table summarizes information about warrant
  transactions:

|                                   |  | Number
      of |   |  | Weighted average | 
|---------------------------------- |  | --------------- | - |  | ---------------- | 
|                                   |  | warrants        |   |  | exercise price   | 
|                                   |  |                 |   |  | $                | 
|Balance at January 1, 2011         |  | 21,010,455      |   |  | 0.44             | 
|Warrants granted                   |  | 5,505,002       |   |  | 0.37             | 
|Warrants exercised                 |  | (4,551,841      | ) |  | 0.37             | 
|Warrants expired                   |  | (3,540,026      | ) |  | 0.48             | 
|Balance at December 31, 2011       |  | 18,423,590      |   |  | 0.43             | 
|Warrants granted                   |  | 13,597,729      |   |  | 0.40             | 
|Warrants exercised                 |  | (2,968,683      | ) |  | 0.37             | 
|Balance at December 31, 2012       |  | 29,052,636      |   |  | 0.42             | 
|Warrants granted                   |  | 7,291,667       |   |  | 0.24             | 
|Balance at
      December 31, 2013 |  | 36,344,303      |   |  | 0.40             | 

Details of the outstanding and exercisable warrants as at
  December 31, 2013 are as follows:

|         |  | Outstanding       |  |  | Exercisable      | 
|-------- |  | ----------------- |  |  | ---------------- | 
|         |  |                   |  |  | Weighted average | 
|         |  | Number            |  |  | exercise         | 
|         |  | of
      warrants |  |  | price            | 
|         |  |                   |  |  | $                | 
|$0.24    |  | 7,291,667         |  |  | 0.24             | 
|$0.40    |  | 3,642,856         |  |  | 0.40             | 
|$0.55    |  | 4,015,151         |  |  | 0.55             | 
|$0.40 US |  | 7,700,000         |  |  | 0.42             | 
|$0.40 US |  | 13,597,729        |  |  | 0.42             | 
|$0.46 US |  | 96,900            |  |  | 0.49             | 
|         |  | 36,344,303        |  |  | 0.40             | 

F-32

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 14  STOCK OPTIONS AND SHARE PURCHASE WARRANTS
  (continued)

Warrants that have their exercise prices denominated in
  currencies other than the Companys functional currency of Canadian dollars are
  accounted for as derivative financial liabilities, other than agents warrants.

NOTE 15  CONTRIBUTED SURPLUS

Contributed surplus is used to recognize the value of stock
  option grants and share warrants prior to exercise. Details of changes in the
  Company's contributed surplus balance are as follows:

|                                               |  | $     |  
|---------------------------------------------- |  | ----- | -
|Balance at January 1, 2011                     |  | 7,639 |  
|Stock based compensation                       |  | 662   |  
|Exercise of options  value reallocation       |  | (167  | )
|Balance at December 31, 2011                   |  | 8,134 |  
|Stock based compensation                       |  | 866   |  
|Exercise of
      options  value reallocation |  | (198  | )
|Balance at December 31, 2012                   |  | 8,802 |  
|Stock based
      compensation                 |  | 348   |  
|Balance at December 31, 2013                   |  | 9,150 |  

NOTE 16  SUPPLEMENTAL INFORMATION

(a)Changes in working
  capital consisted of the following:

|                                         |  | Year ended December 31 |  
|---------------------------------------- |  | ---------------------- | -
|                                         |  | **2013**               |  
|                                         |  | $                      |  
|Changes in working capital:              |  |                        |  
|Accounts receivable                      |  | (282                   | )
|Share subscription receivable            |  | -                      |  
|Prepaids and deposits                    |  | 43                     |  
|Accounts payable and accrued liabilities |  | 604                    |  
|                                         |  | 365                    |  
|                                         |  |                        |  
|Comprised of:                            |  |                        |  
|Operating activities                     |  | 441                    |  
|Investing activities                     |  | (76                    | )
|Financing activities                     |  | -                      |  
|                                         |  | 365                    |  
|                                         |  |                        |  
|Other cash flow information:             |  |                        |  
|Cash paid for interest                   |  | 176                    |  
|Income taxes paid                        |  | -                      |  

F-33

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 16  SUPPLEMENTAL INFORMATION (continued)

(b)Per share amounts:

Basic loss per share amounts has been calculated by dividing
  the net loss for the year attributable to the shareholders of the Company by the
  weighted average number of common shares outstanding. Stock options and share
  purchase warrants were excluded from the calculation. The basic and diluted net
  loss per share is the same as there are no dilutive effects on losses. The
  following table summarizes the common shares used in calculating basic and
  diluted net loss per common share:

|                                           |  | Year ended December 31, | 
|------------------------------------------ |  | ----------------------- | 
|                                           |  | 2013                    | 
|Weighted average common shares outstanding |  | $                       | 
|Basic                                      |  | 148,916,374             | 
|Diluted                                    |  | 148,916,374             | 

(c)The Company had the
  following non-cash transaction:

|                                                                                     |  | **Year ended December 31,** | 
|------------------------------------------------------------------------------------ |  | --------------------------- | 
|                                                                                     |  | **2013**                    | 
|                                                                                     |  | $                           | 
|Non-cash financing for drilling operations of property and
      equipment (note 12) |  | 443                         | 

NOTE 17  RELATED PARTY TRANSACTIONS

During the years ended December 31, 2013, 2012 and 2011, the
  Company entered into the following transactions with related parties:

|(a) | Compensation awarded to key management included a total
      of salaries and consulting fees of $1,173,000 (2012 - $1,194,000 and 2011
      - $1,772,000) and non-cash stock-based compensation of $302,000 (2012 -
      $412,000 and 2011 - $451,000). Key management includes the Companys
      officers and directors. The salaries and consulting fees are included in
      general and administrative expenses.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                           
|(b) | The Company incurred a total of $Nil (2012 - $Nil and
      2011 - $2,000) in finance costs to a company controlled by an officer of
      the Company.                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                           
|(c) | Included in interest and other income is $21,200 (2012 -
      $30,000 and 2011 - $30,000) received from the companies controlled by
      officers of the Company for rental income.                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                           
|(d) | In December 2009, a company controlled by the CEO of the
      Company (HEC) became a 5% working interest partner in the Woodrush
      property. Included in accounts payable and accrued liabilities at December
      31, 2013 is $10,000 (2012 - $20,000 and 2011 - $53,668) owing to
      HEC.                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                           
|(e) | With respect to the private placement of 11,010,000 units
      issued at US$0.30 per unit completed in February 2011, directors and
      officers of the Company purchased 2,000,000 units of this offering (see
      Note 13).                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                           
|(f) | In December 2011, HEC exercised 250,000 warrants with an
      exercise price of US$0.35 each that were issued in February
      2011.                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                           
|(g) | In January 2012, directors and officers of the Company
      exercised 750,000 warrants with an exercise price of US$0.35 each that
      were issued in February 2011.                                                                                                                                                                                                                                                   

F-34

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 17  RELATED PARTY TRANSACTIONS (continued)

|(h) | On December 31, 2012, Dejour USA entered into a financial
      contract with a U.S. oil and gas drilling fund (Drilling Fund) whereby
      the parties agreed to form an industry-standard drilling partnership for
      purposes of drilling three wells and completing four wells in the State of
      Colorado (note 12). A director of the Company provides investment advice
      for a fee to the Drilling Fund. The director abstained from voting when
      the Board of Directors approved the Company signing a financial contract
      with the Drilling Fund.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(i) | In December 2013, Dejour USA sold its working interests
      in certain non-core oil and gas leases in the area of Colorado to a
      related U.S. oil and gas corporation for gross proceeds of $477,000
      (US$450,000). A director of the Company is the President of the U.S. oil
      and gas corporation. The sale price represented the higher of two
      competing offers to purchase the oil and gas leases in Colorado and the
      director of the Company abstained from voting to approve the Companys
      sale of the leases.                           

NOTE 18  INCOME TAXES

The actual income tax provisions differ from the expected
  amounts calculated by applying the Canadian combined federal and provincial
  corporate income tax rates to the Companys loss before income taxes. The
  components of these differences are as follows:

|                                                                   |  | 2013   |   |  | 2012    |   |  | 2011    |  
|------------------------------------------------------------------ |  | ------ | - |  | ------- | - |  | ------- | -
|                                                                   |  | $      |   |  | $       |   |  | $       |  
|Loss before income taxes                                           |  | (2,576 | ) |  | (11,752 | ) |  | (11,230 | )
|Corporate tax rate                                                 |  | 25.21% |   |  | 28.48%  |   |  | 33.36%  |  
|                                                                   |  |        |   |  |         |   |  |         |  
|Expected tax recovery                                              |  | (649   | ) |  | (3,347  | ) |  | (3,747  | )
|Increase (decrease) resulting from:                                |  |        |   |  |         |   |  |         |  
|Differences in foreign tax rates and change in effective tax rates |  | (352   | ) |  | 475     |   |  | (319    | )
|Impact of
      foreign exchange rate changes                      |  | (452   | ) |  | 259     |   |  | (220    | )
|Change in unrecognized
      deferred tax assets                   |  | 2,251  |   |  | 2,799   |   |  | 3,583   |  
|Stock
      based compensation and share issue costs               |  | (197   | ) |  | (197    | ) |  | 221     |  
|Non deductible amounts                                             |  | (601   | ) |  | (121    | ) |  | 347     |  
|Other adjustments                                                  |  |        |   |  | 132     |   |  | (52     | )
|Deferred income
      tax recovery                                 |  | -      |   |  | -       |   |  | (187    | )

No deferred tax asset has been recognized in respect of the
  following losses and deductable temporary differences as it is not considered
  probable that sufficient future taxable profit will allow the deferred tax
  assets to be recovered.

|                                               |  | **2013** |  |  | 2012   | 
|---------------------------------------------- |  | -------- |  |  | ------ | 
|                                               |  | $        |  |  | $      | 
|Deferred income tax assets                     |  |          |  |  |        | 
|Non-capital losses available                   |  | 20,026   |  |  | 11,290 | 
|Capital losses
      available                 |  | 1,072    |  |  | 1,030  | 
|Resource tax pools in excess of net book value |  | 2,495    |  |  | 8,928  | 
|Share issue costs and other                    |  | 153      |  |  | 247    | 
|Unrecognized deferred tax assets               |  | 23,746   |  |  | 21,495 | 

F-35

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 18  INCOME TAXES (continued)

The Company has the approximate amounts of tax pools available
  as follows:

|As at December 31                        |  | 2013    |  |  | 2012   | 
|---------------------------------------- |  | ------- |  |  | ------ | 
|                                         |  | $       |  |  | $      | 
|Canada:                                  |  |         |  |  |        | 
|Exploration and development expenditures |  | 15,050  |  |  | 17,218 | 
|Unamortized share issue costs            |  | 858     |  |  | 988    | 
|Capital losses                           |  | 8,242   |  |  | 8,242  | 
|Non-capital losses                       |  | 24,918  |  |  | 22,762 | 
|                                         |  | 49,068  |  |  | 49,210 | 
|                                         |  |         |  |  |        | 
|United States:                           |  |         |  |  |        | 
|Exploration and development expenditures |  | 17,039  |  |  | 33,287 | 
|Non-capital losses                       |  | 36,112  |  |  | 15,324 | 
|                                         |  | 53,151  |  |  | 48,611 | 
|                                         |  |         |  |  |        | 
|Total                                    |  | 102,219 |  |  | 97,821 | 

The exploration and development expenditures at December 31,
  2013 can be carried forward to reduce future income taxes indefinitely. The
  non-capital losses for income tax purposes expire as follows:

|     |  | Canada |  |  | United
      States |  |  | Total  | 
|---- |  | ------ |  |  | ------------------- |  |  | ------ | 
|     |  | $      |  |  | $                   |  |  | $      | 
|2015 |  | 1,729  |  |  | -                   |  |  | 1,729  | 
|2026 |  | -      |  |  | 2,146               |  |  | 2,146  | 
|2027 |  | 4,152  |  |  | 2,861               |  |  | 7,013  | 
|2028 |  | 4,674  |  |  | 215                 |  |  | 4,889  | 
|2029 |  | 3,373  |  |  | 2,769               |  |  | 6,142  | 
|2030 |  | 2,070  |  |  | 2,353               |  |  | 4,423  | 
|2031 |  | 2,407  |  |  | 2,369               |  |  | 4,776  | 
|2032 |  | 4,357  |  |  | 3,669               |  |  | 8,026  | 
|2033 |  | 2,156  |  |  | 19,730              |  |  | 21,886 | 
|     |  | 24,918 |  |  | 36,112              |  |  | 61,030 | 

The Company does not recognize deferred tax assets related to
  the foregoing tax pools because it is not probable that future taxable profit
  will be available against which the tax pools can be utilized.

NOTE 19  COMMITMENTS

The Company has entered into lease agreements on office
  premises for its various locations. Future minimum annual lease payments under
  the leases are as follows:

|     |  | $   | 
|---- |  | --- | 
|2014 |  | 187 | 
|2015 |  | 52  | 
|     |  | 239 | 

F-36

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 20  PERSONNEL EXPENSES

The aggregate compensation expense of key management was as
  follows:

|                                               |  | Year ended December 31 |  
|---------------------------------------------- |  | ---------------------- | -
|                                               |  | 2013                   |  
|                                               |  | $                      |  
|Salaries, benefits and fees                    |  | 1,173                  |  
|Non-cash
      stock-based compensation        |  | 302                    |  
|                                               |  | 1,475                  |  
|Capitalized
      portion of salaries and fees |  | (251                   | )
|                                               |  | 1,224                  |  

NOTE 21  OPERATING SEGMENTS

Segment information is provided on the basis of geographic
  segments as the Company manages its business through two geographic regions 
  Canada and the United States. The two geographic segments presented reflect the
  way in which the Companys management reviews business performance. The
  Companys revenue and losses of each geographic segment are as follows:

|                                              |  |        |   |  | Canada |   |  |        |   |  |        |   |  | United
      States |   |  |        |   |  |        |   |  | Total   |   |  |         |  
|--------------------------------------------- |  | ------ | - |  | ------ | - |  | ------ | - |  | ------ | - |  | ------------------- | - |  | ------ | - |  | ------ | - |  | ------- | - |  | ------- | -
|                                              |  | 2013   |   |  | 2012   |   |  | 2011   |   |  | 2013   |   |  | 2012                |   |  | 2011   |   |  | 2013   |   |  | 2012    |   |  | 2011    |  
|                                              |  | $      |   |  | $      |   |  | $      |   |  | $      |   |  | $                   |   |  | $      |   |  | $      |   |  | $       |   |  | $       |  
|Year ended December 31                        |  |        |   |  |        |   |  |        |   |  |        |   |  |                     |   |  |        |   |  |        |   |  |         |   |  |         |  
|Revenues                                      |  | 6,039  |   |  | 5,766  |   |  | 7,196  |   |  | 1,467  |   |  | -                   |   |  | -      |   |  | 7,506  |   |  | 5,766   |   |  | 7,196   |  
|Segmented income (loss)                       |  | (1,552 | ) |  | (8,361 | ) |  | (4,662 | ) |  | (1,025 | ) |  | (3,390              | ) |  | (6,381 | ) |  | (2,577 | ) |  | (11,752 | ) |  | (11,043 | )
|Amortization, depletion and impairment losses |  | 2,714  |   |  | 7,927  |   |  | 3,331  |   |  | 916    |   |  | 2,749               |   |  | 5,321  |   |  | 3,630  |   |  | 10,676  |   |  | 8,652   |  
|Interest expense                              |  | 669    |   |  | 233    |   |  | 440    |   |  | 486    |   |  | 1                   |   |  | -      |   |  | 1,155  |   |  | 234     |   |  | 440     |  
|Deferred tax recovery                         |  | -      |   |  | -      |   |  | 187    |   |  | -      |   |  | -                   |   |  | -      |   |  | -      |   |  | -       |   |  | 187     |  
|                                              |  |        |   |  |        |   |  |        |   |  |        |   |  |                     |   |  |        |   |  |        |   |  |         |   |  |         |  
|As at December 31                             |  |        |   |  |        |   |  |        |   |  |        |   |  |                     |   |  |        |   |  |        |   |  |         |   |  |         |  
|Total capital expenditures                    |  | 37     |   |  | 1,423  |   |  | 6,480  |   |  | 2,341  |   |  | 9,389               |   |  | 1,833  |   |  | 2,378  |   |  | 10,812  |   |  | 8,313   |  

NOTE 22  ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive income (loss)
  were as follows:

|As at                                   |  | December 31, 2013 |  |  | December 31, 2012 |   |  | December 31, 2011 | 
|--------------------------------------- |  | ----------------- |  |  | ----------------- | - |  | ----------------- | 
|                                        |  | $                 |  |  | $                 |   |  | $                 | 
|Foreign currency translation adjustment |  | 514               |  |  | (568              | ) |  | 393               | 
|                                        |  | 514               |  |  | (568              | ) |  | 393               | 

NOTE 23  DETERMINATION OF FAIR VALUES

A number of the Companys accounting policies and disclosures
  require the determination of fair value. Fair values have been determined for
  measurement and/or disclosure purposes based on the following methods. When
  applicable, further information about the assumptions made in determining fair
  values is disclosed in the notes specific to that financial asset or financial
  liability. Due to the use of subjective judgments and uncertainties in the
  determination of these fair values the values should not be interpreted as being
  realizable in an immediate settlement of the financial instruments.

F-37

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 23  DETERMINATION OF FAIR VALUES (continued)

The Company classifies the fair value of financial instruments
  according to the following hierarchy based on the amount of observable inputs
  used to value the instruments:

| | Level 1: Values based on unadjusted quoted prices in
      active markets that are accessible at the measurement date for identical
      assets or liabilities.                                              
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                               
| | Level 2: Values based on quoted prices in markets that
      are not active or model inputs that are observable either directly or
      indirectly for substantially the full term of the asset or liability.
|  |                                                                                                                                                                                                               
| | Level 3: Values based on prices or valuation techniques
      that require inputs that are both unobservable and significant to the
      overall fair value measurement.                                     

The recoverable amount of developed and producing properties
  was determined based on fair value less costs to sell (see Note 6). The model
  has significant unobservable inputs (level 3).

At December 31, 2013 and December 31, 2012, fair value of
  warrant liability is measured using the Hull-White Trinomial option pricing
  model with significant unobservable inputs (Level 3). The derivative liability
  is measured using an option pricing model with significant unobservable inputs
  (Level 3). The financial contract liability is measured at the initial
  transaction price, which is deemed to be fair value, and subsequently measured
  based on netbacks in accordance with the Joint Operating Agreement. This model
  also has significant unobservable inputs (Level 3).

Included in E&E assets as at December 31, 2013 of
  $3,281,000 (December 31, 2012 - $3,890,000) is carried at fair value. Included
  in property and equipment as at December 31, 2013 of $20,386,000 (December 31,
  2012 - $21,144,000) is carried at fair value.

NOTE 24  FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT

The Company operates in the United States, giving rise to
  exposure to market risks from changes in foreign currency rates. Currently, the
  Company does not use derivative instruments to reduce its exposure to foreign
  currency risk.

The Company also has exposure to a number of risks from its use
  of financial instruments including: credit risk, liquidity risk, and market
  risk. This note presents information about the Companys exposure to each of
  these risks and the Companys objectives, policies and processes for measuring
  and managing risk, and the Companys management of capital.

(a)Credit Risk

Credit risk arises from credit exposure to receivables due from
  joint venture partners and marketers included in accounts receivable. The
  maximum exposure to credit risk is equal to the carrying value of the financial
  assets.

The Company is exposed to third party credit risk through its
  contractual arrangements with its current or future joint venture partners,
  marketers of its petroleum and natural gas production and other parties. In the
  event such entities fail to meet their contractual obligations to the Company,
  such failures may have a material adverse effect on the Companys business,
  financial condition, and results of operations.

The objective of managing the third party credit risk is to
  minimize losses in financial assets. The Company assesses the credit quality of
  the partners, taking into account their financial position, past experience, and
  other factors. The Company mitigates the risk of non-collection of certain
  amounts by obtaining the joint venture partners share of capital expenditures
  in advance of a project and by monitoring accounts receivable on a regular
  basis. As at December 31, 2013 and 2012, no accounts receivable has been deemed
  uncollectible or written off during the year.

As at December 31, 2013, the Companys receivables consist of
  $4,000 (2012 - $30,000) from joint interest partners, $760,000 (2012 - $494,000)
  from oil and natural gas marketers and $67,000 (2012 - $25,000) from other trade
  receivables.

F-38

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 24  FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT
  (continued)

(a)    Credit Risk (continued)

The Company considers all amounts outstanding for more than 90
  days as past due. Currently, there is no indication that amounts are
  non-collectable; thus an allowance for doubtful accounts has not been set up. As
  at December 31, 2013, $Nil (2012 - $Nil) of accounts receivable are past due.

(b)Liquidity Risk

Liquidity risk is the risk that the Company will not be able to
  meet its financial obligations as they are due. The nature of the oil and gas
  industry is capital intensive and the Company maintains and monitors a certain
  level of cash flow to finance operating and capital expenditures.

The Companys ongoing liquidity and cash flow are impacted by
  various events and conditions. These events and conditions include but are not
  limited to commodity price fluctuations, general credit and market conditions,
  operation and regulatory factors, such as government permits, the availability
  of drilling and other equipment, lands and pipeline access, weather, and
  reservoir quality.

To mitigate the liquidity risk, the Company closely monitors
  its credit facility, production level and capital expenditures to ensure that it
  has adequate liquidity to satisfy its financial obligations.

The following are the contractual maturities of financial
  liabilities as at December 31, 2013:

|                                         |  | Carrying amount |  |  | 2014  | 
|---------------------------------------- |  | --------------- |  |  | ----- | 
|                                         |  | $               |  |  | $     | 
|Accounts payable and accrued liabilities |  | 2,623           |  |  | 2,623 | 
|Bank credit facilities                   |  | 2,900           |  |  | 2,900 | 
|Loan facility                            |  | 2,911           |  |  | 3,500 | 
|                                         |  | 8,434           |  |  | 9,023 | 

For the contractual maturities of financial contract liability
  as at December 31, 2013, see note 12 for details.

(c)Market Risk

Market risk is the risk that changes in market prices, such as
  foreign exchange rates, commodity prices, and interest rates will affect the
  Companys net earnings. The objective of market risk management is to manage and
  control market risk exposures within acceptable limits, while maximizing
  returns. The Company utilizes financial derivatives to manage certain market
  risks. All such transactions are conducted in accordance with the risk
  management policy that has been approved by the Board of Directors.

(i)    Foreign Currency Exchange Risk

Foreign currency exchange rate risk is the risk that the fair
  value of financial instruments or future cash flows will fluctuate as a result
  of changes in foreign exchange rates. Although substantially all of the
  Companys oil and natural gas sales are denominated in Canadian dollars, the
  underlying market prices in Canada for oil and natural gas are impacted by
  changes in the exchange rate between the Canadian and United States dollars.
  Given that changes in exchange rate have an indirect influence, the impact of
  changing exchange rates cannot be accurately quantified. The Company had no
  forward exchange rate contracts in place as at or during the year ended December
  31, 2013 and 2012.

F-39

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 24  FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT
  (continued)

(c)    Market Risk (continued)

(i)    Foreign Currency Exchange Risk
  (continued)

The Company was exposed to the following foreign currency risk
  at December 31:

|                                         |  | 2013   |   |  | 2012  |  
|---------------------------------------- |  | ------ | - |  | ----- | -
|Expressed in
      foreign currencies    |  | CND$   |   |  | CND$  |  
|Cash and cash equivalents                |  | 376    |   |  | 1,031 |  
|Accounts receivable                      |  | 421    |   |  | 30    |  
|Accounts payable and accrued liabilities |  | (1,613 | ) |  | (869  | )
|Balance sheet
      exposure             |  | (816   | ) |  | 192   |  

The following foreign exchange rates applied for the year ended
  and as at December 31:

|                                 |  | 2013   |  |  | 2012   | 
|-------------------------------- |  | ------ |  |  | ------ | 
|December 31, reporting date rate |  | 1.0636 |  |  | 0.9949 | 
|YTD average USD
      to CAD     |  | 1.0301 |  |  | 0.9999 | 

The Company has performed a sensitivity analysis on its foreign
  currency denominated financial instruments. Based on the Companys foreign
  currency exposure noted above and assuming that all other variables remain
  constant, a 10% appreciation of the US dollar against the Canadian dollar would
  result in the increase of net loss of $82,000 at December 31, 2013 (2012 -
  $19,000 decrease of net loss and 2011 - $50,000 decrease of net loss). For a 10%
  depreciation of the above foreign currencies against the Canadian dollar,
  assuming all other variables remain constant, there would be an equal and
  opposite impact on net loss.

(ii)   Interest Rate Risk

Interest rate risk is the risk that future cash flows will
  fluctuate as a result of changes in market interest rates. At the year ended
  December 31, 2013, the Company was exposed to interest rate fluctuations on its
  bank credit facility which bore a floating rate of interest. Assuming all other
  variables remain constant, an increase or decrease of 1% in market interest rate
  at December 31, 2013 would have increased or decreased net loss by $41,000. The
  Company had no interest rate swaps or financial contracts in place at or during
  the year ended December 31, 2013 and 2012.

(iii)  Commodity Price Risk

Revenues and consequently cash flows fluctuate with commodity
  prices and the US/Canadian dollar exchange rate. Commodity prices are determined
  on a global basis and circumstances that occur in various parts of the world are
  outside of the control of the Company. The Company may protect itself from
  fluctuations in prices by using the financial derivative sales contracts. The
  Company may enter into commodity price contracts to manage the risks associated
  with price volatility and thereby protect its cash flows used to fund its
  capital program. Assuming all other variables remain constant, an increase or
  decrease of oil price of $1 per bbl and gas price of $0.01 per mcf at December
  31, 2013 would have decreased or increased net loss by $85,000. The Company had
  no commodity contracts in place at December 31, 2013.

F-40

---

|DEJOUR ENERGY INC.                                                                               
|-------------------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                                   
|For the Year Ended December 31, 2013, 2012 and 2011                                              
|(All tabular amounts are expressed in thousands of
      Canadian dollars unless otherwise noted)
|                                                                                                 

NOTE 24  FINANCIAL INSTRUMENTS AND CAPITAL MANAGEMENT
  (continued)

(d)Capital Management
  Strategy

The Companys policy on capital management is to maintain a
  prudent capital structure so as to maintain financial flexibility, preserve
  access to capital markets, maintain investor, creditor and market confidence,
  and to allow the Company to fund future developments. The Company considers its
  capital structure to include share capital, cash and cash equivalents, bank line
  of credit, and working capital. In order to maintain or adjust capital
  structure, the Company may from time to time issue shares or enter into debt
  agreements and adjust its capital spending to manage current and projected
  operating cash flows and debt levels.

The Companys current borrowing capacity is based on the
  lenders review of the Companys oil and gas reserves. The Company is also
  subject to various covenants. Compliance with these covenants is monitored on a
  regular basis and at December 31, 2013, the Company is in compliance with the
  covenant for its bank credit facility (Note 8) and is in default of the covenant
  for its loan facility (note 10).

The Companys share capital is not subject to any external
  restrictions. The Company has not paid or declared any dividends, nor are any
  contemplated in the foreseeable future. There have been no changes to the
  Companys capital management strategy during the year ended December 31, 2013.

NOTE 25  SUBSEQUENT EVENTS

|(a) | Subsequent to December 31, 2013, the Company completed a
      non-brokered private placement of 7 million common shares at $0.11 per
      share. Gross proceeds raised were $770,000. In connection with this
      private placement, the Company paid finder fees of $27,000 in cash.
      Directors and Officers purchased 900,000 common shares of this
      placement.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(b) | On March 5, 2014, a lawsuit was initiated against the
      Company and its wholly-owned US subsidiary for alleged breach of a
      December 12, 2013 Letter of Intent with respect to a proposed farmin
      arrangement on oil and gas properties owned by the subsidiary and related
      legal claims.                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company is of the opinion the lawsuits claims are
      frivolous and vexatious. The lawsuit is not expected to have a material
      adverse affect on the financial statements.                                                                                                                                                                                         

F-41

---

SUPPLEMENTARY OIL AND GAS RESERVE ESTIMATION AND DISCLOSURES
   ASC 932 (UNAUDITED)

Select supplementary oil and gas reserve estimation and
  disclosure are provided in accordance with U.S. disclosure requirements. The
  standards of the SEC require that proved reserves be estimated using existing
  economic conditions (constant pricing). Based on this methodology, the Companys
  results have been calculated utilizing the 12-month average price for each of
  the years presented within this supplementary disclosure.

The Companys 2013, 2012 and 2011 financial results were
  prepared in accordance with IFRS.

The Company reports in Canadian currency and therefore the
  Reserves Data pertaining to the Companys reserves in the United States set
  forth in the tables below has been converted to Canadian dollars at the
  prevailing conversion rate at December 31, 2013. The conversion rate used per
  Bank of Canada is 1.0636.

(a)Net proved oil and gas reserves

As at December 31, 2013, the Companys oil and gas reserves are
  located in both Canada and the United States.

GLJ Petroleum Consultants (GLJ) of Calgary, Alberta,
  independent petroleum engineering consultants based in Calgary, Alberta were
  retained by the Company to evaluate the Canadian properties of the Company.
  Their report, titled Reserves Assessment and Evaluation of Oil and Gas
  Properties, Dejour Energy (Alberta) Ltd., is dated February 19, 2014 and has an
  effective date of December 31, 2013.

Gustavson Associates (Gustavson), an independent petroleum
  engineering consultants based in Denver, Colorado were retained by the Company
  to evaluate the US properties of the Company. Their report, titled Reserve
  Estimate and Financial Forecast as to Dejours Interests in the Kokopelli Field
  Area, Garfield County, Colorado is dated March 14, 2014 and has an effective
  date of January 1, 2014.

In accordance with the US Securities and Exchange Commissions
  (SEC) definitions and guidelines, GLJ and Gustavson, have used constant prices
  and costs in estimating the reserves and future net cash flows contained in
  their reports. Actual future net cash flows will be affected by other factors,
  such as actual production levels, supply and demand for oil and natural gas,
  curtailments or increases in consumption by oil and natural gas purchasers,
  changes in governmental regulation or taxation and the impact of inflation on
  costs.

The tables in this section set forth oil and gas information
  prepared by the Company in accordance with U.S. disclosure standards, including
  Accounting Standards Codification 932 (ASC 932). Reserves have been estimated
  in accordance with the US Securities and Exchange Commissions (SEC)
  definitions and guidelines. The changes in our net proved reserve quantities are
  outlined below.

Net reserves are Dejour royalty and working interest remaining
  reserves, less all Crown, freehold, and overriding royalties and interests that
  are not owned by Dejour.

Proved reserves are those estimated quantities of crude oil,
  natural gas and natural gas liquids that can be estimated with a high degree of
  certainty to be economically recoverable under existing economic and operating
  conditions. It is likely that the actual remaining quantities recovered will
  exceed the estimated proved reserves.

Proved developed reserves are those reserves that are expected
  to be recovered from existing wells and installed facilities or, if facilities
  have not been installed, that would involve a low expenditure (e.g. when
  compared to the cost of drilling a well) to put the reserves on production.
  Developed reserves may be subdivided into producing and non-producing.

Proved undeveloped reserves are those reserves that are
  expected to be recovered from known accumulations where a significant
  expenditure (e.g. when compared to the cost of drilling a well) is required to
  render them capable of production.

The Company cautions users of this information as the process
  of estimating crude oil and natural gas reserves is subject to a level of
  uncertainty. The reserves are based on economic and operating conditions;
  therefore, changes can be made to future assessments as a result of a number of
  factors, which can include new technology, changing economic conditions and
  development activity.

---

|(a) | CONSTANT PRICES AND COSTS - YEAR ENDED DECEMBER 31,
      2013
|--- | --------------------------------------------------------------

Net Proved Developed andProved Undeveloped ReservesCanada
      
      
      United States
      
      
      TotalLight and
      
      
      Natural Gas
      
      
      
      
      
      Barrels of Oil
      
      
      
      
      
      Natural Gas
      
      
      
      
      
      Barrels of Oil
      
      
      Light and
      
      
      
      
      
      Natural Gas
      
      
      
      
      
      Barrels of OilMedium Oil
      
      
      Liquids
      
      
      Natural Gas
      
      
      Equivalent
      
      
      Condensate
      
      
      Liquids
      
      
      Natural Gas
      
      
      Equivalent
      
      
      Medium Oil
      
      
      Condensate
      
      
      Liquids
      
      
      Natural Gas
      
      
      Equivalent(Mbbl)
      
      
      (Mbbl)
      
      
      (MMcf)
      
      
      (Mboe)
      
      
      (Mbbl)
      
      
      (Mbbl)
      
      
      (MMcf)
      
      
      (Mboe)
      
      
      (Mbbl)
      
      
      (Mbbl)
      
      
      (Mbbl)
      
      
      (MMcf)
      
      
      (Mboe)December 31, 2012
      
      243
      
      
      2
      
      
      165
      
      
      272
      
      
      340
      
      
      4,458
      
      
      40,938
      
      
      11,621
      
      
      243
      
      
      340
      
      
      4,460
      
      
      41,103
      
      
      11,893Extensions
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      283
      
      
      1,726
      
      
      41,571
      
      
      8,938
      
      
      -
      
      
      283
      
      
      1,726
      
      
      41,571
      
      
      8,938Technical Revisions
      
      (56
      )
      
      2
      
      
      551
      
      
      38
      
      
      (36
      )
      
      (2,608
      )
      
      3,974
      
      
      (1,982
      )
      
      (56
      )
      
      (36
      )
      
      (2,606
      )
      
      4,525
      
      
      (1,944
      )Dispositions
      
      .-
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (11
      )
      
      (109
      )
      
      (29
      )
      
      -
      
      
      -
      
      
      (11
      )
      
      (109
      )
      
      (29
      )Economic Factors
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      4
      
      
      33
      
      
      302
      
      
      87
      
      
      -
      
      
      4
      
      
      33
      
      
      302
      
      
      87Production
      
      (73
      )
      
      (2
      )
      
      (250
      )
      
      (117
      )
      
      (1
      )
      
      (2
      )
      
      (65
      )
      
      (14
      )
      
      (73
      )
      
      (1
      )
      
      (4
      )
      
      (315
      )
      
      (131
      )December 31, 2013
      
      114
      
      
      2
      
      
      466
      
      
      194
      
      
      590
      
      
      3,596
      
      
      86,611
      
      
      18,621
      
      
      114
      
      
      590
      
      
      3,598
      
      
      87,077
      
      
      18,814Developed Producing
      
      114
      
      
      2
      
      
      466
      
      
      194
      
      
      3
      
      
      15
      
      
      367
      
      
      79
      
      
      114
      
      
      3
      
      
      17
      
      
      833
      
      
      273Developed Non-producing
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -Undeveloped
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      587
      
      
      3,581
      
      
      86,243
      
      
      18,542
      
      
      -
      
      
      587
      
      
      3,581
      
      
      86,243
      
      
      18,542Total
      
      114
      
      
      2
      
      
      466
      
      
      194
      
      
      590
      
      
      3,596
      
      
      86,610
      
      
      18,621
      
      
      114
      
      
      590
      
      
      3,598
      
      
      87,076
      
      
      18,815


(1) Canada  Increase in Total Proved
  Natural Gas Reserves of 551 MMcf:

During the year ended December 31,
  2013, an expected increase in natural gas reserves as there are more favorable
  decline curves and additional solution gas from the proved undeveloped location.
  GLJ increased, by way of a technical revision, the Companys total proved
  natural gas reserves by 551 MMcf.

(2) United States  Increase in Total
  Proved Natural Gas Liquids Reserves of 1,726 Mbbls and Natural Gas Reserves of
  41,571 MMcfs:

During the year ended December 31,
  2013, an expected increase in the natural gas reserves and natural gas liquids
  reserves as this resulted from a successful 2013 drilling program which
  converted 47 probable drilling locations at December 31, 2012 to proven as
  at December 31, 2013. Gustavson increased, by way of an extension, the Companys
  total proved natural gas and natural gas liquids by 41,571 MMcfs and 1,726
  Mbbls, respectively.

---

CONSTANTPRICESANDCOSTS- YEARENDEDDECEMBER31,
  2012

Net Proved Developed andProved
        Undeveloped ReservesCanada
      
      
      United States
      
      
      TotalLight and
      
      
      Natural Gas
      
      
      
      
      
      Barrels of Oil
      
      
      
      
      
      Natural Gas
      
      
      
      
      
      Barrels of Oil
      
      
      Light and
      
      
      
      
      
      Natural Gas
      
      
      
      
      
      Barrels of OilMedium Oil
      
      
      Liquids
      
      
      Natural Gas
      
      
      Equivalent
      
      
      Condensate
      
      
      Liquids
      
      
      Natural Gas
      
      
      Equivalent
      
      
      Medium Oil
      
      
      Condensate
      
      
      Liquids
      
      
      Natural Gas
      
      
      Equivalent(Mbbl)
      
      
      (Mbbl)
      
      
      (MMcf)
      
      
      (Mboe)
      
      
      (Mbbl)
      
      
      (Mbbl)
      
      
      (MMcf)
      
      
      (Mboe)
      
      
      (Mbbl)
      
      
      (Mbbl)
      
      
      (Mbbl)
      
      
      (MMcf)
      
      
      (Mboe)December 31, 2011
      
      317
      
      
      4
      
      
      752
      
      
      446
      
      
      287
      
      
      3,863
      
      
      41,314
      
      
      11,035
      
      
      317
      
      
      287
      
      
      3,867
      
      
      42,066
      
      
      11,481Technical Revisions
      
      (18
      )
      
      (1
      )
      
      (306
      )
      
      (70
      )
      
      54
      
      
      705
      
      
      615
      
      
      862
      
      
      (18
      )
      
      54
      
      
      704
      
      
      309
      
      
      792Economic Factors
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (1
      )
      
      (110
      )
      
      (991
      )
      
      (276
      )
      
      -
      
      
      (1
      )
      
      (110
      )
      
      (991
      )
      
      (276
      )Production
      
      (56
      )
      
      (1
      )
      
      (281
      )
      
      (104
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (56
      )
      
      -
      
      
      (1
      )
      
      (281
      )
      
      (104
      )December 31, 2012
      
      243
      
      
      2
      
      
      165
      
      
      272
      
      
      340
      
      
      4,458
      
      
      40,938
      
      
      11,621
      
      
      243
      
      
      340
      
      
      4,460
      
      
      41,103
      
      
      11,893Developed Producing
      
      243
      
      
      -
      
      
      104
      
      
      260
      
      
      -
      
      
      11
      
      
      109
      
      
      29
      
      
      243
      
      
      -
      
      
      11
      
      
      213
      
      
      289Developed
        Non-producing
      
      -
      
      
      2
      
      
      61
      
      
      12
      
      
      1
      
      
      7
      
      
      68
      
      
      19
      
      
      -
      
      
      1
      
      
      9
      
      
      129
      
      
      31Undeveloped
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      339
      
      
      4,440
      
      
      40,761
      
      
      11,573
      
      
      -
      
      
      339
      
      
      4,440
      
      
      40,761
      
      
      11,573Total
      
      243
      
      
      2
      
      
      165
      
      
      272
      
      
      340
      
      
      4,458
      
      
      40,938
      
      
      11,621
      
      
      243
      
      
      340
      
      
      4,460
      
      
      41,103
      
      
      11,893


(1) Canada  Decrease in Total Proved
  Natural Gas Reserves of 306 MMcf:

During the year ended December 31,
  2012, following the implementation of waterflood in 2011, an expected decrease
  in natural gas reserves as the influx of water into the reservoir will replace
  some of the natural gas reserves -in-place. AJM Deloitte decreased, by way of a
  technical revision, the Companys total proved natural gas reserves by 306
  MMcfs.

(2) United States  Increase in Total
  Proved Natural Gas Liquids Reserves of 705 Mbbls and Natural Gas Reserves of 615
  MMcf:

During the year ended December 31,
  2012, an expected increase in the natural gas reserves and natural gas liquids
  reserves as the Companys major competitors has strong upside reserves potential
  in the nearby areas of the Piceance Basin of Western Colorado. Gustavson
  increased, by way of a technical revision, the Companys total proved natural
  gas liquids reserves and natural gas reserves by 705 Mbbls and 615 MMcfs
  respectively.

---

|(b) | Capitalized Costs
|--- | -----------------

| |                                        |  | December 31, |   |  | December 31, |   |  | December 31, |  
| | -------------------------------------- |  | ------------ | - |  | ------------ | - |  | ------------ | -
| | (CA$ thousands)                        |  | 2013         |   |  | 2012         |   |  | 2011         |  
| |                                        |  | $            |   |  | $            |   |  | $            |  
| | Canada                                 |  |              |   |  |              |   |  |              |  
| | Proved oil and gas
      properties    |  | 24,550       |   |  | 24,700       |   |  | 23,149       |  
| | Unproved oil and gas properties        |  | 70           |   |  | 23           |   |  | 72           |  
| | Total capital costs                    |  | 24,620       |   |  | 24,723       |   |  | 23,221       |  
| | Accumulated depletion and depreciation |  | (10,593      | ) |  | (8,557       | ) |  | (5,820       | )
| | Impairment                             |  | (6,740       | ) |  | (6,211       | ) |  | (1,298       | )
| | Net capitalized costs                  |  | 7,287        |   |  | 9,955        |   |  | 16,103       |  
| |                                        |  |              |   |  |              |   |  |              |  
| | United States                          |  |              |   |  |              |   |  |              |  
| | Proved oil and gas
      properties    |  | 14,279       |   |  | 13,076       |   |  | 4,076        |  
| | Unproved oil and gas properties        |  | 18,298       |   |  | 25,462       |   |  | 27,772       |  
| | Total capital costs                    |  | 32,577       |   |  | 38,538       |   |  | 31,848       |  
| | Accumulated depletion and depreciation |  | (463         | ) |  | -            |   |  | -            |  
| | Impairment                             |  | (15,781      | ) |  | (23,785      | ) |  | (23,524      | )
| | Net capitalized costs                  |  | 16,333       |   |  | 14,753       |   |  | 8,324        |  
| |                                        |  |              |   |  |              |   |  |              |  
| | Total                                  |  |              |   |  |              |   |  |              |  
| | Proved oil and gas
      properties    |  | 38,829       |   |  | 37,776       |   |  | 27,225       |  
| | Unproved oil and gas properties        |  | 18,368       |   |  | 25,485       |   |  | 27,844       |  
| | Total capital costs                    |  | 57,197       |   |  | 63,261       |   |  | 55,069       |  
| | Accumulated depletion and depreciation |  | (11,056      | ) |  | (8,557       | ) |  | (5,820       | )
| | Impairment                             |  | (22,521      | ) |  | (29,996      | ) |  | (24,823      | )
| | Net capitalized costs                  |  | 23,620       |   |  | 24,708       |   |  | 24,427       |  

---

|(c) | Costs Incurred
|--- | --------------

December 31,
      
      
      December 31,
      
      
      December 31,(CA$ thousands)
      
      2013
      
      
      2012
      
      
      2011$
      
      
      $
      
      
      $CanadaProperty acquisition costs (1)Proved oil and gas properties
      
      17
      
      
      14
      
      
      47Unproved oil and gas properties
      
      -
      
      
      1
      
      
      9Exploration costs (2)
      
      115
      
      
      132
      
      
      32Development costs (3)
      
      4
      
      
      1,407
      
      
      6,410Capital Expenditures
      
      136
      
      
      1,553
      
      
      6,498United StatesProperty acquisition costs (1)Proved oil and gas properties
      
      45
      
      
      40
      
      
      40Unproved oil and gas properties
      
      56
      
      
      211
      
      
      146Exploration costs (2)
      
      79
      
      
      104
      
      
      38Development costs (3)
      
      1,720
      
      
      2,568
      
      
      1,609Capital Expenditures
      
      1,900
      
      
      2,923
      
      
      1,833TotalProperty acquisition costs (1)Proved oil and gas properties
      
      62
      
      
      54
      
      
      87Unproved oil and gas properties
      
      56
      
      
      212
      
      
      155Exploration costs (2)
      
      194
      
      
      236
      
      
      71Development costs (3)
      
      1,724
      
      
      3,975
      
      
      8,019Capital Expenditures
      
      2,036
      
      
      4,476
      
      
      8,332


| | (1) | Acquisitions are not net of disposition of
      properties.                                         
| | --- | -----------------------------------------------------------------------------------------------------
| | (2) | Geological and geophysical capital expenditures and
      drilling costs for exploraton wells drilled
| | (3) | Includes equipping and facilities capital
      expenditures                                         

---

|(d) | Results of Operations of Producing
      Activities
|--- | ---------------------------------------------------

For
        the years ended December 31,(CA$ thousands)
      
      2013
      
      
      2012
      
      
      2011CanadaOil and gas sales, net of royalties
      
      6,038
      
      
      5,766
      
      
      7,196Operating costs and capital taxes
      
      (2,386
      )
      
      (3,101
      )
      
      (1,975
      )Transportation costs
      
      (462
      )
      
      (661
      )
      
      (508
      )Depletion, depreciation and accretion
      
      (2,037
      )
      
      (2,754
      )
      
      (2,393
      )Income taxes (1)
      
      -
      
      
      -
      
      
      -Results of operations
      
      1,153
      
      
      (750
      )
      
      2,320United StatesOil and gas sales, net of royalties
      
      1,467
      
      
      -
      
      
      -Operating costs and capital taxes
      
      (549
      )
      
      (31
      )
      
      (16
      )Transportation costs
      
      -
      
      
      -
      
      
      -Depletion, depreciation and accretion
      
      (502
      )
      
      (13
      )
      
      (11
      )Income taxes (1)
      
      -
      
      
      -
      
      
      -Results of operations
      
      416
      
      
      (44
      )
      
      (27
      )TotalOil and gas sales, net of royalties
      
      7,505
      
      
      5,766
      
      
      7,196Lease operating costs and capital taxes
      
      (2,935
      )
      
      (3,132
      )
      
      (1,991
      )Transportation costs
      
      (462
      )
      
      (661
      )
      
      (508
      )Depletion, depreciation and accretion
      
      (2,539
      )
      
      (2,767
      )
      
      (2,404
      )Income taxes (1)
      
      -
      
      
      -
      
      
      -Results of operations
      
      1,569
      
      
      (794
      )
      
      2,293


| | (1) | Dejour is currently not
      taxable.
| | --- | --------------------------------------

|(e) | Standardized Measure of Discounted Future Net Cash
      Flows and Changes Therein                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The standardized measure of discounted future net cash
      flows is based on estimates made by GLJ and Gustavson of net proved
      reserves. Future cash inflows are computed based on the average of the
      first day constant prices in each of the 12 months for the year ended
      December 31, 2013 and cost assumptions applied against annual future
      production from proved crude oil and natural gas reserves. Future
      development and production costs are computed based on the average of the
      first day constant prices in each of the 12 months for the year ended
      December 31, 2013 and assume the continuation of existing economic
      conditions. Future income taxes are calculated by applying statutory
      income tax rates. The Company is currently not taxable. The standardized
      measure of discounted future net cash flows is computed using a 10 percent
      discount factor.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company cautions users of this information that the
      discounted future net cash flows relating to proved oil and gas reserves
      are neither an indication of the fair market value of our oil and gas
      properties, nor of the future net cash flows expected to be generated from
      such properties. The discounted future cash flows do not include the fair
      market value of exploratory properties and probable or possible oil and
      gas reserves, nor is consideration given to the effect of anticipated
      future changes in crude oil and natural gas prices, development, asset
      retirement and production costs and possible changes to tax and royalty
      regulations. The prescribed discount rate of 10 percent is arbitrary and
      may not appropriately reflect future interest
      rates.                                                                                           

---

Standardized Measure of Discounted
  Future Net Cash Flows

The standardized measure of discounted
  future net cash flows relating to our estimated proved reserves as of December
  31, 2013 is presented below:

As at December 31, 2013(CA$ thousands)
      
      Canada
      
      
      USA
      
      
      Total$
      
      
      $
      
      
      $Future cash from revenues after royalties
      
      11,667
      
      
      694,341
      
      
      706,008Future production,
        abandon and salvage costs
      
      (7,464
      )
      
      (272,478
      )
      
      (279,942
      )Future development costs
      
      -
      
      
      (157,139
      )
      
      (157,139
      )Future income taxes
      
      -
      
      
      (29,123
      )
      
      (29,123
      )Future net cash flows
      
      4,203
      
      
      235,601
      
      
      239,804Less: 10% annual discount factor
      
      (555
      )
      
      (174,682
      )
      
      (175,237
      )Standardized measure of discounted future net cash flow
      
      3,648
      
      
      60,919
      
      
      64,567


The standardized measure of discounted
  future net cash flows relating to our estimated proved reserves as of December
  31, 2012 is presented below:

As at December 31, 2012(CA$ thousands)
      
      Canada
      
      
      USA
      
      
      Total$
      
      
      $
      
      
      $Future cash from revenues after royalties
      
      20,069
      
      
      234,374
      
      
      254,443Future production,
        abandon and salvage costs
      
      (10,835
      )
      
      (90,466
      )
      
      (101,301
      )Future development costs
      
      (153
      )
      
      (95,180
      )
      
      (95,333
      )Future income taxes
      
      (2,270
      )
      
      (9,950
      )
      
      (12,220
      )Future net cash flows
      
      6,811
      
      
      38,778
      
      
      45,589Less: 10% annual discount factor
      
      (1,181
      )
      
      (38,935
      )
      
      (40,116
      )Standardized measure of discounted future net cash flow
      
      5,630
      
      
      (157
      )
      
      5,473


---

|(f) | Changes in Standardized Measure of Discounted Future
      Net Cash Flows                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                
|    | The principal sources of changes in the standardized
      measure of the future net cash flows for the year ended December 31, 2013
      are presented below:

For the Year Ended December 31, 2013(CA$ thousands)
      
      Canada
      
      
      USA
      
      
      Total$
      
      
      $
      
      
      $Beginning Balance, January 1, 2013
      
      5,630
      
      
      (157
      )
      
      5,473Sales and transfers of oil and gas produced, net of
        production costs
      
      (3,640
      )
      
      (213
      )
      
      (3,853
      )Net changes in
        sales and transfer prices, net of production costs and royalties
      
      (1,238
      )
      
      113,216
      
      
      111,978Extensions, discoveries, and improved recovery, less
        estimated costs
      
      -
      
      
      121,937
      
      
      121,937Changes in
        estimated future development costs
      
      (153
      )
      
      (22,212
      )
      
      (22,365
      )Sales of reserves in place, less estimated future costs
      
      -
      
      
      (479
      )
      
      (479
      )Revisions of
        quantity estimates and timing of estimated production
      
      1,040
      
      
      (22,397
      )
      
      (21,357
      )Accretion of discount
      
      625
      
      
      (151,557
      )
      
      (150,932
      )Net change in
        income taxes
      
      1,875
      
      
      26,728
      
      
      28,603Other
      
      (491
      )
      
      (3,947
      )
      
      (4,438
      )Ending Balance, December 31, 2013
      
      3,648
      
      
      60,919
      
      
      64,567


The principal sources of changes in the
  standardized measure of the future net cash flows for the year ended December
  31, 2012 are presented below:

For the Year Ended December 31, 2012(CA$ thousands)
      
      Canada
      
      
      USA
      
      
      Total$
      
      
      $
      
      
      $Beginning Balance, January 1, 2012
      
      18,459
      
      
      33,462
      
      
      51,921Sales and transfers of oil and gas produced, net of
        production costs
      
      (1,973
      )
      
      -
      
      
      (1,973
      )Net changes in
        sales and transfer prices, net of production costs and royalties
      
      (8,514
      )
      
      (42,572
      )
      
      (51,086
      )Changes in estimated future development costs
      
      (3
      )
      
      -
      
      
      (3
      )Revisions of
        quantity estimates and timing of estimated production
      
      (2,924
      )
      
      5,319
      
      
      2,395Accretion of discount
      
      (385
      )
      
      -
      
      
      (385
      )Net change in income taxes
      
      970
      
      
      3,634
      
      
      4,604Ending Balance, December 31, 2012
      
      5,630
      
      
      (157
      )
      
      5,473


---