CRAIG G. ONGLEY
(214) 777-4241
congley@krcl.com
January 30, 2014
Roger Schwall, Assistant Director
United States Securities and Exchange Commission
Division of Corporation Finance
Washington, D.C. 20549
Re: TransCoastal Corporation
Amendment No. 2 to Registration Statement on Form S-1
Filed December 31, 2013
File No. 333-191566
Quarterly Report on Form 10-Q
Filed November 11, 2012
File No. 1-14665
Dear Mr. Schwall:
As a response to certain addition questions and request for clarification from the staff we are supplementing our previous letter dated January 17, 2014. Please see our supplemental response below:
2. | We note your response to prior comment 6 which indicates that you utilized reserve quantities as of December 31, 2010 in your calculations of depreciation, depletion, and amortization for the interim periods ended June 30, 2013 and June 30, 2012. Please revise to clarify why you did not include reserve data as of December 31, 2011 and December 31, 2012. As previously requested, provide your calculations of depreciation, depletion and amortization for all period presented consistent with the definition as disclosed on page F-8. |
RESPONSE:
We investigated the depletion issue and believe we have the answer. It appears the DD&A decreased due to Company overestimating the first two quarters of 2012, thus recording less depletion in Q3 and Q4 based on an updated estimate. This is mainly caused by the utilizing a reserve basis of about $7.9 million (as prepared by the bank) to record depletion for those first two months of 2012 rather than the $11.5 million in reserve basis (as prepared using SEC pricing) which was updated around that point in time for the anticipated filings. However, if you compare the DD&A average for 2013 compared to the average for 2012, it is comparable. Please see the revised Depletion expense calculations below.
Depletion Calculation through 6/30/2013
INPUT CELLS | |||||||||||||||
Depletion Calculation: | |||||||||||||||
Current Period Production (BOE) | 27,552 | ||||||||||||||
Beginning of year reserves (BBLE) | 11,150,180 | ||||||||||||||
Calculated depletion rate | 0.25 | % | Properties subject to Depletion | 26,311,000 | → | 12/31/1 O&G Property | 24,319,000 | ||||||||
PY: Accumulated Depletion | (1,574,000 | ) | Investment through 6/30/13 | 1,992,000 | |||||||||||
Depletable Balance | 95,630,000 | Less: Estimated equipment salvage | - | Disposals through 6/30/13 | - | ||||||||||
Less: Costs excluded from amortization | - | Properties Subject to Depletion | 26,311,000 | ||||||||||||
Depletion for period | $ | 236,301 | Plus: Estimated future development costs | 70,737,000 | |||||||||||
Plus: Estimated ARC on future development expenses | 156,000 | ||||||||||||||
Depletable Balance | 95,630,000 | ||||||||||||||
Depletion Calculation through 6/30/2012 | |||||||||||||||
Depletion Calculation: | |||||||||||||||
Current Period Production (BOE) | 24,131 | ||||||||||||||
Beginning of year reserves (BBLE) | 11,527,867 | ||||||||||||||
Calculated depletion rate | 0.21 | % | Properties subject to Depletion | 22,313,000 | → | 12/31/11 O&G Property | 22,220,000 | ||||||||
PY: Accumulated Depletion | (1,193,000 | ) | Investment through 6/30/12 | 300,000 | |||||||||||
Depletable Balance | 93,417,000 | Less: Estimated equipment salvage | - | Disposals through 6/30/12 | (207,000 | ) | |||||||||
Less: Costs excluded from amortization | - | Properties Subject to Depletion | 22,313,000 | ||||||||||||
Depletion for period | $ | 195,548 | Plus: Estimated future development costs | 72,141,000 | |||||||||||
Plus: Estimated ARC on future development expenses | 156,000 | ||||||||||||||
Depletion Calculation: | Depletable Balance | 93,417,000 | |||||||||||||
Current Period Production (BOE) | 24,131 | ||||||||||||||
Beginning of year reserves (BBLE) | 7,915,000 | ||||||||||||||
Calculated depletion rate | 0.30 | % | |||||||||||||
Depletable Balance | 93,417,000 | ||||||||||||||
Depletion for period | $ | 284,807 | |||||||||||||
Please also note that the difference between the revised depletion expense calculation and the original is 17,000 (236,000-219,000). We believe this difference is immaterial and the current amended registration statement on Form S-1need not be amended not only due to the negligible numerical difference but also because the number itself is not reported to the public as it is only used in other calculations which would not change materially either.
Please contact the undersigned should you have any questions.
| Sincerely,
KANE RUSSELL COLEMAN & LOGAN
/s/ Craig Ongley Craig G. Ongley |
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