 | Andrews Kurth LLP 600 Travis, Suite 4200 Houston, Texas 77002 +1.713.220.4200 Phone +1.713.220.4285 Fax andrewskurth.com |
October 22, 2013
Via EDGAR AND HAND DELIVERY
Ms. Alexandra M. Ledbetter United States Securities and Exchange Commission Division of Corporation Finance 100 F Street, N.E. Washington, D.C. 20549 |
Re: |
Constellation Energy Partners LLC Preliminary Proxy Statement on Schedule 14A Filed October 9, 2013 File No. 1-33147 |
Dear Ms. Ledbetter:
Set forth below are the responses of Constellation Energy Partners LLC, a Delaware limited liability company (“Constellation,” “we,” “us,” or “our”), to the comments received from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission (the “Commission”) by letter dated October 18, 2013, with respect to Constellation’s Preliminary Proxy Statement on Schedule 14A (Commission File No. 1-33147) (the “Proxy Statement”). Each response below has been prepared and is being provided by Constellation, which has authorized Andrews Kurth LLP to respond to the Staff’s comments on its behalf.
Concurrently with the submission of this response letter, we are filing Amendment No. 1 to the Proxy Statement (“Amendment No. 1”). For the Staff’s convenience, we have hand-delivered three copies of Amendment No. 1, together with three copies of Amendment No. 1 that are marked to show all revisions to the Proxy Statement since the initial filing thereof.
For the Staff’s convenience, each of our responses is preceded by the exact text of the Staff’s corresponding comment in bold, italicized text. All references to page numbers and captions correspond to Amendment No. 1, unless indicated otherwise.
Austin Beijing Dallas Dubai Houston London New York Research Triangle Park The Woodlands Washington, DC
October 22, 2013
Page2
Questions &Answers onVotingProcedures,page1
Howwillmyproxyvotemyunits?, page2
| 1. | You statethat the proxies mayexercise their discretionaryauthorityto votein favorofanadjournment of theannualmeeting.Pleasenotethatwedo not considerthe adjournment of anannualmeetingtosolicitadditional proxiesto beamatterincidentto theconduct of the meetingor otherwiseto beanappropriate useofdiscretionaryauthorityunder ExchangeActRule 14a-4(c).Ifyou wish to useproxies in thismanner, pleaseincludea separateproposal on theproxycard(andappropriate disclosureintheproxystatement) so that securityholdersmayexpresslygrantyouthis authority.Alternatively, ifyou do not wish to useproxiesin this manner(because,forinstance,the Chairmanhas theauthorityto adjourn themeetingforanyreason),pleasereviseyourdisclosureinthis section. |
| Response: | We acknowledge the Staff’s comment and have revised the disclosure to remove references to proxies exercising their discretionary authority to vote in favor of an adjournment of the annual meeting, particularly in light of the Chairman of the Board’s authority to adjourn the annual meeting, as set forth in Constellation’s Second Amended and Restated Operating Agreement. Please see pages 2 and 4 of Amendment No. 1. |
Proposal No. 1: Election ofThreeClassBManagers, page5
| 2. | Wenote the followingdisclosureon page28:“Nominations of personsforelection to our board ofmanagers maybemade atanannualmeetingof unitholders only(a)byoratthe direction ofourboard ofmanagers or(b)byanyunitholderof our Company:(i) who isentitled to vote atthemeetingor(ii)who wasa record holderofasufficient number of units as oftherecord date forsuchmeetingtoelect one ormoremembersto our board of managersassumingthatsuchholdercast all ofthe votes itis entitled to castin suchelection in favorof asinglecandidateand suchcandidate received no othervotesfromanyother holderof units (or, inthe casewheresuch holderholds asufficient number of units to electmorethanonemanager, such holdervotes its units asefficientlyas possible forsuchcandidates andsuchcandidates receiveno furthervotesfrom holders of outstandingunits).”Please clarifyhowthis provision operates.Inaddition,whereyou disclose on page7 that the companyreceived timelynoticefrom CEPM thatCEPM intends to solicitproxies to support two separatenominees as Class Bmanagers, please revise to disclosewhether CEPM’s nomination would meetthe eligibilitycriteria.Ifitisyourbelief thatCEPM’s nominationwould notmeetthe eligibilitycriteria,explain whyand disclose how anyvotes in favorof CEPM’snominees would betreated. |
| Response: | We acknowledge the Staff’s comment and have revised the disclosure to clarify the process for unitholders to nominate persons to serve on the Board of Managers. Please see page 28 of Amendment No. 1. We have also revised the disclosure to explain that Constellation does not have enough information about CEPM’s proposed candidates to determine whether they are qualified to serve on the board of managers, as the only information provided to Constellation about the individuals has been written biographical information, which is not sufficient for us to fully evaluate their qualifications. Please see page 7 of Amendment No. 1. |
October 22, 2013
Page3
ExecutiveOfficers, page15
EmploymentAgreements, page23
| 3. | Wenote thedisclosure regardingthe change-of-control provisions in theemploymentagreements withthe company’s namedexecutiveofficers. Pleaserevise to disclose the definition of the term“changeofcontrol” forthepurposeofeachagreement. Also disclosewhetheranyrecent actions byCEPMor SanchezOil &GasCorporationconstituted, ortheelection ofanyindividuals nominatedbyCEPMwouldconstitute, achangeofcontrol under anyof theseagreements,such thatanexecutivemight beentitled to severance amounts upon termination. |
| Response: | We acknowledge the Staff’s comment and have revised the disclosure to define “Change of Control” and also to describe any change of control transactions that have already occurred or may reasonably be expected to occur. Please see page 23 of Amendment No. 1. |
| 4. | Refer to the followingsentenceon page23:“Iftheexecutive’semploymentis terminated in connection with an“InvoluntaryTermination”at anytime prior toa changeofcontrol ofthe Companyoraftertwoyearshave elapsedfollowinga changeofcontrol, the Companywill, pursuantto the termsoftheemploymentagreements,makepayments and take actions….”(emphasis added)Pleaseclarifywhethertheexecutivewould beentitled tothe change-of-control paymentsif therewereanInvoluntaryTermination duringthe twoyearsfollowingachangeof control. |
| Response: | We acknowledge the Staff’s comment and have revised the disclosure to clarify that a termination during the two-year period after a change of control has occurred triggers payment of the Enhanced Severance Amount and not the Severance Amount. Please see page 23 of Amendment No. 1. |
OtherDisclosure,page29
| 5. | Wenote thedisclosureon page29 that the outcome ofthe PostRock litigation may affect the validityof thevotescast forthe proposalssetforthin this proxystatement.Please revise to clarifyhow theoutcome could affectthevalidityof thevotescastand whatcourseofaction thecompanywould take inthatevent. |
| Response: | We acknowledge the Staff’s comment and have revised the disclosure to explain how the outcome of the litigation may affect the validity of the votes cast. Please see page 29 of Amendment No. 1. |
October 22, 2013
Page4
AppendixA
MiscellaneousInformation ConcerningParticipants, pageA-2
| 6. | Wenote that much ofthedisclosureinthissection is qualified intermsofthecompany’s knowledge.With aviewtowardrevised disclosure, pleasetell us what stepsthecompany has taken toascertaintheinformation provided. |
| Response: | In connection with disclosing information about third parties, Constellation provided a draft copy of the disclosure in Appendix A to each of the persons listed in Appendix A and asked each such person to confirm that the information provided about such person was accurate. Constellation is not able to definitively confirm the accuracy of the responses and, therefore, has disclosed the information to its knowledge. We have revised the disclosure to explain that Constellation made due inquiry of each of the persons listed. Please see pages A-2 and A-3 of Amendment No. 1. |
Matters You Are Voting On, page 4
| 7. | You state in two places that if a nominee is unable or unwilling to serve, the proxies may use discretionary authority to vote for the election of another person. This is not consistent with Exchange Act Rule 14a-4(c)(5). Please revise. |
| Response: | We acknowledge the Staff’s comment and have revised the disclosure to clarify that proxies may exercise discretionary authority to vote for an alternate manager only if the nominated person is unable to serve or for good cause will not serve. Please see page 4 of Amendment No. 1. |
Constellation acknowledges that:
| · | should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing; |
| · | the action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve Constellation from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and |
| · | Constellation may not assert Staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
October 22, 2013
Page5
Please direct any questions you have with respect to the foregoing or with respect to the Proxy Statement to the undersigned at (713) 220-4764 or solson@andrewskurth.com.
Very truly yours,
/s/ Scott L. Olson
Scott L. Olson
| cc: | Charles C. Ward, Constellation Energy Partners LLC Elizabeth A. Evans, Constellation Energy Partners LLC G. Michael O’Leary, Andrews Kurth LLP |