| O’Neill Law Group PLLC | 435 Martin Street, Suite 1010 | ||
| Blaine, WA 98230 | |||
| Stephen F.X. O’Neill* | Christian I. Cu** | Telephone: | 360-332-3300 |
| Charles C. Hethey*** | Brian S.R. O’Neill**** | Facsimile: | 360-332-2291 |
| File #4510 |
| March 26, 2010 |
| VIA EDGAR |
THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION
Division of Corporation Finance
100 F Street, N.E.
Mail Stop 7010
Washington, DC 20549
Attention: H. Roger Schwall, Assistant Director
Dear Sirs:
| RE: | DORAL ENERGY CORP. (the “Company”) | |
| - | SEC File Number 000-52738 | |
| - | Form 10-K for the Fiscal Year Ended July 31, 2009 Filed November 13, 2009 (the “2009 | |
| Form 10-K”) | ||
We write on behalf of the Company in response to your comment letter dated February 25, 2010 regarding the above referenced filing of the Company (the “Comment Letter”). Our responses herein are based, in part, on the factual information provided to us by the Company. Paragraph numbering used for each response corresponds to the numbering used in the Comment Letter.
ENGINEERINGCOMMENTS ON THEFORM10-KFOR THEFISCALYEARENDEDJULY31, 2009
PROPERTIES,PAGE13
PROVEDRESERVES,PAGE14
| 1. | WE NOTE THE VOLUMES YOU HAVE PRESENTED AS"SPE RESERVES"DO NOT COMPLY WITHRULE4-10(A)OFREGULATIONS-XAND ARE,BY DEFINITION,UNPROVED RESERVES. INSTRUCTION5TOITEM102OFREGULATIONS-KGENERALLY PROHIBITS DISCLOSURE OF UNPROVED RESERVE VOLUMES IN DOCUMENTS FILED WITH THECOMMISSION. PLEASE AMEND YOUR DOCUMENT TO DISCLOSE ONLY THOSE PROVED RESERVES THAT COMPLY WITHRULE4-10. |
In response to this comment, the Company acknowledges that the SPE Reserves do not meet the definition of “proved oil and gas reserves” as they were not calculated in accordance with the provisions of Rule 4-10(a) of Regulation S-X. The SPE Reserve volumes disclosed in the 2009 Form 10-K were previously disclosed by the Company in its press release dated August 12, 2009. The references to SPE Reserves made in the 2009 Form 10-K were included in order to disclose the reasons why the Company’s reserve volumes as disclosed in the August 12, 2009 press release differed from the reserve volumes disclosed in the 2009 Form 10-K. The Company included this additional disclosure in an attempt to prevent reader confusion.
As the SPE Reserve volumes had previously been disclosed by the Company, we submit that their inclusion in the 2009 Form 10-K is not a material error and does not require the filing of an amendment. We note that, although Instruction 5 to Item 102 of Regulation S-K generally prohibits the disclosure of reserve estimates other than proved reserves, Instruction 5 does permit disclosure of non-proved reserve estimates where the information is required to be disclosed by foreign or state law and where disclosure of those estimates is provided in connection with an offer of a registrant’s securities.
| Canadian Affiliate: | O’Neill Law Corporation |
| Suite 950, 650 West Georgia Street, Box 11587, Vancouver, British Columbia, Canada V6B 4N8 | |
| Tel: (604) 687-5792 / Fax: (604) 687-6650 | |
| *Washington and British Columbia Bars; ** Nevada, Washington and British Columbia Bars; | |
| *** New York and British Columbia Bars; **** Nevada Bar | |
| O’Neill Law Group PLLC | 2 | |
| United States Securities and Exchange Commission | ||
| Attention: H. Roger Schwall | ||
| March 26, 2010 | ||
We also note that new Subpart 1200 to Regulation S-K, applicable to registrants with year ends after December 31, 2009, does permit disclosure of probable and possible reserves in addition to proved reserves. The Company has informed us that it will comply with the provisions of Subpart 1200 to Regulation S-K in disclosing reserve estimates in its future filings.
HANSONPROJECT– EDDYCOUNTY, NEWMEXICO,PAGE16
| 2. | WE NOTE THE DISCLOSURE OF2.7MILLION BARRELS OF PROVED UNDEVELOPED OIL EQUIVALENT RESERVES ON PAGE14AND YOUR STATEMENT THATMACQUARIEBANKLIMITED DECLINED YOUR REQUEST FOR ABOUT$10MILLION IN FUNDING TO DEVELOP2 MMBOEOF YOUR CLAIMED PROVED UNDEVELOPED RESERVES. THEJANUARY29, 2010ANNOUNCEMENT OF YOUR INTENT TO SELL50%OF YOUREDDYCOUNTY, NMOIL AND GAS ASSETS PRESENTED NO OTHER PROSPECTS FOR OBTAINING THE NECESSARY DEVELOPMENT FUNDING YOURPUDRESERVE VOLUMES. WITHOUT REASONABLE CERTAINTY OF FINANCING,THESE VOLUMES DO NOT MEET THE CRITERIA FOR PROVED UNDEVELOPED RESERVES. PLEASE AMEND YOUR DOCUMENT TO REMOVE ALL YOURPUDRESERVES CLAIMED ATJULY31, 2009. |
In response to this comment, the Company has informed us that at the time the 2009 Form 10-K was filed, there was a reasonable certainty that the Company would be able to obtain sufficient financing to develop the proved undeveloped reserve volumes. In September 2009, the Company received a term sheet from a third party private equity provider that would have provided the Company with up to $15,350,000 in financing. This term sheet was relied upon by Russell K. Hall and Associates, Inc. (“Hall and Associates”) in estimating the Company’s proved undeveloped reserve volumes as disclosed in the 2009 Form 10-K. Hall and Associates is an independent petroleum engineering firm that was hired by the Company to evaluate the Company’s reserve volumes. Although the Company did not ultimately proceed with the financing proposal for business reasons, the financing offer was bona fide. As a result, the Company and Hall and Associates determined that there was a “high degree of confidence” that the Company would be able to obtain sufficient financing to develop its proved undeveloped reserves. In addition, the Company was, at that time, evaluating a number of additional financing proposals presented to it by third party equity and debt financing providers. The Company’s entry into the letter of intent referred to in its January 29, 2010 press release also did not occur until well after the 2009 Form 10-K was filed.
The Company has informed us that it will comply with the provisions of Rule 4-10 of Regulation S-X and Subpart 1200 to Regulation S-K in disclosing reserve estimates in its future filings.
If you have any questions or require any additional information or documents, please telephone the undersigned at (604) 687-5792.
Yours truly,
/s/ Christian I. Cu
CHRISTIAN I. CU
CIC/dml
| cc: | Doral Energy Corp. |
| Attn: E. Will Gray, II, CEO |
