June 20, 2005
Mr. Norman G. Haisler
Sr. Vice President - Finance & Chief Financial Officer
Blue Ridge Energy, Inc.
10777 Westheimer, Suite 170
Houston, Texas 77042
Re: Blue Ridge Energy, Inc.
Form 10-KSB for Fiscal Year Ended December 31, 2004
Filed March 30, 2005
Form 10-QSB for Fiscal Quarter Ended March 31, 2005
Filed May 16, 2005
File No. 000-27443
Dear Mr. Haisler:
We have reviewed your filings and have the following
comments.
We have limited our review of your filings to those issues we have
addressed in our comments. Where indicated, we think you should
revise your documents. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosures in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-KSB for the Fiscal Year Ended December 31, 2004
Financial Statements
Note 1 - Operations and Summary of Significant Accounting
Policies,
page F-6
1. We note that you acquired a 35% interest in Channel LLC in
March
2002, and later transferred this investment to Blue Ridge Group in
May 2003. Please disclose the principal terms of the initial
acquisition, including the amount and form of consideration paid,
and
the manner of valuing any non-cash components. Also describe your
relationship with the counterparty.
2. With regard to your May 2003 transfer of seismic information
associated with the Channel LLC acquisition to Blue Ridge Group,
disclose the terms under which you will be "...carried at no cost
for
25% of any future interests acquired and developed by BR Group
through the utilization of this data." Describe the nature of
costs
that will likely be incurred in acquiring and developing such
interests, the provisions of operating arrangements governing
these
activities, and any fees, profits or other consideration to which
BR
Group or any other related parties will be entitled prior to
releasing funds for your benefit. It should be clear how your 25
percent interest would be calculated, and how it relates to any
cash
flows that may ultimately be derived from the interests.
Additionally, we note your disclosure explaining that when BR
Group
has recouped 100% of expenditures for the seismic information and
the
acquisition and development of oil and gas properties, you will
have
the right, but not the obligation, to reverse your position with
BR
Group and receive 75% of the interest in future oil and gas
properties, while carrying BR Group for 25% of the interest.
Please
expand your disclosure to clarify whether these terms relate only
to
properties that you chose to acquire and develop after electing to
"reverse your position," as opposed to all properties acquired and
developed up to that point in time. Specify the terms governing
the
ownership and operation of interests established prior to any such
election date. It should also be clear how properties associated
with the seismic information transferred to BR Group will be
differentiated from any other properties with which that entity
becomes involved.
Tell us why BR Group offered to carry you at no cost for 25%, and
granted you the option to "reverse your position," after expending
all of the funds necessary to first acquire Channel LLC and the
seismic information, and then to acquire and develop property
interests using that data; the economic incentives for the
arrangement are unclear.
Note 3 - Related Party Transactions, page F-12
B. Advances From/To Related Parties
3. After disclosing that BR Group provides you with various
"management, administrative, accounting and geological services,"
and
incurs other costs on your behalf, you explain that BR Group
reimbursed you $140,000 for costs incurred by you on behalf of BR
Group. The arrangement that you describe would seem more likely
to
require cash reimbursement from you to BR Group, than the other
way
around. Further, it is unclear how the arrangement is related to
the
cash advanced from BR Group, for which you issued a $500,000
promissory note at September 30, 2004.
Please expand your disclosure to describe the nature of the
$140,000
in costs incurred by you on behalf of BR Group, and to explain the
reason for the $500,000 cash advance. State the terms of any
ongoing
funding arrangements that are in place, and provide any
disclosures
necessary to comply with paragraph 4 of SFAS 57.
Closing Comments
As appropriate, please amend your filings and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. Please understand that we may have
additional
comments after reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosures in the filings to be certain that the
filings include all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosures, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosures in the filings;
* staff comments or changes to disclosures in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.
You may contact Lily Dang at (202) 551-3867 if you have
questions regarding comments on the financial statements and
related
matters. Please contact me at (202) 551-3686 with any other
questions.
Sincerely,
Karl Hiller
Branch Chief
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Mr. Norman G. Haisler
Blue Ridge Energy, Inc.
June 20, 2005
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE
MAIL STOP 04-05