June 13, 2005
Mr. Michael A. Bardell
Chief Financial Officer
Dynamic Oil & Gas, Inc.
#230-10991 Shellbridge Way
Richmond, British Columbia V6X 3C6
Canada
Re: Dynamic Oil & Gas, Inc.
Form 20-F for Fiscal Year Ended December 31, 2004
Filed March 31, 2005
File No. 0-17551
Dear Mr. Bardell:
We have reviewed your filings and have the following
comments.
We have limited our review of your filing to those issues we have
addressed in our comments.
Please provide a written response to our comments. 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 disclosure in your filing.
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 20-F for the Fiscal Year Ended December 31, 2004
General
1. Please include the most recent fiscal year covered by your
report
on the front page of your filing to comply with the form
requirements.
Operating and Financial Review and Prospects, page 41
Executive Overview
2. We note your disclosures in your executive overview, financial
results, and selective financial data of various measures labeled
"cash flows from operations," which are not commensurate with the
amounts reported as cash flows provided by operating activities in
your statements of cash flows. Additionally, we note your
disclosure
on page 8 indicating these non-GAAP measures demonstrate your
ability
"...to generate the cash flow necessary to fund future growth
through
capital investment and to repay debt." The disclosure of non-GAAP
liquidity measures that exclude the effects of changes in working
capital items, which are typically settled in cash, is not
generally
permissible under the guidance in Item 10(e)ii(A) of Regulation S-
K.
Financial Statements, page F-1
General
3. We note that you have not disclosed your accounting policies
for
either exploratory drilling costs or buy/sell arrangements.
Please
submit the disclosure revisions that you believe would be
responsive
to our February 11, 2005 Industry Letter, posted on our website at
www.sec.gov/divisions/corpfin/guidance/oilgas021105.htm.
Statement of Operations and Deficit Retained Earnings, page F-3
4. We note that you present unlabeled subtotals of revenues less
royalties and production costs, but excluding amortization and
depletion and exploration expense; and that you also present a
measure of earnings from operations excluding these items.
Similarly, you present unlabeled subtotals within the operating
section of your Statements of Cash Flows on page F-4. Tell us how
you characterize the unlabeled items and explain the significance
that you impart to each of these measures, and which you believe
would be helpful for your readers to understand.
Engineering Comments
Business Overview, page 19
Concentration of Operations, page 20
5. You indicate that the St. Albert property is your main
producing
property with it contributing 69% of your production. In future
filings, please expand your disclosure to include all the
requirements of Item 102 of Regulation S-K such as reserves,
development and the nature of your interest.
Estimated Reserves of Crude Oil, Natural Gas and Natural Gas
Liquids,
page 28
Reconciliation of Company Interest Proved Reserves (After
Royalties),
page 30
6. We note the 22% negative reserve revision in 2004. In as much
detail as necessary, please explain this revision to us. You may
submit technical evidence such as production decline curves,
cumulative production over time, pre-drilling reserve estimates
versus post-drilling results, etc. We may have further comments.
Net Present Value of Reserves, page 30
7. We note that you only provide the net present value of reserves
before income tax. FASB 69 requires that you provide the
Standardized Measure of Net Present Value which is the Net Present
Value of reserves after tax. In future filings, please include
this
or tell us why it is not necessary.
Closing Comments
Please respond to these comments within 10 business days or
tell
us when you will provide us with a response. Please furnish a
letter
that keys your responses to our comments and provides any
requested
information. Detailed 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 disclosure in the filing to be certain that the
filing includes 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 disclosure, 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
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; 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 filing or in
response to our comments on your filing.
You may contact Jon Duersch at (202) 551-3719 or Karl Hiller,
Branch Chief, at (202) 551-3686 if you have questions regarding
comments on the financial statements and related matters. You may
contact Jim Murphy, Petroleum Engineer, at (202) 551-3703 with
questions about engineering comments. Please contact me at (202)
551-3745 with any other questions.
Sincerely,
H. Roger Schwall
Assistant Director
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Mr. Michael A. Bardell
Dynamic Oil & Gas, Inc.
June 13, 2005
page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405
DIVISION OF
CORPORATION FINANCE
MAIL STOP 04-05