Mail Stop 3561
February 28, 2006
Mr. Lawrence S. Coben
Chairman of the Board and Chief Executive Officer
Tremisis Energy Acquisition Corporation
1775 Broadway, Suite 604
New York, New York 10019
Re: Tremisis Energy Acquisition Corporation
Amendment No. 1 to Preliminary Proxy Statement on Schedule
14A
Filed February 1, 2006
File No. 000-50682
Dear Mr. Coben:
We have reviewed your filing and have the following
engineering
comments. Where indicated, we think you should revise your
document
in response to these comments. 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 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.
Reserve Data, page 99
1. In our prior comments 91c) and 91d) we asked for "...the AFE
for
each of the three [largest] PUD projects." and engineering
exhibits
for these proved undeveloped properties. We have received only
one
AFE dated 12/13/03 for a Vinegarone field well. Our inspection of
the independent reserve reports indicates the three largest proved
undeveloped properties, on a net equivalent reserve basis, are
(from
the Williamson report):
* H&T.C. PUD 01-08
* Hamilton, R.R. PUD 01-08
* Sumner, Frances PUD 01-08.
Please submit engineering exhibits such as volumetric
calculations,
base maps, production of analogy wells, etc. in support of these
estimates.
2. We note that, for estimated future operating expenses, both
reports by your independent petroleum engineers used the prior 12-
months` average. Production costs have a singular meaning in the
context of public disclosure, i.e. lease operating expense (or
lift
cost) plus production/ad valorem/severance taxes plus appropriate
gathering/transportation costs plus applicable insurance plus
producing well overhead. The estimates of your proved reserves
and
standardized measure should utilize these components as determined
at
reporting fiscal period end. Since oil and gas prices have
increased
significantly over the prior 12 months, we would expect
corresponding
increases in cost components such as labor, fuel, power etc. Such
increases are muted by the use of 12 month averages.
Also, it appears that no producing well overhead for your operated
properties is included in production costs. Financial Accounting
Standard 69, paragraph 27 states "...some expenses incurred at an
enterprise`s central administrative office may not be general
corporate expenses, but rather may be operating expenses of oil
and
gas producing activities, and therefore should be reported as
such."
We consider the allocation of no G&A to production costs as
incorrect
since some supervision is an unavoidable requirement for oil and
gas
production. We recognize that the level of such supervision
varies
in the industry. Please demonstrate to us that the use of these
(presumably) lower average costs and the omission of incurred
production overhead costs do not result in material increases to
your
disclosed proved reserves and standardized measure.
Alternatively,
you may amend your proved reserve disclosures so that only period-
end
cost components - including production overhead - are used for
these
estimates.
Net Production, Unit Prices and Costs, page 102
3. In your response 96, you declined our request to disclose your
historical oil and gas prices before and after the effect of your
hedging arrangements. SEC Industry Guide 2 requires the
disclosure
of annual oil and gas sales prices. SFAS 69 requires the
disclosure
of historical revenues derived from produced oil and gas sales.
This
information is clearly intended to inform the investing public of
your operating results. The Commission`s 12-12-01 news release
(2001-147), FR-60 [33-8040; 34-45149] and FR-61 [33-8056; 34-
45321]
all speak to the need for greater transparency in corporate
disclosure. Compliance with our request to disclose the effects
of
your hedging arrangements on the product prices you actually
realized
will aid the public in understanding the results of your oil and
gas
producing activities. We repeat our prior comment 96.
4. Please amend your document to include the consents of your
independent petroleum engineers.
*******
As appropriate, please amend your filing 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 amendment and responses to our
comments.
You may contact Carlton Tartar at 202-551-3387 or Terence
O`Brien at 202-551-3355, if you have questions regarding comments
on
the financial statements and related matters. You may contact
Ronald
Winfrey, petroleum engineer, at 202-551-3704, if you have
questions
related to oil and gas engineering matters. Please contact Yuna
Peng
at 202-551-3391 or Ronald E. Alper at 202-551-3329, or Pamela
Howell,
who supervised the review of your filing, at (202) 551-3357, with
any
other questions.
Sincerely,
John Reynolds
Assistant Director
cc: David Alan Miller, Esq.
Sherie B. Rosenberg, Esq.
(212) 818-8881
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Mr. Lawrence S. Coben
Tremisis Energy Acquisition Corporation
February 28, 2006
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