Mail Stop 4561
May 15, 2006
James Yeatman
President and Chief Executive Officer
Consolidated Oil & Gas, Inc.
316 Main Street, Suite L
Humble, TX 77338
Re: Consolidated Oil & Gas, Inc.
Form 10-SB
Amendment No. 1 filed April 26, 2006
File No. 0-51667
Dear Mr. Yeatman:
We have reviewed the above filing and have the following
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 supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
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 on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
General
1. Refer to your response to previous comment 1. You state that
your
revenue from oil and gas production do not exceed ten percent of
your
gross revenue. Please tell us how you considered paragraph 25 of
SFAS 69 in determining to exclude your sales of leases from your
determination of revenue from oil and gas production.
2. We refer to your response to previous comment 2. It appears
that
the ownership interests you have sold to "working interest
partners"
may be "securities" within the meaning of Section 2(a)(1) of the
Securities Act of 1933. Please tell us the exemption from
registration that you relied upon for the sale of these interests
and
the facts supporting the exemption. Alternatively, if you believe
that these interests are not "securities," please provide a
detailed
analysis supporting your conclusion.
Description of Business, page 1
3. Disclosure in the first paragraph states that a working
interest
partner receives a share of the monthly net revenue of that well.
Please revise to clarify the impact on working interest partners
if
the well experiences a net loss instead of net revenue.
4. We note your response to previous comment 5. Please expand
your
discussion of the additional 1,500 acres of land you are acquiring
to
describe the remaining steps necessary to complete the purchase
and
clarify your potential interest in the property. For example,
describe whether you are purchasing the property outright or
acquiring an interest in the mineral rights. Please also
disclose
any funds necessary to complete the acquisition.
5. We note your response to previous comment 6. Please clarify
our
understanding that "completion" of a well should not be
interpreted
to mean that you will be successful in producing oil or gas from
that
well, but rather indicates that a well is ready to be used in the
search and exploration of oil and gas.
Management`s Discussion and Analysis
Results of Operations, page 5
6. Please revise to clarify the impact on revenues from gas and
oil
sales resulting from the sale of leases. We note disclosure on
page
1, which states that a working interest partner receives a share
of
your monthly net revenue from that particular well. Currently, it
is
not clear whether or how the amounts reported as revenues from gas
and oil sales reflect distributions of net revenues to the working
interest partners.
Costs of Sales and Gross Margin, page 6
7. Refer to the discussion of selling costs on page 8. Please
tell
us who receives commissions on the sale of working interests.
Liquidity and Sources of Liquidity, page 9
8. Please disclose the interest rate for the note payable to an
individual and identify the individual lender. In addition,
please
clarify whether the full $200,000 principal amount plus interest
was
due on May 10, 2006. Please disclose whether the note is
currently
in default or if the payment date has been extended.
Properties
Present Activities, page 13
9. We refer to your response to previous comment 17. Please file
as
exhibits any agreements upon which your business is substantially
dependent and any material lease. Refer to Item 601(b)(10)(ii)(B)
and (D).
Financial Statements and Notes
Note 1 - Company Organization and Summary of Significant
Accounting
Policies
Oil and Gas Properties, page F-9
10. We have read and considered your response to comment 24. In
the
interest of clarity, please revise the sixth paragraph on page F-9
relating to your impairment policy for proved properties so that
it
is consistent with your impairment policy disclosed on pages F-10
through F-11.
Revenue Recognition of Sales Of Leases, pages F-9 - F-10
11. Your response to comment 25 does not fully address our request
for additional information relating to your accounting policy for
lease sale. As previously requested, please address the following
comments separately for each type of arrangement in which you
conveyed either a portion of, or the entire interest in, the well:
* Explain to us how you determined that these arrangements fall
within the scope of SOP 81-1 instead of SFAS 19.
* Provide us with your analysis of paragraphs 42-47 of SFAS 19 in
determining how to account for these arrangements.
12. Please explain to us how you account, initially and going
forward, for those arrangements in which you secure lease rights
by a
promise to drill within a certain time period and the basis in
GAAP
for your accounting treatment.
Recent Sales of Unregistered Securities, page 21
13. We note your response to prior comment 28; however, the "other
consideration" paid in connection with working interest purchases
still is not clear. Please tell us whether those purchasers gave
you
stock in exchange for a working interest purchase and if so,
identify
the stock, state the number of shares, and tell us how you valued
the
stock.
* * *
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 supplemental 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.
Direct any questions regarding the accounting comments to
Wilson
Lee at (202) 551-3468, or Jorge Bonilla, at (202) 551-3414.
Direct
any other questions to Charito A. Mittelman at (202) 551-3402, or
the
undersigned at (202) 551-3780.
Sincerely,
Karen J. Garnett
Assistant Director
cc (via facsimile): Doug Newman, CFO
Consolidated Oil & Gas, Inc.
James Yeatman
Consolidated Oil & Gas, Inc.
May 15, 2006
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