United States securities and exchange commission logo
February 16, 2021
Eric D. Marsh
President, Chief Executive Officer and Chairman of the Board
Vine Resources Inc.
5800 Granite Parkway, Suite 550
Plano, Texas 75024
Re: Vine Energy Inc.
Amendment No. 1 to
Draft Registration Statement on Form S-1
Submitted February
2, 2021
CIK 0001693853
Dear Mr. Marsh:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 1 to Draft Registration Statement on Form S-1
Industry and Market Data , page vii
1. We note your response
to our prior comment 4. Please revise to include the names and
dates of the reports
you cite by The Oil & Gas Journal, Enverus, IEA, and EIA.
Prospectus Summary
Our Company , page 2
2. We note your revised
disclosure in response to our prior comment 3 that your 85%
weighted average rate
of return is based on internal cost assumptions for your remaining
drilling locations at a
NYMEX gas price of $2.75 per MMbtuMMBtu. Please provide us
with these cost
assumptions and tell ushow you calculated this weighted average rate of
Eric D. Marsh
FirstName LastNameEric D. Marsh
Vine Resources Inc.
Comapany16,
February NameVine
2021 Resources Inc.
February
Page 2 16, 2021 Page 2
FirstName LastName
return.
Recent Developments, page 10
3. We note your response to prior comment 8, but we were unable to find
revisions in your
submission. Revise your disclosure to better describe the effects of
the COVID-19
pandemic, what management expects its future impact will be, how
management is
responding to evolving events, and how it is planning for
COVID-19-related
uncertainties. Refer to Disclosure Guidance Topics Nos. 9 & 9A.
Recent Debt Transactions, page 11
4. We note your disclosure regarding your recent debt transactions.
Please file copies of
your Second Term Lien Loan, Second Lien Credit Agreement, Third Lien
Credit
Agreement, and amendment to and extension of your RBL, as exhibits
with your
registration statement.
Summary Historical and Unaudited Pro Forma Condensed Combined Financial
Information,
page 21
5. Disclosure on page 23 of your submission states that you define
levered free cash flow as
the amount of money you have remaining after paying your financial
obligations related to
investing activities prior to considering any funds received from or
paid for financing
activities. Your disclosure goes on to state that, to the extent it is
positive, levered free
cash flow demonstrates you generated cash that can be used for other
purposes including
reducing debt, distributions to shareholders, or simply increasing
your cash
position. Revise your disclosure as non-GAAP measures such as the one
presented in
your submission should not be used in a manner that implies they
represent the residual
cash flow available for discretionary expenditures. For additional
guidance, refer to
question 102.07 of the Compliance & Disclosure Interpretations for
Non-GAAP Financial
Measures.
6. You define the non-GAAP measure unlevered free cash flow as the amount
of money you
have remaining after paying your financial obligations related to
investing activities prior
to considering any funds received from or paid for financing
activities and cash interest
expense. It appears that this non-GAAP liquidity measure excludes
charges (i.e., cash
interest expense) that required, or will require, cash settlement.
Revise your disclosure to
comply with Item 10(e)(1)(ii)(A) of Regulation S-K.
Risk Factors
Our amended and restated certificate of incorporation will designate the Court
of Chancery of the
State of Delaware, page 47
7. Revise the risk factor to clarify that the exclusive forum provision
in your amended and
restated certificate of incorporation will not apply to Securities Act
or Exchange Act
claims. We note your disclosure on page 140.
Eric D. Marsh
FirstName LastNameEric D. Marsh
Vine Resources Inc.
Comapany16,
February NameVine
2021 Resources Inc.
February
Page 3 16, 2021 Page 3
FirstName LastName
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Overview
Capital Resources and Liquidity, page 73
8. We note disclosure which states that you plan to fund your 2021
capital expenditures
through cash flow from operations, proceeds from this offering and
borrowings under
your New RBL facility. Please expand your discussion to disclose your
expected capital
expenditures for the year ended December 31, 2021. Refer to Item
303(a)(2)(i) of
Regulation S-K.
Business
Our Operations
Reserves Data and Presentation, page 97
9. Your response to prior comment 13 clarifies that all of the probable
and possible reserves
presented on pages 98, 99, and 102 are undeveloped; however, your
disclosure continues
to present these reserves without clarifying that these reserves are
undeveloped. Refer to
the requirements in Items 1202(a)(2)(v) and (a)(2)(vii) of Regulation
S-K regarding the
disclosure of the estimated probable and possible reserves by
producing status category,
e.g. probable undeveloped and possible undeveloped reserves,
respectively, and revise
your disclosure accordingly.
Proved Undeveloped Reserves (in MMcf), page 100
10. The proved undeveloped reserve figure of 367,423 MMcf shown for Brix
and Harvest
combined at December 31, 2020 appears to be inconsistent with the
corresponding
estimates in Exhibits 99.5 and 99.8, respectively. Revise your
disclosure to resolve this
apparent inconsistency as well as the resulting inconsistency in the
proved undeveloped
reserve figure of 1,723,298 MMcf shown for the Combined entities
at December 31,
2020.
11. The figure of 135,545 MMcf shown in the opening line of footnote (3)
that represents the
total negative non-economic change, if combined with the figure of
712,255 MMcf
representing the total negative change due to economic factors, does
not reconcile to the
overall change of 832,532 MMcf for the line item. Please revise your
disclosure to
resolve the apparent inconsistency
12. We have read your response to prior comment 14 and note that you have
expanded the
discussion of the changes that occurred due to revisions of the
previous estimates in the
net quantities of your proved undeveloped reserves. However, it
appears that comparable
modifications were not incorporated into the discussion of the
revisions that occurred in
the net quantities of total proved reserves for Vine Oil & Gas LP on
page F-35 or Brix Oil
& Gas on page F-66 of Submission No. 2, respectively. Please revise
your disclosure to
separately quantify the net amount attributable to each underlying
factor to reconcile to
the overall change due to revisions so that the change in net reserves
between periods is
Eric D. Marsh
FirstName LastNameEric D. Marsh
Vine Resources Inc.
Comapany16,
February NameVine
2021 Resources Inc.
February
Page 4 16, 2021 Page 4
FirstName LastName
fully explained. Refer to the requirements in FASB ASC 932-235-50-5.
Adjusted Index Prices Used in Reserve Calculations,, page 102
13. Please expand the tabular disclosure presented on page 103 to
additionally disclose the
comparable SEC prices used to estimate the probable and possible
reserves as of
December 31, 2020 and 2019, respectively.
14. We have read your response to prior comment 15. Please expand the
disclosure of the
NYMEX futures prices presented on page 104 to additionally provide the
average volume
weighted realized price per Mcf after adjustments for basis and other
factors affecting the
prices sales received.
Preparation of Reserve Estimates, page 105
15. We have read your response to prior comment 14 and note that you have
expanded your
disclosure to discuss the uncertainty related to the estimates of
probable reserves included
in the prospectus. However, it appears that your disclosure does not
include a comparable
discussion of the uncertainty related to the estimates of the possible
reserves included in
the prospectus. Please revise your disclosure to comply with the
requirements in Item
1202(a)(5) of Regulation S-K.
Experts, page 162
16. Please expand the disclosure to reference to reserve reports prepared
by Von Goten as of
December 31, 2020.
Financial Statements
Unaudited Pro Forma Condensed Combined Financial Statements
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
Note 3 - Transaction Accounting Adjustments, page F-9
17. With reference to the relevant guidance per Rule 11-02 of Regulation
S-X, explain your
bases for pro forma adjustment (c) for the write-off of historical
debt issuance costs and
the elimination of amortization expense of such costs related to the
Brix Credit Facility
and pro forma adjustment (m) for the monitoring fee which will be
eliminated upon
completion of the offering.
Vine Oil & Gas LP
Consolidated Statements of Operations, page F-15
18. We note your response to prior comment 22, but it does not appear that
you have
provided pro forma tax and earnings per share data on the face of your
historical
statements of operations. Revise to provide this type of presentation
as you will become a
taxpaying entity for federal income tax purposes following the
completion of your
planned corporate reorganization.
Eric D. Marsh
FirstName LastNameEric D. Marsh
Vine Resources Inc.
Comapany16,
February NameVine
2021 Resources Inc.
February
Page 5 16, 2021 Page 5
FirstName LastName
Exhibits and Financial Statement Schedules, page II-2
19. The reserves reports submitted as Exhibits 99.1 through 99.9 do not
appear to address all
of the requirements of the report pursuant to Item 1202(a)(8) of
Regulation S-K. Please
obtain and submit revised reserves reports to address the following
points.
The reserves report should disclose the producing status
category for the estimated
probable and possible reserve in the report, e.g. developed
and/or undeveloped, to
comply with Item 1202(a)(8)(ix) and Item 1202(a)(2) of Regulation
S-K,
respectively.
The reserves report should disclose the proportion of the
registrant s total reserves,
e.g. total proved, total probable and total possible, covered by
the report to comply
with Item 1202(a)(8)(iii) of Regulation S-K.
The reserves report should disclose that the estimates of
proved, probable and
possible reserves presented in the report were prepared in
conformance with the
Securities and Exchange Commission (SEC) definitions and
requirements as set forth
in Rule 4-10(a) of Regulation S-X to comply with Item
1202(a)(8)(iv) of Regulation
S-K.
The reserves report should discuss the inherent uncertainties
with respect to the
probable and possible reserves included in the report to comply
with Item
1202(a)(8)(vii) and Item 1202(a)(5) of Regulation S-K,
respectively.
20. The reserves reports submitted as Exhibits 99.1 through 99.96 include
disclosure that
appears to be excerpted from the Society of Petroleum Engineers (
SPE ), the World
Petroleum Council ( WPC ), the American Association of Petroleum
Geologists
( AAPG ), and the Society of Petroleum Evaluation Engineers (
SPEE ) Petroleum
Resources Management System ( PRMS ). Please tell us what reliance
you have placed
upon guidance other than the definitions and requirements identified
under (1) Item
1201(c) of Regulation S-K which specifies that the definitions in Rule
4-10(a) of
Regulation S-X shall apply for purposes of disclosure under Subpart
229.1200 and (2) the
FASB Accounting Standards Codification Topic 932, Extractive
Activities Oil and Gas
in the preparation of the estimates of the proved, probable and
possible reserves disclosed
in the reserves report and in the prospectus.
21. The reserves reports included as Exhibits 99.3, 99.6 and 99.9 should
be revised to clarify,
if true, that the report was prepared for inclusion in certain filings
made with the
Securities and Exchange Commission (SEC) as a reserves sensitivity
analysis in
accordance with the definitions and regulations of the SEC other than
the use of optional
price and cost parameters as specified in the report pursuant to Item
1202(b) of Regulation
S-K to comply with Items 1202(a)(8)(i), (iv) and (a)(v) of Regulation
S-K.
22. The reserves reports included as Exhibits 99.3, 99.6 and 99.9 should
be revised to disclose
Eric D. Marsh
Vine Resources Inc.
February 16, 2021
Page 6
the average initial product prices in $ per MMBtu before adjustments for
price
differentials weighted by production over the remaining lives of the
properties along with
the average realized product prices in $ per Mcf after adjustments for
price differentials
weighted by production over the remaining lives of the properties for
each reserves
category included in the report, e.g. total proved, total probable and
total possible, to
comply with Item 1202(a)(8)(v) of Regulation S-K.
23. You disclose the net quantities of total proved reserves and the changes
therein at
December 31, 2018 for Vine Oil & Gas LP on page F-35 or Brix Oil & Gas on
page F-66
of Submission No. 2, respectively. Tell us why the reserves reports
prepared by W.D.
Von Gonten at December 31, 2018 have been removed from the list of
exhibits and were
not submitted with the registration statement.
You may contact Joseph Klinko, Staff Accountant, at 202-551-3824 or
Ethan Horowitz,
Accounting Branch Chief, at 202-551-3311 if you have questions regarding
comments on the
financial statements and related matters. You may contact John Hodgin,
Petroleum Engineer, at
202-551-3699 with questions about engineering comments. Please contact Irene
Barberena-
Meissner, Staff Attorney, at 202-551-6548 or Loan Lauren Nguyen, Legal Branch
Chief, at 202-
551-3642 with any other questions.
Sincerely,
FirstName LastNameEric D. Marsh
Division of
Corporation Finance
Comapany NameVine Resources Inc.
Office of Energy &
Transportation
February 16, 2021 Page 6
cc: Michael Rigdon, Esq.
FirstName LastName