United States securities and exchange commission logo
August 20, 2021
David Rockecharlie
Chief Executive Officer
IE PubCo Inc.
600 Travis Street, Suite 7200
Houston, TX 77002
Re: IE PubCo Inc.
Registration
Statement on Form S-4
Filed July 26, 2021
File No. 333-258157
Dear Mr. Rockecharlie:
We have reviewed your 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 amending your registration
statement and providing the
requested information. 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 any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4
Material U.S. Federal Income Tax Consequences of the Merger, page 127
1. You state throughout
the proxy statement / prospectus that you "intend" the Mergers to be
treated as a
"reorganization." In this section you indicate that although "it is not a
condition to Contango
s obligation or New PubCo s obligation to complete the
Transactions that the
Mergers, taken together, be treated as a 'reorganization,'" your
ensuing discussion
"assumes that the Mergers, taken together, qualify as a
'reorganization' within
the meaning of Section 368(a) of the Code for U.S. federal income
tax purposes." Please
revise the disclosure here to name counsel and to provide as part of
its opinion a clear
statement as to whether the Mergers will qualify as a reorganization. In
that regard,
(presumably) counsel's opinion at page 129 that "a U.S. holder of Contango
Common Stock generally
will not recognize any gain or loss for U.S. federal income tax
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purposes upon the exchange ... pursuant to the Mergers" is based on
the Section 368(a)
assumption. However, counsel cannot assume any legal conclusion
underlying the
opinion. Please see Staff Legal Bulletin 19 at Section III.C.3.
2. We note that you will file an opinion of counsel as exhibit 8.1. Make
clear throughout
your proxy statement / prospectus that your disclosures regarding the
material tax
consequences are based on your reliance on that opinion. Please refer
to Sections III.B and
C of Staff Legal Bulletin 19. Also, disclose in the Summary and
Questions and Answers
sections that the receipt of an opinion from counsel as to the
expected tax consequences --
including that a U.S. holder of Contango Common Stock generally will
not recognize any
gain or loss for U.S. federal income tax purposes upon the exchange --
is not a condition to the merger. Clearly disclose the potential
material tax consequences
that could differ from what the opinion states insofar as there is no
condition that counsel
provide such an opinion, and disclose your intentions regarding
recirculation and
resolicitation if the changes are material.
Unaudited Pro Forma Condensed Combined Financial Statements
Unaudited Pro Forma Condensed Combined Statements of Operations, page 189
3. Please revise your pro forma statements of operations to provide
separate subtotals
showing Independence pro forma as adjusted for the Independence
Transactions and
showing Contango pro forma as adjusted for the Contango Transactions.
Alternatively,
you may present separate pro forma statements of operations for
Independence and
Contango showing the effects of those transactions. Then separately
present the
Reclassification and Transaction Adjustments related to the Merger,
which is subject to
shareholder vote, applied to the pro forma as adjusted amounts for
Independence and
Contango. Information related to the Merger Transaction which is
subject to shareholder
vote should be disaggregated from the other separate transactions of
each entity.
Unaudited Pro Forma Condensed Combined Financial Statements
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
Note 4 Supplemental Pro Forma Oil and Natural Gas Reserves Information
Oil and Natural Gas Reserves, page 201
4. Please expand your disclosure of proved reserves expressed as barrels
of oil equivalent to
clarify the basis for converting your natural gas volumes to
equivalent barrels of oil (e.g.
the number of cubic feet of natural gas per barrel of oil equivalent).
Refer to Instruction 3
to Item 1202(a)(2) of Regulation S-K.
5. Please expand the disclosure on page 201 to further explain the
reason(s) for the negative
adjustments in proved reserves and the resulting negative figures for
the standardized
measure presented on page 203 attributable to the Independence
Transaction Adjustments.
6. Please provide us with separate reconciliations for the proved
reserves by individual
product type and the standardized measure for the year ended December
31, 2020 for the
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individual sources you identify that comprise the Independence
Transaction Adjustments,
e.g. the Noncontrolling Carve-out and the Titan Acquisition.
7. Please expand your disclosure to clarify the party responsible for
preparing the estimates
of proved reserves and the standardized measure for the Noncontrolling
Carve-out and the
Titan Acquisition as of December 31, 2020, e.g. Independence or a
third party engineering
firm.
If a third party engineering firm prepared these estimates, tell us
the rationale for not
including the relevant reserves report as an exhibit to the
Registration Statement on Form
S-4.
Information About Independence
Preparation of Reserve Estimates, page 233
8. As part of your discussion of the preparation of the reserves
estimates, please expand
the disclosure to describe the internal controls used in your reserves
estimation effort and
disclose the qualifications of the technical person within
Independence that is primarily
responsible for overseeing the preparation of the reserves estimates
as of December 31,
2020.
Proved Undeveloped Reserves (PUDs), page 234
9. Please expand your disclosure to provide a narrative explanation of
the material changes
relating to each of the items you identify in the tabular
reconciliation of the changes in the
proved undeveloped reserves for the year ended December 31, 2020. To
the extent that
two or more unrelated factors are combined to arrive at the overall
change for an item,
your disclosure should separately identify and quantify each
individual factor that
contributed to the material change so that the change in net reserve
quantities between
periods is fully explained.
The disclosure of revisions in the previous estimates of your proved
undeveloped reserves
in particular should identify the individual factors such as the
changes caused by
commodity prices and/or costs, interests, well performance,
unsuccessful and/or
uneconomic proved undeveloped locations or the removal of proved
undeveloped
locations due to changes in a previously adopted development plan.
Refer to Item 1203(b)
of Regulation S-K.
Please similarly revise the explanation for the changes in the net
quantities of total proved
reserves presented on pages F-57 and F-73, for each period that
discloses significant
changes related to revisions in the previous estimates of reserves, to
comply with FASB
ASC 932-235-50-5.
10. You disclose 98,579 MBoe in total future proved undeveloped reserves
as of December
31, 2020. You also disclose that you converted 4,021 MBoe of
undeveloped reserves to
developed status during the year. That rate of conversion suggests
that you will not be
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able to develop the undeveloped reserves within five years of initial
disclosure of such
reserves at December 31, 2020.
Please expand your disclosure to discuss the progress made, including
the capital
expenditures incurred to convert your proved undeveloped reserves
during the year, and
any factors that impacted progress in the conversion of your proved
undeveloped reserves
to developed status. Refer to Item 1203(c) of Regulation S-K.
11. Please refer to Rule 4-10(a)(31)(ii) of Regulation S-X and the
Question 131.04 in the
Compliance and Disclosure Interpretations (C&DIs) and tell us if all
of the proved
undeveloped locations as of December 31, 2020 are part of a
development plan adopted
by management including approval by the Board, if such approval is
required.
To the extent that there are material amounts of proved undeveloped
reserves that will not
be converted to proved developed status within five years of initial
disclosure as proved
reserves, please expand your disclosure to explain the reasons for the
delay. Refer to Item
1203(d) of Regulation S-K and the answer to question 131.03 in the
Compliance and
Disclosure Interpretations (C&DIs), respectively.
Drilling and Other Exploratory and Development Activities, page 238
12. Please refer to the disclosure requirements in Item 1205(a) of
Regulation S-K and explain
to us your rationale for limiting your disclosure to the wells drilled
for the year ended
December 31, 2020.
13. Please expand your disclosure to address your present activities,
including the number of
gross and net wells in the process of being drilled, completed, or
waiting on completion
and any other related activities of material importance as of December
31, 2020. Refer to
the disclosure requirements in Item 1206 of Regulation S-K.
Financial Statements, page F-1
14. Please update the unaudited interim historical financial statements of
Independence and
Contango and also update the pro forma financial information included
in the filing.
Refer to Rule 3-12 and Article 11 of Regulation of Regulation S-X.
Independence Energy LLC
Notes to Combined and Consolidated Financial Statements
Note 15 Supplemental Oil and Natural Gas Disclosures (Unaudited)
Standardized Measure of Discounted Future Net Cash Fows Relating to Proved Oil
and Gas
Reserves, page F-59
15. Expand the discussion accompanying the presentation of the
standardized measure to
clarify, if true, that future cash flows take into account the
estimated abandonment costs
for your proved properties. Refer to FASB ASC 932-235-50-36.
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If the abandonment costs, including such costs related to your proved
undeveloped
locations, have not been included for each of the periods presented,
e.g. as of December
31, 2020, 2019 and 2018, respectively, please explain to us your
rationale for excluding
these costs from your calculation of the standardized measure.
Liberty Energy, LLC
Supplemental Oil and Gas Information (Unaudited)
Estimated Quantities of Proved Oil and Natural Gas Reserves-Unaudited, page
F-73
16. Please expand your discussion to clarify the party responsible for
preparing the estimates
of proved reserves presented on page F-73.
Opinion of Jefferies, page G-1
17. Because the Contango board relied on the Jefferies opinion and in
light of disclosure at
page 113 that "Jefferies did not take into account any tax
consequences of the
Transactions to any holder of Contango Common Stock" but that
"Jefferies was advised
that no material income taxes would be due as a result of the Contango
Merger," clarify in
your discussion of the Contango board's recommendation at page 101 the
extent to which
any uncertainty regarding the tax consequences could result in the
board asking
for Jefferies to provide an updated opinion to reflect the uncertainty
or material changes.
Also revise to discuss why the board did not find it necessary to ask
Jefferies to "take into
account" tax consequences as part of rendering its opinion.
Exhibit Index
Exhibit Number 99.4, 99.5, 99.11, page II-6
18. The reserves report, filed as Exhibit 99.4, indicates RPM Energy has
included estimates of
proved undeveloped reserves for certain locations that generate
positive future net revenue
but have negative present worth discounted at 10 percent. Please tell
us the net quantities
of proved reserves attributed to such locations.
This comment also applies to the reserves reports, filed as Exhibit
99.6, 99.7, and 99.8, to
the extent that the negative future net revenues as noted are not the
result of abandonment
costs.
19. The reserves reports, filed as Exhibit 99.4 and 99.11, each indicate
that the per-well
overhead expenses allowed under joint operating agreements along with
the amounts to be
incurred at or below the district and field levels have not been
included as part of the
estimates. In particular, Exhibit 99.4 states that such expenses have
not been included in
the confirmation of economic producibility or in the determination of
economic limits for
the properties. Please explain to us in reasonable detail the
rationale for omitting such
costs. Refer to Rule 4-10(a)(22) and (a)(10), respectively, in
formulating your response.
20. The reserves report, filed as Exhibit 99.11, states that the future
net revenues presented in
the report include contractual fees paid to Bridge Energy by the NPI
owner for operating
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the properties. Please explain to us in reasonable detail the
rationale for including fees
paid by a third party for operating their properties as part of the
determination of the
future net revenues attributed to Bridge Energy's interests. Refer to
FASB ASC 932-235-
50-4.
21. The reserves report, filed as Exhibit 99.11, states that the estimates
in the report have been
prepared in accordance with the definitions and guidelines set forth
in the 2018 Petroleum
Resources Management System (PRMS) approved by the Society of
Petroleum Engineers
(SPE). Please obtain and file a revised reserves report that removes
reference to the
definitions and guidelines set forth in the 2018 Petroleum Resources
Management System.
Additionally, if the estimates of reserves and future net revenues
presented in Exhibit
99.11 do not fulfill the requirements to be classified as reserves
under Rule 4-10(a) of
Regulation S-X, including the requirements for prices and costs set
forth in Rule 4-
10(a)(22)(v), obtain and file a revised reserves report that complies
with these
requirements.
This comment also applies to the reserves reports, filed as Exhibits
99.6, 99.7 and 99.8.
Refer to the disclosure under section Reserves Classification on
page 2 of each report,
respectively.
22. The reserve reports, filed as Exhibits 99.4, 99.5, and 99.11, do not
include certain
disclosures required by Item 1202(a)(8)(i) through (a)(8)(x) of
Regulation S-K. Please
obtain and file revised reports that in each case includes the
required disclosures in order
to satisfy your filing obligations.
This comment also applies to the reserves reports, filed as Exhibits
99.6, 99.7, 99.8, 99.9
and 99.10, respectively.
Exhibit Number 99.6, 99.7, 99.8, page II-6
23. The reserve reports, filed as Exhibits 99.6, 99.7 and 99.8, each
indicates that the reserves
reports as filed rely on the results of another prior report, not
included with the exhibit.
Please obtain and file revised reports to include the referenced prior
reports as
supplemental information. Alternatively, remove these references if
you do not intend to
include this supplemental information with your filed reports.
This comment also applies to certain attachments that are not included
with the reserve
reports, filed as Exhibits 99.6, 99.7, 99.8 99.9, and 99.10,
respectively. Refer to the
disclosure under the section General Information in Exhibits 99.6,
99.7 and 99.7 that
reference additional supplemental information, e.g. summary tables of
economic analysis
of predicted future performance and other tables that identify the
properties appraised with
summary reserves and economic factors applicable to each. Refer to the
disclosure under
the section Presentation in Exhibits 99.9 and 99.10 that reference
Tables I and II not
included with the reports.
24. Please obtain and file revised reserve reports, Exhibits 99.6, 99.7,
and 99.8, to address
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disclosure regarding the following:
The report should state that the audited estimates are within a
specified audit
tolerance threshold and reference the standards for establishing
such thresholds. Refer
to the disclosure requirements under Item 1202(a)(8)(ix) and Item
1202(a)(9) of
Regulation S-K, respectively, and;
The report should include the qualifications of the technical
person within the
engineering firm that is primarily responsible for overseeing the
reserves audit. Refer
to Item 1202(a)(7) of Regulation S-K.
25. The disclosure under the section Operating Expenses & Capital Costs
states that for the
purpose of this report, salvage value for each project was assumed to
be equal to the
abandonment costs. Please tell us if this assumption is supported by,
and consistent with,
Fleur De Lis Energy s cost data.
Also explain to us the reason for the apparent inconsistency regarding
the assumption that
there are no net abandonment costs with the statement under the
section Disclaimers that
indicates the report contains cases with negative FNI, largely due to
abandon costs.
26. The disclosure under the section Disclaimers includes the statement
that without the
express written consent of Haas Engineering, only Fleur De Lis is
entitled to rely on this
report and any information, conclusions, and/or opinions contained
herein. Since the
referenced report is included in, and required as part of, a filing
made with the United
States Securities and Exchange Commission pursuant to Item 1202(a)(8)
of Regulation S-
K, please obtain and file revised reserves reports, Exhibits 99.6,
99.7, and 99.8, to remove
language that limits the distribution of the reports to an exclusive
audience.
Exhibit Number 99.9, 99.10, page II-6
27. The disclosure under the section Reserves and Drilling Locations
states that up to eight
PUD locations were assigned around a single horizontal producer
assuming Vernado OIl
and Gas owned the acreage in all surrounding offset units. Refer to
Rule 4-10(a)(26) of
Regulation S-X and remove any PUD locations assigned to acreage in
which Vernado
does not own interests as of the effective date of the reserves report
or tell us why a
revision is not needed.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
David Rockecharlie
IE PubCo Inc.
August 20, 2021
Page 8
For questions regarding comments on engineering matters, you may contact
John Hodgin, Petroleum Engineer, at (202) 551-3699. You may contact Yong Kim,
Staff
Accountant, at (202) 551-3323 or Sondra Snyder, Staff Accountant, at (202)
551-3332 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Anuja A. Majmudar, Attorney-Advisor, at (202) 551-3844 or, in her
absence, Timothy S.
Levenberg, Special Counsel, at (202) 551-3707 with any other questions.
Sincerely,
FirstName LastNameDavid Rockecharlie
Division of
Corporation Finance
Comapany NameIE PubCo Inc.
Office of Energy &
Transportation
August 20, 2021 Page 8
cc: Doug McWilliams, Esq. of Vinson & Elkins LLP
FirstName LastName