United States securities and exchange commission logo
June 8, 2022
Mehran Ehsan
Chief Executive Officer
Permex Petroleum Corporation
100 Crescent Court, Suite 700
Dallas, TX 75201
Re: Permex Petroleum
Corporation
Draft Registration
Statement on Form F-1
Submitted May 12,
2022
CIK No. 0001922639
Dear Mr. Ehsan:
We have reviewed your 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.
Draft Registration Statement on Form F-1 filed May 12, 2022
Glossary of Terms, page 4
1. The definition provided
in your glossary for Proved Undeveloped Reserves or PUDs
does not appear to be
fully consistent with the definitions in Rule 4-10(a)(22) and (a)(31)
of Regulation S-X.
Please revise as necessary to resolve the inconsistency and tell us of
any implications for
the reserve quantities that you have estimated based on the definition
disclosed rather than
the prescribed definition.
Risk Factors, page 13
2. Please add risk factor
disclosure discussing the more limited SEC reporting requirements
applicable to you as a
foreign private issuer, as compared to a domestic reporting
Mehran Ehsan
FirstName LastNameMehran Ehsan
Permex Petroleum Corporation
Comapany
June 8, 2022NamePermex Petroleum Corporation
June 8,
Page 2 2022 Page 2
FirstName LastName
issuer, and the attendant risks for investors. We note in this regard
your disclosures on
page 70 of your reporting requirements as a foreign private issuer.
Our common shares are subject to the "penny stock" rules of the SEC..., page 23
3. We note your disclosure in this risk factor that your common shares
are subject to the
"penny stock" rules. However, we note your common stock page on OTC
Markets,
available at https://www.otcmarkets.com/stock/OILCF/overview,
discloses that your stock
is "Penny Stock Exempt." Please clarify if your common stock is a
"penny stock" as
defined in SEC Rule 3a51-1 and make consistent disclosure.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Liquidity and Capital Resources, page 31
4. We note your disclosure projecting gross revenue from oil and gas
sales of C$1,400,000
and general administrative expenses of C$800,000 for the next 12
months. Please expand
your disclosure to discuss and quantify all material assumptions
underlying your projected
financial information, and explain how your projections are
representative of your current
business operations and opportunities, given that you generated only
C$59,109 in oil and
gas sales revenue in fiscal year ended September 30, 2021 as reported
on page F-4. Also
please note that revenue projection generally should not be presented
without a measure of
income such as net income or earnings per share. Refer to additional
guidance in Item
10(b) of Regulation S-K, applicable pursuant to General Instruction
C.(e) of Form 20-F,
as directed by General Instruction II.B. of Form F-1, and revise your
disclosure
accordingly.
5. We note the disclosure that you expect to invest additional capital in
your oil and gas
project development. Please expand your disclosures to quantify any
material
commitments for capital expenditures as of and subsequent to September
30, 2021 and
provide an indication of the general purpose of such requirements and
the anticipated
sources of funds needed to satisfy such requirements. Refer to Part I,
Item 5.B.3 of Form
20-F and Item 5.D. of Form 20-F.
Business
Oil and Gas Properties, page 35
6. We note that you have omitted many of the disclosures prescribed by
Subpart 1200 of
Regulation S-K, which is applicable via Instruction 2 to Item 4 of
Form 20-F, and Item
4(a) of Form F-1. We have provided specific Item references in
comments where the
need for revision or incremental disclosure is apparent. Please ensure
that you have
considered and satisfied all of the applicable requirements when
preparing the amendment
to your registration statement.
7. We note your disclosures on pages 8, 29 and 35, indicating that your
estimates of oil and
gas reserves as of September 30, 2021 and September 30, 2020, have
been derived from
independent appraisal reports prepared by MKM Engineering.
Mehran Ehsan
FirstName LastNameMehran Ehsan
Permex Petroleum Corporation
Comapany
June 8, 2022NamePermex Petroleum Corporation
June 8,
Page 3 2022 Page 3
FirstName LastName
Please expand your disclosure under Experts on page 69 to identify the
engineering firm,
and obtain and file copies of the reserve reports and a consent from
the engineering firm
as exhibits to comply with Item 1202(a)(8) and Item 601(b)(23) of
Regulation S-K, which
is applicable pursuant to Item 8(a) of Form F-1.
Please ensure that the reserve reports from MKM Engineering satisfy
the disclosure
requirements for reserves reports in Item 1202(a)(8)(i) through (x) of
Regulation S-K.
8. You disclose that your reserves as of September 30, 2021 and September
30, 2020 were
prepared by MKM Engineering "...using standard engineering practices
generally
accepted by the petroleum industry and conform to those
classifications defined in the
Canadian Oil and Gas Evaluation Handbook."
However, you should adhere to the definitions in Rule 4-10(a) of
Regulation S-X in
preparing the reserve estimates disclosed in your filing to comply
with Item 1201(c) of
Regulation S-K. If your estimates do not fulfill the requirements to
be classified as
reserves based on these definitions, please revise your disclosures,
and obtain and file
revised reserves reports, that are consistent with these requirements.
9. Please expand the tabular presentation of your proved and probable
reserves to
additionally disclose the net quantities of developed and/or
undeveloped reserves by
separate product types, e.g. oil/condensate, natural gas liquids and
natural gas, to comply
with Items 1202(a)(2) and (a)(4) of Regulation S-K.
10. Please revise the tabular presentation of reserves provided on pages
8, 29 and 35 and any
related .disclosures elsewhere in the filing to remove the arithmetic
summation of
information relating to the individual estimates of proved and
probable reserves.
Please also include a discussion of the uncertainty relating to your
probable reserves, and
cautionary language to clarify that because such estimates have not
been adjusted for risk
associated with this uncertainty, the risk profile is different than
for estimates of proved
reserves and therefore should not be added together as if they were
the same.
You may refer to Item 1202(a)(5) of Regulation S-K and the Answer to
Question 105.01
in our Compliance and Disclosure Interpretations ( C&DIs )
regarding Oil and Gas
Rules, available on our website at
https://www.sec.gov/divisions/corpfin/guidance/oilandgas-interp.htm,
if you require
further clarification or guidance.
11. Please expand your disclosure to provide a general discussion of the
technologies used to
establish the appropriate level of certainty for your various reserves
estimates to comply
with Item 1202(a)(6) of Regulation S-K.
Mehran Ehsan
FirstName LastNameMehran Ehsan
Permex Petroleum Corporation
Comapany
June 8, 2022NamePermex Petroleum Corporation
June 8,
Page 4 2022 Page 4
FirstName LastName
12. Please include a discussion of your internal controls pertaining to
your estimation of oil
and gas reserves, and the qualifications of the technical persons at
the company and at
MKM Engineering who are primarily responsible for overseeing the
preparation of the
reserves estimates presented in your filing to comply with Item
1202(a)(7) of Regulation
S-K.
13. Please disclose the information required by Item 1203(b), (c) and (d)
of Regulation S-K,
relating to your proved undeveloped reserves.
14. Please disclose the average sales prices, net production quantities by
final product sold,
and average production costs per unit of production, for each of the
last three fiscal years
to comply with Item 1204 of Regulation S-K.
15. Please expand your disclosure to include (i) the number of net
productive and dry
development and exploratory wells drilled during each of the last
three fiscal years and (ii)
the total number of gross and net productive wells, including wells
with royalty interests,
as of the end of your current fiscal year, to comply with Items 1205
and 1208(a) of
Regulation S-K, based on the definitions in Items 1205(b) and 1208(c)
of Regulation S-K.
16. Please disclose the total gross and net developed and undeveloped
acreage, material
undeveloped acreage concentrations, and the expiration dates of leases
and concessions to
comply with Items 1208(a) and (b) of Regulation S-K.
17. Please disclose 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 September 30, 2021 to comply
with Item 1206 of
Regulation S-K.
Business
Marketing and Customers, page 38
18. We note your disclosure that for the years ended September 30, 2021
and 2020, you had
two significant purchasers that accounted for approximately 49% and
45%, respectively,
of your total oil, natural gas and NGL revenues, and if you lost one
or more of these
significant purchasers and were unable to sell your production to
other purchasers on
terms you consider acceptable, it could materially and adversely
affect your business.
Please include a separate risk factor related to substantial
dependence on a limited number
of customers, if applicable. See Part I, Item 3.D of Form 20-F.
Management, page 45
19. Please revise to disclose the date of expiration of the current terms
of each of your
directors. Refer to Item 4.a of Form F-1 and Part I, Item 6.C.1 of
Form 20-F.
Mehran Ehsan
FirstName LastNameMehran Ehsan
Permex Petroleum Corporation
Comapany
June 8, 2022NamePermex Petroleum Corporation
June 8,
Page 5 2022 Page 5
FirstName LastName
Financial Statements, page F-3
20. Given that you have filed interim financial statements and MD&A
covering the six
months ended March 31, 2022 on SEDAR, you will need to update your
filing to include
this information, consistent with Item 8.A.5 of Form 20-F, applicable
pursuant to Item 4.a
and Item 4A.(b)2 of Form F-1.
Notes to the Consolidated Financial Statements, page F-7
21. Please disclose the information prescribed by FASB ASC 932-235-50-4,
50-5, 50-31 and
50-35 for the years ended September 30, 2020 and 2021, to comply with
Item 17(b) and
Instructions 1 and 2 to Item 18 of Form 20-F, applicable via Item 4(b)
of Form F-1. Please
refer to the examples in FASB ASC 932-235-55-2, 55-6, 55-7 in
formulating your
disclosures.
Financial Statements
Note 7 - Property & Equipment, page F-17
22. We note you disclosed under this heading that on September 30, 2021,
you acquired
working interest and net revenue interest in the Breedlove B
Clearfork leases in Texas
for total purchase price of 25 million common shares issued at fair
value of C$3.125
million and 12.5 million share purchase warrants valued at
approximately C$1.5 million
using the Black-Scholes option pricing model, while you disclosed on
pages 28 and 35
that the purchase price was US$2 million payable in 25 million common
shares and 12.5
million share purchase warrants.
Please revise your disclosures as appropriate to explain or resolve
the discrepancy, which
appears to remain even after giving consideration to the foreign
exchange translation rate
on September 30, 2021 of US$1 to C$1.27 as disclosed on page 70.
General
23. Please provide us with the analysis that supports your conclusion that
you are a foreign
private issuer and, thus, eligible to use Form F-1. Refer to Rule 405
of Regulation C. Also,
please disclose in the prospectus the percentage and number of record
holders of the
company s ordinary shares that are residents of the United States.
Refer to Part I, Item
7.A.2 of Form 20-F and Item 4(a) of Form F-1.
24. Please provide us copies of all written communications, as defined in
Rule 405 under
the Securities Act, that you, or anyone authorized to do so on your
behalf, present to
potential investors in reliance on Section 5(d) of the Securities Act,
whether or not they
retain copies of the communications.
You may contact Lily Dang, Staff Accountant, at (202) 551-3867 or Joseph
Klinko, Staff
Accountant, at (202) 551-3824 if you have questions regarding comments on the
financial
statements and related matters. You may contact John Hodgin, Petroleum
Engineer, at (202) 551-
Mehran Ehsan
Permex Petroleum Corporation
June 8, 2022
Page 6
3699 with questions about engineering comments. Please contact Cheryl Brown,
Staff Attorney,
at (202) 551-3905 or Kevin Dougherty, Staff Attorney, at (202) 551-3271 with
any other
questions.
Sincerely,
FirstName LastNameMehran Ehsan
Division of
Corporation Finance
Comapany NamePermex Petroleum Corporation
Office of Energy &
Transportation
June 8, 2022 Page 6
cc: Andrew Bond, Esq.
FirstName LastName