United States securities and exchange commission logo
May 8, 2023
Howard Crosby
Chief Executive Officer
LGX Energy Corp.
6 1/2 N. 2nd Ave., Suite 201
Walla Walla, WA 99362
Re: LGX Energy Corp.
Amendment No. 1 to
Offering Statement on Form 1-A
Filed April 20,
2023
File No. 024-12189
Dear Howard Crosby:
We have reviewed your amended offering 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 offering 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 offering statement and the
information you
provide in response to these comments, we may have additional comments.
Amendment No. 1 to Offering Statement on Form 1-A
Risk Factors
Risks Relating to Our Business and Industry
Our development and exploration projects require substantial capital
expenditures ..., page 6
1. Please expand the
discussion relating to your intent and the risks, if any, relating to the
sources of funds
necessary to finance your future capital expenditures to additionally
provide the total
dollar amount of the estimated future development capital required to
convert the probable
undeveloped reserves disclosed as of March 31, 2023. Refer to the
requirements in Rule
4-10(a)(26) of Regulation S-X.
Howard Crosby
FirstName LastNameHoward Crosby
LGX Energy Corp.
Comapany
May 8, 2023NameLGX Energy Corp.
May 8,
Page 2 2023 Page 2
FirstName LastName
Business
Drilling Activity, page 33
2. The value you have disclosed for net productive wells appears to be
based on applying the
net revenue interest percentage, and not the working interest
percentage, to the
corresponding gross value. Please revise your disclosure, as
necessary, to correct the
figure for the number of net productive wells drilling during the year
ended April 30,
2023. Refer to the guidance for the disclosure of net wells in Item
1205(a)(2) and the
definition of a net well or a net acre in Item 1208(c)(2) of
Regulation S-K. This comment
also applies to the disclosure of the figures for the number of net
productive wells
presented on page 34 and net acreage amounts on page 36.
3. Please expand your disclosure to separately provide information, if
material, relating to (i)
the number of gross and net productive and dry development and
exploratory wells
drilled, (ii) the total number of gross and net productive wells, and
(iii) the total gross and
net developed and undeveloped acres associated with your royalty
and/or overriding
royalty interests. For the purposes of disclosing net royalty wells
and acres in which you
do not hold a working interest, consider the net revenue interest as a
substitute for the
working interest. Refer to Items 1205 and 1208 of Regulation S-K.
Natural Gas and Oil Reserves
Reserve Estimates, page 34
4. We note you disclose estimates of proved reserves as of March 31,
2023. Please expand
your disclosure to additionally provide the information required by
Items 1202(a)(1) and
(a)(2) regarding the net quantities of proved reserves as of your most
recent fiscal year
end, e.g. as of April 30, 2022.
5. Please expand the disclosure relating to your probable reserves and
cash flows to include
cautionary language clarifying that your estimates have not been
adjusted for uncertainty,
and therefore may not be comparable and should not be summed with
estimates of proved
reserves. Please refer to Item 1202(a)(5) of Regulation S-K and to
question 105.01 in the
Compliance and Disclosure Interpretations ( C&DIs ) regarding Oil
and Gas Rules.
6. We note the figures for your estimated net present value discounted at
10% ( PV-10 ) and
the standardized measure are identical; however, your discussion
explains that these two
measures differ only in that that the standardized measure reflects
estimated future income
taxes. Please revise your disclosure as necessary to resolve this
apparent inconsistency.
7. Please expand the discussion accompanying the presentation of your
PV-10 and
standardized measure to clarify, if true, that future cash flows take
into account the
estimated abandonment costs for your proved and probable properties.
Refer to FASB
ASC 932-235-50-36.
Howard Crosby
FirstName LastNameHoward Crosby
LGX Energy Corp.
Comapany
May 8, 2023NameLGX Energy Corp.
May 8,
Page 3 2023 Page 3
FirstName LastName
If the abandonment costs, including such costs related to your
probable undeveloped
locations, have not been included, please explain to us your rationale
for excluding these
costs from your calculations.
Productive Wells, page 34
8. We note disclosure on page 34 of seven total gross productive wells.
However, the table
on page 32 identifies six gross producing wells, one gross not
completed well and one
gross well shut-in for repairs. Please refer to the definition of a
productive well in Item
1208(c)(3) of Regulation S-K and revise your disclosure, if you
determine that the shut-in
well meets the requirements for disclosure as a productive well.
Volume, Prices and Production Costs, page 34
9. Please modify the disclosure of your production to provide the net
revenue interest share
of your sales volumes by final product sold. Refer to Instruction 1 to
Item 1204 of
Regulation S-K.
10. Please expand your disclosure to provide the average production cost,
not including ad
valorem and severance taxes, per unit of production. Refer to Item
1204(b)(2) of
Regulation S-K.
Reserve Estimation Process, Controls and Technologies, page 35
11. We note your discussion indicates the estimates of reserves and net
cash flows, including
estimates of PV-10 and the standardized measure shown on page 35, were
prepared by
John V. Miller, the President of Adler Energy L.C. However, the
subsequent discussion
refers to year-end reserve reports prepared by reserve engineering
firms. Please revise
your disclosure as necessary to resolve this apparent inconsistency.
If your year-end estimates were prepared by an independent third party
engineering firm,
unrelated to John V. Miller, please obtain and file a copy of the
reserves report and
consent of the third party as exhibits to Form 1-A, including such
reports relating to
estimates of reserves as of dates other than March 31, 2023. Refer to
Item 1202(a)(8) of
Regulation S-K and Item 17.11 of Part III of Form 1-A.
Developed and Undeveloped Acreage, page 36
12. Please revise your disclosure to resolve the apparent inconsistency in
the figures relating
to the net developed and undeveloped acreage amounts presented on page
36 and the
combined total net acreage amount presented on page 32.
Proved Undeveloped Reserves, page 36
13. We note disclosure that there were no proved undeveloped reserves at
March 31, 2023.
However, Item 1203(a) of Regulation S-K requires that you disclose
information relating
to the total quantities of proved undeveloped reserves as of your most
recent fiscal year
Howard Crosby
LGX Energy Corp.
May 8, 2023
Page 4
end, e.g. as of April 30, 2022. If you did have proved undeveloped
reserves as of April
30, 2022, please expand your disclosure to include the information
required in Items
1203(a), 1203(b) and 1203(c) of Regulation S-K.
Notes to the Consolidated Financial Statements, page F-6
14. Please tell us how you considered the requirement to disclose the
information, as
applicable, in FASB ASC 932-235-50-3 through 50-36 for the fiscal year
ended April 30,
2022, to comply with Item 302(b) of Regulation S-K, applicable via Part 1
Item 11(h) of
Form S-1 and Parts II(a)(1)(ii) and F/S(c)(1) of Form 1-A.
You may contact John Hodgin, Petroleum Engineer, at (202) 551-3699 or
Brad Skinner,
Office Chief, at (202) 551-3489 if you have questions regarding engineering
comments and
related matters. Please contact Cheryl Brown, Staff Attorney, at (202) 551-3905
or Mitchell
Austin, Acting Legal Branch Chief, at (202) 551-3574 with any other questions.
Sincerely,
FirstName LastNameHoward Crosby
Division of
Corporation Finance
Comapany NameLGX Energy Corp.
Office of Energy &
Transportation
May 8, 2023 Page 4
cc: Thomas J. Beener, Esq.
FirstName LastName