United States securities and exchange commission logo
June 9, 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. 2 to
Offering Statement on Form 1-A
Filed June 5, 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.
Unless we note
otherwise, our references to prior comments are to comments in our May
8, 2023 letter.
Amendment No. 2 to Form 1-A filed June 5, 2023
Business
Drilling Activity, page 33
1. We note that you
removed the table previously disclosed under this heading in
Amendment No. 1
presenting the information relating to the number of gross and net
productive and dry
development and exploratory wells drilled on an annual basis during
each of the last two
fiscal years. Please revise your disclosure to include this information
to comply with the
requirements in Item 1205 of Regulation S-K.
Howard Crosby
FirstName LastNameHoward Crosby
LGX Energy Corp.
Comapany
June 9, 2023NameLGX Energy Corp.
June 9,
Page 2 2023 Page 2
FirstName LastName
Productive Wells, page 33
2. We have read your response to prior comment 2 but note you continue to
disclose your net
productive wells based on applying your net revenue interest
percentage (66.274%), and
not the working interest percentage (93.25%), to the corresponding
gross value. Please
revise your presentation to correct the figure relating to the number
of net productive
wells as of the year ended April 30, 2023. Refer to the requirements
for the disclosure of
productive wells in Item 1208(a) and the definition of a net well in
Item 1208(c)(2) of
Regulation S-K. This comment also applies to the disclosure of the
figures for the number
of net wells drilled under the disclosure of your Drilling
Activity.
Natural Gas and Oil Reserves
Reserve Estimates, page 34
3. We have read your response to prior comment 4 and note you revised the
as of date for
your reserves from March 31, 2023 to April 30, 2023. However, it
appears that the
estimates of proved producing reserves of 24,602 barrels of oil and
the average 12-month
first-day-of-the-month realized oil price of $70.00 per barrel
previously disclosed as of
March 31, 2023 have not been revised to give effect to the production
that occurred
between the periods or the oil price corresponding to the new
effective date as of April 30,
2023. Please revise your disclosure to correctly reflect the estimates
as of the period
ending April 30, 2023. For additional guidance, please refer to
Instruction 1 to Item
1202(a)(2) of Regulation S-K and Rule 4-10(a)(22)(v) of Regulation
S-X.
4. Please expand the table on page 34 presenting your proved reserves to
include a line item
for proved undeveloped reserves with a figure of 0 to be
consistent with your disclosure
of the future net cash flows on page 35 and the discussion of your
proved undeveloped
reserves on page 36. Refer to the disclosure requirements in Items
1202(a)(1) and (a)(2) of
Regulation S-K.
5. We have read your response to prior comment 5 but reissue our comment
as we are unable
to locate the expanded disclosure relating to your probable reserves
and cash flows that
includes 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. Refer to the requirements in 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 have read your response to prior comment 6 but are unable to locate
your expanded
disclosure. 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 expand your disclosure to clarify why the
two figures are
identical, e.g., you do not have an income tax obligation at April 30,
2023.
Howard Crosby
LGX Energy Corp.
June 9, 2023
Page 3
7. We have read your response to prior comment 7 but reissue our comment
as we are unable
to locate your expanded disclosure stating your future cash flows
include the costs to
abandon your proved and probable properties. If your future cash flows
do not include
these costs, revise your estimates as necessary. Refer to FASB ASC
932-235-50-36.
Volume, Prices and Production Costs, page 34
8. We note the discussion preceding the table on page 34 states the
following table sets
forth certain information regarding the gross production volumes.
However, the line-item
header in the table is shown as Net Production. Please revise
your disclosure to correct
this inconsistency.
9. We note that you updated the figure for your net production from 5,703
barrels of oil for
the period ending March 31, 2023 to 6,403 barrels of oil for the
fiscal year ended April 30,
2023; however, the average sales price of oil appears to remain
unchanged from the
$81.81 per barrel previously disclosed. Please revise your disclosure
to present the
average twelve-month sales price for the fiscal year ended April 30,
2023. Refer to the
disclosure requirements in Item 1204(b)(1) of Regulation S-K.
10. We have read your response to prior comment 10 but reissue our comment
as we are
unable to locate your expanded disclosure of the average production
cost, not including ad
valorem and severance taxes, per unit of production for the twelve
months ending April
30, 2023. Refer to the requirements in Item 1204(b)(2) of Regulation
S-K.
Reserve Estimation Process, Controls and Technologies, page 35
11. We have read your response to prior comment 11 and note your revised
disclosure
removing the references to year-end reserve reports prepared by
reserve engineering
firms. However, it appears that you also removed the discussion of the
internal controls
used by your management in your reserves estimation effort. Please
revise your discussion
to comply with the disclosure requirements in Item 1202(a)(7) of
Regulation S-K.
Notes to the Consolidated Financial Statements, page F-20
12. We have read your response to prior comment 14 but reissue our comment
as we are
unable to locate your disclosure revisions. Please revise your
disclosure to include 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
FirstName LastNameHoward Crosby
1 Item 11(h) of Form S-1 and Parts II(a)(1)(ii) and F/S(c)(1) of Form
1-A. For additional
Comapany NameLGX
guidance, Energy
refer to Corp. of the presentation formats that may be
used to disclose
the examples
June 9,the required
2023 Page 3information shown in FASB ASC 932-235-55-1.
FirstName LastName
Howard Crosby
FirstName LastNameHoward Crosby
LGX Energy Corp.
Comapany
June 9, 2023NameLGX Energy Corp.
June 9,
Page 4 2023 Page 4
FirstName LastName
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, Staff Attorney, at (202) 551-3574 with any other questions.
Sincerely,
Division of
Corporation Finance
Office of Energy &
Transportation
cc: Thomas J. Beener, Esq.