Chancellor Group, Inc.
216 South Price Road
Pampa, Texas 79065
(806) 688-9697
November 18, 2011
United States Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Ms. Anne Nguyen Parker, Branch Chief
Re: Chancellor Group, Inc.
Preliminary Proxy Statement on Schedule 14A
Filed October 19, 2011
Current Report on Form 8-K
Filed October 20, 2011
File No. 000-30219
Ladies and Gentlemen:
The purpose of this letter is to set forth the response of Chancellor Group,
Inc. (the "Company") to your letter dated November 14, 2011 to Maxwell Grant,
Chairman and Chief Executive Officer of the Company, setting forth the comments
of the Division of Corporation Finance (the "Staff") regarding the Company's
Preliminary Proxy Statement on Schedule 14A filed on October 19, 2011 (the
"Preliminary Proxy Statement") and Current Report on Form 8-K filed on October
20, 2011 (the "Form 8-K"). For your convenience, we have repeated the Staff's
comments and used the section headings and numbering used by the Staff in its
letter.
PRELIMINARY PROXY STATEMENT ON SCHEDULE 14A
GENERAL
1. With a view toward disclosure, with respect to the assets being sold to LCB
Resources, please tell us what percentage of Chancellor Group, Inc.'s
assets and revenue and expenses these assets represent. In this regard,
please furnish the information required by Item 14(b) and (c) or provide us
with an analysis as to why this information is not required.
In response to the Staff's comment and after further review of this topic, the
Company is providing the Staff with the following responses:
The assets to be sold to LCB Resources constitute approximately 82% of the
Company's consolidated assets as of September 30, 2011 and contributed
approximately 95% and 77%, respectively, of its consolidated gross revenues
and total expenses for the nine months then ended.
As described in the Preliminary Proxy Statement, the consideration to be
paid in the proposed transaction consists entirely of cash, and the
completion of the proposed transaction is not contingent upon the
availability of financing or the affirmative vote by the members of LCB
Resources in favor of the transaction. Accordingly, we believe that
Instruction 2 to Item 14 provides that (a) the information required by
paragraph (c)(1) of that Item need not be provided, (b) the financial
information required by paragraphs (b)(8) through (b)(11) of that Item for
LCB Resources and the Company need not be provided, and (c) the information
required by paragraph (c)(2) of that Item need not be provided. Further, we
believe that the Company is not required to provide the information
described in paragraph (b)(6) of Item 14 because, although the Company's
board of directors consulted with an advisor regarding the proposed
transaction (as disclosed on page 10 of the Preliminary Proxy Statement),
the Company has not received any report, opinion or appraisal materially
relating to the proposed transaction. Because the Company is not required
to present or incorporate by reference the financial statements described
in paragraphs (b)(8) through (b)(11) of Item 14 (as described above), the
Company does not have any information to provide in response to paragraph
(b)(7) of that Item.
We believe that the Preliminary Proxy Statement already contains
disclosures in response to paragraphs (b)(1) through (b)(4) of Item 14,
which disclosures are contained in the Preliminary Proxy Statement, as
amended, on the pages and under the headings listed below:
Schedule 14A
Paragraph Page(s) and Heading(s)
(b)(1) 3-4, Summary
(b)(2) 3, Summary
(b)(3) 3, Summary; and 12-13, Business of Chancellor
(b)(4) 1, Questions and Answers about the Special Meeting (4);
3-4, Summary (1)(2); 6, Chancellor Special Meeting (4);
and 8-12, Proposal to Approve the Purchase and Sale
Agreement (1)(2)(3)
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(1) Information described in Item 1004(a)(2)(i) of Regulation M-A.
(2) Information described in Item 1004(a)(2)(ii) of Regulation M-A.
(3) Information described in Item 1004(a)(2)(iii) of Regulation M-A.
(4) Information described in Item 1004(a)(2)(iv) of Regulation M-A.
In response to paragraph (b)(1) and (b)(2) of Item 14, we have added
disclosures regarding the contact information of and business conducted by
LCB Resources under the heading "Summary" on page 3. In response to
paragraphs (b)(4) and (b)(5) of such Item, we have added disclosure
regarding regulatory approval, accounting treatment and tax consequences
under the headings "Summary" on page 4 and "Proposal to Approve the
Purchase and Sale Agreement" on pages 11 and 12.
PROPOSAL TO APPROVE THE PURCHASE AND SALE AGREEMENT
BACKGROUND OF THE ASSET SALE, PAGE 9
2. Please provide independent third party support for your conclusory
statements in the first paragraph of this section. In particular, please
clarify whether this is an acquisition by a "larger oil and gas" company
that is paying a "premium" for the Gryphon assets. If not, clarify how this
paragraph is relevant to this transaction.
In response to the Staff's comment and after further review of this topic,
the Company agrees that the paragraph referred to is not appropriate for
inclusion in the Preliminary Proxy Statement. We will delete the paragraph.
CURRENT REPORT ON FORM 8-K FILED OCTOBER 20, 2011
3. Please file all exhibits, such as Exhibit A-1, to the Purchase and Sale
Agreement.
In response to the Staff's comment and after further review of this topic,
the Company will file a Form 8-K/A amending the Form 8-K to include as an
exhibit the Purchase and Sale Agreement together with its exhibits and
schedules.
In connection with this response letter with respect to the Preliminary Proxy
Statement Form 8-K, the Company acknowledges that (i) it is responsible for the
adequacy and accuracy of the disclosure in the filing; (ii) Staff comments or
changes to disclosure in response to Staff comments do not foreclose the
Securities and Exchange Commission from taking any action with respect to the
filing; and (iii) the Staff's position is that the Company may not assert Staff
comments as a defense in any proceeding initiated by the Securities and Exchange
Commission or any person under the federal securities laws of the United States.
If you have any questions or need additional information regarding this letter,
please contact me at (806) 688-9697.
Sincerely,
/s/ Maxwell Grant
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Maxwell Grant,
Chief Executive Officer