SEC Company Response from AgEagle Aerial Systems Inc. (UAVS) (CIK 0000008504) (UAVS) — Aug 19, 2016
AgEagle Aerial Systems Inc. (UAVS) (CIK 0000008504)
Date: Aug. 19, 2016 · CIK: 0000008504 · Accession: 0001144204-16-120406
AI Filing Summary & Sentiment
Referenced dates: July 11, 2016
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CORRESP
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filename1.htm
August 19, 2016
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
Attention: H. Roger Schwall
Re: Enerjex Resources, Inc.
Form
10-K for the Fiscal Year ended December 31, 2014
Filed
March 31, 2015
Form
10-K for the Fiscal Year ended December 31, 2015
Filed
April 11, 2016
File
No. 1-36492
Dear Mr. Schwall
In response to your letter
dated July 11, 2016, set forth below are your comments concerning the EnerJex Resources, Inc.’s Form 10-K and Definitive Proxy
Statement referred to above, and our responses. Your comments are in italics and are followed by our response.
Form 10-K for
the Fiscal Year ended December 31, 2014
Notes to Consolidated
Financial Statements
Supplemental
Oil and Gas Reserve Information (Unaudited), page F-18
Estimated Quantities
of Proved Reserves, page F-19
1. We have read your response to prior comment one and
see that although your proposed disclosure revisions address the requirements regarding the separate disclosure by product type
of changes in your proved developed and undeveloped reserves combined, for the periods ending December 31, 2014 and 2013, these
do not specify the beginning and end-of-year quantities for each product type of proved developed reserves apart from proved undeveloped
reserves, which is also required. Please further revise your disclosure to provide these details. You may refer to FASB ASC 932-235-55-2
for illustrations of the presentation requirement of FASB ASC 932-235-50-4. To the extent applicable, please incorporate these
revisions in the Form 10-K for the fiscal year ending December 31, 2015 as well.
4040 Broadway, Suite 508 | San Antonio, TX 78209 | 210-451-5545 (P) | 210-463-9297 (F)
EnerJex response:
We plan to replace the existing table in
our Form 10-K included in footnote 13 Supplemental Oil and Gas Reserve Information (Unaudited) – Estimated quantities of
proved reserves located on page F-19 with the table below.
Proved Reserves
Total Proved Developed
Proved Undeveloped
Total Proved
Total Proved Developed
Proved Undeveloped
Total Proved
Beginning
Crude Oil BB’Ls
3,141,300
1,303,200
4,444,500
1,546,300
1,380,800
2,927,100
Natural Gas Liquids BBL’s
40,600
40,600
Natural Gas MCF’s
3,857,200
4,059,900
7,917,100
Oil Equivalents BOE’s
3,824,756
1,979,844
5,804,600
1,546,300
1,380,800
2,927,100
Revisions of previous estimates
Crude Oil BB’Ls
(724,191 )
(627,900 )
(1,352,091 )
295,400
(153,800 )
141,600
Natural Gas Liquids BBL’s
56,919
-
56,919
Natural Gas MCF’s
578,470
40
578,510
Oil Equivalents BOE’s
(570,860 )
(627,893 )
(1,198,754 )
Purchases of minerals in place
Crude Oil BB’Ls
2,234
2,234
1,325,500
1,325,500
Natural Gas Liquids BBL’s
40,600
40,600
Natural Gas MCF’s
3,857,200
4,059,900
7,917,100
Oil Equivalents BOE’s
2,008,967
676,650
2,685,617
Extensions and discoveries
Crude Oil BB’Ls
2,226
2,226
34,300
141,600
175,900
Sales of minerals in place
Crude Oil BB’Ls
(4,800 )
(4,800 )
Production
Crude Oil BB’Ls
(150,469 )
(150,469 )
(112,462 )
(112,462 )
Natural Gas Liquids BBL’s
(6,619 )
(6,619 )
(1,650 )
(1,650 )
Natural Gas MCF’s
(318,226 )
(318,226 )
(39,135 )
(39,135 )
Oil Equivalents BOE’s
(210,126 )
(210,126 )
(120,634 )
(120,634 )
Ending
Crude Oil BB’Ls
2,271,100
675,300
2,946,400
3,084,238
1,368,600
4,452,838
Natural Gas Liquids BBL’s
90,900
-
90,900
38,950
-
38,950
Natural Gas MCF’s
4,117,444
4,059,940
8,177,384
3,818,065
4,059,900
7,877,965
Oil Equivalents BOE’s
3,048,229
1,351,951
4,400,180
3,759,412
2,045,188
5,804,600
4040 Broadway, Suite 508 | San Antonio, TX 78209 | 210-451-5545 (P) | 210-463-9297 (F)
Form 10-K for the Fiscal
Year ended December 31, 2015
Notes to Consolidated Financial
Statements
Supplemental Oil and Gas
Reserve Information (Unaudited), page F-17
Estimated Quantities of Proved
Reserves, page F-18
2. We note disclosure indicating you have not converted
material quantities of proved undeveloped reserves to developed reserves for the years ending December 31, 2015 and 2014. Please
provide us with your development schedule, indicating for each future period, the net quantities of proved reserves and estimated
capital expenditures necessary to convert all of the proved undeveloped reserves disclosed as of December 31, 2015 to developed.
Please refer to Rule 4-10(a)(31)(ii) of Regulation S-X and Question 131.04 in the Compliance and Disclosure Interpretations (C&DIs),
issued October 26, 2009 and updated May 16, 2013, and either confirm or tell us the extent to which all of the proved undeveloped
locations are part of a development plan that has been adopted by your management, including approval by your Board of Directors,
if such approval is required, and is current as of December 31, 2015.
EnerJex response:
We plan to insert the following information
to the existing disclosures beginning with the second paragraph of the Estimated quantities of proved
reserves information section of footnote 14, Supplemental Oil and Gas Reserve Information (Unaudited), which can be found at page
F-18 of the 2015 10-K.
Proved developed reserves at December 31,
2015 consisted of 74% oil and 26% natural gas and totaled 1,851.9 MBOEs. Proved developed reserves for December 31, 2014 consisted
of 77% oil and 23% natural gas and totaled 3,048.3 MBOEs. Proved undeveloped reserves for December 31, 2015 were 723.0 MBOEs.
Proved undeveloped reserves at December 31, 2014 were 1,351.9 MBOEs.
The Company annually reviews
its proved undeveloped reserves to ensure an appropriate plan for development exists. The Company books proved undeveloped reserves
only if it plans to convert these reserves to proved developed producing reserves within five years from the date they were first
booked. At December 31, 2015 proved undeveloped reserves were approximately 723.0 MBOE’s a decrease of 628.9 MBOE or 46.5%.
The Company plans to develop all the remaining location that comprise the 723.0 MBOE of proved undeveloped reserves within five
years. However, the decision to deploy capital and the timing of those expenditures is contingent on many different factors. At
the present time the Company estimates capital expenditures of approximately $6.0 million will be sufficient to develop these reserves.
The development plans assume a continued improvement in commodity pricing and general market conditions within the oil and gas
industry.
The
calculation of proved undeveloped reserves requires the Company to make predictions regarding future acquisitions and discoveries
and the impact they may have on the Company’s overall development plan of properties it currently owns. The development plan
is revised to reflect changes in the oil and gas industry, including changing markets and prices, and new investment opportunities,
and such revisions will result in changes to our proved undeveloped reserves. Consequently, the exact timing of capital
expenditures will be heavily dependent upon the Company’s interpretation of market opportunities which are heavily influenced
by projections of future commodity prices. Each year we will review our five year development plan to maximize the value of our
investment in oil and gas assets and in turn maximize shareholder value. At December 31, 2015 we believe the following best characterizes
our development plan.
4040 Broadway, Suite 508 | San Antonio, TX 78209 | 210-451-5545 (P) | 210-463-9297 (F)
Estimated Conversion of Proved Undevelped Reserves
CAPEX ($MM)
MBOE’s
2016
0.0
0.0
2017
1,120.0
112.5
2018
1,162.8
89.6
2019
3,057.2
131.4
2020
561.7
389.5
For the year ended December 31, 2015 proved
reserves decreased 1,825.3 MBOEs of which production accounted for 133.7 MBOEs or 7.3% of the decrease. The remaining decrease
of 1,691.6 MBOEs, was due primarily to decreases in commodity prices. Crude oil prices decreased $40.00 or 46.1% and natural gas
prices declined 42.2% or $1.37. Diminished commodity pricing triggered negative revisions of 586.6 MBOEs of crude oil classified
as proved developed producing, negative revisions of 42.9 MBOEs of crude oil classified as proved developed non-producing and negative
revisions of 522.1 of MBOEs of crude oil classified as proved undeveloped reserves. Natural gas liquids decreased pricing resulted
in decreases of 65.6 MBOEs to the proved developed producing category. Reduced natural gas prices also reduced amounts classified
as proved developed producing by 1,347.9 MMCF’s as well as natural gas reserves classified as proved undeveloped by 637.8
MCF. These decreases were partially offset by increases to natural gas liquid reserves classified as proved developed non-producing
of 29.7 MBOE and 262.4 MMCF of natural gas reserves classified as proved developed non-producing. In 2015 there were no material
transfers from the proved undeveloped category of reserves to the proved developed category
If you have any questions or would like
to discuss our responses above, you may contact our outside counsel, Fernando Velez, Jr. of Reicker, Pfau, Pyle & McRoy, LLP,
at 805-966-2440, or me at 210-451-5545.
Very truly yours,
/s/ Douglas M. Wright
Douglas M. Wright
Chief Financial Officer
cc: Fernando Velez – via email
4040 Broadway, Suite 508 | San Antonio, TX 78209 | 210-451-5545 (P) | 210-463-9297 (F)