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SEC Company Response from AgEagle Aerial Systems Inc. (UAVS) (CIK 0000008504) (UAVS) — Sep 30, 2016

AgEagle Aerial Systems Inc. (UAVS) (CIK 0000008504)
Date: Sept. 30, 2016 · CIK: 0000008504 · Accession: 0001144204-16-126361

AI Filing Summary & Sentiment

Sentiment
Urgency
Document Type
Confidence
SEC Posture
Company Posture

Summary

Reasoning

Referenced dates: September 8, 2016

Date
September 30, 2016
Author
/s/ Douglas M. Wright
Form
CORRESP
Company
AgEagle Aerial Systems Inc. (UAVS) (CIK 0000008504)

Letter

Securities and Exchange Commission Attention: H. Roger Schwall Filed March 31, 2015 Definitive Proxy Statement on Schedule 14A Filed April 3, 2015 File No. 1-36492

Re: EnerJex Resources, Inc.

Dear Mr. Schwall

In response to your letter dated September 8, 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, including your illustration of the proposed disclosure regarding the beginning and end-of-year quantities for each product type of proved developed and proved undeveloped reserves. Please revise your proposed disclosure to correct the mathematical inconsistencies in the calculation of the figures in the illustration. Also revise your proposed disclosure to resolve the inconsistencies regarding the beginning and end-of-year quantities in your illustration compared to the quantities provided in Form 10-K for the fiscal years ending December 31, 2014 and 2013, respectively.

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(1) Total Proved Developed Proved Undeveloped Total Proved Total Proved Developed Proved Undeveloped Total Proved

Beginning

Crude Oil BB'Ls 3,084,238 1,368,600 4,452,838 1,546,300 1,380,800 2,927,100

Natural Gas Liquids BBL's 38,950 - 38,950

Natural Gas MCF's 3,818,065 4,059,900 7,877,965

Oil Equivalents BOE's 3,759,412 2,045,188 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 977,674 (392,586 ) 585,088

Oil Equivalents BOE's (504,326 ) (693,331 ) (1,197,657 )

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 2,234

2,234 2,008,967 676,650 2,685,617

Extensions and discoveries

Crude Oil BBL's 2,226

2,226 34,300 141,600 175,900

Sales of minerals in place

Crude Oil BBL's

(4,800 )

(4,800 )

Production

Crude Oil BBL's (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 (325,894 )

(325,894 ) (39,135 )

(39,135 )

Oil Equivalents BOE's (211,403 )

(211,403 ) (120,634 )

(120,634 )

Ending

Crude Oil BBL's 2,214,038 740,700 2,954,738 3,084,238 1,368,600 4,452,838

Natural Gas Liquids BBL's 89,250 - 89,250 38,950 - 38,950

Natural Gas MCF's 4,469,845 3,667,314 8,137,159 3,818,065 4,059,900 7,877,965

Oil Equivalents BOE's 3,048,261 1,351,919 4,400,180 3,759,412 2,045,188 5,804,600

(1) Amounts in this table may differ from amounts previously disclosed due to roundings.

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. Please expand your disclosure to provide a narrative explanation for the significant changes in net reserves relating to each line item entry other than production for each of the periods presented. Refer to the disclosure requirements in FASB ASC 932-235-50-5.

EnerJex response:

We plan to insert the following information 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 2014 10-K with the following:

Proved developed reserves at December 31, 2014 consisted of 76% oil (including NGL’s) and 24% natural gas and totaled 3,048.2 MBOEs. Proved developed reserves for December 31, 2013 consisted of 83% oil (including NGL’s) and 17% natural gas and totaled 3,759.4 MBOEs. Proved undeveloped reserves for December 31, 2014 were 1,351.9 MBOEs. Proved undeveloped reserves at December 31, 2013 were 2,045.2 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, 2014 proved undeveloped reserves were approximately 1,351.9 MBOE’s a decrease of 693.3 MBOE or 33.9%. The Company plans to develop all the remaining location that comprise the 1,351.9 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. The Company estimates capital expenditures of approximately $13.7 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, 2014 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

6,354.6 388.6

3,681.9 438.3

1,500.0 175.0

1,100.0 175.0

1,100.0 175.0

For the year ended December 31, 2014 proved reserves decreased 1,404.4 MBOEs of which production accounted for 211.4 MBOEs or 15.1% of the decrease. The remaining decrease of 1,193.0 MBOEs was due primarily to a revision of decline curves related to our Cherokee project in Eastern Kansas. Our third party independent engineering firm, MHA Petroleum Consultants revised their decline curve forecast methodology in response to 2014 production performance that fell short of forecast using the original methodology, resulting in a negative revision of a 724,191 BOEs of crude oil classified as proved developed and a negative revision of 627,893 of BOEs of crude oil classified as proved undeveloped reserves for a total of 1,352,091 BOEs. These decreases were partially offset by increases to estimated proved developed reserves of approximately 163,000 BOE of natural gas and 56,919 barrels of natural gas liquids that resulted from the transfer of an Adena gas-cap well from proved non-producing to the proved developed producing category. Additionally, proved undeveloped natural gas reserves decreased approximately 65,000 BOE again due to the transferring of a gas-cap well from proved undeveloped to the proved developed category.

3. To the extent applicable, please incorporate the disclosure revisions identified in your response to comment one regarding the presentation of total net proved reserves, developed reserves and undeveloped reserves along with the changes in net quantities for the periods ending December 31, 2014 and 2015, respectively, as disclosed in the Form 10-K for the fiscal year ending December 31, 2015.

EnerJex response:

Understood and we will comply.

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

Show Raw Text
CORRESP
1
filename1.htm

September 30, 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

Definitive Proxy Statement on Schedule 14A

Filed April 3, 2015

File No. 1-36492

Dear Mr. Schwall

In response to your letter
dated September 8, 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, including
your illustration of the proposed disclosure regarding the beginning and end-of-year quantities for each product type of proved
developed and proved undeveloped reserves. Please revise your proposed disclosure to correct the mathematical inconsistencies in
the calculation of the figures in the illustration. Also revise your proposed disclosure to resolve the inconsistencies regarding
the beginning and end-of-year quantities in your illustration compared to the quantities provided in Form 10-K for the fiscal years
ending December 31, 2014 and 2013, respectively.

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(1)
    Total Proved
 Developed
    Proved
 Undeveloped
    Total Proved
    Total Proved
 Developed
    Proved
 Undeveloped
    Total Proved

    Beginning

    Crude Oil BB'Ls
      3,084,238
      1,368,600
      4,452,838
      1,546,300
      1,380,800
      2,927,100

    Natural Gas Liquids BBL's
      38,950
      -
      38,950

    Natural Gas MCF's
      3,818,065
      4,059,900
      7,877,965

    Oil Equivalents BOE's
      3,759,412
      2,045,188
      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
      977,674
      (392,586 )
      585,088

    Oil Equivalents BOE's
      (504,326 )
      (693,331 )
      (1,197,657 )

    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
      2,234

      2,234
      2,008,967
      676,650
      2,685,617

    Extensions and discoveries

    Crude Oil BBL's
      2,226

      2,226
      34,300
      141,600
      175,900

    Sales of minerals in place

    Crude Oil BBL's

      (4,800 )

      (4,800 )

    Production

    Crude Oil BBL's
      (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
      (325,894 )

      (325,894 )
      (39,135 )

      (39,135 )

    Oil Equivalents BOE's
      (211,403 )

      (211,403 )
      (120,634 )

      (120,634 )

    Ending

    Crude Oil BBL's
      2,214,038
      740,700
      2,954,738
      3,084,238
      1,368,600
      4,452,838

    Natural Gas Liquids BBL's
      89,250
      -
      89,250
      38,950
      -
      38,950

    Natural Gas MCF's
      4,469,845
      3,667,314
      8,137,159
      3,818,065
      4,059,900
      7,877,965

    Oil Equivalents BOE's
      3,048,261
      1,351,919
      4,400,180
      3,759,412
      2,045,188
      5,804,600

(1) Amounts in this table may differ from amounts
previously disclosed due to roundings.

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.             Please expand your disclosure
to provide a narrative explanation for the significant changes in net reserves relating to each line item entry other than production
for each of the periods presented. Refer to the disclosure requirements in FASB ASC 932-235-50-5.

EnerJex response:

We plan to insert the following information
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 2014 10-K with
the following:

Proved developed reserves at December 31,
2014 consisted of 76% oil (including NGL’s) and 24% natural gas and totaled 3,048.2 MBOEs. Proved developed reserves for
December 31, 2013 consisted of 83% oil (including NGL’s) and 17% natural gas and totaled 3,759.4 MBOEs. Proved
undeveloped reserves for December 31, 2014 were 1,351.9 MBOEs. Proved undeveloped reserves at December 31, 2013 were 2,045.2
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, 2014 proved undeveloped reserves were approximately 1,351.9 MBOE’s a decrease of 693.3 MBOE or 33.9%. The
Company plans to develop all the remaining location that comprise the 1,351.9 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. The Company
estimates capital expenditures of approximately $13.7 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, 2014 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

    2015
      6,354.6
      388.6

    2016
      3,681.9
      438.3

    2017
      1,500.0
      175.0

    2018
      1,100.0
      175.0

    2019
      1,100.0
      175.0

For the year ended December 31, 2014 proved
reserves decreased 1,404.4 MBOEs of which production accounted for 211.4 MBOEs or 15.1% of the decrease. The remaining decrease
of 1,193.0 MBOEs was due primarily to a revision of decline curves related to our Cherokee project in Eastern Kansas. Our third
party independent engineering firm, MHA Petroleum Consultants revised their decline curve forecast methodology in response to 2014
production performance that fell short of forecast using the original methodology, resulting in a negative revision of a 724,191
BOEs of crude oil classified as proved developed and a negative revision of 627,893 of BOEs of crude oil classified as proved undeveloped
reserves for a total of 1,352,091 BOEs. These decreases were partially offset by increases to estimated proved developed reserves
of approximately 163,000 BOE of natural gas and 56,919 barrels of natural gas liquids that resulted from the transfer of an Adena
gas-cap well from proved non-producing to the proved developed producing category. Additionally, proved undeveloped natural gas
reserves decreased approximately 65,000 BOE again due to the transferring of a gas-cap well from proved undeveloped to the proved
developed category.

3.             To the extent applicable, please
incorporate the disclosure revisions identified in your response to comment one regarding the presentation of total net proved
reserves, developed reserves and undeveloped reserves along with the changes in net quantities for the periods ending December
31, 2014 and 2015, respectively, as disclosed in the Form 10-K for the fiscal year ending December 31, 2015.

EnerJex response:

Understood and we will comply.

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)