SecProbe.io

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<FILENAME>filename1.txt
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							March 8, 2005

via facsimile and U.S. mail
Timothy L. Hoops
President and Chief Executive
(Principal Financial Officer)
Kestrel Energy, Inc.
1726 Cole Boulevard, Suite 210
Lakewood, Colorado 80401

	Re:	Kestrel Energy, Inc.
		Form 10-KSB, for the year ended June 30, 2004
      File No. 0-9261

Dear Mr. Timothy L. Hoops:

      We have reviewed the above filing and have the following
accounting comments.  We have limited our review to only the
matters
addressed below and will make no further review of your document.
Where indicated, we think you should revise your document in
response
to these comments.  If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a revision is
unnecessary.
Please be as detailed as necessary in your explanation.  In some
of
our comments, we may ask you to provide us with supplemental
information so we may better understand your disclosure.  After
reviewing this information, we may or may not raise additional
comments.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We
look forward to working with you in these respects.  We welcome
any
questions you may have about our comments or on any other aspect
of
our review.  Feel free to call us at the telephone numbers listed
at
the end of this letter.

Form 10-KSB, for the year ended June 30, 2004

Item 8A Controls and Procedures, page 12

1. Your disclosures do not appear to be in accordance with the
guidance in Item 307 of Regulation S-B and SEC Release No. 33-
8238.
For example, your evaluation of disclosure controls should have
occurred as of the end of the most recent fiscal year.  Please
update
your evaluation and revise your disclosure accordingly.

Note 1 Summary of Significant Accounting policies, page F-8

      Property and Equipment

2. It is unclear from your disclosures what reserves you have
included
in the denominator for calculating depletion and amortization
expense
for acquisition costs and well development costs.  Please expand
your
disclosure to clarify that your development costs are amortized
using
proved developed reserves rather than total proved reserves, and
that
acquisition costs are amortized by using total proved reserves as
the
denominator, if true.  Otherwise, please submit an analysis
showing
how your financial statements would need to change, for each
period
presented, to reflect the accounting required under paragraphs 30
and
35 of SFAS 19.

Note 5 Income Taxes, page F-15

3. We note that you have not disclosed the reconciliation of
reported
income tax expense attributed to continuing operations, to the
amount
of income tax expense that would result from applying domestic
federal
statutory tax rates to pretax income from continuing operations,
that
is required under paragraph 47 of SFAS 109.  Please expand your
disclosures to include this reconciliation; clearly identify each
reconciling item.

Closing Comments

      As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response.  You may wish to provide us with marked copies of
amendments to expedite our review.  Please furnish a cover letter
with
your amendment that keys your responses to our comments and
provides
any requested supplemental information.  Detailed cover letters
greatly facilitate our review.  Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating to the company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have
made.  In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:

the company is responsible for the adequacy and accuracy of the
disclosure in the filing(s);

staff comments or changes to disclosure in response to staff
comments
do not foreclose the Commission from taking any action with
respect to
the filing; and

	the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal
securities laws of the United States.

	In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division
of Corporation Finance in our review of your filing or in response
to
our comments on your filing.

      You may contact Jon Duersch at (202) 942-1761 or Karl Hiller
at
(202) 942-1981 if you have questions regarding comments on the
financial statements and related matters.  Please contact me at
(202)
942-1870 with any other questions.  Direct all correspondence to
the
following ZIP code:  20549-0405.

							Sincerely,

							H. Roger Schwall
							Assistant Director
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Kestrel Energy, Inc.
March 8, 2005
Page 1

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0405

         DIVISION OF
CORPORATION FINANCE

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