SEC Company Response from BLUE DOLPHIN ENERGY CO (BDCO) (CIK 0000793306) (BDCO) — Jul 29, 2005
BLUE DOLPHIN ENERGY CO (BDCO) (CIK 0000793306)
Date: July 29, 2005 · CIK: 0000793306 · Accession: 0000950129-05-007474
AI Filing Summary & Sentiment
File numbers found in text: 333-124908
Referenced dates: July 12, 2005
Letter
July 29, 2005 Division of Corporation Finance U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-0405 Attention: Carmen Moncada-Terry Attorney-Adviser
Re: Blue Dolphin Energy Company Form S-3, File No. 333-124908 Form 10-KSB/A File No. 0-15905
Dear Ms. Moncada-Terry:
I am writing on behalf of Blue Dolphin Energy Company (the "Company") in response to the staff's comment letter dated July 12, 2005, on the above referenced filing.
Form 10-KSB/A-1 for the Fiscal Year Ended December 31, 2004
Oil and Gas Exploration and Production Activities, page 4
1. In accordance with Rule 4-10(c)(6)(i) of Regulation S-X, the Company recorded a gain on the sale of its interests in the Galveston Area Blocks 287 and 297 leases because recording the proceeds as an adjustment to capitalized costs would have significantly altered the relationship between capitalized costs and proved reserves of oil and gas.
During the quarter ended March 31, 2005, prior to earning the proceeds from the placement of the Company's interest in these leases, capitalized costs in the full cost pool totaled approximately $180,000 and proved reserves totaled approximately 400 barrels of oil and 35 million cubic feet of natural gas. Its proved reserves were unchanged by the sale of these leases since there were no proved reserves associated with the interests sold. If the sale had been treated solely as an adjustment to capitalized costs, all of its capitalized costs would have been eliminated. <PAGE> Division of Corporate Finance July 29, 2005 Page 2
Thus, since the relationship between capitalized costs and proved reserves would have been significantly altered if all proceeds were recorded as an adjustment to the capitalized costs, the Company allocated the costs in the 287 and 297 leases between the relative fair values of the interests sold and the interests retained. The Company then applied the proceeds to the allocated costs of the sold properties and recognized a gain on the sale of certain interests in the Galveston Area Blocks 287 and 297 leases.
Note 13 - Supplemental Oil and Gas Information - Unaudited, page 50
2. The Company supplementally confirms that the calculation of future development and production costs included in the Form 10-KSB were made based on year-end costs.
If necessary, the Company would like to have a conference call with the staff to discuss any further comments relating to comment no. 1. Upon resolution of all comments, the Company will file an additional amendment to the Form 10-KSB in response to comment no. 2 to further clarify that the calculation of future development and productions costs were made based on year-end costs. In the event that the staff has follow-up comments, please contact the undersigned at 713-226-6691 (phone) or 713-226-6291 (fax) or by e-mail at bbrown@porterhedges.com.
Very truly yours,
/s/ Bryan K. Brown
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Bryan K. Brown
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Porter & Hedges, L.L.P.
ATTORNEYS AND COUNSELORS AT LAW
1000 MAIN STREET, 36TH FLOOR
BRYAN K. BROWN HOUSTON, TEXAS 77002-6336
PARTNER
Tel. Direct (713) 226-6691 MAILING ADDRESS:
Fax Direct (713) 226-6291 TELECOPIER (713) 228-1331 P.O. BOX 4744
BBROWN@PORTERHEDGES.COM TELEPHONE (713) 226-6000 HOUSTON, TX 77210-4744
July 29, 2005
Division of Corporation Finance
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-0405
Attention: Carmen Moncada-Terry
Attorney-Adviser
Re: Blue Dolphin Energy Company
Form S-3, File No. 333-124908
Form 10-KSB/A
File No. 0-15905
Dear Ms. Moncada-Terry:
I am writing on behalf of Blue Dolphin Energy Company (the "Company") in
response to the staff's comment letter dated July 12, 2005, on the above
referenced filing.
Form 10-KSB/A-1 for the Fiscal Year Ended December 31, 2004
Oil and Gas Exploration and Production Activities, page 4
1. In accordance with Rule 4-10(c)(6)(i) of Regulation S-X, the Company
recorded a gain on the sale of its interests in the Galveston Area Blocks
287 and 297 leases because recording the proceeds as an adjustment to
capitalized costs would have significantly altered the relationship between
capitalized costs and proved reserves of oil and gas.
During the quarter ended March 31, 2005, prior to earning the proceeds
from the placement of the Company's interest in these leases, capitalized
costs in the full cost pool totaled approximately $180,000 and proved
reserves totaled approximately 400 barrels of oil and 35 million cubic feet
of natural gas. Its proved reserves were unchanged by the sale of these
leases since there were no proved reserves associated with the interests
sold. If the sale had been treated solely as an adjustment to capitalized
costs, all of its capitalized costs would have been eliminated.
<PAGE>
Division of Corporate Finance
July 29, 2005
Page 2
Thus, since the relationship between capitalized costs and proved reserves
would have been significantly altered if all proceeds were recorded as an
adjustment to the capitalized costs, the Company allocated the costs in the
287 and 297 leases between the relative fair values of the interests sold
and the interests retained. The Company then applied the proceeds to the
allocated costs of the sold properties and recognized a gain on the sale of
certain interests in the Galveston Area Blocks 287 and 297 leases.
Note 13 - Supplemental Oil and Gas Information - Unaudited, page 50
2. The Company supplementally confirms that the calculation of future
development and production costs included in the Form 10-KSB were made
based on year-end costs.
If necessary, the Company would like to have a conference call with the
staff to discuss any further comments relating to comment no. 1. Upon
resolution of all comments, the Company will file an additional amendment to
the Form 10-KSB in response to comment no. 2 to further clarify that the
calculation of future development and productions costs were made based on
year-end costs. In the event that the staff has follow-up comments, please
contact the undersigned at 713-226-6691 (phone) or 713-226-6291 (fax) or by
e-mail at bbrown@porterhedges.com.
Very truly yours,
/s/ Bryan K. Brown
------------------
Bryan K. Brown
BKB
cc: Greg Starks
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