SEC Company Response from Freedom Holding Corp. (FRHC) (CIK 0000924805) (FRHC) — Sep 10, 2007
Freedom Holding Corp. (FRHC) (CIK 0000924805)
Date: Sept. 10, 2007 · CIK: 0000924805 · Accession: 0001038838-07-000685
AI Filing Summary & Sentiment
Referenced dates: July 6, 2007
Letter
United States Securities and Exchange Commission Form 10-KSB for the Fiscal Year Ended March 31, 2007 Filed June 14, 2007 File No.: 1-33034 Supplemental Response dated May 22, 2007
Dear Ms. Sifford:
At the request of the management of BMB Munai, Inc., (the “Company” or “BMB Munai”) we are responding to comments raised by the staff at the Securities and Exchange Commission in your letter dated July 6, 2007. Following are the responses to your comments.
Engineering Comments
Form 10-KSB for the Fiscal Year Ended March 31, 2007
Business, page 4
Oil and gas reserves, page 6
1.
Please amend your proved reserve table to also disclose those proved developed and proved undeveloped reserve volumes that you have scheduled to be recovered after expiration of your current exploration license.
The Company proposes to amend the proved reserves table on page 6 of the Form 10-K as follows:
Ms. April Sifford
September 10, 2007
Page
Proved reserves to be developed by
June 30, 2009(1)
Proved reserves to be developed after June 30, 2009(1)
Developed(2)
Undeveloped(3)
Developed(2)
Undeveloped(3)
Total
Oil and condensate (MBbls)(4)
2,275
9,579
3,185
15,281
Natural gas (MMcf)
-
-
-
-
-
Total BOE (MBbls)
2,275
9,579
3,185
15,281
Standardized Measure of discounted future net cash flows(5) (in thousands of U.S. Dollars)
$171,265
(1)
Under our license with the Republic of Kazakhstan we have the right to sell the oil and natural gas we produce while we undertake exploration stage activities within our licensed territory. As discussed in more detail in “Risk Factors” and “Description of Properties” we have the right to engage in exploration stage activities until June 30, 2009. To retain our rights to produce and sell oil and natural gas after that date, we must apply for and be granted commercial production rights by no later than June 30, 2009. If we are not granted commercial production rights by that time, we would expect to lose our rights to the licensed territory and would expect to be unable to produce reserves after June 30, 2009.
(2)
Proved developed reserves are proved reserves that are expected to be recovered from existing wells with existing equipment and operating methods.
(3)
Proved undeveloped reserves are proved reserves which are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.
(4)
Includes natural gas liquids.
(5)
The standardized measure of discounted future net cash flows represents the present value of future net cash flow net of all taxes.
Properties, page 17
As noted above, from June 2006 through March 31, 2007 we invested approximately $37.4 million in the exploration and development of our properties . . ., page
2.
We note that the figure here disagrees with the 2007 costs incurred - $76.6 million and $8.2 million – on pages 28 and F-30. Please amend your document to remove these inconsistencies.
There are several reasons why the figures in the table on page 19 differ from the figures contained in the “Exploration, Development and Acquisition Capital Expenditures” table on page 28 and the “Costs Incurred” table on page F-30. First, the figures included in the table on page 19 reflect amounts expended by the Company during each work program year. Under the Company’s license, its work program year runs from July to July, whereas the figures contained in the tables on pages 28 and F-30 are based on the Company’s fiscal year end of March 31. Also, the amounts contained in the tables on pages 28 and F-30 are cumulative figures, whereas, except as indicated, the numbers contained in the table on page 19 are not cumulative
Ms. April Sifford
September 10, 2007
Page
and reflect the amounts spent in each yearly period. The Company proposes to amend the Report to clarify the figures presented in the three tables.
The Company will amend the paragraph preceding the table on page 19 and the table on page 19 as follows:
The contract we hold follows the above format. The contract sets the minimum dollar amount we must expend during each year of our work program. Under our exploration license our work program year ends on July 9 each year, whereas our fiscal year ends on March 31 each year. As a result these timing differences, the amounts reflected in this table as “Actually Made” may differ from amounts disclosed elsewhere in our Management’s Discussion and Analysis or Consolidated Financial Statements, which present figures based on our fiscal year end rather than our work program year end.
Amount of
Expenditure
Prior to
July 2005
July 2005 to July 2006
July 2006 to July 2007
July 2007 to July 2008
July 2008 to
July 2009
Total
Mandated by
Contract
$21,500,000
$6,000,000
$12,700,000
$ 8,480,000
$70,000
$48,750,000
Actually Made
$38,400,000
$12,700,000
$37,410,000*
$ -
$ -
$88,510,000
* Investment as of March 31, 2007.
The Company will also amend the “Capitalized Costs” table and the “Exploration, Development and Acquisition Capital Expenditures” table on page 28 as follows:
Capitalized Costs
Capitalized costs and accumulated depletion, depreciation and amortization relating to our oil and natural gas producing activities, all of which are conducted in the Republic of Kazakhstan, are summarized below:
As of March 31, 2007
As of March 31, 2006
Developed oil and natural gas properties
$ 82,311,230
$ 68,079,938
Unevaluated oil and natural gas properties
25,279,813
-
Accumulated depletion, depreciation and
amortization
(3,403,475)
(1,396,641)
Net capitalized cost
$ 104,187,568
$ 66,683,297
Exploration, Development and Acquisition Capital Expenditures
The following table sets forth certain information regarding the total costs incurred associated with exploration, development and acquisition activities.
Ms. April Sifford
September 10, 2007
Page
As of March 31, 2007
As of March 31, 2006
Acquisition costs:
Unproved properties
$ -
$ -
Proved properties
20,788,119
20,788,119
Exploration costs
8,197,492
6,826,695
Development costs
76,611,170
39,547,849
Subtotal
105,596,781
67,162,663
Asset retirement costs
1,994,262
917,275
Total costs incurred
$ 107,591,043
$ 68,079,938
Drilling Operations, page 22
3.
It appears your drilling activity table does not present the number of gross and net wells drilled in each of the last three years per SEC Industry Guide 2, paragraph 6A. The number of wells drilled refers to the number of wells (holes) completed at any time during the fiscal years, regardless when drilling was initiated. Please amend your document to adhere to this requirement.
The Company proposes to amend the drilling activity table on page 22 of the Form 10-K as follows:
March 31, 2007
March 31, 2006
March 31, 2005
Gross
Net
Gross
Net
Gross
Net
Exploratory:
Productive
-
-
-
-
-
-
Non-productive
-
-
-
-
-
-
Total
-
-
-
-
-
-
Development:
Productive
Non-productive
-
-
-
-
-
-
Total
-
-
-
-
-
-
Grand Total
Report of Independent Registered Public Accounting Firm, page F-1
Reserves, page F-32
4.
We note the significant reconciliation line items – extensions and discoveries, revisions – in your 2007 proved reserves. Financial Accounting Standard 69, paragraph 11 requires “appropriate explanation of significant changes.” Please amend your document to disclose this information.
Ms. April Sifford
September 10, 2007
Page
The Company proposes to amend the reserves table on page F-32 to add a footnote to “Extensions and discoveries” explaining the significant change to Extensions and discoveries during the year ended March 31, 2007:
The addition of the Kariman structure during the year ended March 31, 2007 resulted in an increase in our estimated proved reserves base of approximately 2.7 million BOE (barrels of oil equivalent).
The Company also proposes to amend the changes in standardized measure table on page F-33 to
Show Raw Text
CORRESP
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filename1.htm
POULTON & YORDAN
ATTORNEYS AT LAW
324
SOUTH 400 WEST, SUITE 250
SALT
LAKE CITY, UTAH 84101
Richard T. Ludlow
Telephone: (801) 355-1341
Fax: (801) 355-2990
Email: post@poulton-yordan.com
September 10, 2007
April
Sifford
Branch
Chief
United
States Securities and Exchange Commission
Washington, D.C. 20549
Re:
BMB Munai, Inc.
Form 10-KSB for the Fiscal Year Ended March 31, 2007
Filed June 14, 2007
File No.: 1-33034
Supplemental Response dated May 22, 2007
Dear
Ms. Sifford:
At the request of the management of BMB Munai, Inc., (the
“Company” or “BMB Munai”) we are responding to comments raised
by the staff at the Securities and Exchange Commission in your letter dated July 6,
2007. Following are the responses to your comments.
Engineering Comments
Form
10-KSB for the Fiscal Year Ended March 31, 2007
Business, page 4
Oil
and gas reserves, page 6
1.
Please amend your proved reserve table to also disclose
those proved developed and proved undeveloped reserve volumes that you
have scheduled to be recovered after expiration of your current
exploration license.
The Company proposes to amend the proved reserves table on page 6 of
the Form 10-K as follows:
Ms.
April Sifford
September 10, 2007
Page
2
Proved reserves to be developed
by
June 30, 2009(1)
Proved reserves to be developed after June 30,
2009(1)
Developed(2)
Undeveloped(3)
Developed(2)
Undeveloped(3)
Total
Oil and condensate (MBbls)(4)
2,275
242
9,579
3,185
15,281
Natural gas (MMcf)
-
-
-
-
-
Total BOE (MBbls)
2,275
242
9,579
3,185
15,281
Standardized Measure of discounted future net cash
flows(5) (in thousands of U.S. Dollars)
$171,265
(1)
Under our license with the Republic of Kazakhstan
we have the right to sell the oil and natural gas we produce while we
undertake exploration stage activities within our licensed territory.
As discussed in more detail in “Risk Factors” and
“Description of Properties” we have the right to engage in
exploration stage activities until June 30, 2009. To retain our rights
to produce and sell oil and natural gas after that date, we must apply
for and be granted commercial production rights by no later than June
30, 2009. If we are not granted commercial production rights by that
time, we would expect to lose our rights to the licensed territory
and would expect to be unable to produce reserves after June 30,
2009.
(2)
Proved developed reserves are proved reserves that
are expected to be recovered from existing wells with existing
equipment and operating methods.
(3)
Proved undeveloped reserves are proved reserves
which are expected to be recovered from new wells on undrilled acreage
or from existing wells where a relatively major expenditure is required
for recompletion.
(4)
Includes natural gas liquids.
(5)
The standardized measure of discounted future net
cash flows represents the present value of future net cash flow net of
all taxes.
Properties, page 17
As
noted above, from June 2006 through March 31, 2007 we invested approximately $37.4
million in the exploration and development of our properties . . ., page
19
2.
We note that the figure here disagrees with the 2007
costs incurred - $76.6 million and $8.2 million – on pages 28 and
F-30. Please amend your document to remove these
inconsistencies.
There are several reasons why the figures in the table on page 19
differ from the figures contained in the “Exploration, Development and
Acquisition Capital Expenditures” table on page 28 and the “Costs
Incurred” table on page F-30. First, the figures included in the table on page 19
reflect amounts expended by the Company during each work program year. Under the
Company’s license, its work program year runs from July to July, whereas the
figures contained in the tables on pages 28 and F-30 are based on the Company’s
fiscal year end of March 31. Also, the amounts contained in the tables on pages 28 and
F-30 are cumulative figures, whereas, except as indicated, the numbers
contained in the table on page 19 are not cumulative
Ms.
April Sifford
September 10, 2007
Page
3
and
reflect the amounts spent in each yearly period. The Company proposes to amend the
Report to clarify the figures presented in the three tables.
The Company will amend the paragraph preceding the table on page 19
and the table on page 19 as follows:
The contract we hold follows the above format. The contract sets
the minimum dollar amount we must expend during each year of our work program. Under
our exploration license our work program year ends on July 9 each year, whereas our
fiscal year ends on March 31 each year. As a result these timing differences, the
amounts reflected in this table as “Actually Made” may differ from amounts
disclosed elsewhere in our Management’s Discussion and Analysis or Consolidated
Financial Statements, which present figures based on our fiscal year end rather than
our work program year end.
Amount of
Expenditure
Prior to
July 2005
July 2005 to July 2006
July 2006 to July 2007
July 2007 to July 2008
July 2008 to
July 2009
Total
Mandated by
Contract
$21,500,000
$6,000,000
$12,700,000
$ 8,480,000
$70,000
$48,750,000
Actually Made
$38,400,000
$12,700,000
$37,410,000*
$
-
$
-
$88,510,000
* Investment as of March 31,
2007.
The Company will also amend the “Capitalized Costs” table
and the “Exploration, Development and Acquisition Capital Expenditures”
table on page 28 as follows:
Capitalized Costs
Capitalized costs and accumulated depletion, depreciation and
amortization relating to our oil and natural gas producing activities, all of which are
conducted in the Republic of Kazakhstan, are summarized below:
As of March 31, 2007
As of March 31, 2006
Developed oil and natural gas
properties
$
82,311,230
$
68,079,938
Unevaluated oil and natural gas
properties
25,279,813
-
Accumulated depletion, depreciation
and
amortization
(3,403,475)
(1,396,641)
Net capitalized cost
$
104,187,568
$
66,683,297
Exploration, Development and Acquisition Capital
Expenditures
The following table sets forth certain information regarding the
total costs incurred associated with exploration, development and acquisition
activities.
Ms.
April Sifford
September 10, 2007
Page
4
As of March 31, 2007
As of March 31, 2006
Acquisition costs:
Unproved properties
$
-
$
-
Proved properties
20,788,119
20,788,119
Exploration costs
8,197,492
6,826,695
Development costs
76,611,170
39,547,849
Subtotal
105,596,781
67,162,663
Asset retirement costs
1,994,262
917,275
Total costs incurred
$ 107,591,043
$ 68,079,938
Drilling Operations, page 22
3.
It appears your drilling activity table does not present
the number of gross and net wells drilled in each of the last three
years per SEC Industry Guide 2, paragraph 6A. The number of wells
drilled refers to the number of wells (holes) completed at any time
during the fiscal years, regardless when drilling was initiated. Please
amend your document to adhere to this requirement.
The Company proposes to amend the drilling activity table on page 22
of the Form 10-K as follows:
March 31, 2007
March 31, 2006
March 31, 2005
Gross
Net
Gross
Net
Gross
Net
Exploratory:
Productive
-
-
-
-
-
-
Non-productive
-
-
-
-
-
-
Total
-
-
-
-
-
-
Development:
Productive
3
3
2
2
4
4
Non-productive
-
-
-
-
-
-
Total
-
-
-
-
-
-
Grand Total
3
3
2
2
4
4
Report of Independent Registered Public Accounting Firm, page
F-1
Reserves, page F-32
4.
We note the significant reconciliation line items
– extensions and discoveries, revisions – in your 2007
proved reserves. Financial Accounting Standard 69, paragraph 11
requires “appropriate explanation of significant changes.”
Please amend your document to disclose this information.
Ms.
April Sifford
September 10, 2007
Page
5
The Company proposes to amend the reserves table on page F-32 to add
a footnote to “Extensions and discoveries” explaining the significant
change to Extensions and discoveries during the year ended March 31,
2007:
The addition of the Kariman structure during the year ended March
31, 2007 resulted in an increase in our estimated proved reserves base of approximately
2.7 million BOE (barrels of oil equivalent).
The Company also proposes to amend the changes in standardized
measure table on page F-33 to