SEC Company Response from Freedom Holding (FRHC) — Nov 6, 2007
Freedom Holding Corp.
Date: Nov. 6, 2007 · CIK: 0000924805 · Accession: 0001038838-07-000751
AI Filing Summary & Sentiment
Referenced dates: July 6, 2007, November 1, 2007
Letter
United States Securities and Exchange Commission Division of Corporate Finance Form 10-KSB for the Fiscal Year Ended March 31, Filed June 14, 2007 File No. 1-33034 Supplemental Response dated September 10,
Dear Mr. Skinner:
At the request of the management of BMB Munai, Inc., (the “Company” or “BMB Munai”) we are responding to comments raised by the staff of the Securities and Exchange Commission in your letter dated November 1, 2007. Following are the responses to your comments.
Engineering Comments
Form 10-KSB for the Fiscal Year Ended March 31, 2007
General
1.
These comments were initially presented to you in our telephone conversation with Richard T. Ludlow, your outside legal counsel on October 19, 2007.
No response required.
Mr. W. Bradshaw Skinner
November 6, 2007
Page
Business, page 4
Oil and Gas Reserves, page 6
2.
In comment 1 of our letter dated July 6, 2007, we asked that you 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. Your proposed text displays “Proved reserves to be developed by June 30, 2009” rather than “recovered”. Please amend your document to disclose the information that we requested.
We propose to change the proved reserves table on page 6 of the Form 10-K as follows to clearly disclose the proved reserves to be recovered by and after June 30, 2009:
Proved reserves to be recovered by
June 30, 2009(1)
Proved reserves to be recovered
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.
Mr. W. Bradshaw Skinner
November 6, 2007
Page
As noted above, from June 2006 through March 31, 2007 we invested approximately $37.4 million in the exploration and development of our properties..., page19
3.
Your response to our prior comment 2 stated that the amounts contained in the tables on pages 28 and F-30 are cumulative figures”. The “costs incurred” as prescribed by Financial Accounting Standard 69, paragraphs 21-23, are figures for each prior year, not a cumulative total. “Capitalized costs”, as described by paragraphs 18-20, are cumulative. Please amend your document to comply with FAS 69.
The Company will also amend the “Exploration, Development and Acquisition Capital Expenditures” table on page 28 to present the costs incurred for each prior year rather than on a cumulative basis, as follows:
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.
For the year ended March 31,
For the year ended March 31,
For the year ended
March 31, 2005
Acquisition costs:
Unproved properties
$ -
$ -
$ -
Proved properties
-
-
19,075,000
Exploration costs
1,370,797
3,453,603
713,220
Development costs
37,063,321
14,368,323
16,687,432
Subtotal
38,434,118
17,821,926
36,475,652
Asset retirement costs
1,076,987
856,302
60,973
Total costs incurred
$ 39,511,105
$ 18,678,228
$ 36,536,625
Mr. W. Bradshaw Skinner
November 6, 2007
Page
The Company will also amend the “Costs Incurred” table on page F-30 to present the costs incurred for each prior year rather than on a cumulative basis, as follows:
Costs Incurred – Costs incurred in oil and natural gas property acquisition, exploration and development activities are summarized below:
For the year ended March 31,
For the year ended March 31,
For the year ended
March 31, 2005
Acquisition costs:
Unproved properties
$ -
$ -
$ -
Proved properties
-
-
19,075,000
Exploration costs
1,370,797
3,453,603
713,220
Development costs
37,063,321
14,368,323
16,687,432
Subtotal
38,434,118
17,821,926
36,475,652
Asset retirement costs
1,076,987
856,302
60,973
Total costs incurred
$ 39,511,105
$ 18,678,228
$ 36,536,625
Report of Independent Registered Public Accounting Firm, page F-1
Reserves, page F-32
4.
In your response to our prior comment 4, you present the “addition of the Kariman structure” as the explanation for the significant additions to your March 31, 2007 proved reserves by extensions and discoveries. Please expand this to include additional information, e.g. gross and net wells drilled, proved undeveloped reserves added, etc.
In light of the above comment, the Company proposes 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:
During the year ended March 31, 2007 we drilled one well (gross and net) on the Kariman structure. The addition of the Kariman structure during the year ended March 31, 2007 resulted in an increase in our estimated proved developed reserves of approximately 2.7 million BOE (barrels of oil equivalent) and no increase in our proved undeveloped reserves. These were the only extensions or discoveries made during the year ended March 31, 2007.
Mr. W. Bradshaw Skinner
November 6, 2007
Page
Attached to this letter, please find a statement from the Company acknowledging that:
§
the Company is responsible for the adequacy and accuracy of the disclosure in the filling;
§
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.
Based on my telephone conversation on November 6, 2007 with Mr. Ronald Winfrey, Petroleum Engineer, Division of Corporation Finance, the Company plans to file amendments to its reports to reflect the changes proposed in this and our prior letters responding to the Staff’s comments within the next two weeks.
Thank you for your assistance in this matter. If you have any questions or require additional information, please contact me directly.
Very truly yours,
POULTON & YORDAN
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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
November 6, 2007
W.
Bradshaw Skinner
Senior
Assistant Chief Accountant
United
States Securities and Exchange Commission
Division of Corporate Finance
100 F
Street N.E.
Mail
Stop 7010
Washington, D.C. 20002
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 September 10,
2007
Dear
Mr. Skinner:
At the request of the management of BMB Munai, Inc., (the
“Company” or “BMB Munai”) we are responding to comments raised
by the staff of the Securities and Exchange Commission in your letter dated November 1,
2007. Following are the responses to your comments.
Engineering Comments
Form
10-KSB for the Fiscal Year Ended March 31, 2007
General
1.
These comments were initially presented to you in our
telephone conversation with Richard T. Ludlow, your outside legal
counsel on October 19, 2007.
No response required.
Mr. W.
Bradshaw Skinner
November 6, 2007
Page
2
Business, page 4
Oil
and Gas Reserves, page 6
2.
In comment 1 of our letter dated July 6, 2007, we asked
that you 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. Your proposed text displays “Proved reserves to be
developed by June 30, 2009” rather than “recovered”.
Please amend your document to disclose the information that we
requested.
We propose to change the proved reserves table on page 6 of the Form
10-K as follows to clearly disclose the proved reserves to be recovered by and after
June 30, 2009:
Proved reserves to be recovered
by
June 30, 2009(1)
Proved reserves to be
recovered
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.
Mr. W.
Bradshaw Skinner
November 6, 2007
Page
3
As
noted above, from June 2006 through March 31, 2007 we invested approximately
$37.4 million in the exploration and development of our
properties..., page19
3.
Your response to our prior comment 2 stated that the
amounts contained in the tables on pages 28 and F-30 are cumulative
figures”. The “costs incurred” as prescribed by
Financial Accounting Standard 69, paragraphs 21-23, are figures for
each prior year, not a cumulative total. “Capitalized
costs”, as described by paragraphs 18-20, are cumulative. Please
amend your document to comply with FAS 69.
The Company will also amend the “Exploration, Development and
Acquisition Capital Expenditures” table on page 28 to present the costs incurred
for each prior year rather than on a cumulative basis, as follows:
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.
For the year ended March 31,
2007
For the year ended March 31,
2006
For the year ended
March 31, 2005
Acquisition costs:
Unproved properties
$
-
$
-
$
-
Proved properties
-
-
19,075,000
Exploration costs
1,370,797
3,453,603
713,220
Development costs
37,063,321
14,368,323
16,687,432
Subtotal
38,434,118
17,821,926
36,475,652
Asset retirement costs
1,076,987
856,302
60,973
Total costs incurred
$ 39,511,105
$ 18,678,228
$ 36,536,625
Mr. W.
Bradshaw Skinner
November 6, 2007
Page
4
The Company will also amend the “Costs Incurred” table on
page F-30 to present the costs incurred for each prior year rather than on a cumulative
basis, as follows:
Costs Incurred – Costs incurred in oil and natural gas
property acquisition, exploration and development activities are summarized
below:
For the year ended March 31,
2007
For the year ended March 31,
2006
For the year ended
March 31, 2005
Acquisition costs:
Unproved properties
$
-
$
-
$
-
Proved properties
-
-
19,075,000
Exploration costs
1,370,797
3,453,603
713,220
Development costs
37,063,321
14,368,323
16,687,432
Subtotal
38,434,118
17,821,926
36,475,652
Asset retirement costs
1,076,987
856,302
60,973
Total costs incurred
$ 39,511,105
$ 18,678,228
$ 36,536,625
Report of Independent Registered Public Accounting Firm, page
F-1
Reserves, page F-32
4.
In your response to our prior comment 4, you present the
“addition of the Kariman structure” as the explanation for
the significant additions to your March 31, 2007 proved reserves by
extensions and discoveries. Please expand this to include additional
information, e.g. gross and net wells drilled, proved undeveloped
reserves added, etc.
In light of the above comment, the Company proposes 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:
During the year ended March 31, 2007 we drilled one well (gross
and net) on the Kariman structure. The addition of the Kariman structure during the
year ended March 31, 2007 resulted in an increase in our estimated proved developed
reserves of approximately 2.7 million BOE (barrels of oil equivalent) and no increase
in our proved undeveloped reserves. These were the only extensions or discoveries made
during the year ended March 31, 2007.
Mr. W.
Bradshaw Skinner
November 6, 2007
Page
5
Attached to this letter, please find a statement from the Company
acknowledging that:
§
the Company is responsible for the adequacy and accuracy
of the disclosure in the filling;
§
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.
Based on my telephone conversation on November 6, 2007 with Mr. Ronald
Winfrey, Petroleum Engineer, Division of Corporation Finance, the Company plans to
file amendments to its reports to reflect the changes proposed in this and our
prior letters responding to the Staff’s comments within the next two
weeks.
Thank you for your assistance in this matter. If you have any questions
or require additional information, please contact me directly.
Very truly yours,
POULTON & YORDAN
Richard T. Ludlow
Attorney at Law
November 6, 2007
W.
Bradshaw Skinner
Senior
Assistant Chief Accountant
United
States Securities and Exchange Commission
Division of Corporate Finance
100 F
Street N.E.
Mail
Stop 7010
Washington, D.C. 20002
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 September 10,
2007
Dear
Mr. Skinner:
In connection with the Company’s responses to comments raised by
the staff at the Securities and Exchange Commission in your letter dated November 1,
2007 the Company acknowledges that:
•
it is responsible for the adequacy and accuracy of the
disclosure in its filings;
•
staff comments or changes to disclosure in response to
staff comments do not foreclose the Commission from taking any actio