SEC Company Response from EVOLUTION PETROLEUM CORP (EPM) (CIK 0001006655) (EPM) — Apr 1, 2015
EVOLUTION PETROLEUM CORP (EPM) (CIK 0001006655)
Date: April 1, 2015 · CIK: 0001006655 · Accession: 0001006655-15-000021
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-32942
Referenced dates: March 18, 2015
Letter
VIA FEDERAL EXPRESS, EMAIL (Mr. John Hodgin) AND EDGAR Mr. Karl Hiller Branch Chief Securities & Exchange Commission Washington, D.C. 20549 Re: Evolution Petroleum Corporation Form 10-K for the Fiscal Year ended June 30, 2014 Filed September 12, 2014 File No. 001-32942
Dear Mr. Hiller:
Set forth below are the responses of Evolution Petroleum Corporation (the “Company”) to the comments contained in your letter dated March 18, 2015 regarding the Company’s above referenced filings. For your convenience, we have repeated in bold type the comments exactly as set forth in the March 18, 2015 letter. The Company’s response to each comment and request is set forth immediately below the text of the applicable comment or request.
Form 10-K for the Fiscal Year ended June 30, 2014
General
1.
We note references to hydraulic fracturing in various locations in the filing. Please expand your disclosure where appropriate to convey clearly the extent to which hydraulic fracturing is employed in your operations. If significant, then please also add tailored risk factor disclosure regarding the specific operational and financial risks associated with hydraulic fracturing, such as underground migration and surface spillage or mishandling of fluids, including chemical additives. In this regard, we note your reference on page 3 to a well that ceased production “when an offset well was hydraulically fractured and the water migrated to our well bore.”
Mr. Karl Hiller
April 1, 2015
Page 2
Answer:
The Company believes that the use of hydraulic fracturing in our operations is not significant as we have not employed hydraulic fracturing since fiscal 2013. Under Business Strategy, Other Projects, Mississippi Lime, we discussed past fracturing which was performed during the completion of two wells in that play during fiscal 2013. The reference on page 3 to an "offset well was hydraulically fractured" relates to an adjacent third party-owned well that was fractured and caused a water migration into our well, which rendered it uneconomic. The Company has no future plans to employ hydraulic fracturing at this time and it is a not a relevant part of our current business strategy. The Company respectfully submits that its current disclosures are adequate under the circumstances.
2.
Please expand your discussion of reserves on pages 2 and 14, and any similar presentations elsewhere in your filing to provide a cautionary statement regarding the different levels of uncertainty relating to the estimates of proved, probable and possible reserves, and net present worth discounted at 10% (PV-10). For example, you should indicate that the reserves and net present worth discounted at 10%, relating to the categories of proved, probable and possible, have not been adjusted to reflect different levels of recovery risk among these categories, and are therefore not comparable and not meaningfully combined. Please remove all combined estimates of proved plus probable reserves, including those expressed as a single barrel of oil equivalent figure and the future net revenue expressed as the combined proved and probable net present values discounted at 10% (PV-10), as presented on pages 22 and 24. If you require further guidance, refer to the answer to Question 105.01 in our Compliance and Disclosure guidance, Interpretations (C&DIs), issued October 26, 2009 and updated May 16, 2013, available on our website at http://sec.gov/divisions/corpfin/guidance/oilandgas-interp.htm.
Answer:
The Company acknowledges the Staff's comment. The Company proposes to comply with this comment by (i) in future filings not including any disclosure of combined estimates of proved plus probable reserves, including those expressed as a single barrel of oil equivalent figure and the future net revenue expressed as the combined proved and probable net present values discounted at 10% (PV-10), and (ii) adding cautionary disclosure in future filings where it discusses each of the three levels of reserves and respective net present worth discounted at 10% (PV-10) regarding the different levels of uncertainty, similar to the following:
Page 2 (additional language in bold):
Our independent reservoir engineers, DeGolyer & MacNaughton, assigned the following estimated reserves net to our interests at Delhi as of June 30, 2014:
•
13.1 million bbls of proved oil equivalent reserves, with a PV-10* of $318.1 million
•
9.5 million bbls of probable** oil equivalent reserves, with a PV-10* of $135.9 million
•
3.0 million bbls of possible** oil equivalent reserves, with a PV-10* of $20.1 million
_______________________________________________________________________________
*
PV-10 of Proved reserves is a non-GAAP measure, reconciled to the Standardized Measure at "Estimated Oil and Natural Gas Reserves and Estimated Future Net Revenues" under Item 2. Properties of this Form 10-K. Probable and Possible reserves are not recognized by GAAP, and therefore the PV-10 of such reserves cannot be reconciled to a GAAP measure.
Mr. Karl Hiller
April 1, 2015
Page 3
**
With respect to the above reserve numbers, estimates of Probable and Possible reserves are inherently imprecise. When producing an estimate of the amount of oil and natural gas that is recoverable from a particular reservoir, Probable reserves are those additional reserves that are less certain to be recovered than Proved reserves but which, together with Proved reserves, are as likely as not to be recovered. Possible reserves are even less certain and generally require only a 10% or greater probability of being recovered. All categories of reserves are continually subject to revisions based on production history, results of additional exploration and development, price changes and other factors. Estimates of Probable and Possible reserves are by their nature much more speculative than estimates of Proved reserves and are subject to greater uncertainties, and accordingly the likelihood of recovering those reserves is subject to substantially greater risk. These three reserve categories and net present worth discounted at 10% relating to each category have not been adjusted to reflect different levels of recovery risk among these categories and are therefore not comparable and are not meaningfully combined.
Page 14 (additional language in bold):
Estimated Oil and Natural Gas Reserves and Estimated Future Net Revenues
The SEC sets rules related to reserve estimation and disclosure requirements for oil and natural gas companies. These rules require disclosure of oil and gas proved reserves by significant geographic area, using the 12-month average price, calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period, rather than year-end prices, and allows the use of new technologies in the determination of proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volumes. Subject to limited exceptions, the rules also require that proved undeveloped reserves may only be classified as such if a development plan has been adopted indicating that they are scheduled to be drilled within five years.
There are numerous uncertainties inherent in estimating quantities of proved reserves and estimates of reserves quantities and values must be viewed as being subject to significant change as more data about the properties becomes available.
Estimates of Probable and Possible reserves are inherently imprecise. When producing an estimate of the amount of oil and natural gas that is recoverable from a particular reservoir, Probable reserves are those additional reserves that are less certain to be recovered than Proved reserves but which, together with Proved reserves, are as likely as not to be recovered. Possible reserves are even less certain and generally require only a 10% or greater probability of being recovered. All categories of reserves are continually subject to revisions based on production history, results of additional exploration and development, price changes and other factors. Estimates of Probable and Possible reserves are by their nature much more speculative than estimates of Proved reserves and are subject to greater uncertainties, and accordingly the likelihood of recovering those reserves is subject to substantially greater risk. These three reserve categories and net present worth discounted at 10% relating to each category have not been adjusted to reflect different levels of recovery risk among these categories and are therefore not comparable and are not meaningfully combined.
Page 22 (revised language in bold):
Oil & Gas Reserves
•
Combined Delhi Proved and Probable oil equivalent volumes at June 30, 2014 increased to 22.6 MMBOE, an 8% increase over the previous year;
•
Delhi proved oil equivalent volumes at June 30, 2014 decreased to 13.1 MMBOE, a 3% decline from the previous year and corresponding PV-10* declined to $318 million, 30% lower prior year.
•
Reserves volumes in the immediate area of the June 2013 Event and within the Delhi town limits were re-categorized from Proved Reserves to Probable Reserves, due to the operator’s current forecast of deferred CO2 injection;
•
Combined Proved and Probable future net revenues remain essentially unchanged, despite a lower trailing average oil price than that used in 2013, while the combined PV‑10* of $454 million is 20% lower than the previous year,
Mr. Karl Hiller
April 1, 2015
Page 4
due primarily to a more conservative operating plan that defers a portion of forecast production into later periods and a lower peak production rate;
•
Delhi probable volumes at June 30, 2014 increased to 9.5 MMBOE, a 28% increase over the previous year and corresponding PV-10* increased to $136 million, 24% higher than prior year.
Page 24 (deleting the sentence in bold below):
The decline in Proved Reserves resulting from reduced injection pressure and deferred development was partially offset, in volumes, by the addition of incremental proved gas plant volumes, with forecasts of a more robust natural gas liquids (“NGL”) recovery than projected in the previous year’s estimate. The combined impacts on PV-10* of the lower peak production rate, later date of peak rate and re-categorization of reserves resulted in a decrease of our Proved PV-10* by 30% to $318 million. Due to the re-categorization, Probable volumes and related PV-10* increased 28% and 24%, respectively, to 9.5 MMBOE and $136 million, respectively. Consequently, the aggregate impact on Proved and Probable reserves was an 8% increase in combined volumes to 22.6 MMBOE and a 20% decrease in combined PV-10* to $454 million.
Possible reserves volumes at Delhi decreased by 20% to 3.0 MMBOE and PV-10* declined by 38% to $20 million, both primarily due to the incremental recovery factor being reduced from 3% to 2% of original oil in place and the projected slower production pace.
Properties, page 14
Summary of Oil & Gas Reserves for Fiscal Year Ended 2014, page 14
3.
We note your disclosure of possible reserves is limited to a total barrel of oil equivalent figure on page 2 and 24. Please expand your disclosure to provide the net quantities of developed, undeveloped and total possible reserves by product type, i.e. oil, natural gas liquids and natural gas, to comply with Item 1202(a)(2) of Regulation S-K.
Answer:
The Company acknowledges the Staff's comment. In future filings, the Company proposes to expand the disclosure below appearing in Item 2. Properties on page 15 to include net quantities of developed, undeveloped and total possible reserves by product type:
Mr. Karl Hiller
April 1, 2015
Page 5
Reserve Category
Oil
(MBbls)
NGLs
(MBbls)
Natural Gas
(MMcf)
Total Reserves
(MBOE)
PV-10
PROVED
Developed (60% of Proved)
7,858
7,970
$
257,954,613
Undeveloped (40% of Proved)
2,668
2,247
2,426
5,319
61,790,784
TOTAL PROVED
10,526
2,279
2,907
13,289
$
319,745,397
Product Mix
%
%
%
%
PROBABLE
Developed (43% of Probable)
4,039
—
—
4,039
$
79,823,271
Undeveloped (57% of Probable)
3,381
1,735
1,873
5,428
56,106,975
TOTAL PROBABLE
7,420
1,735
1,873
9,467
$
135,930,246
Product Mix
%
%
%
%
POSSIBLE
Developed (55% of Possible)
1,628
—
—
1,628
$
14,260,632
Undeveloped (45% of Possible)
1,324
5,886,949
TOTAL POSSIBLE
2,359
2,952
$
20,147,581
Product Mix
%
%
%
%
Internal Controls over Reserves Estimation Process and Qualifications of Technical Persons with Oversight for the Company’s Overall Reserve Estimation Process, page 16:
4.
Please expand your disclosure of the internal controls used in your reserves estimation effort to describe the qualifications of the technical person(s) within the Company primarily responsible for overseeing the preparation of the reserves estimates disclosed in your filing to comply with Item 1202(a)(7) of Regulation S-K.
Answer:
The Company acknowledges the Staff's comment. The Company proposes to expand its disclosure in future filings to include the following additional information (in bold) regarding the qualifications of the technical person within the Company primarily responsible for overseeing the preparation of the reserves estimates disclosed in its filings:
Our policies regarding internal controls over reserve estimates require reserves to be prepared by an independent engineering firm under the supervision of our Chief Executive Officer and Vice President of Operations and to be in compliance with generally accepted petroleum engineering and evaluation principles and definitions and guidelines established by the SEC. Our Chief Executive holds B.S. and M.E. degrees from Rice University in chemical engineering and earned an M.B.A. from Harvard University. He has over 30 years of experience in engineering, energy transactions, operations and finance with small independents, larger independents and major integrated oil companies. Our Vice of Operations has over 25 years of experience in oil and gas operations and hold a Bachelor of Science in Petroleum Engineering degree from the University of Oklahoma at Norman. The reserve information in this filing is based on estimates prepared by DeGoyler and MacNaughton, our independent engineering firm. The person responsible for preparing the reserve report is a Registered Professional Engineer in the State of Texas and a firm Senior Vice President. He holds a Bachelor of Science degree in Petroleum Engineering awarded in 1974 from Texas A&M University and has over 40 years of oil and gas reservoir experience. We provide our engineering firm with property interests, production, current operating costs, current production prices and other information. This information is reviewed by our Vice President of Operations and our Chief Executive Officer to ensure accuracy and completeness of the data prior to submission to our independent engineering firm. The scope and results of our independent engineering firm's procedures, as well as their professional qualifications, are summarized in the letter included as exhibit 99.4 to this Annual Report on Form 10-K.
Mr. Karl Hiller
April 1, 2015
Page 6
Proved Undeveloped Reserves, page 16
5.
We note that your disclosure of the changes in proved undeveloped reserves does not appear to separately address the revis
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CORRESP 1 filename1.htm RsponseLettertoSECreservescommentson201410-K-KarlHiller Seyfarth Shaw LLP 700 Milam Street Suite 1400 Writer's direct phone Houston, TX 77002-2812 (713) 225-1337 (713) 225-2300 Writer's Email fax (713) 225-2340 mcoffin@seyfarth.com www.seyfarth.com April 1, 2015 VIA FEDERAL EXPRESS, EMAIL (Mr. John Hodgin) AND EDGAR Mr. Karl Hiller Branch Chief Securities & Exchange Commission Washington, D.C. 20549 Re: Evolution Petroleum Corporation Form 10-K for the Fiscal Year ended June 30, 2014 Filed September 12, 2014 File No. 001-32942 Dear Mr. Hiller: Set forth below are the responses of Evolution Petroleum Corporation (the “Company”) to the comments contained in your letter dated March 18, 2015 regarding the Company’s above referenced filings. For your convenience, we have repeated in bold type the comments exactly as set forth in the March 18, 2015 letter. The Company’s response to each comment and request is set forth immediately below the text of the applicable comment or request. Form 10-K for the Fiscal Year ended June 30, 2014 General 1. We note references to hydraulic fracturing in various locations in the filing. Please expand your disclosure where appropriate to convey clearly the extent to which hydraulic fracturing is employed in your operations. If significant, then please also add tailored risk factor disclosure regarding the specific operational and financial risks associated with hydraulic fracturing, such as underground migration and surface spillage or mishandling of fluids, including chemical additives. In this regard, we note your reference on page 3 to a well that ceased production “when an offset well was hydraulically fractured and the water migrated to our well bore.” Mr. Karl Hiller April 1, 2015 Page 2 Answer: The Company believes that the use of hydraulic fracturing in our operations is not significant as we have not employed hydraulic fracturing since fiscal 2013. Under Business Strategy, Other Projects, Mississippi Lime, we discussed past fracturing which was performed during the completion of two wells in that play during fiscal 2013. The reference on page 3 to an "offset well was hydraulically fractured" relates to an adjacent third party-owned well that was fractured and caused a water migration into our well, which rendered it uneconomic. The Company has no future plans to employ hydraulic fracturing at this time and it is a not a relevant part of our current business strategy. The Company respectfully submits that its current disclosures are adequate under the circumstances. 2. Please expand your discussion of reserves on pages 2 and 14, and any similar presentations elsewhere in your filing to provide a cautionary statement regarding the different levels of uncertainty relating to the estimates of proved, probable and possible reserves, and net present worth discounted at 10% (PV-10). For example, you should indicate that the reserves and net present worth discounted at 10%, relating to the categories of proved, probable and possible, have not been adjusted to reflect different levels of recovery risk among these categories, and are therefore not comparable and not meaningfully combined. Please remove all combined estimates of proved plus probable reserves, including those expressed as a single barrel of oil equivalent figure and the future net revenue expressed as the combined proved and probable net present values discounted at 10% (PV-10), as presented on pages 22 and 24. If you require further guidance, refer to the answer to Question 105.01 in our Compliance and Disclosure guidance, Interpretations (C&DIs), issued October 26, 2009 and updated May 16, 2013, available on our website at http://sec.gov/divisions/corpfin/guidance/oilandgas-interp.htm. Answer: The Company acknowledges the Staff's comment. The Company proposes to comply with this comment by (i) in future filings not including any disclosure of combined estimates of proved plus probable reserves, including those expressed as a single barrel of oil equivalent figure and the future net revenue expressed as the combined proved and probable net present values discounted at 10% (PV-10), and (ii) adding cautionary disclosure in future filings where it discusses each of the three levels of reserves and respective net present worth discounted at 10% (PV-10) regarding the different levels of uncertainty, similar to the following: Page 2 (additional language in bold): Our independent reservoir engineers, DeGolyer & MacNaughton, assigned the following estimated reserves net to our interests at Delhi as of June 30, 2014: • 13.1 million bbls of proved oil equivalent reserves, with a PV-10* of $318.1 million • 9.5 million bbls of probable** oil equivalent reserves, with a PV-10* of $135.9 million • 3.0 million bbls of possible** oil equivalent reserves, with a PV-10* of $20.1 million _______________________________________________________________________________ * PV-10 of Proved reserves is a non-GAAP measure, reconciled to the Standardized Measure at "Estimated Oil and Natural Gas Reserves and Estimated Future Net Revenues" under Item 2. Properties of this Form 10-K. Probable and Possible reserves are not recognized by GAAP, and therefore the PV-10 of such reserves cannot be reconciled to a GAAP measure. Mr. Karl Hiller April 1, 2015 Page 3 ** With respect to the above reserve numbers, estimates of Probable and Possible reserves are inherently imprecise. When producing an estimate of the amount of oil and natural gas that is recoverable from a particular reservoir, Probable reserves are those additional reserves that are less certain to be recovered than Proved reserves but which, together with Proved reserves, are as likely as not to be recovered. Possible reserves are even less certain and generally require only a 10% or greater probability of being recovered. All categories of reserves are continually subject to revisions based on production history, results of additional exploration and development, price changes and other factors. Estimates of Probable and Possible reserves are by their nature much more speculative than estimates of Proved reserves and are subject to greater uncertainties, and accordingly the likelihood of recovering those reserves is subject to substantially greater risk. These three reserve categories and net present worth discounted at 10% relating to each category have not been adjusted to reflect different levels of recovery risk among these categories and are therefore not comparable and are not meaningfully combined. Page 14 (additional language in bold): Estimated Oil and Natural Gas Reserves and Estimated Future Net Revenues The SEC sets rules related to reserve estimation and disclosure requirements for oil and natural gas companies. These rules require disclosure of oil and gas proved reserves by significant geographic area, using the 12-month average price, calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period, rather than year-end prices, and allows the use of new technologies in the determination of proved reserves if those technologies have been demonstrated empirically to lead to reliable conclusions about reserve volumes. Subject to limited exceptions, the rules also require that proved undeveloped reserves may only be classified as such if a development plan has been adopted indicating that they are scheduled to be drilled within five years. There are numerous uncertainties inherent in estimating quantities of proved reserves and estimates of reserves quantities and values must be viewed as being subject to significant change as more data about the properties becomes available. Estimates of Probable and Possible reserves are inherently imprecise. When producing an estimate of the amount of oil and natural gas that is recoverable from a particular reservoir, Probable reserves are those additional reserves that are less certain to be recovered than Proved reserves but which, together with Proved reserves, are as likely as not to be recovered. Possible reserves are even less certain and generally require only a 10% or greater probability of being recovered. All categories of reserves are continually subject to revisions based on production history, results of additional exploration and development, price changes and other factors. Estimates of Probable and Possible reserves are by their nature much more speculative than estimates of Proved reserves and are subject to greater uncertainties, and accordingly the likelihood of recovering those reserves is subject to substantially greater risk. These three reserve categories and net present worth discounted at 10% relating to each category have not been adjusted to reflect different levels of recovery risk among these categories and are therefore not comparable and are not meaningfully combined. Page 22 (revised language in bold): Oil & Gas Reserves • Combined Delhi Proved and Probable oil equivalent volumes at June 30, 2014 increased to 22.6 MMBOE, an 8% increase over the previous year; • Delhi proved oil equivalent volumes at June 30, 2014 decreased to 13.1 MMBOE, a 3% decline from the previous year and corresponding PV-10* declined to $318 million, 30% lower prior year. • Reserves volumes in the immediate area of the June 2013 Event and within the Delhi town limits were re-categorized from Proved Reserves to Probable Reserves, due to the operator’s current forecast of deferred CO2 injection; • Combined Proved and Probable future net revenues remain essentially unchanged, despite a lower trailing average oil price than that used in 2013, while the combined PV‑10* of $454 million is 20% lower than the previous year, Mr. Karl Hiller April 1, 2015 Page 4 due primarily to a more conservative operating plan that defers a portion of forecast production into later periods and a lower peak production rate; • Delhi probable volumes at June 30, 2014 increased to 9.5 MMBOE, a 28% increase over the previous year and corresponding PV-10* increased to $136 million, 24% higher than prior year. Page 24 (deleting the sentence in bold below): The decline in Proved Reserves resulting from reduced injection pressure and deferred development was partially offset, in volumes, by the addition of incremental proved gas plant volumes, with forecasts of a more robust natural gas liquids (“NGL”) recovery than projected in the previous year’s estimate. The combined impacts on PV-10* of the lower peak production rate, later date of peak rate and re-categorization of reserves resulted in a decrease of our Proved PV-10* by 30% to $318 million. Due to the re-categorization, Probable volumes and related PV-10* increased 28% and 24%, respectively, to 9.5 MMBOE and $136 million, respectively. Consequently, the aggregate impact on Proved and Probable reserves was an 8% increase in combined volumes to 22.6 MMBOE and a 20% decrease in combined PV-10* to $454 million. Possible reserves volumes at Delhi decreased by 20% to 3.0 MMBOE and PV-10* declined by 38% to $20 million, both primarily due to the incremental recovery factor being reduced from 3% to 2% of original oil in place and the projected slower production pace. Properties, page 14 Summary of Oil & Gas Reserves for Fiscal Year Ended 2014, page 14 3. We note your disclosure of possible reserves is limited to a total barrel of oil equivalent figure on page 2 and 24. Please expand your disclosure to provide the net quantities of developed, undeveloped and total possible reserves by product type, i.e. oil, natural gas liquids and natural gas, to comply with Item 1202(a)(2) of Regulation S-K. Answer: The Company acknowledges the Staff's comment. In future filings, the Company proposes to expand the disclosure below appearing in Item 2. Properties on page 15 to include net quantities of developed, undeveloped and total possible reserves by product type: Mr. Karl Hiller April 1, 2015 Page 5 Reserve Category Oil (MBbls) NGLs (MBbls) Natural Gas (MMcf) Total Reserves (MBOE) PV-10 PROVED Developed (60% of Proved) 7,858 32 481 7,970 $ 257,954,613 Undeveloped (40% of Proved) 2,668 2,247 2,426 5,319 61,790,784 TOTAL PROVED 10,526 2,279 2,907 13,289 $ 319,745,397 Product Mix 79 % 17 % 4 % 100 % PROBABLE Developed (43% of Probable) 4,039 — — 4,039 $ 79,823,271 Undeveloped (57% of Probable) 3,381 1,735 1,873 5,428 56,106,975 TOTAL PROBABLE 7,420 1,735 1,873 9,467 $ 135,930,246 Product Mix 79 % 18 % 3 % 100 % POSSIBLE Developed (55% of Possible) 1,628 — — 1,628 $ 14,260,632 Undeveloped (45% of Possible) 731 503 543 1,324 5,886,949 TOTAL POSSIBLE 2,359 503 543 2,952 $ 20,147,581 Product Mix 80 % 17 % 3 % 100 % Internal Controls over Reserves Estimation Process and Qualifications of Technical Persons with Oversight for the Company’s Overall Reserve Estimation Process, page 16: 4. Please expand your disclosure of the internal controls used in your reserves estimation effort to describe the qualifications of the technical person(s) within the Company primarily responsible for overseeing the preparation of the reserves estimates disclosed in your filing to comply with Item 1202(a)(7) of Regulation S-K. Answer: The Company acknowledges the Staff's comment. The Company proposes to expand its disclosure in future filings to include the following additional information (in bold) regarding the qualifications of the technical person within the Company primarily responsible for overseeing the preparation of the reserves estimates disclosed in its filings: Our policies regarding internal controls over reserve estimates require reserves to be prepared by an independent engineering firm under the supervision of our Chief Executive Officer and Vice President of Operations and to be in compliance with generally accepted petroleum engineering and evaluation principles and definitions and guidelines established by the SEC. Our Chief Executive holds B.S. and M.E. degrees from Rice University in chemical engineering and earned an M.B.A. from Harvard University. He has over 30 years of experience in engineering, energy transactions, operations and finance with small independents, larger independents and major integrated oil companies. Our Vice of Operations has over 25 years of experience in oil and gas operations and hold a Bachelor of Science in Petroleum Engineering degree from the University of Oklahoma at Norman. The reserve information in this filing is based on estimates prepared by DeGoyler and MacNaughton, our independent engineering firm. The person responsible for preparing the reserve report is a Registered Professional Engineer in the State of Texas and a firm Senior Vice President. He holds a Bachelor of Science degree in Petroleum Engineering awarded in 1974 from Texas A&M University and has over 40 years of oil and gas reservoir experience. We provide our engineering firm with property interests, production, current operating costs, current production prices and other information. This information is reviewed by our Vice President of Operations and our Chief Executive Officer to ensure accuracy and completeness of the data prior to submission to our independent engineering firm. The scope and results of our independent engineering firm's procedures, as well as their professional qualifications, are summarized in the letter included as exhibit 99.4 to this Annual Report on Form 10-K. Mr. Karl Hiller April 1, 2015 Page 6 Proved Undeveloped Reserves, page 16 5. We note that your disclosure of the changes in proved undeveloped reserves does not appear to separately address the revis