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CORRESP
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 filename1.htm

 CORRESP

 555 Eleventh Street, N.W., Suite 1000

 Washington, D.C. 20004-1304

 Tel: +1.202.637.2200 Fax: +1.202.637.2201

 www.lw.com

 FIRM / AFFILIATE OFFICES

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 March 28, 2025

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 Via EDGAR

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 Office of Energy & Transportation

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 U.S. Securities and Exchange Commission

 Los Angeles

 Washington, D.C.

 100 F Street, N.E.

 Madrid

 Washington, D.C. 20549

 Attn:
 Myra Moosariparambil
 Craig Arakawa John Hodgin
 Anuja Majmudar Daniel Morris

 Re:
 Phoenix Energy One, LLC
 Amendment No. 1 to Registration Statement on Form S-1
 Filed on December 30, 2024
 File No. 333-282862
 To Whom It May Concern: On behalf of our
client, Phoenix Energy One, LLC, formerly known as Phoenix Capital Group Holdings, LLC (the “ Company ”), and pursuant to the applicable provisions of the U.S. Securities Act of 1933, as amended, and the rules promulgated
thereunder (the “ Securities Act ”), we are submitting this letter setting forth the responses of the Company to the comments provided by the staff (the “ Staff ”) of the U.S. Securities and Exchange
Commission (the “ Commission ”) in its comment letter dated January 28, 2025 (the “ Comment Letter ”) with respect to the Company’s Amendment No. 1 to Registration Statement on Form S-1 filed by the Company on December 30, 2024. Concurrently with the furnishing of this letter, the Company has filed an amendment (“ Amendment No. 2 ”) to
the above-referenced Registration Statement on Form S-1 (collectively, the “ Registration Statement ”) through EDGAR, which has been revised where applicable to address the Staff’s
comments. The numbered paragraphs in bold italics below set forth the comments of the Staff in the Comment Letter and are followed by the
Company’s responses. Unless otherwise indicated, capitalized terms used herein have the meanings assigned to them in Amendment No. 2. All references to page numbers and captions (other than those in the Staff’s comments) correspond to
the page numbers and captions in Amendment No. 2.

 March 28, 2025
 Page
 2

 Registration Statement on Form S-1
 Cover Page

 1.
 Please revise the cover page to insert a paragraph immediately following your discussion of your
outstanding debt obligations to disclose the following, if true:

 •

 You report net losses for the year ended December 31, 2023 and the
subsequent interim period;

 •

 You do not anticipate that your cash flow from operations will be sufficient to service your debt
obligations for the next several years; and

 •

 Your ability to service your outstanding debt depends on your ability to issue additional notes, including
the notes in this offering, so that such proceeds may be used to pay the principal and interest due to existing debt holders.
 Provide similar disclosure in the opening paragraphs of the Overview at page 1, and in your risk factor and liquidity discussions. In
addition, include a cross-reference to a risk factor addressing the risk to investors if you are unable to issue additional notes and therefore unable to use proceeds from the sale of debt to pay outstanding debt holders.
 Response : The Company acknowledges the Staff’s comment and advises the Staff that it has revised the cover page and pages 1, 40,
55, 75, and 86 accordingly to disclose the Company’s net losses in recent periods and the risk to holders that the Company’s cash flows from operations may alone be insufficient to service its debt.
 However, the Company respectfully advises the Staff that, although its cash flows from operations have not historically been sufficient to
service required cash interest and principal payment obligations under the Company’s debt, the Company anticipates that its cash flows from operations will be sufficient for that purpose going forward. As set out in the analysis supplementally
provided to the Staff per its request in comment 25 below, the Company’s projected capital needs in 2025 and thereafter are driven primarily by planned investments that the Company anticipates making under its business plan to drive continued
growth. The Company notes that it may ultimately elect to use the cash intended for such purposes to instead service obligations, whether those be payroll, lease expenses, or debt service.
 The Company also respectfully advises the Staff that the incurrence of new debt to repay or service existing debt obligations is a standard
practice for issuers across a broad spectrum of corporate maturity, including newly public companies and long-time term loan and bond issuers. For example, issuers frequently rely on access to additional liquidity to service debt, engage in
corporate debt refinancings, and undertake various other transactions to satisfy debt obligations. Similar to other issuers, the Company has deliberately established multiple liquidity and capital resources to help ensure access to adequate
liquidity and capital. Notwithstanding the foregoing, the Company has made clear in Amendment No. 2 that its cash flows from operations alone may be insufficient to service its debt, in which case the Company may require additional capital and
so may use the proceeds of newly issued debt, including the Notes, to service its existing debt.

 2.
 We note your response to prior comment 1. Please supplementally provide a detailed job description for
Mr. Matthew Willer, Managing Director, Capital Markets, including his role with respect to the structure and amount of your debt offerings, and his involvement in the sale of your notes. In this regard, we note that
Mr. Willer is described on your website as a former investment banker and C-suite level executive at multiple startups. In addition, please provide the names and titles of the
representatives entitled to fees and commissions as well as the aggregate amounts that have been paid to each individual.

 March 28, 2025
 Page
 3

 Response : The Company acknowledges the Staff’s comment and advises the Staff
that, concurrently with the furnishing of this letter, the Company has supplementally provided the Staff with the requested detailed job description for Mr. Matthew Willer, the names and titles of the other licensed registered representatives
of the Dalmore Group entitled to fees and commissions in connection with the offering of the Notes, and the aggregate amounts such individuals were paid as fees and commissions in connection with the Company’s debt issuances under Regulation A
and Regulation D of the Securities Act. The Company respectfully advises the Staff that no amounts have been paid to Mr. Willer or any other representative in connection with the offering of the Notes, and that no such amounts will be paid
unless and until the Registration Statement is declared effective, the offering of the Notes commences, and Notes are sold in accordance with the terms described in the Registration Statement.

 3.
 Refer to the fifth paragraph on the cover page. We note you disclose here that a holder may require you
at any time prior to maturity, to redeem its notes subject to certain exceptions and to an annual cap of 10%. Please revise your disclosure here to include the risk that you may not be able to pay the required price for the Notes because you may not
have enough funds at that time or the terms of your indebtedness may prevent you from making such payment.
 Response : The Company acknowledges the Staff’s comment and advises the Staff that it has revised the cover page accordingly.

 4.
 We note your response to prior comment 3 and reissue in part. Please revise to explain how you will
determine whether to grant requests to transfer, including objective criteria. To the extent that that you will not apply objective criteria, please revise to state, if true, that determinations will be made on an ad hoc basis. In addition, revise
at page 124 to clarify the procedures that investors must follow to submit a request to transfer and the number of days in which they should expect the request to be accepted or rejected.
 Response : The Company acknowledges the Staff’s comment and advises the Staff that it has revised the cover page and pages 12, 45,
and 132 accordingly. Prospectus Summary
 Overview, page 1

 5.
 Revise the opening paragraphs of this section to disclose your net losses and accumulated deficit for
FY23 and any subsequent interim or annual period. In addition, revise the opening paragraphs to quantify your aggregate outstanding debt for the same periods.
 Response : The Company acknowledges the Staff’s comment and advises the Staff that it has revised pages 1, 55, and 86 accordingly.

 6.
 Please expand your disclosure of the number of gross productive development wells and gross wells drilled
during 2023 to additionally provide the corresponding number of net wells consistent with the definitions in Item 1208 of Regulation S-K and the disclosure of the number of gross and net wells drilled under
the direct drilling operations. This comment also applies to disclosure on pages 52 and 83. Response : The
Company acknowledges the Staff’s comment and advises the Staff that it has revised pages 1, 54, 86 accordingly.

 March 28, 2025
 Page
 4

 Prospectus Summary
 Our Company Direct Drilling Operations, page 2

 7.
 We note your disclosure that in 2025, you expect to have increased needs for additional capital,
potentially in excess of free cash flow from your operations. Please revise your disclosure to explain how you define free cash flows from your operations and to clearly indicate whether your current operating plans contemplate or project that your
capital needs for 2025 will exceed the free cash flow from your operations. Response : The Company
acknowledges the Staff’s comment and advises the Staff that it has revised pages 2 and 86 to clarify that the Company expects to require capital in excess of cash flows from operations in order to execute on the Company’s business plan,
and that this requirement is primarily driven by the Company’s plans to fund the expansion of its direct drilling operations.

 8.
 You disclose that as of November 30, 2024 you had
$251.8 million available to borrow under the Adamantium Loan Agreement (assuming Adamantium is able to issue the corresponding amount of Adamantium Securities). Please expand your disclosure here and at page 84 to
provide additional details about the likelihood of the availability of funds under this arrangement. In this regard, we note that Adamantium is a wholly owned finance subsidiary and any amounts available under the Adamantium Loan Agreement are
contingent upon Adamantium’s receipt of proceeds from the sale of Adamantium Securities, which cannot be guaranteed.
 Response : The Company acknowledges the Staff’s comment and advises the Staff that it has revised pages 2 and 87 accordingly.
 Company Structure, page 5

 9.
 We note your response to prior comments 4 and 5. In particular, we note your revised disclosure that
Holdco was created to pledge equity interests of the Issuer as collateral to secure the borrowings under the Fortress Credit Agreement. It is unclear from your disclosure whether the Issuer itself was unable to pledge interests or similar
collateral. Please clarify and, if the issuer could have pledged equity interests or similar collateral, explain the business reasons for creating a new entity to do so. In addition, please revise here and provide a cross-reference to appropriate
risk factor disclosure explaining how, if at all, the creation of Holdco affects may affect the claims of note holders in the event of the bankruptcy of the issuer.
 Response : The Company acknowledges the Staff’s comment and respectfully advises the Staff that a customary and typical collateral
package for a secured term loan includes a pledge of 100% of the equity of the borrower in order to provide for a “single point of enforcement” in a foreclosure. Under Delaware law, a company does not own its equity that has been issued to
third parties, and so cannot generally pledge such equity interests. At the time the Company entered into the Fortress Credit Agreement as the primary borrower under the facility, its equity was held by multiple individuals, making perfection and
enforcement of equity collateral more difficult than is market-standard. As a result, and as is common in negotiations with lenders in secured term loan financings, the Company and its equityholders agreed to form a parent entity, Phoenix Equity,
that holds 100% of the equity interests of the borrower. This enabled the Company to provide a pledge of such equity interests as collateral to the lenders under the Fortress Credit Agreement and allowed the Company to obtain a term loan financing
with a reputable lender under market terms. As disclosed in the Registration Statement, in connection with the formation of Phoenix Equity, the equityholders of the Company exchanged their interests in the borrower for interests in Phoenix Equity
and, as a result, the formation of Phoenix Equity resulted in no change to the beneficial ownership of the group. With respect to the
Staff’s comment regarding the impact of the creation of Phoenix Equity and the related pledge of equity interests on the claims of holders of Notes in a bankruptcy, the Company respectfully advises the Staff that such claims are unchanged. As
disclosed in the Registration Statement, including in the risk factors, the Notes are unsecured, subordinated obligations and are both

 March 28, 2025
 Page
 5

(i) effectively subordinated to any of the Company’s existing or future secured indebtedness and other obligations, including under the Fortress Credit Agreement, to the extent of the value
of the assets securing such indebtedness, and (ii) contractually subordinated to any Senior Debt, including indebtedness under the Fortress Credit Agreement. Prior to the formation of Phoenix Equity, the lenders under the Fortress Credit
Agreement already had an all-assets lien that would be enforceable in a bankruptcy and used to satisfy any claims under that agreement prior to any repayment of amounts under the Notes. Those lenders also had
a contractual priority on the proceeds of any sales of assets by virtue of being designated as Senior Debt. As a result, the formation of Phoenix Equity and related pledge of equity interests did not put holders of Notes in any different position vis-à-vis the lenders under the Fortress Credit Agreement (or any other secured debt issued or to be issued by the Company in the future).
 Ranking, page 9

 10.
 We note your response to our prior comment 6 and re-issue it.
Other than the first bullet, please revise each bullet to quantify the current aggregate amount of debt and liabilities that fall within each category as of the most recent practicable date. These aggregate amounts should reconcile with the itemized
amounts disclosed in further detail in the four paragraphs following this bulleted disclosure. In this regard, we also note that the disclosed amounts outstanding under each of the four paragraphs do not sum up to the
$964.4 million of total indebtedness outstanding. Response : The Company
acknowledges the Staff’s comment and advises the Staff that it has revised pages 9, 10, 11, 124, and 125 accordingly. Mandatory Redemption, page
11

 11.
 We note your response to our prior comment 8 and 14 and that any Notes redeemed by your manager,
executive officers, or their respective family members during any calendar year will not be included in calculating the 10% Limit with respect to any other holders for such calendar year. Please disclose whether the managers, executive officers and
their respective family members are subject to any limit t