SEC Comment Letter 0000000000-24-010263 to Crescent Energy Co (CRGY) (CIK 0001866175) (CRGY)
Crescent Energy Co (CRGY) (CIK 0001866175)
Date: Sept. 11, 2024 · CIK: 0001866175 · Accession: 0000000000-24-010263
AI Filing Summary & Sentiment
File numbers found in text: 001-41132
Letter
September 11, 2024 Brandi Kendall Chief Financial Officer Crescent Energy Co 600 Travis Street, Suite 7200 Houston, Texas 77002 Re:Crescent Energy Co Form 10-K for the Fiscal Year ended December 31, 2023 Filed March 4, 2024 File No. 001-41132 Dear Brandi Kendall: We have limited our review of your filing to the financial statements and related disclosures and have the following comments. Please respond to this letter within ten business days by providing the requested information or advise us as soon as possible when you will respond. If you do not believe a comment applies to your facts and circumstances, please tell us why in your response. After reviewing your response to this letter, we may have additional comments. Form 10-K for the Fiscal Year ended December 31, 2023 Business and Properties Drilling and other exploration and development activities, page 22 1.The disclosure relating to the drilling activities that occurred during the years ended December 31, 2023, 2022 and 2021 appears to be limited to your operated wells.
Please expand your disclosure to also address the drilling activities relating to non- operated wells and wells in which you own a mineral or royalty interest.
For the purposes of disclosing net royalty wells in which you do not hold a working interest, consider the net revenue interest as a substitute for the working interest. Refer to Items 1205 and the definitions in 1208(c) of Regulation S-K.
September 11, 2024 Page 2 Leasehold acreage, page 22 2.You disclose that approximately 2,302 thousand acres, or approximately 95%, of your leasehold acreage is developed. Based on disclosure on page 12 regarding an "acreage position that is 96% held by production," it appears that you might be treating acreage that is held by production as developed acreage for purposes of the disclosure on page 22.
Please note the acreage associated with your undeveloped reserves and acreage held by production that encompasses those leased acres on which wells have not been drilled or completed should be classified as undeveloped acreage for purposes of disclosure under Item 1208(b) of Regulation S-K.
Please advise or modify your disclosure as necessary to resolve any inconsistencies in the classification of your acreage. Refer to the disclosure requirements in Items 1208(a) and (b) and the definitions in 1208(c) of Regulation S-K.
3.Please tell us the extent to which you have assigned any proved undeveloped reserves to locations which are currently scheduled to be drilled after lease expiration.
If there are material quantities of net proved undeveloped reserves relating to such locations, expand the disclosure here or in an appropriate section elsewhere in your filing to describe the uncertainty in reasonable detail, including the steps and related costs that would be necessary to extend the time to the expiration of such leases, considering the guidance in Rule 4-10(a)(26) of Regulation S-X and FASB ASC 932-235-50-10.
Management's Discussion and Analysis, page 78 We note your discussion in the first paragraph on page 77 attributing the increase in general and administrative expenses during 2023 partially to higher expense payable under the Management Agreement, corresponding to an increase in your interest in the operating company associated with redemptions.
You indicate that you have included adjustments to recognize additional Manager Compensation in computing certain non-GAAP measures, representing such costs attributed to the redeemable noncontrolling interests, which have been excluded from your computation of net income and characterized as distributions.
We also note your discussion in Note 14 on page 129, and the corresponding amounts in the roll-forward of the redeemable non-controlling interests account on page 123 and in the financing section of your Statements of Cash Flows on page 99.
Please explain to us your rationale for excluding amounts attributable to the redeemable non-controlling interests from your computation of consolidated net income, with reference to the specific accounting guidance considered in formulating your policy.
4.
September 11, 2024 Page 3 Please also explain how your approach correlates with Sections 6 and 7 of the agreement at Exhibit 10.3 and provide us with the Cost Allocation Policy referenced in that agreement along with the computations made to determine the allocations.
In closing, we remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. Please contact John Cannarella at 202-551-3337 or Karl Hiller at 202-551-3686 with any questions. Sincerely, Division of Corporation Finance Office of Energy & Transportation
Show Raw Text
September 11, 2024
Brandi Kendall
Chief Financial Officer
Crescent Energy Co
600 Travis Street, Suite 7200
Houston, Texas 77002
Re:Crescent Energy Co
Form 10-K for the Fiscal Year ended December 31, 2023
Filed March 4, 2024
File No. 001-41132
Dear Brandi Kendall:
We have limited our review of your filing to the financial statements and related
disclosures and have the following comments.
Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
After reviewing your response to this letter, we may have additional comments.
Form 10-K for the Fiscal Year ended December 31, 2023
Business and Properties
Drilling and other exploration and development activities, page 22
1.The disclosure relating to the drilling activities that occurred during the years ended
December 31, 2023, 2022 and 2021 appears to be limited to your operated wells.
Please expand your disclosure to also address the drilling activities relating to non-
operated wells and wells in which you own a mineral or royalty interest.
For the purposes of disclosing net royalty wells in which you do not hold a working
interest, consider the net revenue interest as a substitute for the working interest. Refer to
Items 1205 and the definitions in 1208(c) of Regulation S-K.
September 11, 2024
Page 2
Leasehold acreage, page 22
2.You disclose that approximately 2,302 thousand acres, or approximately 95%, of your
leasehold acreage is developed. Based on disclosure on page 12 regarding an "acreage
position that is 96% held by production," it appears that you might be treating acreage that
is held by production as developed acreage for purposes of the disclosure on page 22.
Please note the acreage associated with your undeveloped reserves and acreage held by
production that encompasses those leased acres on which wells have not been drilled or
completed should be classified as undeveloped acreage for purposes of disclosure under
Item 1208(b) of Regulation S-K.
Please advise or modify your disclosure as necessary to resolve any inconsistencies in the
classification of your acreage. Refer to the disclosure requirements in Items 1208(a) and
(b) and the definitions in 1208(c) of Regulation S-K.
3.Please tell us the extent to which you have assigned any proved undeveloped reserves to
locations which are currently scheduled to be drilled after lease expiration.
If there are material quantities of net proved undeveloped reserves relating to such
locations, expand the disclosure here or in an appropriate section elsewhere in your filing
to describe the uncertainty in reasonable detail, including the steps and related costs that
would be necessary to extend the time to the expiration of such leases, considering the
guidance in Rule 4-10(a)(26) of Regulation S-X and FASB ASC 932-235-50-10.
Management's Discussion and Analysis, page 78
We note your discussion in the first paragraph on page 77 attributing the increase in
general and administrative expenses during 2023 partially to higher expense payable
under the Management Agreement, corresponding to an increase in your interest in the
operating company associated with redemptions.
You indicate that you have included adjustments to recognize additional Manager
Compensation in computing certain non-GAAP measures, representing such costs
attributed to the redeemable noncontrolling interests, which have been excluded from
your computation of net income and characterized as distributions.
We also note your discussion in Note 14 on page 129, and the corresponding amounts in
the roll-forward of the redeemable non-controlling interests account on page 123 and in
the financing section of your Statements of Cash Flows on page 99.
Please explain to us your rationale for excluding amounts attributable to the redeemable
non-controlling interests from your computation of consolidated net income, with
reference to the specific accounting guidance considered in formulating your policy.
4.
September 11, 2024
Page 3
Please also explain how your approach correlates with Sections 6 and 7 of the agreement
at Exhibit 10.3 and provide us with the Cost Allocation Policy referenced in that
agreement along with the computations made to determine the allocations.
In closing, we remind you that the company and its management are responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or
absence of action by the staff.
Please contact John Cannarella at 202-551-3337 or Karl Hiller at 202-551-3686 with any
questions.
Sincerely,
Division of Corporation Finance
Office of Energy & Transportation