-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D01GXO+3v+7pvwdvHwCy4AAAH4XgpVbMRm8Bwv1zwgr4V/USdoNRyDXPwZwWyOyN ctC0KvbeHjOP9r/91IwY1A== 0001144439-10-000002.txt : 20100412 0001144439-10-000002.hdr.sgml : 20100412 20100202154503 ACCESSION NUMBER: 0001144439-10-000002 CONFORMED SUBMISSION TYPE: CORRESP PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20100202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BASIC EARTH SCIENCE SYSTEMS INC CENTRAL INDEX KEY: 0000010254 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 840592823 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: CORRESP BUSINESS ADDRESS: STREET 1: 633 SEVENTEENTH STREET STREET 2: SUITE 1645 CITY: DENVER STATE: CO ZIP: 80202-3625 BUSINESS PHONE: 303-296-3076 MAIL ADDRESS: STREET 1: 633 SEVENTEENTH STREET STREET 2: SUITE 1645 CITY: DENVER STATE: CO ZIP: 80202-3625 FORMER COMPANY: FORMER CONFORMED NAME: BASIC EARTH SCIENCE SYSTEMS INC DATE OF NAME CHANGE: 19920703 CORRESP 1 filename1.htm corresp.htm
 
Basic Earth Science Systems, Inc.
633 Seventeenth Street, Suite 1645
Denver, CO 80303
Phone: 303-296-3076
Fax: 303-773-8099
 
 
February 2, 2010

VIA EDGAR CORRESPONDENCE

Securities and Exchange Commission
100 F Street, N.E.
Washington, DC  20549
 
Attn:  Mark Wojciechowski, Staff Accountant
Mark C. Shannon, Branch Chief

Kevin Stertzel, Staff Accountant
James Murphy, Petroleum Engineer

Re: Basic Earth Science Systems, Inc.
Form 10-K for the Fiscal Year Ended March 31, 2009
Filed June 18, 2009
File No. 000-07914

Mr. Wojciechowski:
 
The following responses address the comments of the reviewing Staff of the Commission as set forth in a comment letter dated January 21, 2010 (the “Comment Letter”) relating to the Annual Report on Form 10-K for the fiscal year ended March 31, 2009 (the “Annual Report”) of Basic Earth Science Systems, Inc. (the “Company”). The answers set forth herein refer to each of the Staffs' comments by number. 
 
Form 10-K for the Fiscal Year Ended March 31, 2009

Note 12 Unaudited oil and Gas Reserves Information

Analysis of Changes in Proved Reserves, page 39

1.  
We have reviewed your response to prior comment five of our letter of December 11, 2009 regarding your proved reserves disclosure. As previously stated, the reserve table should represent the total proved reserves, not just the proved developed reserves.  SFAS 69 requires you to additionally disclose the proved developed reserves at the beginning and end of each year.  Please provide us with an example of your proposed disclosure.
 
 
1
 
Response:

Below is our proposed disclosure of the changes in proved reserves, which we will include in our next annual filing on Form 10-K.
 
   
March 31, 2009
    
March 31, 2008
  
   
Oil (Bbls)
    
Gas (Mcf)
    
Oil (Bbls)
    
Gas (Mcf)
  
Proved reserves:
                                
Balance, beginning of year
    
1,074,000
      
1,120,000
      
995,000
      
1,138,000
  
     Revisions of previous estimates (1)
    
(429,000
)
    
(262,000
)
    
112,000
      
(113,000
)
     Extensions and discoveries (2)
    
86,000
      
253,000
      
19,000
      
203,000
  
     Sales of reserves in place
    
—
      
—
      
—
      
—
  
     Improved recovery
    
—
      
—
      
15,000
      
1,000
  
     Purchase of reserves
    
—
      
—
      
22,000
      
—
  
     Production (3)
    
(93,000
)
    
(175,000
)
    
(89,000
)
    
(109,000
)
                                 
Balance, end of year
    
638,000
      
936,000
      
1,074,000
      
1,120,000
  
                                 
Proved developed reserves:
                                
Balance, beginning of year
    
1,074,000
      
1,120,000
      
995,000
      
1,138,000
  
                                 
Balance, end of year
    
587,000
      
907,000
      
1,074,000
      
1,120,000
  
                                 
Proved undeveloped reserves:
                                
Balance, beginning of year
    
— 
      
— 
      
— 
      
— 
  
                                 
Balance, end of year
    
51,000 
      
29,000 
      
— 
      
— 
  
 

2.  
We have reviewed your response to prior comment six of our letter regarding the significant changes to your proved oil and natural gas reserves.  SFAS 69 requires you to provide appropriate explanations for the significant reserve changes.  It does not ask you provide an explanation of the line item itself.  Therefore, for example, if you had significant changes to your reserves due to revisions please disclose the appropriate explanation for those revisions such as the percentage due to price changes and the percentage due to performance changes, the nature of the performance changes and the location of those reserves changes such as Montana or the specific field if the revisions are material to that field.  Similarly, if you had significant additions to reserves due to extensions and discoveries please disclose the details of those additions.  Please provide us with an example of your proposed disclosure.

Response:

The following is a proposed disclosure which we will include in our next annual filing on Form 10-K for significant changes in our reserves:

1)  
Revisions of Previous Estimates – All our properties experienced a decline in estimated economic life due to the dramatic changes in oil and gas prices during the year ended March 31, 2009.  This resulted in a decline in recoverable reserves.  None of revision relates to changes in performance.

2)  
Extensions and Discoveries – The additions consisted of one new well in Richland County, Montana, and 16 wells in Weld County, Colorado.

3)  
Production – This change in reserves is due to volumes of oil and gas being produced and the resulting reduction in remaining reserves in the reservoir.
 
2
 
3.  
We have reviewed your response to prior comment seven of our letter regarding how much of your revisions in oil and gas reserves were due to price changes and how much were due to performance changes in each of the reported periods of March 31, 2008 and March 31, 2009.  We are asking supplementally for how much of the reserve revisions in the reserve table were due to these two factors.  We are not asking for the change in the future value in the Standardized Measure as your response appears to indicate.

Response:

Substantially all of our revisions in oil and gas reserves were due to price changes for the year ended March 31, 2009.  This amounted to 429,000 bbls and 262,000 mmcf.  Virtually none of the changes related to performance.  While some individual properties exhibited performance improvements, these increases were negated by performance reductions on other wells.  For the year ended March 31, 2008, approximately 75% of the revisions to our oil and gas reserves related to price changes and approximately 25% related to performance changes on two wells in Richland County, Montana.

 In Conclusion

The Company herewith acknowledges that:

 
·
the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

 
·
staff comments or changes to disclosures 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.

We trust that the foregoing appropriately addresses the issues raised by your recent Letter of Comment.  Thank you in advance for your prompt review and assistance.

Very truly yours,

By: /s/ Joseph Young
Name: Joseph Young
Title: Principal Accounting Officer
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