AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
FEBRUARY 23, 1998
REGISTRATION NO. 333-43819
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HONDO OIL & GAS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 95-1998768
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10375 RICHMOND AVENUE
SUITE 900
HOUSTON, TEXAS 77042
(713) 954-4600
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
JOHN J. HOEY
PRESIDENT
HONDO OIL & GAS COMPANY
10375 RICHMOND AVENUE, SUITE 900
HOUSTON, TEXAS 77042
(713) 954-4600
WITH A COPY TO:
RICHARD A. BOEHMER, ESQ.
O'MELVENY & MYERS LLP
400 SOUTH HOPE STREET
LOS ANGELES, CALIFORNIA 90071
(213) 669-6643
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to the
public: FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT IS
DECLARED EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box [ ].
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier registration statement for the same
offering. [ ] __________________
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH
DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL
THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY
STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8 OF THE SECURITIES ACT OF
1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8, MAY
DETERMINE.
SUBJECT TO COMPLETION, DATED FEBRUARY 23, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR
TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER
THE SECURITIES LAW OF ANY SUCH STATE.
PROSPECTUS
HONDO OIL & GAS COMPANY
208,656 SHARES
COMMON STOCK
($1.00 PAR VALUE)
The 208,656 shares (the "Shares") of the Common Stock, par value
$1.00 per share, of Hondo Oil & Gas Company (the "Company") offered
hereby are being offered by Phillips Petroleum Company (the
"Selling Stockholder"). The Company will not receive any proceeds
from this offering. See "Selling Stockholder" below.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 HEREOF FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY THE
PROSPECTIVE INVESTOR.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The Shares may be sold from time to time in one or more
transactions on the American Stock Exchange, in the over-the-
counter market, in negotiated transactions or a combination of such
methods of sale, or otherwise, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or
at negotiated prices including (a) through ordinary brokerage
transactions in which the broker solicits purchases, (b) sales to
one or more brokers or dealers as principal, and the resale by such
brokers or dealers for their account pursuant to this Prospectus,
including resales to other brokers and dealers, (c) block trades in
which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block
as principal in order to facilitate the transaction or (d)
negotiated transactions with purchasers with or without a broker or
dealer. On February 19, 1998, the last reported sales price of
the Common Stock of the Company on the American Stock Exchange was
$6.31 per share.
The date of this Prospectus is _____________, 1998.
TABLE OF CONTENTS
Page
Available Information. . . . . . . . . . . . . . . . . . 3
Documents Incorporated by Reference. . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . 4
The Company. . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 6
Selling Stockholder. . . . . . . . . . . . . . . . . . . 6
Plan of Distribution . . . . . . . . . . . . . . . . . . 6
Experts. . . . . . . . . . . . . . . . . . . . . . . . . 6
Legal Matters. . . . . . . . . . . . . . . . . . . . . . 6
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
ANY SECURITIES OTHER THAN THE SHARES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, SHARES IN ANY JURISDICTION IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER OR SOLICITATION WOULD
BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements, information statements
and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the following Regional Offices of the Commission: Seven World
Trade Center, New York, New York 10048 and Citicorp Center, Suite
1400, 500 West Madison Street, Chicago, Illinois 60661. Copies of
such material can be obtained at prescribed rates from the Public
Reference Section of the Commission, at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Common Stock is listed on the American
Stock Exchange; reports, proxy statements, information statements
and other information filed by the Company with the American Stock
Exchange can be inspected at the offices of the American Stock
Exchange at 86 Trinity Place, New York, New York 10006. The
Commission maintains a website that contains reports, proxy
statements, information statements and other information filed
electronically with the Commission at http:www.sec.gov.
This Prospectus does not contain all the information set forth
in the Registration Statement (No. 333-43819) on Form S-3 (the
"Registration Statement") of which this Prospectus is a part,
including exhibits thereto, which has been filed with the
Commission in Washington, D.C. Copies of the Registration
Statement and the exhibits thereto may be obtained, upon payment of
the fee prescribed by the Commission, or may be examined without
charge, at the office of the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1997 (the "1997 Form 10-K"), the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31,
1997 (the "Form 10-Q") and the Company's definitive proxy statement
dated January 26, 1998, in connection with the Company's Annual
Meeting of Shareholders to be held on March 10, 1998 (other than
the Compensation and Benefits Committee Report, the Report of the
1993 Stock Incentive Plan Committee on Repricing of Options/SARs
and the Performance Graph included therein), as filed by the
Company (File No. 1-8979) with the Commission pursuant to the
Exchange Act, are incorporated in this Prospectus by reference.
All documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to
termination of this offering, shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the
date of filing of such document. Any statement contained in a
document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for the
purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which
also is incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS
DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF
ANY AND ALL DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS
(NOT INCLUDING EXHIBITS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE). REQUESTS FOR SUCH INFORMATION SHOULD
BE DIRECTED TO THE SECRETARY OF HONDO OIL & GAS COMPANY, 10375
RICHMOND AVENUE, SUITE 900, HOUSTON, TEXAS 77042, TELEPHONE: (713)
954-4600.
RISK FACTORS
The following factors should be considered carefully by
prospective investors in the Shares offered hereby.
Substantial Reliance on Single Investment. The Company's
success currently is dependent on its investment in the Opon
project, a gas and oil exploration concession in Colombia, South
America. The Opon project began producing natural gas and
condensate in December 1997 and is the Company's only source of
operating revenue.
Ecopetrol's Inherent Conflict of Interest and Role. As
described in the Company's 1997 Form 10-K, Ecopetrol is a quasi-
governmental corporate organization wholly owned by the Colombian
government, a party to the contract with respect to the Opon
project and a purchaser of natural gas and liquid hydrocarbons
under contracts for the sale of production from the Opon field. At
present, the price of natural gas is set by law enacted by the
legislature of Colombia in 1983. The regulated price of natural
gas could be changed in the future by governmental action. The
participation of Ecopetrol, a government-owned company, in the Opon
project as a producer and as a purchaser, and the power of the
government of Colombia to set the price of natural gas creates an
inherent conflict of interest in Ecopetrol and the government.
Disputes with Ecopetrol, including a recent disagreement about the
obligation to make take-or-pay payments under a gas sales
agreement, must be resolved in non-judicial or judicial proceedings
in Colombia. These conflicts may affect the value of the Company's
interest in the Opon project.
Under the terms of the Opon Contract, an application for
commerciality must be submitted to, and approved by, Ecopetrol
before production of the wells in that area can begin. Ecopetrol
cannot prevent the other contract parties from producing discovered
hydrocarbons by disapproving the application, but Ecopetrol can
delay the commencement of production for up to one year by
requiring additional work (which can cost no more than $1.0
million).
Marketing of Natural Gas. The Company must secure additional
markets and sales contracts for natural gas in Colombia in order to
increase production and cash flow from the Opon project. This will
depend on the continued development of gas markets and an
infrastructure for the delivery of natural gas in Colombia. Also,
other producers of natural gas in Colombia will compete for the
natural gas market and for access to limited pipeline
transportation facilities.
Foreign Operations. The Company's operations in Colombia are
subject to political risks inherent in all foreign operations,
including: (i) loss of revenue, property and equipment as a result
of unforeseen events such as expropriation, nationalization, war
and insurrection, (ii) risks of increases in taxes and governmental
royalties, (iii) renegotiation of contracts with governmental
entities, and (iv) changes in laws and policies governing
operations of foreign-based companies in Colombia. Guerrilla
activity in Colombia has disrupted the operation of oil and gas
projects, including those at the Opon project. Security in the
area has been improved and the associate parties have taken steps
to enhance relations with the local population through a community
relations program. The government continues its efforts through
negotiation and legislation to reduce the problems and effects of
insurgent groups, including regulations containing sanctions such
as impairment or loss of contract rights on companies and
contractors if found to be giving aid to such groups.
Colombia is among several nations whose progress in stemming
the production and transit of illegal drugs is subject to annual
certification by the President of the United States. The President
of the United States is expected to announce shortly whether
Colombia will be certified or granted a national interest waiver.
Colombia was not certified or granted a national interest waiver in
1997. The consequences of the failure to receive certification
generally include the following: (i) all bilateral aid, except
anti-narcotics and humanitarian aid, has been or will be suspended;
(ii) the Export-Import Bank of the United States and the Overseas
Private Investment Corporation will not approve financing for new
projects in Colombia; (iii) U.S. representatives at multilateral
lending institutions will be required to vote against all loan
requests from Colombia, although such votes will not constitute
vetoes; and (iv) the President of the United States and Congress
retain the right to apply future trade sanctions. Each of these
consequences of the failure to receive such certification could
result in adverse economic consequences in Colombia and could
further heighten the political and economic risks associated with
the Company's operations in Colombia.
Risks of Oil and Gas Exploration. Inherent to the oil and gas
industry is the risk that future wells will not find hydrocarbons
where information from prior wells and engineering and geological
data indicate hydrocarbons should be found. Further, existing
wells can deplete faster than anticipated, potentially causing
revisions to reserve estimates and increasing costs due to
replacement wells. Also, because of the limited number of wells in
the Opon project area (there are presently two producing wells),
the impact of the loss of a single well would potentially affect
the Company's production capacity. Operations at the Opon project
area are subject to the operating risks normally associated with
exploration for, and production of, oil and gas, including
blowouts, cratering, and fires, each of which could result in
damage to, or destruction of, the oil and gas wells, formations or
production facilities or properties. In addition, there are
greater than normal mechanical drilling risks at the Opon project
area associated with high pressures in the La Paz and other
formations. These pressures may: cause collapse of the well bore,
impede the drill string while drilling, or cause difficulty in
completing a well with casing and cement.
Acreage Relinquishments. The terms of the Opon Contract
include provisions which require the associate parties to
relinquish portions of the concession acreage which have not been
found to contain hydrocarbons in commercial quantities. Management
believes the relinquishments of acreage to date have not deprived
the associate parties of significant undiscovered reserves.
Ecopetrol has agreed to extend contractual relinquishment
requirements in light of current exploration activity on more than
one occasion. Nonetheless, there can be no assurances that
Ecopetrol will agree to additional extensions in the future, or
that other factors (including for example: lack of capital, rig
availability or political unrest) will prevent the parties from
completing assessment of unproved acreage before the acreage must
be released.
Laws and Regulations. The Company may be adversely affected
by new laws or regulations in the United States or Colombia
regarding its operations and/or environmental compliance, or by
existing laws and regulations. The Colombian governmental agency
responsible for setting pipeline tariffs has set a tariff
substantially lower than that requested by the Company. This
action has been appealed to an administrative committee within
the governmental agency, but no prediction can be made about the
outcome and the final determination of the tariff. A reduction of
the tariff will impair the Company's ability to recover its
investment in the pipeline through tariff revenue and/or sale of
the pipeline. For additional information, see Other Factors
Affecting the Company's Business in Item 1, Business of the
Company's 1997 Form 10-K.
Highly Leveraged. As of December 31, 1997, the Company owed
debts to its principal shareholder, Lonrho Plc, of $106.5 million,
of which $99.8 million is due January 15, 1999. The terms of this
debt require the Company to increase its September 30, 1997 proved
reserves of 52.5 billion cubic of gas by 13.0 billion cubic feet
of gas by October 1, 1998 to avoid an acceleration of the maturity
of all of the debt to that date. Acquisition of the additional
reserves is dependent on the results of drilling of the Opon No. 14
well and additional work to be performed on the Opon No. 6 well, if
any. As more fully described above under "Risks of Oil and Gas
Exploration" above, there can be no assurances that the additional
work will discover the reserves necessary to prevent the debt from
being accelerated. The Company does not have the resources to
repay the indebtedness when it is due. Over the past five years,
Lonrho Plc has demonstrated a willingness to extend the repayment
terms of the Company's debts. However, there can be no assurances
that Lonrho Plc will continue to extend the maturity of the
Company's debts in the future. See "Limited Capital" and "Change
of Control and Financial Support of Shareholder" below.
Limited Capital. At December 31, 1997, the Company had a
deficiency in net assets of $96.4 million. The Company's principal
asset, its investment in the Opon project, will require additional
capital for further exploration works (additional exploratory wells
and the related surface facilities to put newly discovered
hydrocarbons into production) if the associate parties elect to
proceed beyond the work currently in progress. The Opon project
commenced production in December 1997. However, net revenue from
the sale of the first 80 million cubic feet of natural gas per day
and associated condensate (estimated to be approximately 60% to 80%
of the Company's net revenue) is pledged to repayment of amounts
advanced by the operator under a Funding Agreement. Cash from
operations after Funding Agreement repayments will not be
sufficient to fund Colombian operating costs and capital
expenditures, and U.S. overhead, during fiscal 1998. The Company
has been unable to secure financing from sources other than its
principal shareholder. Management believes successful completion
of the Opon No. 14 well is critical to obtaining third party
financing. See "Highly Leveraged" above and "Change of Control and
Financial Support of Shareholder" below.
Change of Control and Financial Support of Shareholder. In a
Schedule 13D amendment filed October 15, 1997 by Lonrho Plc and its
affiliates, the filing parties said that Lonrho Plc had retained
Morgan Stanley & Co. Incorporated to assess and implement strategic
alternatives with respect to Lonrho's direct and indirect
investment in the Company. Lonrho Plc said such strategic
alternatives could include, without limitation, a possible
recapitalization of the Company or a sale or business combination
involving the Company or Lonrho's direct and indirect equity
interest in the Company (including the sale or assumption of the
debt obligations of the Company to affiliates of Lonrho).
Recently, in its annual report, Lonrho stated that it intends to
sell its investment in the Company. The Company has relied upon
Lonrho to provide funds for capital investment and operations when
such funds have not been available from third parties, and at
December 31, 1997, was indebted to Lonrho in the amount of $106.5
million. If and when Lonrho sells its investment in the Company,
the Company will need to find another source of financing, from
outside sources or a new controlling shareholder. The Company
cannot predict the effect that a sale of Lonrho's interest to a
third party will have on the Company's ability to secure financing.
See "Highly Leveraged" and "Limited Capital" above.
Limited Revenues and Losses From Operations. The Opon project
commenced production in December 1997. The Company reported its
first operating revenue of $0.1 million for the quarter ended
December 31, 1997. This is the only operating revenue the Company
has had since it sold its domestic operations in 1992. The Company
experienced losses of $12.4 million, $12.7 million and $11.9
million for the years ended September 30, 1997, 1996 and 1995,
respectively. The Company anticipates continued losses through
fiscal 1998.
Potential Environmental Liabilities. Generators of
hazardous substances found in disposal sites at which environmental
problems are alleged to exist, as well as the owners of those sites
and certain other classes of persons, are subject to claims brought
by federal and state regulatory agencies. These claims may be
brought under the federal statute, the Comprehensive Response,
Compensation and Liability Act ("CERCLA"), or similar state
legislation. Under CERCLA and the comparable state statutes, a
party found liable is jointly and severally liable for all of the
cleanup costs. As more fully described in the Company's 1997 Form
10-K, a former subsidiary of the Company, the Fletcher Refinery,
was notified prior to 1988 that it was a potentially responsible
party under CERCLA. The Company believes that any liability for
this matter is remote because, among other reasons, the deliveries
to the dump site in issue occurred before the Company owned the
Fletcher Refinery, the Fletcher Refinery went through a bankruptcy
proceeding before the Company acquired its interest, and the
Company sold the Fletcher Refinery in a stock sale with full
disclosure of this matter. As more fully described in the
Company's 1997 Form 10-K, a subsidiary, the Newhall Refinery, was
recently notified by a California state agency that it is
considered a potentially responsible party under the California
equivalent to CERCLA in the matter of the cleanup of a dump site
near Bakersfield, California. Because of the recent nature of the
matter, the Company has no estimates of the total liability at this
dump site. From information available, it appears that the amounts
of material sent by the Newhall Refinery to the dump site are
minute compared to total volumes. However, no assurances can be
given that the Newhall Refinery will not be ultimately held liable
for the cleanup of the dump site in an amount greater than its
proportional share (which is not estimable at this time). As more
fully described in the Company's 1997 Form 10-K, the Newhall
Refinery property has been contaminated by refining operations.
The Company has obtained assessments of the contamination and
estimates the cost of cleanup to be $2,000,000, which amount is
deducted from the carrying value of the property. The site is not
one subject to CERCLA or similar state statute. No assurances can
be given that the cost of remediation of the contamination will not
be greater than the amount estimated.
Continuation of American Stock Exchange Listing. Because of
continuing losses and decreases in shareholders' equity, the
Company does not fully meet all of the guidelines of the American
Stock Exchange for continued listing of its shares. For additional
information, see "Item 5, Market For Registrant's Equity and
Related Shareholder Matters" in the Company's 1997 Form 10-K.
Management has kept the Exchange fully informed regarding the
Company's present status and future plans. Although the Company
does not or may not meet all of the guidelines, to date, the
American Stock Exchange has chosen to allow the Company's shares to
remain listed. However, no assurances can be given that the
Company's shares will remain listed on the Exchange in the future.
If the Company's shares are delisted from the Exchange, there may
be significantly reduced liquidity and a concomitant decrease in
stock price.
Potential Sale of Substantial Number of Shares of Common Stock
by Controlling Shareholder. Sales or potential sales of other
shares registered by the Company for the account of The Hondo
Company, and Lonrho Plc as pledgee, and for the account of Lonrho
Plc may have an adverse effect on the market price for the
Company's Common Stock. At January 16, 1998, the Hondo Company and
Lonrho Plc in the aggregate beneficially owned 9,434,596 shares
(or 68.4%) of the Company's Common Stock, of which 2,695,652
shares (19.5%) are registered for resale under the Securities Act
of 1933. See "Change of Control and Financial Support of
Shareholder" above.
THE COMPANY
The Company, a Delaware corporation organized in 1958, is an
independent oil and gas company presently focusing on international
oil and gas exploration and development. The Company's principal
asset is an interest in the Opon project, an exploration concession
in Colombia. For a more detailed description of the business of
the Company, including audited and unaudited financial information,
see the 1997 Form 10-K and Form 10-Q and other documents referred
to in "Documents Incorporated by Reference." The Company's
principal executive offices are located at 10375 Richmond Avenue,
Suite 900, Houston, Texas 77042, telephone: (713) 954-4600.
USE OF PROCEEDS
The Company will not receive any of the proceeds from this
offering.
SELLING STOCKHOLDER
This Prospectus relates to the resale of the Shares by
Phillips Petroleum Company, Bartlesville, Oklahoma 74004. The
Shares constitute shares of Common Stock of the Company acquired by
the Selling Stockholder, and shares of Common Stock of the Company
issuable upon exercise of a Warrant acquired by the Selling
Stockholder, pursuant to a Stock Purchase Agreement, dated as of
December 23, 1997, such acquisition being in satisfaction of a debt
owed by the Company to the Selling Stockholder. The Selling
Stockholder does not beneficially own any other shares of the
Common Stock of the Company.
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling
Stockholder. The Selling Stockholder has informed the Company that
Shares sold under this Prospectus may be sold on the American Stock
Exchange, in the over-the-counter market, in negotiated
transactions, or a combination of such methods of sale, or
otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated
prices by one or more of the following methods: (a) through
ordinary brokerage transactions in which the broker solicits
purchases, (b) sales to one or more brokers or dealers as
principal, and the resale by such brokers or dealers for their
account pursuant to this Prospectus, including resales to other
brokers and dealers, (c) block trades in which the broker or dealer
so engaged will attempt to sell the Shares as agent but may
position and resell a portion of the block as principal in order to
facilitate the transaction or (d) negotiated transactions with
purchasers with or without a broker or dealer. In connection with
any sales, any broker or dealer participating in such sales may be
deemed an "underwriter" within the meaning of the Securities Act of
1933, as amended, and any commissions, discounts or concessions
received by a broker or dealer (which may be in excess of customary
commissions) and any gain realized by such broker or dealer on the
sale of Shares may be deemed "underwriting compensation." Any such
commissions, discounts or concessions will be paid or borne by the
Selling Stockholder and not the Company.
EXPERTS
The consolidated financial statements of the Company appearing
in the Company's Annual Report on Form 10-K for the year ended
September 30, 1997, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares is being passed upon for the
Company by C.B. McDaniel. Mr. McDaniel holds options to acquire
60,000 shares of the Common Stock of the Company at exercise prices
ranging from $7.50 to $14.625 per share. At December 31, 1997,
options to acquire 55,000 of such shares were exercisable.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the actual and estimated expenses incurred
in connection with the registration and sale of the Shares.
Item Amount
SEC registration fee . . . . . . . . . . . . . . . . $ 426.00
Listing fee, American Stock Exchange . . . . . . . . 4,173.12
Legal fees and expenses. . . . . . . . . . . . . . . 5,000.00
Accountants' fees and expenses . . . . . . . . . . . 5,000.00
Miscellaneous. . . . . . . . . . . . . . . . . . . . 100.88
Total . . . . . . . . . . . . . . . . . . . . . $14,700.00
____________________
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a
Delaware corporation to indemnify its officers or directors under
certain circumstances. That statute provides that, in actions in
which the corporation is not a party, the corporation may indemnify
its officers and directors for losses incurred by them if the
officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. In actions in which the corporation is a party, the
statute provides the same standard but prohibits indemnification if
the officer or director is adjudged liable to the corporation,
unless the Delaware Court of Chancery or the court in which the
suit or action is brought determines that, despite the adjudication
of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity. The statute
further permits a corporation to purchase and maintain insurance on
behalf of its officers or directors against any liability asserted
against him and incurred by him in such capacity or arising out of
his status as such, whether or not the corporation would have the
power to indemnify him against such liability.
The Company's Certificate of Incorporation does not restrict
the indemnification of officers or directors. The Company's Bylaws
provide for the indemnification of the Company's officers and
directors to the fullest extent permitted under Delaware law
against all costs, charges, expenses, liabilities and losses
reasonably incurred or suffered by such person in connection with
any action, suit or proceeding by reason of the fact that they are
or were officers or directors of the Company. The Company's Bylaws
permit the Company to maintain insurance to protect any officer or
director of the Company against any expense, liability or loss,
whether or not the Company would have the power to indemnify such
person against such expense, liability or loss under Delaware law.
The Company's Bylaws further permit the Company to enter into
agreements with any officer or director providing for
indemnification to the fullest extent permitted by Delaware law.
The Company has directors' and officers' liability insurance
policies presently in force insuring directors and officers of the
Company and its subsidiaries.
ITEM 16. EXHIBITS.
Exhibits required by Item 601 of Regulation S-K are set forth
in the Exhibit Index commencing on page II-4.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(a) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Securities Act") may be permitted
to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(b) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (b)(i) and (b)(ii) of this
section do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
Company pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration statement.
(c) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(d) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(e) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and
has duly caused this Amendment No. 1 to Registration Statement to
be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Houston, State of Texas, on
February 20, 1998.
Signature Title Date
JOHN J. HOEY* President, Chief Executive February 20, 1998
John J. Hoey Officer and Director
NICHOLAS J. MORRELL* Director February 20, 1998
Nicholas J. Morrell
DOUGLAS G. McNAIR* Director February 20, 1998
Douglas G. McNair
JOHN F. PRICE* Director February 20, 1998
John F. Price
ROBERT K. STEER* Director February 20, 1998
Robert K. Steer
R. E. WHITTEN* Director February 20, 1998
R. E. Whitten
/s/ STANTON J. URQUHART Vice President February 20, 1998
Stanton J. Urquhart (Principal Financial and
Principal Accounting Officer)
*By: /s/ STANTON J. URQUHART Attorney-in-fact
Stanton J. Urquhart
EXHIBIT INDEX
Exhibit
Number Subject
+4.1 Form of Warrant by the Company in favor of Phillips
Petroleum Company.
*4.2 Documents relating to the $1 million principal amount of
California Pollution Control Authority, 7-1/2% Industrial
Development Revenue Bonds (Newhall Refining Co., Inc.
Project) including Installment Sale Agreement and
Indenture of Trust.
*4.3 Documents relating to the $5 million principal amount of
California Pollution Control Financing Authority
Pollution Control Revenue Bonds (Newhall Refining Co.,
Inc. Project), including Pollution Control Facilities
Lease Agreement, Indenture, U.S. Small Business
Administration Pollution Control Facility Payment
Guaranty and Reimbursement Agreement.
+5 Opinion of C.B. McDaniel, Esq.
23.1 Consent of Ernst & Young LLP.
+23.2 The consent of C.B. McDaniel, Esq. appears in Exhibit 5.
+24 Powers of Attorney.
_________________________
* These exhibits, which were previously incorporated by reference
to the Company's reports which have now been on file with the
Commission for more than 5 years, are not filed with this
Registration Statement. The Company agrees to furnish these
documents to the Commission upon request.
+ Previously filed.