1
As filed with the Securities and Exchange Commission on February 2, 1995
Registration No. 33-56829
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
HARKEN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
____________________
DELAWARE 95-2841597
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
HARKEN ENERGY CORPORATION
5605 NORTH MACARTHUR, SUITE 400
IRVING, TEXAS 75038
(214) 753-6900
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
________________________________
copy to:
LARRY E. CUMMINGS HAYNES AND BOONE, L.L.P.
VICE PRESIDENT, SECRETARY 1300 BURNETT PLAZA
AND GENERAL COUNSEL 801 CHERRY STREET
HARKEN ENERGY CORPORATION FORT WORTH, TEXAS 76102
5605 NORTH MACARTHUR, SUITE 400 ATTN: WILLIAM D. GREENHILL
IRVING, TEXAS 75038 (817) 347-6600
(214) 753-6900
(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 the effective date of this Registration Statement.
________________________________
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]
=============================================================================================================================
Title of each class of Amount to be Proposed maximum Proposed maximum Amount of
securities to be registered registered offering price per aggregate offering registration fee
unit(1) price(1)
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 960,000 $1.94 $1,862,400 $642.16
per share
=============================================================================================================================
___________
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low prices
reported on the American Stock Exchange on December 12, 1994.
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(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CROSS REFERENCE SHEET
BETWEEN ITEMS OF FORM S-3 AND THE PROSPECTUS
Item
No. Prospectus Caption or Page
------ --------------------------------------------
1 Forepart of the Registration Statement Facing Page; Cross-Reference Sheet;
and Outside Front Cover Page of Outside Front Cover Page of Prospectus
Prospectus
2 Inside Front and Outside Back Cover Pages Inside Front and Outside Back Cover
of Prospectus Pages of Prospectus
3 Summary Information, Risk Factors and Outside Front Cover Page of Prospectus;
Ratio of Earnings to Fixed Charges Investment Considerations
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price *
6 Dilution *
7 Selling Security Holders Selling Stockholders
8 Plan of Distribution Plan of Distribution
9 Description of Securities to be *
Registered
10 Interests of Named Experts and Counsel *
11 Material Changes *
12 Incorporation of Certain Information by Inside Front Cover Page of Prospectus
Reference
13 Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
_________________
* Not Applicable
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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 LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 2, 1995
PROSPECTUS
960,000 Shares
HARKEN ENERGY CORPORATION
Common Stock
(par value $0.01 per share)
____________________
The 960,000 shares ("Shares") of common stock, par value $0.01 per
share ("Common Stock"), of Harken Energy Corporation, a Delaware corporation
("Harken"), offered hereby are being sold by the holders thereof (the "Selling
Stockholders"). See "SELLING STOCKHOLDERS." Harken will not receive any part
of the proceeds from the sale of the Shares by the Selling Stockholders.
The Selling Stockholders may sell the Shares from time to time
directly or indirectly, through agents designated from time to time, in one or
more open market transactions, including block trades, on the American Stock
Exchange, in negotiated transactions or in a combination of any such methods of
sale or through dealers or underwriters also to be designated, on terms to be
determined at the time of sale. To the extent required, the specific Shares to
be sold, the name of the Selling Stockholders, purchase price, public offering
price, the name of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offer will be set forth in
an accompanying prospectus supplement. The aggregate proceeds to the Selling
Stockholders from sales of the Shares will be the purchase price of the Shares
sold less the aggregate agents' commissions and underwriters' discounts, if
any, and other expenses of issuance and distribution. All of the registration
expenses of this offering will be paid for by Harken. See "PLAN OF
DISTRIBUTION."
The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the distribution
of any of the Shares may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"), and any
commission received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "PLAN OF DISTRIBUTION" for indemnification
arrangements.
The Common Stock, including the Shares, is listed on the American
Stock Exchange. On January 31, 1995, the closing sales price of the Common
Stock as reported on the American Stock Exchange was $1 7/8 per share.
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PROSPECTIVE INVESTORS SHOULD CONSIDER AND REVIEW THE INFORMATION UNDER
THE CAPTION "INVESTMENT CONSIDERATIONS" IN CONNECTION WITH THEIR DECISION
CONCERNING THE PURCHASE OF THE SECURITIES OFFERED HEREBY.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE 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 date of this Prospectus is ___________, 1995.
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AVAILABLE INFORMATION
Harken is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"), which can be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Room 1024, Washington, D.C. 20549, and at the
following regional offices of the Commission: Chicago Regional Office, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed
rates. In addition, the Common Stock is listed on the American Stock Exchange,
and such reports, proxy statements and other information concerning Harken may
be inspected at the offices of the American Stock Exchange, 86 Trinity Place,
New York, New York 10006.
Harken has filed with the Commission a Registration Statement
("Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information with respect to Harken and such securities, reference is
made to such Registration Statement and to the exhibits thereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission are
incorporated herein by reference:
(1) Harken's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993;
(2) Harken's Quarterly Report on Form 10-Q for the fiscal period
ended March 31, 1994;
(3) Harken's Quarterly Report on Form 10-Q for the fiscal period
ended June 30, 1994;
(4) Harken's Quarterly Report on Form 10-Q for the fiscal period
ended September 30, 1994;
(5) Proxy Statement for the Annual Meeting of Stockholders of
Harken held June 3, 1994;
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(6) Description of the Common Stock contained in Harken's
Registration Statements filed under Section 12 of the Exchange
Act, including Form 8-A dated March 13, 1991;
(7) Current Report on Form 8-K of Harken dated November 4, 1994,
reporting the acquisition of additional interest in Four
Corners Properties; and
(8) Form 8-K/A of Harken dated January 3, 1995, amending the Form
8-K dated November 4, 1994.
All documents filed by Harken pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in this
Prospectus, in a supplement to this Prospectus or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed supplement to this Prospectus or
in any document that also is or is deemed to be 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.
Harken hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents unless such exhibits are specifically
incorporated by reference in such documents. Written or oral requests for such
copies should be directed to Larry E. Cummings, Vice President, Secretary and
General Counsel, Harken Energy Corporation, 5605 North MacArthur, Suite 400,
Irving, Texas 75038 (Telephone: 214/753-6900).
____________________
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BUSINESS OF HARKEN
General
Harken is engaged in oil and gas exploration, development and
production operations both domestically and internationally through its various
wholly-owned subsidiaries and joint venture investments. Harken's domestic
operations primarily consist of the oil and gas exploration and production
operations of its wholly-owned subsidiary, Harken Southwest Corporation
("HSW"), which was formerly known as Chuska Energy Corporation. Harken's
international operations include two exclusive Colombian Association Contracts
between Harken's wholly-owned subsidiary, Harken de Colombia, Ltd., and Empresa
Colombiana de Petroleos, as well as a production sharing agreement between
Harken's wholly- owned subsidiary, Harken Bahrain Oil Company, and the Bahrain
National Oil Company. Harken's international operations currently consist
solely of exploration activities, however, management is continuing to pursue
international opportunities in all areas of Harken's operations, including
oilfield services and oil and gas exploration and development. Harken
considers that the opportunities to profitably deploy Harken's expertise and
assets internationally are generally greater than those available domestically.
Harken was incorporated in 1973 in the State of California and
reincorporated in 1979 in the State of Delaware. Harken's principal offices
are located at 5605 North MacArthur, Suite 400, Irving, Texas 75038 and its
telephone number is (214) 753-6900.
Recent Developments
Search Acquisition. On November 8, 1994, Harken and its wholly-owned
subsidiary, Search Acquisition Corp. ("Acq. Sub."), entered into an Agreement
and Plan of Merger (the "Merger Agreement") with Search Exploration, Inc.
("Search"), a publicly held Delaware corporation. Search is primarily engaged
in the business of participating in oil and gas prospect ventures and in
related exploration activities. If the proposed merger ("Merger") is
consummated, Harken anticipates that Search, as a wholly-owned subsidiary,
would continue to pursue its present domestic oil and gas operations.
Under the terms of the Merger Agreement, certain contingencies must be
satisfied by Search, unless waived by Harken, prior to the consummation of the
Merger. Such contingencies include the requirement that Search shall have
terminated three private limited partnerships of which a wholly-owned
subsidiary of Search, McCullough Energy Corp ("McCullough"), serves as the
managing general partner. The plan proposed by Search and McCullough to
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terminate these partnerships must receive 100% approval by all of the other
limited and general partners of each of these partnerships. Assuming the
successful termination of these limited partnerships, Search must then submit
the proposed merger to its stockholders for their approval and receive the
affirmative vote of a majority of such stockholders. Unless the Merger is
completed by March 31, 1995, or unless such date is extended by the mutual
agreement of the parties, either Harken or Search may terminate the Merger
Agreement.
In the event that the Merger is completed then, upon closing, Search
will merge into Acq. Sub. with Acq. Sub. being the surviving entity. Each
share of Search common stock, $.05 par value (the "Search Common Stock") then
outstanding will be exchanged for shares of Harken's Common Stock based upon
the Exchange Ratio (as defined below). Each share of Search preferred stock,
$.001 par value (the "Search Preferred Stock") then outstanding will be
exchanged for shares of Harken's Common Stock based upon the Preferred Exchange
Ratio (as defined below). In addition, certain outstanding notes issued by
Search to third parties will be exchanged in the Merger for the number of
shares of Harken's Common Stock equal to the face amount of such notes divided
by the Strike Price (as defined below).
In addition, certain parties, including the holders of Search Common
Stock, the note holders and the holders of certain overriding royalty interests
who agree to reassign these interests to Search, may be entitled to
subsequently receive additional shares of Harken's Common Stock based upon the
subsequently determined value of certain undeveloped properties of Search.
Under the Merger Agreement, certain identified undeveloped properties of Search
will be valued by an independent petroleum engineer as of June 30, 1996 (the
"Valuation Date"). These parties may be entitled to receive such additional
shares of Harken's Common Stock based upon an increase in the value of these
undeveloped properties as of such Valuation Date.
The Merger Agreement provides, however, that Harken is not required in
any event to issue more than a maximum of eleven million shares of its Common
Stock, which will constitute less than 20% of its outstanding Common Stock, in
connection with all exchanges and transactions contemplated by the Merger
Agreement. The Merger Agreement does provide that in the event the undeveloped
properties of Search are valued as of the Valuation Date at an amount which
would provide for greater than eleven million shares of Harken's Common Stock
being issued in such transactions in the aggregate, then Harken may at its
option either pay such excess valuation in cash or obtain the approval of the
holders of Harken's Common Stock to issue additional shares of Common Stock in
excess of 20% of its outstanding shares of Common Stock.
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As of the execution date of the Merger Agreement, Search had
outstanding 3,690,632 shares of Search Common Stock and 575,000 shares of
Search Preferred Stock. The "Exchange Ratio" as provided in the Merger
Agreement is determined by dividing $.8099 by the Strike Price and the
"Preferred Exchange Ratio" is determined by dividing $1.00 by the Strike Price.
The "Strike Price" is defined as the average of the closing prices of a share
of Harken's Common Stock on the American Stock Exchange (as reported by the
Wall Street Journal or, if not reported thereby, by another authoritative
source) over the 30 days immediately preceding the date that is five trading
days prior to the closing of the Merger; provided, however, that in no event
shall the Strike Price be an amount which is (i) greater than $2.366 or (ii)
less than $1.274.
See "UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS" for
certain additional information regarding the Merger.
Colombian Activities. On December 14, 1994 Harken entered into its
third Association Contract with Ecopetrol covering a tract of land of
approximately 10,000 acres in size referred to as the Playero Contract Area.
This area is located in the Llanos Basin of Colombia and lies adjacent to
Harken's Alcaravan Contract Area. On December 20, 1994, Harken awarded a
contract to Perforaciones El Dorado, S.A. ("El Dorado") to drill the Alcaravan
#1 well in the Llanos Basin of Colombia. El Dorado is a Colombian drilling
contractor with significant experience in the oil producing basins of Colombia.
The drilling of the Alcaravan #1 well is currently scheduled to begin in early
February 1995 and will be drilled to a projected approximate depth of 10,500
feet to test for commercial quantities of oil in the oil prone zones prevalent
in the Llanos basin: the Carbonera, Mirador, Guadalupe and the basal
cretaceous formations. Harken will hold a 50% interest in the Alcaravan #1
well.
On January 19, 1995, Harken notified Ecopetrol, the National Oil
Company of Colombia, of Harken's commitment to drill a well on its Bocachico
Association Contract Area and thereby extended the contract into its second
year. Harken currently anticipates that a well site will be selected and
drilling will commence by mid-1995. The Bocachico area is located in
Colombia's Middle Magdelena Basin.
CHAP Interest. In October 1994 Harken purchased an approximate
additional 20% participating interest in properties which it currently
operates, through the CHAP joint venture, in the Paradox Basin, thus increasing
its and one of its subsidiary's total combined interest in CHAP to
approximately 70%. Harken acquired this additional participating interest from
the Selling Stockholders. Each CHAP co-venturer, in proportion to its
respective participating interest, pays its share of the costs and expenses and
receives its share of revenues; thus, as a result of the acquisition, Harken
and its subsidiary's proportionate share in such costs, expenses,
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and revenues increased by approximately 20% with respect to CHAP. The
acquisition also included the Selling Stockholders' interests in certain oil
and gas leases relating to exploration acreage and development drilling
locations and increased Harken's ownership interest in the Aneth Gas Plant, all
located in the Paradox Basin.
UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial
statements give effect to the Merger under the purchase method of accounting.
The pro forma combined condensed balance sheet gives effect to the Merger as if
it had been consummated as of September 30, 1994. The pro forma combined
condensed statements of operations for the nine month periods ended September
30, 1994 for Harken and Search, for the year ended December 31, 1993 for Harken
and Search, give effect to the Merger as if it had occurred as of January 1,
1993.
These statements have been prepared from the historical consolidated
financial statements of Harken and Search and should be read in conjunction
with such statements and the related notes contained in each company's Annual
Report on Form 10-K for the year ended December 31, 1993 for Harken and Search,
and Quarterly Report on Form 10-Q for the period ended September 30, 1994.
The pro forma data are presented for illustrative purposes only and
are not necessarily indicative of the financial position or operating results
that would have occurred had the Merger been consummated at the dates
indicated, nor are they indicative of future financial position or operating
results.
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HARKEN ENERGY CORPORATION AND SEARCH EXPLORATION, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
September 30, 1994
Harken Search
Energy Exploration Pro Forma
ASSETS Corporation Historical Adjustments Pro Forma
- ------------------------------------- ----------- ----------- ------------ -----------
CURRENT ASSETS
Cash, temporary investments, and notes $3,140,000 ($9,000) (1) $117,000 $3,648,000
(6) 400,000
Accounts receivable, net 376,000 48,000 (1) 144,000 568,000
Accounts receivable from former
subsidiaries 984,000 0 (1) 6,000 990,000
Prepaid expenses and other 315,000 0 (1) 65,000 380,000
Marketable equity securities 931,000 0 931,000
----------- ----------- ----------- -----------
Total current assets 5,746,000 39,000 732,000 6,517,000
PROPERTY AND EQUIPMENT, NET 18,395,000 2,883,000 (1) 3,663,000 23,603,000
(2) (378,000)
(3) (1,966,000)
(5) 964,000
(6) (400,000)
(7) 442,000
INVESTMENTS IN FORMER SUBSIDIARIES 8,459,000 0 8,459,000
NOTES RECEIVABLE FROM RELATED PARTIES
INCLUDING INTEREST 464,000 0 464,000
OTHER ASSETS 885,000 0 (1) 14,000 899,000
----------- ----------- ----------- -----------
Total assets $33,949,000 $2,922,000 $3,071,000 $39,942,000
=========== =========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Trade payables $274,000 $286,000 $560,000
Accrued liabilities and other 2,238,000 0 (1) 470,000 2,545,000
(2) (378,000)
(5) 215,000
Revenues and royalties payable 1,279,000 0 (1) 43,000 1,322,000
Notes payable and current maturities 900,000 25,000 (7) 133,000 1,058,000
----------- ----------- ----------- -----------
Total current liabilities 4,691,000 311,000 483,000 5,485,000
COMMITMENTS AND CONTINGENCIES
DEFERRED REVENUE, net of current portion 77,000 0 77,000
NOTES PAYABLE-LONG-TERM 0 0 (7) 309,000 309,000
REDEEMABLE PREFERRED STOCK 1,868,000 575,000 (5) (575,000) 1,868,000
STOCKHOLDERS' EQUITY:
Common stock 654,000 185,000 (1) 10,000 684,000
(5) (185,000)
(5) 20,000
Additional paid-in capital 131,052,000 4,400,000 (1) 3,486,000 135,912,000
(3) (1,966,000)
(5) (4,400,000)
(5) 3,340,000
Retained deficit (83,636,000) (2,549,000) (5) 2,549,000 (83,636,000)
Treasury stock (20,757,000) 0 (20,757,000)
----------- ----------- ----------- -----------
Total stockholders' equity 27,313,000 2,036,000 2,854,000 32,203,000
----------- ----------- ----------- -----------
Total liabilities and
stockholders' equity $33,949,000 $2,922,000 $3,071,000 $39,942,000
=========== =========== ========== ===========
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HARKEN ENERGY CORPORATION AND SEARCH EXPLORATION, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1994
Harken Search
Energy Exploration Pro Forma
Corporation Historical Adjustments Pro Forma
----------- ----------- ----------- -----------
REVENUES:
- --------
Oil and gas operations $2,817,000 $416,000 (1) $1,035,000 $4,339,000
(5) 71,000
Interest income 67,000 22,000 (1) 2,000 91,000
Other income 562,000 0 (1) 37,000 599,000
----------- ----------- ---------- -----------
3,446,000 438,000 1,145,000 5,029,000
COSTS AND EXPENSES:
- ------------------
Oil and gas operating expenses 991,000 208,000 (1) 337,000 1,571,000
(5) 35,000
General and administrative expenses, net 2,372,000 536,000 (1) 96,000 3,004,000
Depreciation and amortization 1,444,000 90,000 (1) 416,000 1,816,000
(4) (324,000)
(5) 190,000
Provision for asset impairments 0 3,063,000 (5) (3,063,000) 0
Interest expense and other 68,000 0 68,000
----------- ----------- ----------- -----------
4,875,000 3,897,000 (2,313,000) 6,459,000
----------- ----------- ----------- -----------
Net income (loss) before
income taxes (1,429,000) (3,459,000) 3,458,000 (1,430,000)
INCOME TAX EXPENSE (BENEFIT) 0 (223,000) (5) 223,000 0
----------- ----------- ----------- -----------
Income (loss) from
continuing operations $(1,429,000) $(3,236,000) $3,235,000 $(1,430,000)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE
- ---------------------------
ATTRIBUTABLE TO COMMON STOCK:
- ----------------------------
Loss from continuing operations ($0.03) ($0.02)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
59,482,853 62,411,340
=========== ===========
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HARKEN ENERGY CORPORATION AND SEARCH EXPLORATION, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the Fiscal Year Ended December 31, 1993
Harken Search
Energy Exploration Pro Forma
Corporation Historical Adjustments Pro Forma
----------- ----------- ----------- -----------
REVENUES:
- --------
Oil and gas operations $4,970,000 $1,057,000 (1) $2,135,000 $8,293,000
(5) 131,000 --
Management fee income 300,000 0 300,000
Interest income 225,000 44,000 (1) 4,000 273,000
Other income 1,106,000 0 (1) 53,000 1,159,000
----------- ----------- ---------- -----------
6,601,000 1,101,000 2,323,000 10,025,000
COSTS AND EXPENSES:
- ------------------
Oil and gas operating expenses 1,825,000 286,000 (1) 676,000 2,825,000
(5) 38,000
General and administrative expenses, net 3,179,000 788,000 (1) 199,000 4,166,000
Depreciation and amortization 2,571,000 670,000 (1) 1,136,000 3,288,000
(4) (837,000)
(5) (252,000)
Provision for asset impairments 726,000 462,000 (5) (462,000) 726,000
Loss on sale of investments 0 108,000 (5) (108,000) 0
Interest expense and other 97,000 27,000 (1) 13,000 137,000
----------- ----------- ---------- -----------
8,398,000 2,341,000 403,000 11,142,000
----------- ----------- ---------- -----------
Net income (loss) before
income taxes (1,797,000) (1,240,000) 1,920,000 (1,117,000)
INCOME TAX EXPENSE (BENEFIT) 0 (335,000) (5) 335,000 0
----------- ----------- ---------- -----------
Net income (loss) from
continuing operations ($1,797,000) ($905,000) $1,585,000 ($1,117,000)
=========== =========== ========== ===========
NET INCOME (LOSS) PER SHARE
- ---------------------------
ATTRIBUTABLE TO COMMON STOCK:
- ----------------------------
Net income (loss) from continuing
operations ($0.03) ($0.02)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 58,392,901 61,321,388
=========== ===========
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NOTES TO THE UNAUDITED PRO FORMA COMBINED
CONDENSED FINANCIAL STATEMENTS
1. Pro Forma Adjustments
(1) Pro forma entry to reflect the acquired interest in the CHAP
Venture (represents 20.35625% of CHAP Venture historical
balances).
(2) Pro forma entry to eliminate certain CHAP Venture liabilities
which were retained by the sellers. Harken increased its
interest in all CHAP Venture liabilities with the exception of
certain accrued operational and environmental claims related
to CHAP Venture operations which were retained and indemnified
by the sellers.
(3) Pro forma entry to reflect the value related to the issuance
of 960,000 shares of restricted Harken Common Stock, and to
record the corresponding adjustment to the purchase price of
the acquired interest in CHAP Venture oil and gas properties.
In accordance with the Concession and Lease Purchase
Agreement, the sellers retained certain distributions related
to the reduction in CHAP Venture's interest in the Aneth gas
plant.
(4) Pro forma entry to adjust historical CHAP Venture depreciation
and depletion expense to the depreciation and depletion
calculated on a consolidated basis.
(5) Pro forma entry to record acquisition of Search in exchange
for Harken Common Stock. Such adjustments utilize the market
value of Harken Common Stock over the most recent 30 days to
calculate the number of shares of Harken Common Stock to be
issued according to the Merger Agreement.
(6) Pro forma entry to record sale for cash of Search's Provident
City prospect, which occurred in November, 1994.
(7) Pro forma entry to record acquisition of Search's non-owned
interest in operated partnerships in exchange for three-year,
ten percent (10%) notes payable.
2. Federal Income Tax Consequences of the Merger
The pro forma combined condensed financial statements assume that the
Merger qualifies as a "tax free" reorganization for U.S. federal income tax
purposes.
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15
INVESTMENT CONSIDERATIONS
The following matters should be considered with all other information
contained and incorporated by reference in this Prospectus in evaluating an
investment in the Common Stock.
Losses From Continuing Operations
Harken reported losses from continuing operations for the fiscal years
ended December 31, 1991 and 1993, and the first nine months of 1994, in the
amounts of $12,606,000, $5,494,000 and $1,650,000, respectively. While the
reasons for most of these annual losses, as explained below, are nonrecurring,
there can be no assurance that Harken will not continue to report losses,
including future losses from other nonrecurring items.
During 1991, Harken's contract drilling and well servicing operations
contributed losses of $8,193,000. Harken included in these results for the
quarter ended December 31, 1991, a one-time, non-cash charge against earnings
of $7.1 million in order to decrease the carrying value of certain of its
drilling rigs and related domestic assets, pursuant to the decision to attempt
to sell certain of these assets which are not suitable for the pursuit of
international drilling opportunities. The above mentioned charge resulted in a
carrying value equal to the estimated selling price, or salvage value of these
assets.
The net loss for 1993 was primarily a result of certain non-cash
charges relating to non-recurring asset valuation write-downs. Such unusual
non-cash charges totalled $3.8 million. In January 1994, Harken made the
decision to liquidate its remaining drilling rigs and related assets and apply
the proceeds primarily to its international exploration efforts. As a result
of this decision, Harken recognized a non-cash charge of $3.1 million during
the fourth quarter of 1993 in order to write-down the carrying value of the
drilling rigs and related assets to estimated liquidation value. Additionally,
during 1993, Harken's depreciation and amortization expenses increased by
approximately $1.8 million due primarily to the acquisition of HSW in February
1993. HSW's oil and gas properties accounted for approximately $1.4 million of
this increase.
The net losses experienced by Harken during the first nine months of
1994 are primarily related to decreases in revenues due to reductions in
product price and volume and certain shut-down costs associated with the
discontinuation of its well service activities previously conducted by Supreme
Well Service Company, a Harken wholly-owned subsidiary.
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Effect of Sales of Common Stock and Other Events on Market Price
As of November 1, 1994, there were 60,442,853 shares of Common Stock
outstanding. Harken, on behalf of the Selling Stockholders, is registering for
sale 960,000 shares of Common Stock pursuant to the Registration Statement of
which this Prospectus is a part. Harken has no knowledge of the proposed plan
of distribution of the Shares other than as described in this Prospectus. See
"PLAN OF DISTRIBUTION." If the Merger (see "Recent Developments - Search
Acquisition") is consummated, up to an aggregate maximum of 11 million shares
of Harken's Common Stock may be issued at various times following the closing
thereof. Assuming a Strike Price calculated for Harken's Common Stock at the
time of closing as provided under the Merger Agreement of $2.00 per share,
Harken expects that up to approximately 2,002,021 of such shares will be issued
upon consummation of the Merger and be freely tradeable immediately as a result
of such shares being registered under applicable securities laws, except for a
portion of the shares held by affiliates as described below. Regarding the
remainder of such 11 million shares which may be issued under this transaction,
the shares of Harken Common Stock to be issued in the Merger and the shares
issuable upon an exercise of the Harken Warrants (herein so called) issued in
the Merger in exchange for the Search Warrants (herein so called) will be
subject to adjustment on June 30, 1996 in the event the valuation of certain
Search undeveloped oil and gas properties increases during the period from the
effective date of the Merger to June 30, 1996. These shares of Common Stock to
be issued as a result of a valuation increase, if any, will be distributed by
September 30, 1996. Additionally, any shares of Common Stock issuable upon the
exercise of Search Warrants which were not exchanged in the Merger will be
issued not later than November 14, 1998; provided the holder of the unexchanged
Search Warrant exercises it prior to such date. If exercised prior to its
termination date, the unexchanged Search Warrant will be entitled to be
exercisable for additional shares of Common Stock due to the June 30, 1996
valuation increase, if any. There is no assurance that these undeveloped
properties will result in any increase in value and thereby give rise to
additional shares of Harken's Common Stock being issued or for the holders of
the Search Warrants to either exchange their Search Warrants for Harken
Warrants or, if so exchanged, to exercise such Harken Warrants, before their
expiration on June 30, 1996. Shares of Harken's Common Stock acquired by
"affiliates" (as that term is defined in the Securities Act) of Search at the
time the Merger is submitted to a vote of its stockholders may be sold by them
only in transactions permitted by the resale provisions of Rule 145 promulgated
under the Securities Act (or Rule 144 in case such persons become affiliates of
Harken) or as otherwise permitted under the Securities Act. Harken estimates
that up to approximately 32.23% of the shares of its Common Stock which can be
issued in this transaction may be acquired by affiliates of Search based upon
an assumed Strike Price of $2.00 per share for Harken's Common Stock and
further upon the assumption of full acceptance by the affiliates of Search of
the Warrant Exchange Offer and subsequent exercise of the Harken Warrants
issued in such exchange. There can be no assurance that the sale of the Shares
by the Selling Stockholders or the shares of Common Stock to be issued in
connection with the Merger will not have a material adverse effect on the then
prevailing market price of the Common Stock. The closing price of a share of
Harken's Common Stock on the American Stock Exchange on January 31, 1995, was
$1 7/8.
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Preferred Stock Authorized for Issuance
Harken has available for issuance 10 million shares of preferred
stock, par value $1.00 per share. The Board of Directors is authorized to
provide for the issuance of such preferred stock in one or more series and to
set the designations, preferences, powers and relative participating, optional
or other rights and restrictions thereof. Presently, Harken has three series
of preferred stock authorized, of which only one has any shares currently
outstanding. Such shares have certain preferences over the shares of Common
Stock with respect to the payment of dividends and upon liquidation,
dissolution, winding-up and in certain instances, voting. The Board of
Directors of Harken also may authorize other series of preferred stock in the
future that have similar as well as other preferences over the shares of Common
Stock.
Factors Related to International Operations
Harken conducts international operations presently and anticipates
that it will conduct significant international operations in the future.
Foreign properties, operations or investments may be adversely affected by
local political and economic developments, exchange controls, currency
fluctuations, royalty and tax increases, retroactive tax claims, renegotiation
of contracts with governmental entities, expropriation, import and export
regulations and other foreign laws or policies governing operations of
foreign-based companies, as well as by laws and policies of the United States
affecting foreign trade, taxation and investment. In addition, as certain of
Harken's operations are governed by foreign laws, in the event of a dispute,
Harken may be subject to the exclusive jurisdiction of foreign courts or may
not be successful in subjecting foreign persons to the jurisdiction of courts
in the United States. Harken may also be hindered or prevented from enforcing
its rights with respect to a governmental instrumentality because of the
doctrine of sovereign immunity. Exploration and production activities in areas
outside the United States are also subject to the risks inherent in foreign
operations, including loss of revenue, property and equipment as a result of
hazards such as expropriation, nationalization, war, insurrection and other
political risks.
Regarding Harken's activities in Colombia, management anticipates that
full development of reserves that may be found in the Alcaravan and Playero
areas of the Llanos Basin and the Bocachico area of the Middle Magdelena Basin
may take several years and may require extensive production facilities which
could require significant additional capital expenditures. The ultimate amount
of such expenditures cannot be presently predicted. Harken anticipates that
amounts required to fund international activities, including those in Colombia,
will be funded from existing cash balances, asset sales, stock issuances,
operating cash flows and potentially from industry partners; however, there can
be no assurances that industry
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18
partners can be obtained to fund such international activities, nor that Harken
will have adequate funds available to it to fund its international activities
without participation from industry partners. While pipelines presently
connect the major producing fields in Colombia to export facilities and various
refineries, Harken anticipates that additional pipeline capacity will likely be
needed in the future. Guerilla activity in Colombia has in the past disrupted
the operation of certain oil and gas projects of some foreign-based companies.
Harken does not anticipate that future guerilla activity will have a material
impact on Harken's eventual exploration and development of the Alcaravan,
Bocachico and Playero areas. However, there can be no assurance that such
activity will not occur or have such an impact.
Price Volatility
The revenues generated by Harken are highly dependent upon the prices
of oil and gas. Fluctuations in the energy market make it difficult to
estimate future prices of oil and natural gas. Fluctuations in energy prices
are caused by a number of factors, including regional, domestic and
international demand, energy legislation, federal or state taxes (if any) on
sales of crude oil and natural gas, production guidelines established by the
Organization of Petroleum Exporting Countries, and the relative abundance of
supplies of alternative fuel such as coal. Additionally, changing
international economic and political conditions may have a dramatic impact upon
crude oil and natural gas prices. Many of these factors are beyond the control
of Harken.
Business Risks
Harken must continually acquire or explore for and develop new oil and
gas reserves to replace those being depleted by production. Without successful
drilling or acquisition ventures, Harken's assets, properties and revenues will
decline over time. To the extent Harken engages in drilling activities, such
activities carry the risk that no commercially viable oil or gas production
will be obtained. The cost of drilling, completing and operating wells is
often uncertain. Moreover, drilling may be curtailed, delayed or canceled as a
result of many factors, including title problems, weather conditions, shortages
of or delays in delivery of equipment, as well as the financial instability of
well operators, major working interest owners and drilling and well servicing
companies. The availability of a ready market for Harken's oil and gas depends
on numerous factors beyond its control, including the demand for and supply of
oil and gas, the proximity of Harken's natural gas reserves to pipelines, the
capacity of such pipelines, fluctuation in seasonal demand, the effects of
inclement weather, and government regulation. New gas wells may be shut-in for
lack of a market until a gas pipeline or gathering system with available
capacity is extended into the area.
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19
In February 1994, the Navajo Nation issued a moratorium on future oil
and gas development agreements and exploration on lands situated within the
Aneth Chapter of the Navajo Reservation, which is an area that includes much of
HSW's undeveloped acreage. It is unknown what effect, if any, this moratorium
will have on HSW's operations.
Operating Hazards and Uninsured Risks
The operations of Harken are subject to the inherent risks normally
associated with exploration for and production of oil and gas, including
blowouts, cratering, pollution and fires, each of which could result in damage
to or destruction of oil and gas wells or production facilities or damage to
persons and property. As is common in the oil and gas industry, Harken is not
fully insured against certain of these risks, either because insurance is not
available or because Harken has elected to self-insure due to high premium
costs. The occurrence of a significant event not fully insured against could
have a material adverse effect on Harken's financial condition.
Environmental Regulation
The activities of Harken are subject to various Navajo, federal,
state, and local laws and regulations covering the discharge of material into
the environment or otherwise relating to protection of the environment. In
particular, Harken's oil and gas exploration, development, production, its
activities in connection with storage and transportation of liquid hydrocarbons
and its use of facilities for treating, processing, recovering, or otherwise
handling hydrocarbons and wastes therefrom are subject to stringent
environmental regulation by governmental authorities. In addition to these
domestic laws and regulations, Harken's international operations are subject to
the laws, regulations and governmental approvals of each foreign country in
which it conducts activities including, but not limited to, environmental laws
and regulations governing oil and gas operations. Such domestic and foreign
laws and regulations have increased the costs of planning, designing, drilling,
installing, operating and abandoning Harken's oil and gas wells and other
facilities.
The Aneth Gas Plant facility, of which HSW is a co-owner, was in
operation for many years prior to HSW's becoming an owner. The operations at
the Aneth Gas Plant previously used open, unlined drip pits for storage of
various waste products. The plant owners have replaced all of the open ground
pits currently being used with steel tanks. The plant owners are currently in
the process of closing the open ground pits.
Texaco, the plant's operator, received a letter from the EPA dated
July 2, 1991 and a subsequent letter dated June 8, 1992, in which the EPA
requested certain information in order to determine if there had been at the
Aneth Gas Plant the
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release of hazardous substances to the environment. Texaco has advised HSW
that certain information was supplied to the EPA pursuant to this request.
Subsequently, core samples in and around certain pit areas were taken by the
EPA and Texaco jointly. The EPA has responded to the initial sampling of the
drip pits and Texaco is now planning the next phase of required evaluation.
Texaco had indicated to HSW that it believes that some of these pits
may require reclamation or remediation. In the event such action should or
must be taken, the plant owners, including HSW, will seek contractual
indemnification from the previous owner of the Aneth Gas Plant for the costs
incurred in the reclamation and remediation process. At this time, however, it
is impossible for HSW to determine or estimate the costs of the cleanup at the
Aneth Gas Plant or if the prior owner will indemnify the present owners,
including HSW, for such costs.
Harken has expended significant resources, both financial and
managerial, to comply with environmental regulations and permitting
requirements and anticipates that it will continue to do so in the future.
Although Harken believes that its respective operations and facilities are in
general compliance with applicable environmental laws and regulations, risks of
substantial costs and liabilities are inherent in oil and gas operations, and
there can be no assurance that significant costs and liabilities will not be
incurred in the future. Moreover, it is possible that other developments, such
as increasingly strict environmental laws, regulations and enforcement policies
thereunder, and claims for damages to property, employees, other persons and
the environment resulting from Harken's operations, could result in substantial
costs and liabilities in the future.
Imprecise Nature of Reserve Estimates
Reserve estimates are imprecise and may be expected to change as
additional information becomes available. Furthermore, estimates of oil and
gas reserves, of necessity, are projections based on engineering data, and
there are uncertainties inherent in the interpretation of such data as well as
the projection of future rates of production and the timing of development
expenditures. Reserve engineering is a subjective process of estimating
underground accumulations of oil and gas that cannot be measured in an exact
way, and the accuracy of any reserve estimate is a function of the quality of
available data and of engineering and geological interpretation and judgment.
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Competitive Factors in Oil and Gas Industry
The oil and gas industry is competitive in all its phases.
Competition is particularly intense respecting the acquisition of desirable
producing properties and the sale of oil and natural gas production. Harken's
competitors in oil and gas exploration, development and production, include
major oil companies and numerous independent oil and gas companies, and
individual producers and operators. Many of Harken's competitors possess and
employ financial and personnel resources substantially greater than those which
are available to Harken, and may, therefore, be able to pay greater amounts for
desirable leases and to define, evaluate, bid for and purchase a greater number
of producing prospects than the financial or personnel resources of Harken will
permit.
Regulatory Items
The production of oil and gas is subject to extensive Navajo, federal
and state laws, rules, orders and regulations governing a wide variety of
matters, including the drilling and spacing of wells, allowable rates of
production, prevention of waste and pollution and protection of the
environment. In addition to the direct costs borne in complying with such
regulations, operations and revenues may be impacted to the extent that certain
regulations limit oil and gas production to below economic levels. Although
the particular regulations applicable in each state in which operations are
conducted vary, such regulations are generally designed to ensure that oil and
gas operations are carried out in a safe and efficient manner and to ensure
that similarly-situated operators are provided with reasonable opportunities to
produce their respective fair shares of available oil and gas reserves.
However, since these regulations generally apply to all oil and gas producers,
management of Harken believes that these regulations should not put Harken at a
material disadvantage to other oil and gas producers.
Certain sales, transportation, and resales of natural gas by Harken
are subject to Navajo, federal and state laws and regulations, including, but
not limited to, The Natural Gas Act of 1938, as amended ("NGA"), the Natural
Gas Policy Act of 1978, as amended ("NGPA") and regulations promulgated by the
Federal Energy Regulatory Commission ("FERC") under the NGA, the NGPA and other
statutes. The provisions of the NGA and NGPA, as well as the regulations
thereunder, are complex, and can affect all who produce, resell, transport,
purchase or consume natural gas.
Although recent FERC transportation regulations do not directly apply
to Harken because they are not engaged in rendering jurisdictional
transportation services, these regulations do affect the operations of Harken
by virtue of the need to deliver its gas production to markets served by
interstate or intrastate pipelines.
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22
In most instances, interstate pipelines represent the only available method of
accomplishing such transportation.
In addition to these domestic laws and regulations, Harken's
international operations are subject to the laws, regulations and governmental
approvals of each foreign country in which it conducts activities including,
but not limited to, environmental laws and regulations governing oil and gas
operations.
USE OF PROCEEDS
Harken will not receive any part of the proceeds from the sale of
Shares by the Selling Stockholders.
SELLING STOCKHOLDERS
This Prospectus covers offers from time to time by the Selling
Stockholders of the respective shares of Common Stock owned by each Selling
Stockholder. Set forth below is the name of each Selling Stockholder, the
number of shares of Common Stock owned of record by each Selling Stockholder as
of January 31, 1995, the number of shares of Common Stock which may be offered
by the Selling Stockholder pursuant to this Prospectus, and the number of
shares of Common Stock and percentage of the class of Common Stock to be owned
by each Selling Stockholder upon completion of the offering if all Shares are
sold. Any or all of the Shares listed below may be offered for sale by the
Selling Stockholders from time to time.
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23
Shares Shares
Owned Prior Shares Owned After Percent of Class
to the Registered the After the
Selling Stockholder Offering Hereunder Offering(1) Offering
------------------- ----------- ---------- ----------- ----------------
C.A.B. Resources, Inc. 121,712 121,712 -0- - 0-
Crusader, Inc. 578,130 578,130 -0- - 0-
Australian 260,158 260,158 -0- - 0-
Hydrocarbon, Inc.
_________________
(1) Assumes no other disposition or acquisition of Common Stock and all
Shares included herein are sold.
PLAN OF DISTRIBUTION
Any or all of the Shares may be sold from time to time to purchasers
directly by the Selling Stockholders in one or more open market transactions,
including block trades on the American Stock Exchange, in negotiated
transactions or in a combination of any such methods of sale. Alternatively,
the Selling Stockholders may from time to time offer the Shares through
underwriters, dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling
Stockholders or the purchasers of the Shares for whom they may act as agent.
The Selling Stockholders and any such underwriters, dealers or agents that
participate in the distribution of the Shares may be deemed to be underwriters,
and any profit on the sale of the Shares by them and any discounts, commissions
or concessions received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
At the time a particular offer of the Shares is made, to the extent required, a
Prospectus Supplement will be distributed that will set forth the aggregate
amount of Shares being offered and the terms of the offering, including the
name or names of any underwriters, dealers or agents, any discounts,
commissions and other items constituting compensation from the Selling
Stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to dealers, including the proposed selling price to the public. Harken
will not receive any of the proceeds from the sale by the Selling Stockholders
of the Shares offered hereby. All of the registration expenses of the offering
will be paid by Harken.
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24
The Shares may be sold from time to time in one or more transactions
at a fixed offering price, which may be changed, or at varying prices
determined at the time of sale or at negotiated prices.
Harken has agreed to indemnify in certain circumstances the Selling
Stockholders and any underwriter, selling brokers, dealer managers or similar
persons who participate in the distribution of the Shares, if any, and certain
persons related to the foregoing persons, against certain liabilities,
including liabilities under the Securities Act. The Selling Stockholders have
agreed to indemnify in certain circumstances Harken and certain persons related
to Harken against certain liabilities, including liabilities under the
Securities Act.
In order to comply with certain states' securities laws, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless the Shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is
available and is complied with.
LEGAL MATTERS
The validity of the Shares will be passed upon for Harken by Larry E.
Cummings, Vice President, General Counsel and Secretary of Harken.
EXPERTS
The (i) consolidated financial statements and schedules of Harken
included in Harken's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993, and (ii) financial statements of the CHAP Venture as of
December 31, 1993, included in Harken's Amendment to Application or Report on
Form 8-K/A dated January 3, 1995, each of which are incorporated by reference
in this Registration Statement of which this Prospectus forms a part, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
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------------------------------------------------ ------------------------------------------------
No dealer, salesperson or any other
individual has been authorized to give any
information or to make any representation not
contained or incorporated by reference in this
Prospectus and, if given or made, such
information or representation must not be
relied upon as having been authorized by Harken 960,000 Shares
or any Selling Stockholder. This Prospectus
does not constitute an offer to sell or a
solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction HARKEN ENERGY CORPORATION
to any person to whom it is unlawful to make
such offer or solicitation in such
jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, COMMON STOCK
under any circumstances, create any implication
that the information herein is correct as of
any time subsequent to the date hereof or that
there has been no change in the affairs of
Harken since such date.
---------------
TABLE OF CONTENTS
Page
--------------------
Available Information . . . . 3
Incorporation of Certain
Documents by Reference . . . 3 P R O S P E C T U S
Business of Harken . . . . . . 5
Unaudited Pro Forma
--------------------
Combined Condensed
Financial Statements . . . . 8
Investment Considerations . . . 13
Use of Proceeds . . . . . . . . 20
Selling Stockholders . . . . . 20
Plan of Distribution . . . . . 21
Legal Matters . . . . . . . . . 22 _____________, 1995
Experts . . . . . . . . . . . . 22
------------------------------------------------ ------------------------------------------------
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses (other than underwriting discounts and commissions) in
connection with the offering described in this Registration Statement are as
follows:
SEC Registration Fee . . . . . . . . . . . . $ 642.16
AMEX Listing Fee . . . . . . . . . . . . . . 17,500.00
Printing and Engraving Expenses . . . . . . -
Accounting Fees and Expenses . . . . . . . . 10,000.00
Legal Fees and Expenses . . . . . . . . . . 10,000.00
Blue Sky Fees and Expenses . . . . . . . . . -
Miscellaneous . . . . . . . . . . . . . . . 1,000.00
----------
Total . . . . . . . . . . . . . . . . . $39,142.16
==========
All of the foregoing expenses will be paid by Harken.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
provides generally and in pertinent part that a Delaware corporation may
indemnify its directors and officers against expenses, judgments, fines and
settlements actually and reasonably incurred by them in connection with any
civil, criminal, administrative, or investigative suit or action except actions
by or in the right of the corporation if, in connection with the matters in
issue, they acted in good faith and in a manner they reasonably believed to be
in or not opposed to the best interests of the corporation, and in connection
with any criminal suit or proceeding, if in connection with the matters in
issue, they had no reasonable cause to believe their conduct was unlawful.
Section 145 further provides that in connection with the defense or settlement
of any action by or in the right of the corporation, a Delaware corporation may
indemnify its directors and officers against expenses actually and reasonably
incurred by them if, in connection with the matters in issue, they acted in
good faith, in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made
with respect to any claim, issue or matter as to which such person has been
adjudged liable for negligence or misconduct unless the Court of Chancery or
the court in which such action or suit is brought approves such
indemnification. Section 145 further permits a Delaware corporation to grant
its directors and officers additional rights of
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indemnification through bylaw provisions and otherwise, and to purchase
indemnity insurance on behalf of its directors and officers.
Article Ten of the Registrant's Certificate of Incorporation and
Article VII of the Registrant's bylaws provide, in general, that the Registrant
shall indemnify its directors and officers under certain of the circumstances
defined in Section 145. The Registrant has entered into agreements with each
member of its Board of Directors pursuant to which it will advance to each
director costs of litigation in accordance with the indemnification provisions
of the Registrant's Certificate of Incorporation and bylaws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act") may be permitted to
directors, officers or persons controlling the Registrant pursuant to the
foregoing provisions, the Registrant has been informed that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
Item 16. Exhibits.
*2.1 - Agreement and Plan of Merger dated November 8, 1994, between
Harken Energy Corporation, Search Acquisition Corp. and
Search Exploration, Inc.
4.1 - Certificate of Incorporation of Harken Energy Corporation,
as amended (incorporated by reference as Exhibit 3.1 to
Harken Energy Corporation's Annual Report on Form 10-K for
fiscal year ended December 31, 1989)
4.2 - Amendment to the Certificate of Incorporation of Harken
Energy Corporation (incorporated by reference as Exhibit
28.8 to the Registration Statement on Form S-1, as amended,
of E-Z Serve Corporation and Tejas Power Corporation --
Registration No. 33-37141); Amendment dated February 28,
1991, to the Certificate of Incorporation of Harken
(incorporated by reference as Exhibit 3 to Harken's
Quarterly Report on Form 10-Q for the quarter ended March
31, 1991); Amendment dated July 8, 1991, to Harken's
Certificate of Incorporation (incorporated by reference as
Exhibit 3 to Harken's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991); and Amendment dated June 30,
1992, to Harken's Certificate of Incorporation (incorporated
by reference as Exhibit 3 to Harken's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992)
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28
4.3 - Bylaws of Harken Energy Corporation, as amended
(incorporated by reference as Exhibit 3.2 to Harken Energy
Corporation's Annual Report on Form 10-K for fiscal year
ended December 31, 1989)
4.4 - Certificate of the Designations, Powers, Preferences and
Rights of Series C Cumulative Convertible Preferred Stock,
$1.00 par value of Harken Energy Corporation (incorporated
by reference as Exhibit 4.3 to Harken Energy Corporation's
Annual Report on Form 10-K for fiscal year ended December
31, 1989)
*5.1 - Opinion of Larry E. Cummings, General Counsel of Harken
Energy Corporation
*23.1 - Consent of Arthur Andersen LLP
*23.2 - Consent of Larry E. Cummings (included in opinion filed as
Exhibit 5.1)
+24.1 - Powers of Attorney.
99.1 - Form of Concession and Lease Purchase Agreement dated as of
October 20, 1994 and effective as of August 1, 1994, by and
among C.A.B. Resources, Inc., Crusader, Inc., Australian
Hydrocarbons, Inc. and Harken Energy Corporation
(incorporated by reference as an exhibit to Harken's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994).
_____________
* Filed herewith.
+ Previously filed.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement 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.
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(b) The undersigned Registrant hereby undertakes:
(1) 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 thereto) 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 (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) 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.
(3) 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that, in the opinion of the
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
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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 its 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 Securities Act and will be governed by the final adjudication
of such issue.
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SIGNATURES
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 Irving, State of Texas,
on January 31, 1995.
HARKEN ENERGY CORPORATION
*
----------------------------------
Mikel D. Faulkner, Chairman of the
Board and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
------------------------------------ --------------------------- ----------------
* Chairman of the Board and January 31, 1995
------------------------------------ Chief Executive Officer
Mikel D. Faulkner (Principal Executive Officer)
* President and Director January 31, 1995
------------------------------------
Richard H. Schroeder
* Senior Vice President and January 31, 1995
------------------------------------ Chief Financial Officer
Bruce N. Huff (Principal Accounting
Officer and Principal
Financial Officer)
* Director January 31, 1995
------------------------------------
Michael M. Ameen, Jr.
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* Director January 31, 1995
------------------------------------
Michael R. Eisenson
* Director January 31, 1995
------------------------------------
Edwin C. Kettenbrink, Jr.
* Director January 31, 1995
------------------------------------
Talat M. Othman
* Director January 31, 1995
------------------------------------
Donald W. Raymond
*Larry E. Cummings, by signing his name hereto, does hereby sign this Amendment
No. 1 to Registration Statement on behalf of Harken Energy Corporation and each
of the above-named officers and directors of such Company pursuant to powers of
attorney, executed on behalf of the Company by each officer and director.
/s/ Larry E. Cummings
Larry E. Cummings,
Attorney-in-Fact
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INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit No. Exhibit Page
----------- ------------------------------------------------------------- ------------
*2.1 Agreement and Plan of Merger dated November 8, 1994, between
Harken Energy Corporation, Search Acquisition Corp. and
Search Exploration, Inc.
4.1 Certificate of Incorporation of Harken Energy Corporation,
as amended (incorporated by reference as Exhibit 3.1 to
Harken Energy Corporation's Annual Report on Form 10-K for
fiscal year ended December 31, 1989)
4.2 Amendment to the Certificate of Incorporation of Harken
Energy Corporation (incorporated by reference as Exhibit
28.8 to the Registration Statement on Form S-1, as amended,
of E-Z Serve Corporation and Tejas Power Corporation --
Registration No. 33-37141); Amendment dated February 28,
1991, to the Certificate of Incorporation of Harken
(incorporated by reference as Exhibit 3 to Harken's
Quarterly Report on Form 10-Q for the quarter ended
March 31, 1991); Amendment dated July 8, 1991, to Harken's
Certificate of Incorporation (incorporated by reference as
Exhibit 3 to Harken's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991); and Amendment dated June 30,
1992, to Harken's Certificate of Incorporation (incorporated
by reference as Exhibit 3 to Harken's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992)
4.3 Bylaws of Harken Energy Corporation, as amended
(incorporated by reference as Exhibit 3.2 to Harken Energy
Corporation's Annual Report on Form 10-K for fiscal year
ended December 31, 1989)
4.4 Certificate of the Designations, Powers, Preferences and
Rights of Series C Cumulative Convertible Preferred Stock,
$1.00 par value of Harken Energy Corporation (incorporated
by reference as Exhibit 4.3 to Harken Energy Corporation's
Annual Report on Form 10-K for fiscal year ended
December 31, 1989)
*5.1 Opinion of Larry E. Cummings, General Counsel of Harken
Energy Corporation
*23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Larry E. Cummings (included in opinion filed as
Exhibit 5.1)
+24.1 Powers of Attorney
99.1 Form of Concession and Lease Purchase Agreement dated as of
October 20, 1994 and effective as of August 1, 1994, by and
among C.A.B. Resources, Inc., Crusader, Inc., Australian
Hydrocarbons, Inc. and Harken Energy Corporation
(incorporated by reference as an exhibit to Harken's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1994)
____________________
* Filed herewith.
+ Previously filed.