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As filed with the Securities and Exchange Commission on October 4, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
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 BLVD., SUITE 400
IRVING, TEXAS 75038
(214) 753-6900
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
________________________________
GREGORY S. PORTER
VICE PRESIDENT - LEGAL
HARKEN ENERGY CORPORATION
5605 NORTH MACARTHUR BLVD., SUITE 400
IRVING, TEXAS 75038
(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]
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
effective 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: [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of each Class of Amount to be Offering Price Per Aggregate Offering Amount of
Securities to be Registered Registered Unit(1) Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.01 1,600,000 $1.875 $3,000,000 $1,034
per share
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(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 sales
prices of the common stock as reported by the American Stock Exchange on
September 28, 1995.
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
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1 Forepart of the Registration Statement Facing Page; Cross-Reference Sheet;
and Outside Front Cover Pages of Outside Front Cover Page of Prospectus
Prospectus
2 Inside Front and Outside Back Cover Pages Inside Front Cover Pages of Prospectus
of Prospectus
3 Summary Information, Risk Factors and Outside Front Cover Page of Prospectus;
Ratio of Earnings to Fixed Charges Risk Factors
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price *
6 Dilution *
7 Selling Security Holders Selling Stockholder
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 Pages of Prospectus
Reference
13 Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
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* Not Applicable
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PROSPECTUS
1,600,000 Shares
HARKEN ENERGY CORPORATION
Common Stock
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The 1,600,000 shares (the "Shares") of common stock, par value $0.01
per share ("Common Stock"), of Harken Energy Corporation, a Delaware
corporation ("Harken" or the "Company"), offered hereby are being offered by
the stockholders of the Company named herein (the "Selling Stockholders").
The Company will not receive any of the proceeds from the sale of the Shares,
but the Company has agreed to bear certain expenses of registration of the
Shares under the federal and state securities laws (currently estimated to be
$25,000), and of any offering and sale hereunder not including certain expenses
such as commissions and discounts of underwriters, dealers or agents. See
"Selling Stockholders" and "Use of Proceeds."
The Common Stock is traded on the American Stock Exchange, under the
symbol "HEC." On October , 1995, the closing sales price of the Common
Stock as reported on the American Stock Exchange was $ per share.
The Shares may be offered and sold from time to time by the Selling
Stockholders directly or through broker-dealers or underwriters who may act
solely as agents, or who may acquire the Shares as principals. The
distribution of the Shares may be effected in one or more transactions that may
take place through the American Stock Exchange or any other national securities
exchange on which the Common Stock is approved for listing in the future,
including block trades or ordinary broker's transactions, or through privately
negotiated transactions, or through an underwritten public offering, or through
a combination of any such methods of sale, at such prices as may be obtainable.
Usual and customary or specially negotiated brokerage fees or commissions may
be paid by the Selling Stockholders in connection with such sales. See "Plan
of Distribution."
To the extent required, the specific shares of Common Stock to be
sold, the purchase price, public offering price, names of any agent, dealer or
underwriter, and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The aggregate proceeds to the Selling Stockholders from the sale of the Shares
will be the purchase price thereof less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of distribution not borne
by the Company.
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.
PROSPECTIVE INVESTORS SHOULD CONSIDER AND REVIEW THE INFORMATION UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4 PRIOR TO AN INVESTMENT IN THE
SHARES 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 October , 1995.
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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, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied, at prescribed rates, at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024, as
well as at the regional offices of the Commission at Seven World Trade Center,
13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60601. Copies of such material
may also be obtained at prescribed rates by writing to 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 and other information described above may also be inspected and
copied at the offices of the American Stock Exchange at 86 Trinity Place, New
York, New York 10006.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act, with respect
to the Shares offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock, reference is hereby made to such
Registration Statement and exhibits. Statements contained herein concerning
the provisions of any documents are necessarily summaries of those documents,
and each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. The Registration Statement and
any amendments thereto, including exhibits filed as a part thereof, are
available for inspection and copying as set forth above.
TABLE OF CONTENTS
Page
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Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE 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, THE SELLING STOCKHOLDERS OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR
ANY OFFER TO OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994;
(2) The Company's Quarterly Report on Form 10-Q, for the quarterly
period ended March 31, 1995;
(3) The Company's Quarterly Report on Form 10-Q, for the quarterly
period ended June 30, 1995.
(4) The Company's Proxy Statement for the Annual Meeting of
Stockholders of Harken held on June 16, 1995;
(5) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, as amended, including all
amendments and reports filed for the purpose of updating such
description;
(6) The Company's Current Report on Form 8-K dated November 4,
1994, as amended by the Company's Current Report on Form 8-K/A
filed on January 3, 1995;
(7) The Company's Current Report on Form 8-K dated April 27, 1995,
reporting the results on an exploration well in Colombia,
South America;
(8) The Company's Current Report on Form 8-K dated May 16, 1995,
reporting the placement of its 8% Senior Convertible Notes due
May 1998; and
(9) The Company's Current Report on Form 8-K dated June 2, 1995,
reporting the acquisition of Search Exploration, Inc., as
amended by the Company's Current Report on Form 8-K/A filed on
August 3, 1995.
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.
The Company will furnish without charge to each person to whom a copy
of this Prospectus has been delivered, upon written or oral request, a copy of
any or all documents incorporated by reference in this Prospectus, 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 Gregory S. Porter, Harken Energy Corporation, 5605 North
MacArthur Blvd., Suite 400, Irving, Texas 75038 (Telephone: (214) 753-6900).
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THE COMPANY
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 include oil and gas exploration and production operations in the
Aneth Field and Blanding Sub-Basin portions of the Paradox Basin in Utah,
Arizona and New Mexico, in the Western Paradox Basin in Utah, and in Texas and
Louisiana. Harken's international operations include four exclusive Colombian
Association Contracts between Harken's wholly-owned subsidiary, Harken de
Colombia, Ltd., and Empresa Colombiana de Petroleos ("Ecopetrol"), as well as a
production sharing agreement between Harken's wholly-owned subsidiary, Harken
Bahrain Oil Company, and the Bahrain National Oil Company ("Banoco"). 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.
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 Blvd., Suite 400, Irving, Texas 75038 and
its telephone number is (214) 753-6900.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider carefully all of the information set forth in this Prospectus and, in
particular, should evaluate the following risk factors.
LOSSES FROM CONTINUING OPERATIONS
Harken reported losses from continuing operations for the fiscal years
ended December 31, 1993 and 1994 and the six months ended June 30, 1995, in the
amounts of $1,797,000, $8,211,000 and $297,000, respectively. There can be no
assurance that Harken will not continue to report losses.
EFFECT OF SALES OF COMMON STOCK ON MARKET PRICE
As of September 12, 1995, there were 66,696,846 shares of Common Stock
outstanding. Harken has previously registered with the Commission an aggregate
of 3,386,308 shares of Common Stock for resale by certain stockholders of the
Company, in addition to the 1,600,000 shares of Common Stock registered for
resale pursuant to the Registration Statement of which this Prospectus forms a
part. In addition, pursuant to the terms of an Agreement and Plan of Merger
among Harken, Search Exploration, Inc. ("Search") and a wholly-owned subsidiary
of Harken (the "Search Acquisition"), Harken may be required to issue up to
approximately 8.8 million shares of Common Stock, in addition to the
approximately 2.2 million shares of Common Stock that were issued upon the
consummation of the Search Acquisition in May 1995. Of the approximately 8.8
million shares of Common Stock which may be required to be issued in connection
with the Search Acquisition, (i) approximately 730,000 shares of Common Stock
may be issued upon the exercise of certain warrants issued by Harken, and (ii)
up to 8.1 million shares of Common Stock may be issued on or about September
30, 1996, to the holders of record at the effective time of the merger of
certain securities of Search and overriding royalty interests in certain
properties held by Search, based in part upon the increase that may
subsequently be realized in the value of a group of undeveloped leases and
properties of Search. Furthermore, Harken has $15,000,000 in principal amount
of 8% Senior Convertible Notes (the "Notes") outstanding which are presently
convertible by the holders thereof into 10,000,000 shares of Common Stock.
There can be no assurance that the sale of (i) the 1,600,000 shares registered
for resale by the Selling Stockholders pursuant to the Registration Statement,
(ii) the 3,386,308 shares of Common Stock previously registered for resale,
(iii) the shares of Common Stock which may be required to be issued in
connection with the Search Acquisition, or (iv) the shares of Common Stock
which may be issued in connection with the conversion of the Notes into Common
Stock will not have a material adverse effect on the then prevailing market
price of the Common Stock.
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VOLATILITY OF HARKEN COMMON STOCK TRADING PRICE
The daily closing prices of the Common Stock as reported by the
American Stock Exchange has fluctuated significantly over the past 18 months,
ranging from a high of $2 3/4 per share on September 14, 1994, to a low of
$15/16 on April 10, 1995. Management believes that the price fluctuations and
trading activity in the Common Stock during the past 18 months are attributable
to a number of factors, including Harken's international exploration
activities. In the event that Harken's international exploration activities
are unsuccessful, there can be no assurance that such results will not have a
substantial adverse effect on the then prevailing market price of the Common
Stock.
CONTINGENT LIABILITIES OF HARKEN
Harken has certain contingent liabilities that could have a material
adverse affect on its financial condition if Harken were required to satisfy
these liabilities, including the following:
Harken Southwest Corporation ("HSW") owns an interest in the Aneth Gas
Plant. The Aneth Gas Plant facility was in operation for many years prior to
HSW becoming an owner. The operations at the Aneth Gas Plant previously used
open, unlined drip pits for storage of various waste products. The current
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 Environmental
Protection Agency ("EPA") dated July 21, 1991 and a subsequent letter dated
June 8, 1992, in which the EPA requested certain information in order to
determine if hazardous substances had been released into the environment at the
Aneth Gas Plant. 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 jointly taken by the EPA and Texaco. The EPA has
responded to the initial sampling of the drip pits, and Texaco is now
completing a Phase II environmental investigation to provide further test
results in response to evaluation procedures required by the EPA related to the
drip pits.
The prior owner of the Aneth Gas Plant facility has agreed to accept
financial responsibility for a portion of this remediation work. Texaco and
the other current plant owners, including HSW, are presently negotiating a
formal agreement with the prior owner to allocate the costs of the remediation
work. At this time, however, it is impossible for HSW to estimate the costs of
the cleanup at the Aneth Gas Plant facility or the amount of indemnification
the prior owner will provide to the present owners, including HSW, for the
costs of the remediation work.
PREFERRED STOCK AUTHORIZED FOR ISSUANCE
Harken has ten million shares of preferred stock available for
issuance. The Board of Directors is authorized to issue such preferred stock
in one or more series and to set the designations, preferences, powers and
relative rights and restrictions thereof without further approval by the
stockholders of the Company. 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
additional series of preferred stock in the future that have similar or
additional preferences over the shares of Common Stock.
RISKS RELATED TO INTERNATIONAL OPERATIONS
Harken presently conducts international operations 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
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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.
Harken anticipates that full development of reserves in the Alcaravan
area of the Llanos Basin and the Bocachico area of the Middle Magdalena Basin
of Colombia 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 Harken will have adequate funds
available to it to fund its international activities without participation from
industry partners or that industry partners can be obtained to fund such
international activities.
INDUSTRY RISKS
Oil and Gas Price Volatility. The revenues generated by Harken are
highly dependent upon the prices of crude oil and natural 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 oil and gas
assets, properties and revenues derived therefrom 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.
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 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
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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.
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.
Competition. 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.
Extensive Regulation. 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 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 laws, rules and regulations
are subject to change. Any such change in any law, rule or regulation could
have the effect of increasing the Company's cost of exploration or production
or may limit the Company's revenues by regulating the level of oil and gas
production, either of which could have a material adverse effect on the
financial condition of the Company.
USE OF PROCEEDS
Harken will not receive any part of the proceeds from the sale of
Shares by the Selling Stockholders.
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SELLING STOCKHOLDERS
This Prospectus covers the offer and sale of the Shares by the Selling
Stockholders. Set forth below are the names of each Selling Stockholder, the
nature of any position, office or other material relationship that a Selling
Stockholder has had within the last three years with the Company or any of its
predecessors or affiliates, the number of shares of Common Stock owned by each
Selling Stockholder as of the date of this Prospectus, the number of shares of
Common Stock which may be offered by each Selling Stockholder pursuant to this
Prospectus, and the number of shares of Common Stock and the percentage of the
outstanding shares of Common Stock to be owned by each Selling Stockholder upon
completion of the offering if all of the Shares held by such Selling
Stockholder are sold. Any or all of the Shares listed below may be offered for
sale by the Selling Stockholders from time to time.
Shares Owned Shares Owned Percent of Common
Selling Prior to the Shares Offered After the Stock Owned After
Stockholders Offering Hereby Offering(1) the Offering(1)
------------ ------------- -------------- ------------- -----------------
Harold E. Vanberg 700,000 700,000 -0- 0.0%
Aeneas Venture 8,061,473(2)(4) 506,321 7,555,152(2)(4) 11.3%(2)
Corporation
Phemus Corporation 321,679(2) 321,679 -0-(2) 0.0%(2)
Harvard Master 468,367(2) 46,800 421,567(2) (2)(3)
Trust
Harvard - Yenching 234,204(2) 25,200 209,004(2) (2)(3)
Institute
- --------------------
(1) Assumes no other disposition or acquisition of Common Stock and all
Shares included herein are sold.
(2) Michael R. Eisenson, a director of the Company, is an officer and
director of Aeneas Venture Corporation ("Aeneas") and Phemus
Corporation ("Phemus"). In addition, Aeneas, Phemus, Harvard Master
Trust and Harvard - Yenching Institute (collectively, the "Harvard
Group") may be considered to be a group for purposes for Rule 13d-5
promulgated under the Securities Exchange Act of 1934. If all of the
shares of Common Stock offered by the Harvard Group pursuant to this
Prospectus are sold, the Harvard Group will collectively beneficially
own 8,185,723 shares of Common Stock or 12.3% of the outstanding
Common Stock. Mr Eisenson shares voting and investment power over
the shares of Common Stock owned by Aeneas and Phemus with the other
officers and directors of Aeneas and Phemus and may be deemed to have
beneficial ownership of such shares. Mr. Eisenson has no investment
or voting power over the shares owned by Harvard Master Trust and
Harvard - Yenching Institute.
(3) Less than 1%.
(4) Includes 25,000 shares of Common Stock that may be acquired through the
exercise of options exercisable at $5.625 per share, which options were
transferred to Aeneas from Michael R. Eisenson, a director of the
Company, effective March 1, 1991.
8
11
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from the sale of Common
Stock owned by the Selling Stockholders. It is anticipated that the Selling
Stockholders will offer the Shares in the manner set forth on the cover page of
this Prospectus, from time to time, directly or through broker-dealers or
underwriters who may act solely as agents or may acquire the Shares as
principals, in all cases as designated by the Selling Stockholders. Such
underwriters or broker-dealers acting either as principal or as agent, may
receive compensation in the form of usual and customary or specifically
negotiated underwriting discounts, concessions or commissions from the Selling
Stockholders or the purchasers of the securities offered hereby for whom they
may act as agent.
The net proceeds to the Selling Stockholders from the sale of Common
Stock so offered will be the purchase price of the Common Stock sold less the
aggregate agents' commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by the Company. The Selling
Stockholders and any dealers or agents that participate in the distribution of
Common Stock may be deemed to be "underwriters" within the meaning of the
Securities Act.
At any time a particular offer of Common Stock is made, to the extent
required, the specific shares of Common Stock to be sold, the purchase price,
public offering price, the names of any such agent, dealer or underwriter and
any applicable commission or discount with respect to a particular offering
will be set forth in an accompanying Prospectus Supplement. Such Prospectus
Supplement may, if necessary, be in the form of a post-effective amendment to
the Registration Statement of which this Prospectus is a part, and will be
filed with the Commission to reflect the disclosure of additional information
with respect to the distribution of such securities.
Pursuant to the terms of a Private Placement Subscription Agreement
between the Company and Harold E. Vanberg, the Company has agreed to file a
"shelf" registration statement pursuant to Rule 415 under the Securities Act
covering the sale of 700,000 shares of Common Stock held by Mr. Vanberg, and to
use diligent efforts to maintain the effectiveness of such registration
statement for the shorter of (i) one year from the date of effectiveness of
such registration statement, or (ii) the date on which all of the shares have
been sold by Mr. Vanberg.
Pursuant to a Stock Purchase Agreement dated October 31, 1986 between
the Company and Aeneas, the members of the Harvard Group have requested that
the Company file a "shelf" registration statement pursuant to Rule 415 under
the Securities Act covering the sale of an aggregate of 900,000 shares of
Common Stock held by the members of the Harvard Group. The Company has agreed
to use diligent efforts to maintain the effectiveness of such registration
statement for the shorter of (i) 180 days from the date of effectiveness of
such registration statement, or (ii) the date on which all of the shares have
been sold by the Harvard Group.
Under the terms of the Private Placement Subscription Agreement and
the Stock Purchase Agreement, the Company has agreed to bear certain expenses
of registration of the Shares under the federal and state securities laws
(currently estimated to be $25,000) and of any offering and sale hereunder not
including certain expenses such as commissions or discounts of underwriters,
dealers or agents attributable to the sale of such Common Stock.
Pursuant to the Private Placement Subscription Agreement and the Stock
Purchase Agreement, the Company has agreed to indemnify the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Selling Stockholders may be
required to make in respect thereof.
To comply with the securities laws of certain jurisdictions, the
securities offered hereby may be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
The Selling Stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-2,
9
12
10b-6 and 10b-7, which provisions may limit the timing of purchases and sales
by each Selling Stockholder and any other such person. Furthermore, under Rule
10b-6 under the Exchange Act, any person engaged in a distribution of the
Common Stock may not simultaneously engage in market making activities with
respect to such securities for a period of two business days prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the securities offered hereby.
LEGAL MATTERS
The validity of the Shares will be passed upon for Harken by Gregory
S. Porter, Esq.
EXPERTS
The (i) consolidated financial statements and schedules of the Company
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and (ii) financial statements of the CHAP Venture as of
December 31, 1993, included in the Company's Current Report on Form 8-K dated
November 4, 1994, as amended by the Company's Current Report on Form 8-K/A
filed on January 3, 1995, each of which are incorporated by reference herein,
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.
The consolidated financial statements of Search for the year ended
December 31, 1994, included in the Company's Current Report on Form 8-K dated
June 2, 1995, as amended by the Company's Current Report on Form 8-K/A filed on
August 3, 1995, which is incorporated by reference herein, have been audited by
Hein + Associates LLP, independent public accountants, as indicated in their
report 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.
10
13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by the Company in connection with the offering
described in this Registration Statement are estimated as follows:
Commission Registration Fee . . . . $ 1,034.00
AMEX Listing Fee . . . . . . . . . 17,500.00
Printing and Engraving Expenses . . 2,000.00
Accounting Fees and Expenses . . . 3,000.00
Blue Sky Fees and Expenses . . . . 1,000.00
Miscellaneous . . . . . . . . . . . 466.00
-----------
Total . . . . . . . . $ 25,000.00
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of
Delaware ("Delaware Law"), a Delaware corporation may indemnify its directors,
officers, employees and agents against expenses (including attorneys fees),
judgments, fines and settlements in nonderivative suits, actually and
reasonably incurred by them in connection with the defense of any action, suit
or proceeding in which they or any of them were or are made parties or are
threatened to be made parties by reason of their serving or having served in
such capacity. Delaware law, however provides that such person must have 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 the case of a criminal action,
such person must have had no reasonable cause to believe his or her 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
indemnification through bylaw provisions and otherwise, and to purchase
indemnity insurance on behalf of its directors and officers. Indemnification
is mandatory to the extent a claim, issue or matter has been successfully
defended.
Article Ten of the Company's Certificate of Incorporation and Article
VII of the Company's bylaws provide, in general, that the Company shall
indemnify its directors and officers under certain of the circumstances defined
in Section 145. The Company 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
Company's Certificate of Incorporation and bylaws.
II-1
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ITEM 16. EXHIBITS.
4.1 - Form of certificate representing shares of Harken common stock, par value $.01 per share (filed as
Exhibit 1 to Harken's Registration Statement on Form 8-A, File No. 0-9207, and incorporated by
reference herein).
4.2 - Certificate of the Designations, Powers, Preferences and Rights of Series C Cumulative Convertible
Preferred Stock, $1.00 par value of Harken Energy Corporation (filed as Exhibit 4.3 to Harken's
Annual Report on Form 10-K for fiscal year ended December 31, 1989, File No. 0-9207, and incorporated
by reference herein).
*5.1 - Opinion of Gregory S. Porter, Esq.
*23.1 - Consent of Arthur Andersen LLP
*23.2 - Consent of Gregory S. Porter, Esq. (included in opinion filed as Exhibit 5.1)
*23.3 - Consent of Hein + Associates LLP
*24.1 - Powers of Attorney.
*99.1 - Private Placement Subscription Agreement between Harken and Harold Vanberg.
99.2 - Stock Purchase Agreement between Aeneas Venture Corporation and Harken, dated October 31, 1986 (filed
as Exhibit 10.28 to Harken's Annual Report on Form 10-K for the fiscal year ended December 31, 1989,
and incorporated by reference herein).
_____________
* Filed herewith.
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.
(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. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
II-2
15
(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
registration statement is on Form S-3 or Form S-8, and 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 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
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Irving, State of Texas, on October 4, 1995.
HARKEN ENERGY CORPORATION
*
------------------------------------------
Mikel D. Faulkner, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
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 Chief October 4, 1995
Mikel D. Faulkner Executive Officer (Principal
Executive Officer)
*
--------------------------- President and Chief Operating October 4, 1995
Richard H. Schroeder Officer and Director
/s/ Bruce N. Huff October 4, 1995
--------------------------- Senior Vice President and Chief
Bruce N. Huff Financial Officer (Principal
Accounting Officer and Principal
Financial Officer)
*
--------------------------- Director October 4, 1995
Michael M. Ameen, Jr.
*
--------------------------- Director October 4, 1995
Michael R. Eisenson
II-4
17
* Director October 4, 1995
---------------------------
Edwin C. Kettenbrink, Jr.
* Director October 4, 1995
---------------------------
Talat M. Othman
* Director October 4, 1995
---------------------------
Donald W. Raymond
* Director October 4, 1995
---------------------------
Gary B. Wood
* Bruce N. Huff, by signing his name hereto, does hereby sign this 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 and each officer and director.
/S/ BRUCE N. HUFF
Bruce N. Huff,
Attorney-in-Fact
II-5
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INDEX TO EXHIBITS
Sequentially
Exhibit No. Exhibit Numbered Page
------------------------------------------------------------ -------------
4.1 Form of certificate representing shares of Harken common
stock, par value $.01 per share (filed as Exhibit 1 to
Harken's Registration Statement on Form 8-A, File No. 0-
9207, and incorporated by reference herein).
4.2 Certificate of the Designations, Powers, Preferences and
Rights of Series C Cumulative Convertible Preferred Stock,
$1.00 par value of Harken Energy Corporation (filed as
Exhibit 4.3 to Harken's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989, File No. 0-9207, and
incorporated by reference herein).
*5.1 Opinion of Gregory S. Porter, Esq.
*23.1 Consent of Arthur Andersen LLP
*23.2 Consent of Gregory S. Porter, Esq. (included in opinion
filed as Exhibit 5.1)
*23.3 Consent of Hein + Associates LLP
*24.1 Powers of Attorney
*99.1 Private Placement Subscription Agreement between Harken and
Harold Vanberg.
99.2 Stock Purchase Agreement between Aeneas Venture Corporation
and Harken, dated October 31, 1986 (filed as Exhibit 10.28
to Harken's Annual Report on Form 10-K for the fiscal year
ended December 31, 1989, and incorporated by reference
herein).
- -----------------
* Filed herewith