<PAGE>
As filed with the Securities and Exchange Commission on August 24, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TITAN EXPLORATION, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 75-2671582
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Jack D. Hightower
President, Chief Executive Officer and
500 West Texas, Suite 200 Chairman of the Board of Directors
Midland, Texas 79701 Titan Exploration, Inc.
(915) 498-8600 500 West Texas, Suite 200
(Address, including zip code, and Midland, Texas 79701
telephone number, including area code, (915) 498-8600
of registrant's principal executive offices) (Name, address, including zip code, and telephone number,
including area code, of agent for service)
</TABLE>
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Copy to:
Joe Dannenmaier
Thompson & Knight, P.C.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
(214) 969-1700 (phone)
(214) 969-1751 (fax)
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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. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, $.01
PAR VALUE PER SHARE......... 1,749,445 SHARES $7.00 $12,246,115 $3,612.61
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</TABLE>
(1) Estimated pursuant to Rule 457(c) under the Securities Act of 1933 solely
for the purpose of calculating the registration fee, based on the average of
the high and low sale prices of the Common Stock on the Nasdaq National
Market on August 18, 1998.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 24, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS
1,749,445 SHARES
TITAN EXPLORATION, INC.
COMMON STOCK
____________________
All of the 1,749,445 shares (the "Shares") of Common Stock, par value $.01
per share (the "Common Stock"), of Titan Exploration, Inc., a Delaware
corporation (the "Company"), offered hereby are being offered by and for the
account of certain stockholders of the Company (the "Selling Stockholders").
See "Selling Stockholders." The Shares being offered by the Selling
Stockholders were acquired from the Company pursuant to (i) an amended and
restated merger agreement, dated November 6, 1997, among the Company, a wholly-
owned subsidiary and Offshore Energy Development Corporation (the "OEDC Merger
Agreement") and (ii) a merger agreement, dated November 4, 1997, among the
Company, a wholly-owned subsidiary and Carrollton Resources, L.L.C. (the
"Carrollton Merger Agreement"). The Company is registering the Shares of the
Selling Stockholders pursuant to certain registration requirements contained in
a registration rights agreement entered into pursuant to the OEDC Merger
Agreement and the Carrollton Merger Agreement to permit secondary trading of the
Shares. Certain transfer restrictions have been placed on the Shares by
agreement between the Company and the Selling Stockholders. Between June 10,
1998 and December 12, 1998, the Selling Stockholders may only sell one-half of
their shares. After December 12, 1998, the remaining shares of the Selling
Stockholders may be sold from time to time. See "Plan of Distribution."
The Common Stock is listed on The Nasdaq Stock Market's National Market
(the "Nasdaq") under the symbol "TEXP." On August 21, 1998, the last reported
sale price of the Common Stock on the Nasdaq was $7.00 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
____________________
The Shares may be sold by the Selling Stockholders from time to time in
open market transactions (which may include block transactions) or otherwise in
the over-the-counter market through the Nasdaq, or in private transactions at
prices relating to prevailing market prices or at negotiated prices. The
Selling Stockholders may effect such transactions by selling Shares to or
through broker-dealers, and such broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the Selling Stockholders
and/or the purchasers of Shares for whom such broker-dealers may act as agent or
to whom they sell as principal or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Stockholders and any broker-dealer acting in connection with the sale of the
Shares offered hereby may be deemed to be "underwriters" within the meaning of
the Securities Act, in which event any discounts, concessions or commissions
received by them, which are not expected to exceed those customary in the types
of transactions involved, or any profit on resales of the Shares by them, may be
deemed to be underwriting commissions or discounts under the Securities Act. See
"Plan of Distribution" and "Selling Stockholders."
The Company will receive no part of the proceeds of sales made hereunder.
All expenses in connection with this offering are being borne by the Company,
except for any underwriting commissions or similar selling expenses incurred by
the Selling Stockholders, which will be borne by such Selling Stockholders. See
"Selling Stockholders."
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is August , 1998.
<PAGE>
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 can be inspected and copied at the office of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the regional offices of the Commission at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of
such information can be obtained by mail from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Additionally, the Commission maintains a web site
that contains reports, proxy statements and other information regarding
registrants (including the Company) that file electronically with the
Commission. The address of the Commission's web site is http://www.sec.gov.
The Company's Common Stock is listed on the Nasdaq and copies of reports, proxy
statements and other information concerning the Company also can be inspected at
the offices of The Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006.
This Prospectus constitutes a part of a registration statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act. This Prospectus does not contain all the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission, and reference is
hereby made to the Registration Statement and to the exhibits relating thereto
for further information with respect to the Company and the Shares offered
hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and, in each instance, reference is made
to a copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference. Copies of the Registration Statement and the
exhibits thereto may be inspected, without charge, at the offices of the
Commission, or obtained at prescribed rates from the Public Reference Section of
the Commission at the address set forth above.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
(File No. 000-21843) pursuant to the Exchange Act are hereby incorporated by
reference into this Prospectus:
(1) Consolidated Financial Statements of Offshore Energy Development
Corporation included in the Company's Registration Statement on Form
S-4 (Registration No. 333-40215) filed with the Commission on
November 14, 1997 (the "Company's Form S-4");
(2) Financial Statements of the 1995 Acquisition included in the Company's
Form S-4;
(3) Financial Statements of the 1996 Acquisition included in the Company's
Form S-4;
(4) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(5) The Company's quarterly report on Form 10-Q for the quarter ended June
30, 1998;
(6) The Company's Current Report on Form 8-K (Date of Event: December 12,
1997) filed December 29, 1997;
(7) The Company's Current Report on Form 8-K (Date of Event: December 12,
1997), as amended, filed February 27, 1998;
(8) The Company's Proxy Statement dated April 30, 1998, relating to the
1998 annual meeting of stockholders of the Company; and
(9) The description of the Common Stock contained in the Registration
Statement on Form 8-A of the Company heretofore filed with the
Commission, including any amendments or reports filed for the purpose
of updating such description.
All documents filed by the Company 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 filing of a post-effective amendment which indicates that all Shares offered
hereby have been sold or which deregisters all Shares then remaining unsold,
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such documents. Any statement contained
in 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 other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
THE COMPANY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING
ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR
ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN (OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH
ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). WRITTEN
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE COMPANY, 500 WEST TEXAS,
SUITE 200, MIDLAND, TEXAS 79701, ATTENTION: WILLIAM K. WHITE, VICE PRESIDENT,
FINANCE AND CHIEF FINANCIAL OFFICER. TELEPHONE REQUESTS MAY ALSO BE DIRECTED TO
MR. WHITE AT (915) 498-8600.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE
SPECIFICALLY OFFERED HEREBY OR OF ANY SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
SUCH DATE.
3
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THE COMPANY
Titan is an independent energy company engaged in the exploitation,
development, exploration and acquisition of oil and gas properties located in
the Permian Basin of West Texas and southeastern New Mexico. In late 1997, the
Company expanded its core operating areas into the Gulf Coast Region through
acquisitions onshore in South Texas and Louisiana and offshore in the Gulf of
Mexico. Since its inception in March 1995, the Company has increased its
reserves, production and cash flow through (i) the development and exploration
of its properties and (ii) the acquisition of producing properties that provide
exploitation, development and exploration potential. As of December 31, 1997,
the Company had proved reserves of 527 Bcfe, with a PV-10 of $435.1 million, and
operated 821 productive gross (724 net) wells. Natural gas constituted
approximately 66% of the Company's reserves, and approximately 68% of the
Company's reserves were classified as proved developed.
From its inception through December 31, 1997, the Company has made five
significant acquisitions for an aggregate purchase price of approximately $357.1
million, approximately $277.2 million of which is attributable to proved
reserves and $53.7 million of which is attributable to mid-stream gas gathering
and processing assets acquired in connection with the acquisition of Offshore
Energy Development Corporation. These acquisitions have added approximately 326
Bcfe of reserves at an average cost of $0.85 per Mcfe. Subsequently, the
Company has spent approximately $32.3 million on the exploitation, development
and exploration of these acquired properties, adding 175 Bcfe of proved reserves
at an average finding cost of $0.18 per Mcfe. As a result, the Company's
finding cost from proved properties on these five acquisitions through December
31, 1997 was $0.62 per Mcfe.
RISK FACTORS
In addition to the other information contained or incorporated by reference
in this Prospectus, the following should be considered carefully by prospective
purchasers in evaluating an investment in the shares of Common Stock offered by
this Prospectus.
VOLATILITY OF OIL AND GAS PRICES; MARKETABILITY OF PRODUCTION
The Company's revenues, operating results and future rate of growth are
highly dependent upon the prices received for the Company's oil and gas.
Historically, the markets for oil and gas have been volatile and may continue to
be volatile in the future. Various factors beyond the control of the Company
will affect prices of oil and gas, including but not limited to the worldwide
and domestic supplies of oil and gas, the ability of the members of the
Organization of Petroleum Exporting Countries ("OPEC") to agree to and maintain
oil price and production controls, political instability or armed conflict in
oil-producing regions, the price and level of foreign imports, the level of
consumer demand, the price and availability of alternative fuels, the
availability of pipeline capacity, weather conditions, domestic and foreign
governmental regulations and taxes and the overall economic environment. The
Company is unable to predict the long-term effects of these and other conditions
on the prices of oil. Lower oil and gas prices may reduce the amount of oil and
gas the Company can produce economically which may adversely affect the
Company's revenues and operating income and may require a reduction in the
carrying value of the Company's oil and gas properties. Substantially all of
the Company's sales of oil and gas are made in the spot market or pursuant to
contracts based on spot market prices and not pursuant to long-term fixed price
contracts. With the objective of reducing price risk, the Company enters into
hedging transactions with respect to a portion of its expected future
production. There can be no assurance, however, that such hedging transactions
will reduce risk or mitigate the effect of any substantial or extended decline
in oil or natural gas prices.
The marketability of the Company's production depends in part upon the
availability, proximity and capacity of natural gas gathering systems,
pipelines and processing facilities. Most of the Company's natural gas is
delivered through gas gathering systems and gas pipelines that are not owned by
the Company. Federal and state regulation of oil and gas production and
transportation, tax and energy policies, changes in supply and demand and
general economic conditions all could adversely affect the Company's ability to
produce and market its oil and gas. Any dramatic change in market factors could
have a material adverse effect on the Company's business, financial condition
and results of operations.
UNCERTAINTY OF RESERVE INFORMATION AND FUTURE NET REVENUE ESTIMATES
There are numerous uncertainties inherent in estimating quantities of
proved reserves and their values, including many factors beyond the Company's
control. The reserve information set forth in the Company's filings with the
Commission represents estimates only. Although the Company believes such
estimates to be reasonable, reserve estimates are imprecise and should be
expected to change as additional information becomes available.
4
<PAGE>
Estimates of oil and gas reserves, by necessity, are projections based on
the evaluation of available geological, geophysical, economic and 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 are difficult to
measure. The accuracy of any reserve estimate is a function of the quality of
available data, engineering and geological interpretation and judgment.
Estimates of economically recoverable oil and gas reserves and of future net
cash flows necessarily depend upon a number of variable factors and assumptions,
such as historical production from the area compared with production from other
producing areas, the assumed effects of regulations by governmental agencies and
assumptions concerning future oil and gas prices, future operating costs,
severance and excise taxes, development costs and workover and remedial costs,
all of which may in fact vary considerably from actual results. For these
reasons, estimates of the economically recoverable quantities of oil and gas
attributable to any particular group of properties, classifications of such
reserves based on risk of recovery and estimates of the future net cash flows
expected therefrom may vary substantially from those estimated in the Company's
filings with the Commission. Moreover, there can be no assurance that the
Company's reserves will ultimately be produced or that the Company's proved
undeveloped reserves, the recovery of which requires significant capital
expenditures and successful drilling operations, will be developed within the
periods anticipated. Any significant variance in the assumptions could
materially affect the estimated quantity and value of the Company's reserves.
Actual production, revenues and expenditures with respect to the Company's
reserves will likely vary from estimates, and such variances may be material.
Approximately 32% of the Company's total proved reserves at December 31,
1997 were undeveloped, which are by their nature less certain. Recovery of such
reserves will require significant capital expenditures and successful drilling
operations. The reserve data set forth in the Company's estimates assumes that
substantial capital expenditures by the Company will be required to develop such
reserves. Although cost and reserve estimates attributable to the Company's oil
and gas reserves have been prepared in accordance with industry standards, no
assurance can be given that the estimated costs are accurate, that development
will occur as scheduled or that the results will be as estimated.
In addition, the PV-10 referred to in this report should not be construed
as the current market value of the estimated oil and gas reserves attributable
to the Company's properties. In accordance with applicable requirements, the
estimated discounted future net cash flows from proved reserves are generally
based on prices and costs as of the date of the estimate, whereas actual future
prices and costs may be materially higher or lower. Actual future net cash
flows also will be affected by factors such as the amount and timing of actual
production, supply and demand for oil and gas, curtailments or increases in
consumption by gas purchasers and changes in governmental regulations or
taxation. The timing of actual future net cash flows from proved reserves, and
thus their actual present value, will be affected by the timing of both the
production and the incurrence of expenses in connection with development and
production of oil and gas properties. In addition, the 10% discount factor,
which is required by the Commission to be used to calculate discounted future
net cash flows for reporting purposes, is not necessarily the most appropriate
discount factor based on interest rates in effect from time to time and risks
associated with the Company or the oil and gas industry in general.
RESERVE REPLACEMENT RISK
The Company's future success depends upon its ability to find, develop or
acquire additional oil and gas reserves that are economically recoverable. The
proved reserves of the Company will generally decline as reserves are depleted,
except to the extent that the Company conducts successful exploration or
development activities or acquires properties containing proved reserves, or
both. In order to increase reserves and production, the Company must continue
its development and exploration drilling and recompletion programs or undertake
other replacement activities.
Exploratory drilling and, to a lesser extent, development drilling involve
a high degree of risk that no commercial production will be obtained or that the
production will be insufficient to recover drilling and completion costs. The
costs of drilling, completing and operating wells are uncertain. The Company's
drilling operations may be curtailed, delayed or canceled as a result of
numerous factors, including title problems, weather conditions, compliance with
governmental requirements and shortages or delays in the delivery of equipment.
Furthermore, completion of a well does not assure a profit on the investment or
a recovery of drilling, completion and operations costs.
There are certain risks associated with secondary recovery operations,
especially the use of waterflooding techniques. Part of the Company's inventory
of development prospects consists of waterflood projects. Waterflooding
involves significant capital expenditures and uncertainty as to the total amount
of secondary reserves that can be recovered. In waterflood operations, there is
generally a delay between the initiation of water injection into a formation
containing hydrocarbons and any increase in production that may result. The
operating cost per unit of production of waterflood projects is generally higher
during the initial phases of such
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projects due to the purchase of injection water and related costs, as well as
during the later stages of the life of the project as production declines. The
degree of success, if any, of any secondary recovery program depends on a large
number of factors, including the porosity of the formation, the technique used
and the location of injector wells.
The Company's current strategy includes increasing its reserve base through
acquisitions of producing properties, continued exploitation of its existing
properties and exploration of new and existing properties. There can be no
assurance, however, that the Company's planned development and exploration
projects and acquisition activities will result in significant additional
reserves or that the Company will have continuing success drilling productive
wells at low finding and development costs. Furthermore, while the Company's
revenues may increase if prevailing oil and gas prices increase significantly,
the Company's finding costs for additional reserves could also increase.
ACQUISITION RISKS
The Company expects to continue to evaluate and pursue acquisition
opportunities available on terms management considers favorable to the Company.
The successful acquisition of producing properties involves an assessment of
recoverable reserves, future oil and gas prices, operating costs, potential
environmental and other liabilities and other factors beyond the Company's
control. This assessment is necessarily inexact and its accuracy is inherently
uncertain. In connection with such an assessment of the subject properties, the
Company performs a review it believes to be generally consistent with industry
practices. This review, however, will not reveal all existing or potential
problems, nor will it permit a buyer to become sufficiently familiar with the
properties to assess fully their deficiencies and capabilities. Inspections may
not be performed on every well, and structural and environmental problems are
not necessarily observable even when an inspection is undertaken. The Company
generally assumes preclosing liabilities, including environmental liabilities,
and generally acquires interests in the properties on an "as is" basis. With
respect to its acquisitions to date, the Company has no material commitments for
capital expenditures to comply with existing environmental requirements. In
addition, volatile oil and gas prices make it difficult to estimate the value of
producing properties for acquisition and often cause disruption in the market
for oil and gas producing properties, as buyers and sellers have difficulty
agreeing on such value. Price volatility also makes it difficult to budget for
and project the return on acquisitions and development and exploration projects.
There can be no assurance that the Company's acquisitions will be successful.
Any unsuccessful acquisition could have a material adverse effect on the
Company.
LIMITED OPERATING HISTORY; RAPID GROWTH
The Company, which began operations in March 1995, has a brief operating
history, including three years of net losses, and has experienced rapid growth.
As a result, the Company's historical results are not readily comparable to and
may not be indicative of future results. There can be no assurance that the
Company will continue to experience growth in, or maintain its current level of,
revenues, oil and gas reserves or production. In addition, the Company's
predecessor was classified as a partnership for federal income tax purposes.
Therefore, no income taxes were paid by the Company prior to the conversion to a
corporation. Future tax amounts, if any, will be dependent upon several
factors, including, but not limited to, the Company's results of operations.
The Company's rapid growth has placed significant demands on its
administrative, operational and financial resources. Any future growth of the
Company's oil and gas reserves, production and operations would place
significant further demands on the Company's financial, operational and
administrative resources. The Company's future performance and profitability
will depend in part on its ability to successfully integrate the administrative
and financial functions of acquired properties and companies into the Company's
operations, to hire additional personnel and to implement necessary enhancements
to its management systems to respond to changes in its business. There can be
no assurance that the Company will be successful in these efforts. The
inability of the Company to integrate acquired properties and companies, to hire
additional personnel or to enhance its management systems could have a material
adverse effect on the Company's results of operations.
SUBSTANTIAL CAPITAL REQUIREMENTS
The Company makes, and will continue to make, substantial capital
expenditures for the exploration, development, acquisition and production of its
oil and gas reserves. The Company intends to finance such capital expenditures
primarily with funds provided by operations, the incurrence of debt, the
issuance of equity and the sale of non-core assets. The Company's direct
capital expenditures for oil and gas producing activities were $2.0 million for
the nine months ended December 31, 1995 and $12.6 million and $47.8 million for
the years ended December 31, 1996 and 1997, respectively. If revenues decrease
as a result of lower oil or gas prices or otherwise, the Company may have
limited ability to expend the capital necessary to replace its reserves or to
maintain production at current levels, resulting in a decrease in production
over time. If the Company's cash flow from operations
6
<PAGE>
and availability under the its credit agreement are not sufficient to satisfy
its capital expenditure requirements, there can be no assurance that additional
debt or equity financing will be available to meet these requirements.
EFFECTS OF LEVERAGE
The Company has certain debt obligations that may have several important
effects on its operations, including (i) a substantial portion of the Company's
cash flow from operations will be dedicated to the payment of interest on its
indebtedness and will not be available for other purposes; (ii) the covenants
contained in the Company's credit facility limit its ability to borrow
additional funds or to dispose of assets and may affect the Company's
flexibility in planning for, and reacting to, changes in business conditions and
(iii) the Company's ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions, general corporate purposes
or other purposes may be impaired. Moreover, future acquisition or development
activities may require the Company to alter its capitalization significantly.
These changes in capitalization may significantly alter the leverage of the
Company. The Company's ability to meet its debt service obligations and to
reduce its total indebtedness will be dependent upon the Company's future
performance, which will be subject to general economic conditions and to
financial, business and other factors affecting the operations of the Company,
many of which are beyond its control. There can be no assurance that the
Company's future performance will not be adversely affected by such economic
conditions and financial, business and other factors.
DRILLING AND OPERATING RISKS; UNINSURED RISKS
Drilling activities are subject to many risks, including well blow outs,
cratering, uncontrollable flows of oil, natural gas or well fluids, fires,
formations with abnormal pressures, pollution, releases of toxic gases and other
environmental hazards and risks, any of which could result in substantial losses
to the Company. The Company's offshore operations are also subject to the
additional hazards of marine operations such as severe weather, capsizing and
collision. In addition, the Company incurs the risk that no commercially
productive reservoirs will be encountered through its drilling operations.
There can be no assurance that new wells drilled by the Company will be
productive or that the Company will recover all or any portion of its investment
in wells drilled. Drilling for oil and gas may involve unprofitable efforts,
not only from dry wells, but from wells that are productive but do not produce
net reserves to return a profit after drilling, operating and other costs. The
cost of drilling, completing and operating wells is often uncertain. The
Company's drilling operations may be curtailed, delayed or canceled as a result
of numerous factors, many of which are beyond its control, including economic
conditions, mechanical problems, title problems, weather conditions, compliance
with governmental requirements and shortages and delays in the delivery of
equipment and services. In accordance with industry practices, the Company
maintains insurance against some, but not all, of these risks. There can be no
assurance that any insurance of the Company will be adequate to cover losses or
liabilities.
RISK OF HEDGING ACTIVITIES
The Company's use of energy swap arrangements and financial futures to
reduce its sensitivity to oil and gas price volatility is subject to a number of
risks. If the Company's reserves are not produced at the rates estimated by the
Company due to inaccuracies in the reserve estimation process, operational
difficulties or regulatory limitations, the Company would be required to satisfy
obligations it may have under fixed price sales and hedging contracts on
potentially unfavorable terms without the ability to hedge that risk through
sales of comparable quantities of its own production. Further, the terms under
which the Company enters into fixed price sales and hedging contracts are based
on assumptions and estimates of numerous factors such as cost of production and
pipeline and other transportation costs to delivery points. Substantial
variations between the assumptions and estimates used by the Company and actual
results experienced could materially adversely affect the Company's anticipated
profit margins and its ability to manage the risk associated with fluctuations
in oil and gas prices. Additionally, fixed price sales and hedging contracts
limit the benefits the Company will realize if actual prices rise above the
contract prices. In addition, fixed price sales and hedging contracts are
subject to the risk that the counter-party may prove unable or unwilling to
perform its obligations under such contracts. Any significant nonperformance
could have a material adverse financial effect on the Company. As of June 30,
1998, 7,820 and 6,544 MMcfe of the Company's 1998 and 1999 production,
respectively, were subject to hedging contracts.
GAS GATHERING, PROCESSING AND MARKETING
The Company's gas gathering, processing and marketing operations depend in
large part on the ability of the Company to contract with third party producers
to produce their gas, to obtain sufficient volumes of committed natural gas
reserves, to maintain throughput in the Company's processing plant at optimal
levels, to replace production from declining wells, to assess and respond to
changing market conditions in negotiating gas purchase and sale agreements and
to obtain satisfactory margins between the purchase price of its natural gas
supply and the sales price for such residual gas volumes and the natural gas
liquids processed.
7
<PAGE>
In addition, the Company's operations are subject to changes in regulations
relating to gathering and marketing of oil and gas. The inability of the Company
to attract new sources of third party natural gas or to promptly respond to
changing market conditions or regulations in connection with its gathering,
processing and marketing operations could materially adversely affect the
Company's business, financial condition and results of operations.
COMPLIANCE WITH GOVERNMENT REGULATIONS
The Company's business is subject to federal, state and local laws and
regulations relating to the exploration for, and the development, production and
transportation of, oil and gas, as well as safety matters that change from time
to time in response to economic or political conditions. Although the Company
believes it is in substantial compliance with all applicable laws and
regulations, the requirements imposed by such laws and regulations are
frequently changed and subject to interpretation, and the Company is unable to
predict the ultimate cost of compliance with these requirements or their effect
on its operations. Significant expenditures may be required to comply with
governmental laws and regulations and may have a material adverse effect on the
Company's business, financial condition and results of operations.
COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
The Company's operations are subject to complex and constantly changing
environmental laws and regulations adopted by federal, state and local
governmental authorities. The implementation of new, or the modification of
existing, laws or regulations could have a material adverse affect on the
Company's business, financial condition and results of operations. The
discharge of oil, gas or other pollutants into the air, soil or water may give
rise to significant liabilities on the part of the Company to the government and
third parties and may require the Company to incur substantial costs of
remediation. Moreover, the Company has agreed to indemnify sellers of producing
properties purchased in each of its substantial acquisitions against
environmental claims associated with such properties. No assurance can be given
that existing environmental laws or regulations, as currently interpreted or
reinterpreted in the future, or future laws or regulations will not materially
adversely affect the results of operations or financial condition of the Company
or that material indemnity claims will not arise against the Company with
respect to properties acquired by it.
COMPETITION
The Company operates in the highly competitive areas of oil and gas
exploration, development, acquisition and production with other companies, many
of which have substantially larger financial resources, staffs and facilities.
In seeking to acquire desirable producing properties or new leases for future
exploration and in marketing its oil and gas production, the Company faces
intense competition from both major and independent oil and gas companies. Many
of these competitors have financial and other resources substantially in excess
of those available to the Company. This highly competitive environment could
have a material adverse affect on the Company.
DEPENDANCE ON KEY PERSONNEL
The Company's success has been and will continue to be highly dependent on
Jack Hightower, its Chairman of the Board and Chief Executive Officer, and a
limited number of other senior management personnel. Loss of the services of
Mr. Hightower or any of those other individuals could have a material adverse
effect on the Company's operations. The Company maintains a $3.0 million key
man life insurance policy on the life of Mr. Hightower, but no other senior
management personnel. In addition, as a result of the Company's acquisitions,
the Company has significantly increased its number of employees and employed 110
employees at June 30, 1998. As the Company increases its workforce, it will
face competition for such personnel from other companies. There can be no
assurance that the Company will be successful in hiring or retaining key
personnel. The Company's failure to hire additional personnel or retain its key
personnel could have a material adverse effect on the Company's business,
financial condition and results of operations.
CONTROL BY EXISTING STOCKHOLDERS
Directors, executive officers and principal stockholders of the Company,
and certain of their affiliates, beneficially own approximately 48.7% of the
Company's outstanding Common Stock on a fully-diluted basis (45.4% assuming the
sale of the Shares). Accordingly, these stockholders, as a group, are able to
control the outcome of stockholder votes, including votes concerning the
election of directors, the adoption or amendment of provisions in the Company's
Amended Certificate of Incorporation or Bylaws and the approval of mergers and
other significant corporate transactions. The existence of these levels of
ownership concentrated
8
<PAGE>
in a few persons makes it unlikely that any other holder of Common Stock will be
able to affect the management or direction of the Company. These factors may
also have the effect of delaying or preventing a change in the management or
voting control of the Company.
ANTI-TAKEOVER PROVISIONS
Delaware law includes a number of provisions that may have the effect of
delaying or deterring a change in the control of management of the Company and
encouraging persons considering unsolicited tender offers or other unilateral
takeover proposals to negotiate with the Company's Board of Directors rather
than pursue non-negotiated takeover attempts. These provisions may make it more
difficult for shareholders of the Company to benefit from certain transactions
which are opposed by the incumbent Board of Directors.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two digit entries in the data code field. These data code fields
will need to accept four digit entries to distinguish the 21st century dates
from 20th century dates. As a result, computer systems and software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.
Although the Company believes that its software products are Year 2000
compliant, there can be no assurance that the Company's software products
contain all necessary software routines and programs necessary for the accurate
calculation, display, storage and manipulation of data involving dates.
Moreover, the Company cannot determine what effect, if any, the Year 2000
requirements will have on its vendors, customers, other businesses with which
its conducts business and the numerous local, state, federal, and other U.S. and
foreign governmental entities by which it is regulated, governed or taxed. No
assurance can be given that the computer systems and software of such entities
will be Year 2000 compliant or that compliance costs or the impact of the
Company's failure to achieve substantial Year 2000 compliance will not have a
material adverse effect on the Company's business, financial position and
results of operations.
FORWARD-LOOKING STATEMENTS
Certain statements contained in or incorporated by reference into this
Prospectus, including, but not limited to, those regarding the Company's
financial position, business strategy and other plans and objectives for future
operations and any other statements which are not historical facts constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other important factors that could cause
the actual results, performance or achievements of the Company, or industry
results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Although
the Company believes that the expectations reflected in these forward-looking
statements are reasonable, there can be no assurance that the actual results or
developments anticipated by the Company will be realized or, even if
substantially realized, that they will have the expected effects on its business
or operations. Among the factors that could cause actual results to differ
materially from the Company's expectations are inherent uncertainties in
interpreting engineering and reserve data, operating hazards, delays or
cancellations of drilling operations for a variety of reasons, competition,
fluctuations and volatility in oil and gas prices, the ability of the Company to
successfully integrate the business and operations of acquired companies,
compliance with government and environmental regulations, increases in the
Company's cost of borrowing or inability or unavailability of capital resources
to fund capital expenditures, dependence on key personnel, changes in general
economic conditions and/or in the markets in which the Company competes or may,
from time to time, compete and other factors including but not limited to those
set forth in "Risk Factors" or in "The Company." All subsequent oral and
written forward-looking statements attributable to the Company or persons acting
on its behalf are expressly qualified in their entirety by these factors. The
Company assumes no obligation to update any of these statements.
9
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS OF
TITAN EXPLORATION, INC.
The unaudited pro forma combined statement of operations has been prepared
to give effect to (i) the acquisition of certain oil and gas properties from
Pioneer Natural Resources Company (the "Pioneer Acquisition") on December 16,
1997, (ii) the acquisition of all the membership units of Carrollton Resources,
L.L.C. (the "Carrollton Acquisition") on December 12, 1997 and (iii) the
acquisition of all the capital stock of Offshore Energy Development Corporation
(the "OEDC Acquisition") on December 12, 1997 as if each transaction had taken
place on January 1, 1997 with respect to the unaudited pro forma combined
statement of operations.
The unaudited pro forma combined statement of operations included herein is
not necessarily indicative of the results that might have occurred had the
transactions taken place at the date specified and are not intended to be a
projection of future results. In addition, future results may vary significantly
from the results reflected in the accompanying unaudited pro forma combined
statement of operations because of normal production declines, changes in
product prices, future acquisitions and divestitures, and other factors.
The following unaudited pro forma combined statement of operations should
be read in conjunction with the consolidated financial statements and the
related notes of Titan Exploration, Inc. (the "Company") included in the
Company's Annual Report on Form 10-K, the consolidated financial statements and
the related notes of Offshore Energy Development Corporation ("OEDC") included
in the Company's Registration Statement on Form S-4 dated November 14, 1997, and
the statement of revenues and direct operating expenses and the related notes of
the Pioneer Acquisition included in the Company's Current Report on Form 8-K, as
amended, dated December 29, 1997.
10
<PAGE>
TITAN EXPLORATION, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Year ended December 31, 1997
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro forma
Pioneer Combined Pro forma
Titan OEDC Carrollton Acquisition Adjustments Combined
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues -
Oil and gas sales $ 73,827 $ 10,396 $ 2,806 $ 17,311 $ (421) (a) $ 103,919
----------- ----------- ----------- ----------- -----------
Expenses:
Oil and gas production 21,846 1,291 1,025 7,080 (99) (a) 31,143
General and administrative 5,372 3,886 1,130 - 10,388
Amortization of stock option awards 5,053 - - - 5,053
Exploration and abandonment 3,055 10,945 - - 291 (b) 14,291
Depletion, depreciation and amortization 19,972 11,022 836 - (7,999) (c) 28,009
4,178 (d)
Impairment expense 68,997 - - - 68,997
----------- ----------- ----------- ----------- -----------
Total expenses 124,295 27,144 2,991 7,080 157,881
----------- ----------- ----------- ----------- -----------
Operating income (loss) (50,468) (16,748) (185) 10,231 (53,962)
----------- ----------- ----------- ----------- -----------
Other income (expense):
Interest expense (1,524) (694) (87) - (3,712) (e) (6,017)
Interest and other income (expense) 258 56 (1,196) - (882)
Equity in net loss of affiliates - (1,426) - - (632) (f) (2,058)
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes (51,734) (18,812) (1,468) 10,231 (62,919)
Income tax (benefit) expense (18,267) (1,443) 2,659 - (4,971) (g) (22,022)
----------- ----------- ----------- ----------- -----------
Net income (loss) $ (33,467) $ (17,369) $ (4,127) $ 10,231 $ (40,897)
=========== =========== =========== =========== ===========
Net loss per share $ (.99) $ (2.00) $ (1.01)
=========== =========== ===========
Net loss per share-assuming dilution $ (.99) $(2.00) $ (1.01)
=========== =========== ===========
Weighted average common shares outstanding 33,942 8,702 40,329
=========== =========== ===========
</TABLE>
See accompanying notes to unaudited pro forma combined statement of operations.
11
<PAGE>
TITAN EXPLORATION, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
DECEMBER 31, 1997
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma combined statement of operations has been prepared
to give effect to (i) the Pioneer Acquisition, (ii) the Carrollton Acquisition
and (iii) the OEDC Acquisition as if each transaction had taken place on January
1, 1997 with respect to the unaudited pro forma combined statement of
operations. Each acquisition is recorded using the purchase method of
accounting, any future adjustments to the initial allocation of the purchase
price are not anticipated to be material to the unaudited pro forma combined
statement of operations.
Following is a description of the individual columns included in the
unaudited pro forma combined statement of operations:
TITAN. Represents the consolidated statement of operations of Titan
Exploration, Inc. (the "Company") for the year ended December 31, 1997.
OEDC. Represents the consolidated statement of operations of Offshore
Energy Development Corporation ("OEDC") for the period from January 1, 1997
through December 12, 1997.
CARROLLTON. Represents the consolidated statement of operations of
Carrollton Resources, L.L.C. ("Carrollton") for the period from January 1, 1997
through December 12, 1997.
PIONEER ACQUISITION. Represents the revenues and direct operating expenses
of the properties acquired in the Pioneer Acquisition for the period from
January 1, 1997 through December 16, 1997.
NOTE 2. PRO FORMA ENTRIES
(a) To adjust oil and gas sales and production expenses for properties
sold by Carrollton in May and July of 1997.
(b) To expense exploration and abandonment costs of Carrollton previously
capitalized to conform to the successful efforts method of accounting
used by the Company.
(c) To adjust depreciation, depletion and amortization expense ("DD&A")
for the basis allocated to the properties acquired in the Carrollton
Acquisition and OEDC Acquisition, using the successful efforts method
of accounting. The adjustment to Carrollton was to increase DD&A by
$16,000 and to decrease DD&A by $8,015,000 for OEDC.
(d) To record estimated DD&A for the properties acquired in the Pioneer
Acquisition, utilizing the successful efforts method of accounting.
(e) To adjust interest expense related to the financing of the Pioneer
Acquisition.
(f) To record the amortization the Company's allocated cost in excess of
the historical net assets of OEDC's investments accounted for on the
equity method.
(g) To adjust income tax expense (benefit).
12
<PAGE>
TITAN EXPLORATION, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (CONTINUED)
DECEMBER 31, 1997
NOTE 3. INCOME TAXES
The Company accounts for income taxes pursuant to the provisions of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes."
NOTE 4. SUPPLEMENTAL OIL AND GAS RESERVE INFORMATION (UNAUDITED)
The following unaudited pro forma combined supplemental information
regarding the oil and gas activities of the Company is presented pursuant to the
disclosure requirements promulgated by the Securities and Exchange Commission
and Statement of Financial Accounting Standards No. 69, "Disclosures About Oil
and Gas Producing Activities". The pro forma combined reserve information is
presented as if the OEDC Acquisition, Pioneer Acquisition and the Carrollton
Acquisition had occurred on January 1, 1997.
Management emphasizes that reserve estimates are inherently imprecise and
subject to revision and that estimates of new discoveries are more imprecise
than those of producing oil and gas properties. Accordingly, the estimates are
expected to change as future information becomes available; such changes could
be significant.
Quantities of oil and gas reserves
Set forth below is a pro forma summary of the changes in the net quantities
of oil and natural gas reserves for the year ended December 31, 1997.
Oil and
Natural Condensate
Gas (MMcf) (MBbls)
---------- -----------
Total Proved Reserves:
Balance, January 1, 1997 353,366 30,773
Revisions of previous estimates (20,192) 2,209
Extensions and discoveries 40,633 20
Production (28,435) (2,727)
---------- -----------
Balance, December 31, 1997 345,372 30,275
========== ===========
Proved Developed Reserves:
January 1, 1997 221,271 26,653
December 31,1997 219,307 23,604
13
<PAGE>
TITAN EXPLORATION, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS (CONTINUED)
DECEMBER 31, 1997
Standardized measure of discounted future net cash flows
The pro forma combined standardized measure of discounted future net cash
flows is computed by applying year-end prices of oil and gas (with consideration
of price changes only to the extent provided by contractual arrangements) to the
estimated future production of oil and gas reserves less estimated future
expenditures (based on year-end costs) to be incurred in developing timing of
the future cash flows. Future income taxes are calculated by comparing
discounted future cash flows to the tax basis of oil and gas properties, plus
available carryforwards and credits, and applying the current tax rate to the
difference.
December 31,
1997
--------------
(in thousands)
Future cash inflows $ 1,121,526
Future production and development costs (392,475)
Future income tax expense (153,100)
--------------
Future net cash flows 575,951
10% annual discount factor (226,901)
--------------
Standardized measure of discounted future net cash flows $ 349,050
==============
Changes relating to the standardized measure of discounted future net cash flows
The principal sources of the change in the pro forma combined standardized
measure of discounted future net cash flows for the year ended December 31, 1997
are as follows (in thousands):
Standardized Measure, beginning of year $ 530,985
Revisions of previous quantity estimates (5,191)
Extensions and discoveries less related costs 36,439
Net changes in income tax 40,115
Net changes in prices and production costs (265,534)
Sales, net of production costs (72,776)
Accretion of discount 53,098
Other 31,914
--------------
Standardized Measure, end of year $ 349,050
==============
14
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder, the
aggregate number of shares owned by each Selling Stockholder prior to this
offering, the percentage of the Company's outstanding Common Stock owned by such
Selling Stockholder prior to this offering, the aggregate number of shares to be
offered by each Selling Stockholder, the aggregate number of shares to be owned
by each Selling Stockholder after the sale of all Shares in this offering and
the percentage of the Company's outstanding Common Stock that will be owned by
such Selling Stockholder thereafter, in each case assuming the offering of and
sale of all Shares in this offering.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING(1) AFTER OFFERING
------------------------- --------------------------
NUMBER OF NUMBER OF SHARES NUMBER OF
SELLING STOCKHOLDERS SHARES PERCENT BEING OFFERED SHARES PERCENT
- -------------------------------------- ----------- --------- ----------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Natural Gas Partners, L.P. (2)
777 Main Street, Suite 2700
Fort Worth, Texas 76102 6,159,366 16.2% 1,391,959 4,767,407 12.5%
NGP Louisiana Partners, L.P. (2) (3)
777 Main Street, Suite 2700
Fort Worth, Texas 76102 357,486 * 357,486 -- --
----------- ------------- ------------
Total 6,156,852 1,749,445 4,767,407
=========== ============= ============
</TABLE>
- ------------------
*Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Based on 38,074,675 shares of Common Stock issued and outstanding as of
August 3, 1998.
(2) The Shares being offered by these Selling Stockholders were acquired from
the Company pursuant to (i) the OEDC Merger Agreement and (ii) the
Carrollton Merger Agreement. The Company is registering the Shares of the
Selling Stockholders pursuant to certain registration requirements
contained in a registration rights agreement entered into pursuant to the
OEDC Merger Agreement and the Carrollton Merger Agreement to permit
secondary trading of the Shares. Certain transfer restrictions have been
placed on the Shares by agreement between the Company and the Selling
Stockholders. Between June 10, 1998 and December 12, 1998, the Selling
Stockholders may only sell one-half of their shares offered hereby. After
December 12, 1998, the remaining shares of the Selling Stockholders may be
sold from time to time. See "Plan of Distribution."
(3) Natural Gas Partners, L.P. ("NGP") is the sole limited partner of NGP-
Louisiana Partners, L.P. ("NGP-Louisiana") and owns a 95.07% economic
interest in NGP-Louisiana. A corporation serves as the general partner and
owns the remaining 4.93% of NGP-Louisiana.
15
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders,
subject to certain restrictions, including the contractual restriction limiting
the Selling Stockholders to the sale of one-half of their Shares prior to
December 12, 1998 (see "Selling Stockholders"), after June 10, 1998. All sales
may be made by the Selling Stockholders on the Nasdaq, in privately negotiated
transactions or otherwise at prices and at terms related to the then current
market price, or in negotiated transactions. The Shares may be sold by any one
or more of the following methods:
(a) a block trade in which the broker or dealer so engaged will attempt to
sell the Shares as agent, but may position and resell a portion of a block as
principal to facilitate the transaction;
(b) underwritten public offering;
(c) purchases by a broker or dealer as principal, and resale by such broker
or dealer, for its account pursuant to this Prospectus;
(d) ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
(e) privately negotiated transactions.
The Selling Stockholders may effect such transactions by selling the Shares
through or to brokers or dealers, and such brokers or dealers will receive
compensation in the form of discounts or commissions from the Selling
Stockholders, and may receive commissions from the purchasers of the Shares for
whom they may act as agent (which discounts or commissions from the Selling
Stockholders or such purchasers might exceed those customary in the types of
transactions involved).
Any Shares covered by this Prospectus which qualify for sale pursuant to
Rule 144 or Rule 145 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus.
There can be no assurance that the Selling Stockholders will sell any or
all of the Shares offered by them hereunder.
The Company will pay all fees and expenses incident to the preparation and
filing of the Registration Statement and this Prospectus, including legal and
accounting fees and expenses and any printing expenses other than any
underwriting discounts, any selling commissions payable in respect of sales of
the Shares; all of which will be paid by the Selling Stockholders. The Company
will receive no part of the proceeds from sales of the Shares. The Company
intends to keep the Registration Statement effective until the earlier of such
time as the number of Shares held by the Selling Stockholders represents less
than 10% of the initial number of Shares and December 12, 1999.
The Selling Stockholders and any broker-dealer acting in connection with
the sale of the Shares offered hereby may be deemed to be "underwriters" within
the meaning of the Securities Act, in which event any discounts, concessions or
commissions received by them, which are not expected to exceed those customary
in the types of transactions involved, or any profit on resales of the Shares by
them, may be deemed to be underwriting commissions or discounts under the
Securities Act.
LEGAL MATTERS
The legality of the Shares offered hereby will be passed upon for the
Company by Thompson & Knight, P.C., Dallas, Texas.
EXPERTS
The consolidated financial statements of Titan Exploration, Inc. as of and
for the years ended December 31, 1997 and 1996 and for the period March 31, 1995
(date of inception) through December 31, 1995, the statements of revenues and
direct operating expenses for the 1996 Acquisition for the years ended December
31, 1995, 1994, and 1993, and the statements of revenues and direct operating
expenses for the 1995 Acquisition for the period ended December 31, 1995 and the
years ended December 31, 1994 and 1993, have been incorporated herein by
reference in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
16
<PAGE>
The consolidated financial statements of Offshore Energy Development
Corporation and its predecessors as of December 31, 1995 and 1996 and for each
of the years in the three year period ended December 31, 1996, have been
incorporated herein by reference in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, and upon the authority of
said firm as experts in accounting and auditing.
The statement of revenues and direct operating expenses for the Pioneer
Acquisition for the year ended December 31, 1996 has been incorporated herein by
reference in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
17
<PAGE>
GLOSSARY OF OIL AND GAS TERMS
The following are abbreviations and definitions of terms commonly used in
the oil and gas industry and in this prospectus. Unless otherwise indicated in
this Prospectus, natural gas volumes are stated at the legal pressure base of
the state or area in which the reserves are located and at 60 degrees Fahrenheit
and in most instances are rounded to the nearest major multiple. BOEs are
determined using the ratio of six Mcf of natural gas to one Bbl of oil.
"1995 Acquisition" means the acquisition of a concentrated group of Permian
Basin producing oil and gas properties from a large independent company for
approximately $40.6 million in December 1995.
"1996 Acquisition" means the acquisition of Permian Basin producing
properties from a major integrated company for approximately $135.7 million in
October 1996.
"Bbl" means a barrel of 42 U.S. gallons of oil.
"Bcf" means billion cubic feet of natural gas.
"Bcfe" means billion cubic feet equivalent, determined using the ratio of
six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas
liquids.
"BOE" means barrels of oil equivalent.
"Completion" means the installation of permanent equipment for the
production of oil or gas.
"Development well" means a well drilled within the proved area of an oil or
gas reservoir to the depth of a stratigraphic horizon known to be productive.
"EBITDAX" means net income (loss) plus income taxes, exploration and
abandonment expense, interest expense, depletion, depreciation and amortization,
impairment of long-lived assets and amortization of stock option awards.
"Exploratory well" means a well drilled to find and produce oil or gas in
an unproved area, to find a new reservoir in a field previously found to be
productive of oil or gas in another reservoir, or to extend a known reservoir.
"Gross," when used with respect to acres or wells, refers to the total
acres or wells in which the Company has a working interest.
"Horizontal drilling" means a drilling technique that permits the operator
to contact and intersect a larger portion of the producing horizon than
conventional vertical drilling techniques and can result in both increased
production rates and greater ultimate recoveries of hydrocarbons.
"MBbls" means thousands of barrels of oil.
"Mcf" means thousand cubic feet of natural gas.
"Mcfe" means 1,000 cubic feet equivalent, determined using the ratio of six
Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.
"MMBbls" means millions of barrels of oil.
"MMBOE" means millions of barrels of oil equivalent on a 6:1 basis.
"MMcf" means million cubic feet of natural gas.
"MMcfe" means million cubic feet equivalent, determined using the ratio of
six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas
liquids.
18
<PAGE>
"Net," when used with respect to acres or wells, refers to gross acres of
wells multiplied, in each case, by the percentage working interest owned by the
Company.
"Net production" means production that is owned by the Company less
royalties and production due others.
"Oil" means crude oil or condensate.
"Operator" means the individual or company responsible for the exploration,
development, and production of an oil or gas well or lease.
"Present Value of Future Revenues" or "PV-10" means the pretax present
value of estimated future revenues to be generated from the production of proved
reserves calculated in accordance with SEC guidelines, net of estimated
production and future development costs, using prices and costs as of the date
of estimation without future escalation, without giving effect to non-property
related expenses such as general and administrative expenses, debt service and
depreciation, depletion and amortization, and discounted using an annual
discount rate of 10%.
"Proved developed reserves" means reserves that can be expected to be
recovered through existing wells with existing equipment and operating methods.
Additional oil and gas expected to be obtained through the application of fluid
injection or other improved recovery techniques for supplementing the natural
forces and mechanisms of primary recovery will be included as "proved developed
reserves" only after testing by a pilot project or after the operation of an
installed program has confirmed through production response that increased
recovery will be achieved.
"Proved reserves" means the estimated quantities of crude oil, natural gas,
and natural gas liquids which geological and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions, i.e., prices and costs as of
the date the estimate is made. Prices include consideration of changes in
existing prices provided only by contractual arrangements, but not on
escalations based upon future conditions.
i. Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation test. The
area of a reservoir considered proved includes (A) that portion delineated
by drilling and defined by gas-oil and/or oil-water contacts, if any; and
(B) the immediately adjoining portions not yet drilled, but which can be
reasonably judged as economically productive on the basis of available
geological and engineering data. In the absence of information on fluid
contacts, the lowest known structural occurrence of hydrocarbons controls
the lower proved limit of the reservoir.
ii. Reserves which can be produced economically through application
of improved recovery techniques (such as fluid injection) are included in
the "proved" classification when successful testing by a pilot project, or
the operation of an installed program in the reservoir, provides support
for the engineering analysis on which the project or program was based.
iii. Estimates of proved reserves do not include the following: (A)
oil that may become available from known reservoirs but is classified
separately as "indicated additional reserves"; (B) crude oil, natural gas,
and natural gas liquids, the recovery of which is subject to reasonable
doubt because of uncertainty as to geology, reservoir characteristics, or
economic factors; (C) crude oil, natural gas, and natural gas liquids that
may occur in undrilled prospects; and (D) crude oil, natural gas, and
natural gas liquids that may be recovered from oil shales, coal, gilsonite
and other such sources.
"Proved undeveloped reserves" means reserves that are expected to be
recovered from new wells on undrilled acreage, or from existing wells where a
relatively major expenditure is required for recompletion. Reserves on
undrilled acreage shall be limited to those drilling units offsetting productive
units that are reasonably certain of production when drilled. Proved reserves
for other undrilled units can be claimed only where it can be demonstrated with
certainty that there is continuity of production from the existing productive
formation. Under no circumstances should estimates for proved undeveloped
reserves be attributable to any acreage for which an application of fluid
injection or other improved recovery technique is contemplated, unless such
techniques have been proved effective by actual tests in the area and in the
same reservoir.
"Recompletion" means the completion for production of an existing well bore
in another formation from that in which the well has been previously completed.
19
<PAGE>
"Reserve Life Index" means how long it will take to produce a quantity of
proved reserves, calculated by dividing year-end proved reserves by annual
production for the most recent year.
"Reserves" means proved reserves.
"Royalty" means an interest in an oil and gas lease that gives the owner of
the interest the right to receive a portion of the production from the leased
acreage (or of the proceeds of the sale thereof), but generally does not require
the owner to pay any portion of the costs of drilling or operating the wells on
the leased acreage. Royalties may be either landowner's royalties, which are
reserved by the owner of the leased acreage at the time the lease is granted, or
overriding royalties, which are usually reserved by an owner of the leasehold in
connection with a transfer to a subsequent owner.
"Secondary recovery" means
"3-D seismic" means seismic data that are acquired and processed to yield a
three-dimensional picture of the subsurface.
"Tcf" means trillion cubic feet of natural gas.
"Tertiary recovery" means enhanced recovery methods for the production of
oil or gas. Enhanced recovery of crude oil requires a means for displacing oil
from the reservoir rock, modifying the properties of the fluids in the reservoir
and/or the reservoir rock to cause movement of oil in an efficient manner, and
providing the energy and drive mechanism to force its flow to a production well.
The Company injects chemicals or energy as required for displacement and for the
control of flow rate and flow pattern in the reservoir, and a fluid drive is
provided to force the oil toward a production well.
"Working interest" means an interest in an oil and gas lease that gives the
owner of the interest the right to drill for and produce oil and gas on the
leased acreage and requires the owner to pay a share of the costs of drilling
and production operations. The share of production to which a working interest
owner is entitled will always be smaller than the share of costs that the
working interest owner is required to bear, with the balance of the production
accruing to the owners of royalties. For example, the owner of a 100% working
interest in a lease burdened only by a landowner's royalty of 12.5% would be
required to pay 100% of the costs of a well but would be entitled to retain
87.5% of the production.
"Workover" means operations on a producing well to restore or increase
production.
20
<PAGE>
================================================================================
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 REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE 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 AN 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.
----------------------
TABLE OF CONTENTS
PAGE
----
Available Information................................................... 2
Incorporation of Certain Documents by
Reference............................................................ 3
The Company............................................................. 4
Risk Factors............................................................ 4
Forward-Looking Statements.............................................. 9
Unaudited Pro Forma Combined Statement of
Operations of Titan Exploration, Inc................................. 10
Notes to Unaudited Pro Forma Combined
Statement of Operations of Titan Exploration, Inc.................... 12
Selling Stockholders.................................................... 15
Plan of Distribution.................................................... 16
Legal Matters........................................................... 16
Experts................................................................. 16
Glossary of Oil and Gas Terms........................................... 18
================================================================================
================================================================================
1,749,445 SHARES
COMMON STOCK
TITAN EXPLORATION,
INC.
August , 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Except for the SEC registration fee, all expenses are estimated. All such
expenses will be paid by the Registrant.
SEC registration fee ............................ $ 3,612.61
Accounting fees and expenses..................... 2,500.00
Legal fees and expenses.......................... 5,000.00
Miscellaneous.................................... 1,887.39
Total....................................... $13,000.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the Delaware General Corporation Law ("DGCL") enables
a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal liability of members of its board of
directors to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director. Such a provision may not eliminate or limit
the liability of a director (1) for any breach of a director's duty of loyalty
to the corporation or its stockholders, (2) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of a law,
(3) for paying an unlawful dividend or approving an illegal stock repurchase (as
provided in Section 174 of the DGCL), or (4) for any transaction from which the
director derived an improper personal benefit.
Under Section 145 of the DGCL, a corporation has the power to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, against any and all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement and reasonably incurred in connection with such action, suit or
proceeding. The power to indemnify applies only if the person acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful.
In the case of an action by or in the right of the corporation, no
indemnification may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court of chancery or the court in which
such action or suit was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 of the DGCL further
provides that to the extent a director or officer of a corporation has been
successful in the defense of any action, suit or proceeding referred to above or
in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection therewith.
A corporation also has the power to purchase and maintain insurance on
behalf of any person covering any liability incurred by such person in his
capacity as a director, officer, employee or agent of the corporation, or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability.
The Registrant's Certificate of Incorporation and Bylaws provide that no
director of the Registrant will be personally liable to the Registrant or any of
its stockholders for monetary damages arising from the director's breach of
fiduciary duty as a director. However, this does not apply with respect to any
action in which the director would be liable under Section 174 of Title 8 of the
DGCL nor does it apply with respect to any liability in which the director (i)
breached his duty of loyalty to the Registrant; (ii) did not act in good faith
or, in failing to act, did not act in good faith; (iii) acted in a manner
involving intentional misconduct or a knowing violation of law or, in failing to
act, shall have acted in a manner involving intentional misconduct or a knowing
violation of law; or (iv) derived an improper personal benefit.
The Certificate of Incorporation and Bylaws provide that the Registrant
will indemnify its officers and directors and former officers and directors
against any expenses, judgments or settlement payments sustained or paid by such
persons as a result of having acted as an officer or director of the Registrant,
or, at the request of the Registrant, as an officer, director, agent or employee
of another business entity. The Certificate of Incorporation and Bylaws further
provide that the Registrant may, by action of its Board
<PAGE>
of Directors, provide indemnification to employees and agents of the Registrant,
individually or as a group, with the same scope and effect as the
indemnification of directors and officers.
ITEM 16. EXHIBITS.
The information required by this Item 16 is set forth in the Index to
Exhibits accompanying this Registration Statement.
ITEM 17. UNDERTAKINGS.
(a) Rule 415 Offering.
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 of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. 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; and
(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 (a)(1)(i) and (a)(1)(ii) 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 Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(b) Filings incorporating subsequent Exchange Act documents by reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 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.
(h) Request for acceleration of effective date.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
<PAGE>
expressed in the 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 Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Midland, State of Texas, on the 24th day of August,
1998.
TITAN EXPLORATION, INC.
(Registrant)
By: /s/ Jack D. Hightower
-----------------------------
Jack D. Hightower
Chairman of the Board,
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Jack D.
Hightower and William K. White, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign on his behalf individually and in each
capacity stated below any amendment, including post-effective amendments, to
this Registration Statement under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents and either of them, or their substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack D. Hightower President, Chief Executive Officer and August 24, 1998
- ---------------------------- Chairman of the Board (principal executive
Jack D. Hightower officer)
/s/ George G. Staley Executive Vice President and Director August 24, 1998
- ----------------------------
George G. Staley
/s/ William K. White Vice President, Finance and Chief Financial August 24, 1998
- ---------------------------- Officer (principal financial and accounting
William K. White officer)
/s/ David R. Albin Director August 24, 1998
- ----------------------------
David R. Albin
/s/ Kenneth A. Hersh Director August 24, 1998
- ----------------------------
Kenneth A. Hersh
/s/ William J. Vaughn, Jr. Director August 24, 1998
- ----------------------------
William J. Vaughn, Jr.
</TABLE>
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
4.1 Certificate of Incorporation (filed as Exhibit 3.1 to the Company's
Registration Statement on Form S-1 (SEC No. 333-14029) and
incorporated herein by reference).
4.2 Bylaws (filed as Exhibit 3.2 to the Company's Registration Statement
on Form S-1 (SEC No. 333-14029) and incorporated herein by reference).
5.1* Opinion of Thompson & Knight, P.C.
23.1* Consent of counsel (included in the opinion of Thompson & Knight, P.C.
filed herewith as Exhibit 5.1).
23.2* Consent of independent auditors.
23.3* Consent of independent auditors.
24* Power of Attorney (a power of attorney pursuant to which amendments to
this Registration Statement may be filed is included on the signature
page hereof).
- --------------------
* Filed herewith.
<PAGE>
EXHIBIT 5.1
================================================================================
TITAN EXPLORATION, INC.
EXHIBIT 5.1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
================================================================================
<PAGE>
(214) 969-1700
August 24, 1998
Titan Exploration
500 West Texas, Suite 500
Midland, Texas 79701
Re: TITAN EXPLORATION, INC.;
FORM S-3 REGISTRATION STATEMENT
Gentlemen:
We have acted as counsel for Titan Exploration, Inc. (the "Company"), in
connection with the preparation of the Company's Registration Statement on Form
S-3 (the "Registration Statement"), filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), covering the proposed sale of up to 1,749,445 shares (the
"Shares") of Common Stock, par value $.01 per share, of the Company by the
Selling Stockholders named therein (the "Selling Stockholders"). The Shares are
proposed to be sold by the Selling Stockholders in the manner set forth in the
Prospectus constituting Part I of the Registration Statement under the caption
"Plan of Distribution".
In connection with the foregoing, we have examined the originals or copies,
certified or otherwise authenticated to our satisfaction, of such corporate
records of the Company, certificates of public officials and other instruments
and documents as we have deemed necessary to require as a basis for the opinion
hereinafter expressed. As to questions of fact material to such opinion, we
have, where relevant facts are not independently established, relied upon
statements of officers of the Company.
On the basis of the foregoing and in reliance thereon, we advise you that
in our opinion the Shares to be sold by the Selling Stockholders pursuant to the
Registration Statement have been duly and validly authorized by the Company and,
when sold by the Selling Stockholders as described in the Registration
Statement, will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 of the Registration Statement and to the reference to us in the
Prospectus under the caption "Legal Matters". In giving this consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules or regulations of
the Commission thereunder.
Respectfully submitted,
THOMPSON & KNIGHT, P.C.
A Professional Corporation
By: /s/ Joe Dannenmaier
---------------------------
Joe Dannenmaier, Attorney
<PAGE>
EXHIBIT 23.2
================================================================================
TITAN EXPLORATION, INC.
EXHIBIT 23.2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
================================================================================
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Offshore Energy Development Corporation
We consent to the use of our audit report dated March 17, 1997 on the
consolidated financial statements of Offshore Energy Development Corporation and
its predecessors as of December 31, 1995 and 1996 and for each of the years in
the three-year period ended December 31, 1996 incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the Prospectus.
KPMG PEAT MARWICK LLP
Houston, Texas
August 21, 1998
<PAGE>
EXHIBIT 23.3
================================================================================
TITAN EXPLORATION, INC.
EXHIBIT 23.3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
================================================================================
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Titan Exploration, Inc.
We consent to the use of our audit report dated March 6, 1998 on the
consolidated financial statements of Titan Exploration, Inc. and subsidiaries as
of and for the years ended December 31, 1997 and 1996 and for the period from
March 31, 1995 (date of inception) through December 31, 1995, our audit report
on the 1996 Acquisition for the years ended December 31, 1995, 1994 and 1993,
our audit report on the 1995 Acquisition for the period ended December 11, 1995
and the years ended December 31, 1994 and 1993, and our report on the Pioneer
Acquisition for the year ended December 31, 1996, each incorporated herein by
reference and to the reference to our firm under the heading "Experts" in the
Prospectus.
KPMG PEAT MARWICK LLP
Midland, Texas
August 21, 1998
