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As filed with the Securities and Exchange Commission on November 29, 2000
REGISTRATION NO. 333-49152
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SPINNAKER EXPLORATION COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 76-0560101
(State or other jurisdiction (I.R.S. Employer
of incorporation of organization) Identification No.)
1200 SMITH STREET, SUITE 800
HOUSTON, TEXAS 77002
(713) 759-1770
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JAMES M. ALEXANDER
VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
SPINNAKER EXPLORATION COMPANY
1200 SMITH STREET, SUITE 800
HOUSTON, TEXAS 77002
(713) 759-1770
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
SCOTT N. WULFE WALTER J. SMITH
VINSON & ELKINS L.L.P. BAKER BOTTS L.L.P.
2300 FIRST CITY TOWER 3000 ONE SHELL PLAZA
1001 FANNIN 910 LOUISIANA
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 758-2222 (713) 229-1234
Approximate date of commencement of proposed sale to the public: After the
effective date of the registration statement as determined by market conditions
and other factors.
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 this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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********************************************************************************
* The information in this prospectus is not complete and may be changed. *
* Securities may not be sold pursuant to this prospectus until the registration*
* statement filed with the Securities and Exchange Commission is effective. *
* This prospectus is not an offer to sell these securities and is not *
* soliciting an offer to buy these securities in any state where the offer or *
* sale is not permitted. *
********************************************************************************
SUBJECT TO COMPLETION, DATED NOVEMBER 29, 2000
PROSPECTUS
5,388,743 SHARES
SPINNAKER EXPLORATION COMPANY
Common Stock
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This prospectus relates to the offer and sale from time to time of up to
5,388,743 shares of our common stock for the account of the selling stockholder
identified on page 13 of this prospectus. We will not receive any of the
proceeds from the sale of shares by the selling stockholder. Our common stock is
listed for trading on the New York Stock Exchange under the symbol "SKE." On
November 28, 2000, the last reported sales price for our common stock was $32.00
per share.
Investing in our common stock involves risks. See "Risk Factors" on page 2.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is __________, 2000
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TABLE OF CONTENTS
ABOUT SPINNAKER EXPLORATION COMPANY..................................... 2
RISK FACTORS............................................................ 2
FORWARD-LOOKING STATEMENTS.............................................. 11
USE OF PROCEEDS......................................................... 12
DESCRIPTION OF CAPITAL STOCK............................................ 12
SELLING STOCKHOLDER..................................................... 13
PLAN OF DISTRIBUTION.................................................... 14
VALIDITY OF SECURITIES.................................................. 16
EXPERTS................................................................. 16
WHERE YOU CAN FIND MORE INFORMATION..................................... 16
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You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We will not make an offer
to sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus
is accurate only as of the date on the cover page.
In this prospectus, references to "Spinnaker," "the Company," "we," "us"
and "our" mean Spinnaker Exploration Company.
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ABOUT SPINNAKER EXPLORATION COMPANY
Spinnaker Exploration Company is an independent energy company engaged in the
exploration, development and production of natural gas and oil in the U.S. Gulf
of Mexico. We have license rights to approximately 8,900 blocks of mostly
contiguous, recent vintage 3-D seismic data in the Gulf of Mexico, including
approximately 5,750 blocks from our 3-D seismic data agreement with Petroleum
Geo-Services ASA. This database covers an area of approximately 35 million
acres, which we believe is one of the largest recent vintage 3-D seismic
databases of any independent exploration and production company in the Gulf of
Mexico. We consider recent vintage 3-D seismic data to be data generated since
1990. We have approximately 200 leasehold interests located in Texas state and
federal waters covering approximately 731,000 gross and 345,000 net acres. We
believe our regional 3-D seismic approach allows us to create and maintain a
large inventory of high-quality prospects and provides us the opportunity to
enhance our exploration success and efficiently deploy our capital resources.
We also believe our license rights to large quantities of high-quality seismic
data and our management and technical staff are important factors for our
current and future success.
Our Chief Executive Officer, Petroleum Geo-Services and Warburg, Pincus
Ventures, L.P. formed Spinnaker in December 1996. Petroleum Geo-Services, a
leader in acquiring 3-D seismic data, received most of its equity ownership in
Spinnaker in exchange for providing us with access to its inventory of 3-D
seismic data covering a substantial portion of the natural gas and oil producing
area of the Gulf of Mexico. We plan to continue to grow our inventory of 3-D
seismic data through our agreement with Petroleum Geo-Services and through
acquisitions from other seismic data vendors.
Our executive offices are located at 1200 Smith Street, Suite 800, Houston,
Texas 77002, and our telephone number is (713) 759-1770.
RISK FACTORS
Investing in our common stock will provide you with an equity ownership in
Spinnaker. As one of our stockholders, you will be subject to risks inherent in
our business. The trading price of your shares will be affected by the
performance of our business relative to, among other things, competition, market
conditions and general economic and industry conditions. The value of your
investment may decrease, resulting in a loss. You should carefully consider the
following factors as well as other information contained in this prospectus
before deciding to invest in shares of our common stock.
BECAUSE WE HAVE A LIMITED OPERATING HISTORY AND HAVE INCURRED LOSSES FROM
OPERATIONS AND NET LOSSES IN RECENT YEARS, OUR FUTURE OPERATING RESULTS ARE
DIFFICULT TO FORECAST. OUR FAILURE TO ACHIEVE OR SUSTAIN PROFITABILITY IN THE
FUTURE COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
We were formed in December 1996 and, as a result, we have a limited operating
history. Our limited operating history and the unpredictable results of our
exploration and development strategy make it difficult to forecast our operating
results. In considering whether to invest in our common stock, you should
consider the limited historical financial and operating information available on
which to base your evaluation of our performance. In addition, because we have
a limited operating history and fewer financial resources than many companies in
our industry, we may be at a disadvantage in bidding for exploratory prospects
and in developing natural gas and oil properties.
We have incurred losses from operations and net losses in recent years. We
incurred net losses of $328,000 in 1996, $2.2 million in 1997, $6.9 million in
1998 and $1.3 million in 1999. Our development of and participation in an
increasingly larger number of prospects has required and will continue to
require substantial capital expenditures. We cannot assure you that we will
achieve or sustain
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profitability or positive cash flows from operating activities in the future.
Our failure to achieve or sustain profitability in the future could adversely
affect the market price of our common stock.
EXPLORATION IS A HIGH-RISK ACTIVITY, AND THE 3-D SEISMIC DATA AND OTHER ADVANCED
TECHNOLOGIES WE USE CANNOT ELIMINATE EXPLORATION RISK AND REQUIRE EXPERIENCED
TECHNICAL PERSONNEL WHOM WE MAY BE UNABLE TO ATTRACT OR RETAIN.
Our future success will depend on the success of our exploratory drilling
program. Exploration activities involve numerous risks, including the risk that
no commercially productive natural gas or oil reservoirs will be discovered. In
addition, we often are uncertain as to the future cost or timing of drilling,
completing and producing wells. Furthermore, our drilling operations may be
curtailed, delayed or canceled as a result of the additional exploration time
and expense associated with a variety of factors, including:
. unexpected drilling conditions;
. pressure or irregularities in formations;
. equipment failures or accidents;
. adverse weather conditions;
. compliance with governmental requirements; and
. shortages or delays in the availability of drilling rigs or equipment.
Even when used and properly interpreted, 3-D seismic data and visualization
techniques only assist geoscientists in identifying subsurface structures and
hydrocarbon indicators. They do not allow the interpreter to know conclusively
if hydrocarbons are present or economically producible. We could incur losses
as a result of these expenditures. Poor results from our exploration activities
could affect our future cash flows and results of operations materially and
adversely.
Our exploratory drilling success will depend, in part, on our ability to
attract and retain experienced explorationists and other professional personnel.
Competition for explorationists and engineers with experience in the Gulf of
Mexico is extremely intense. If we cannot retain our current personnel or
attract additional experienced personnel, our ability to compete in the Gulf of
Mexico could be adversely affected.
IF PETROLEUM GEO-SERVICES TERMINATES OUR DATA AGREEMENT, OUR ABILITY TO FIND
ADDITIONAL RESERVES COULD BE MATERIALLY IMPAIRED. IF PETROLEUM GEO-SERVICES
DOES NOT RESUME 3-D SEISMIC DATA ACQUISITION IN THE GULF OF MEXICO DURING THE
REMAINING TERM OF OUR AGREEMENT, WE MAY INCUR ADDITIONAL COSTS TO ACQUIRE DATA
FROM OTHER VENDORS, WHICH COSTS COULD BE MATERIAL.
Our success depends heavily on our access to 3-D seismic data, and our primary
source for 3-D seismic data is our data agreement with Petroleum Geo-Services.
If Petroleum Geo-Services terminates our agreement, we would lose access to a
large portion of our 3-D seismic data which loss could have a material adverse
effect on our ability to find additional reserves.
Petroleum Geo-Services may terminate our data agreement on several grounds,
including if a Petroleum Geo-Services competitor acquires control of us or we
breach the agreement subject to specified exceptions.
We have license rights under our Petroleum Geo-Services data agreement to
approximately 5,750 blocks of 3-D seismic data in the Gulf of Mexico. Our
agreement does not require Petroleum Geo-Services to acquire or process any
further data. At this time, Petroleum Geo-Services has
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elected to cease 3-D seismic data acquisitions in the Gulf of Mexico. We cannot
assure you that Petroleum Geo-Services will resume 3-D seismic data acquisitions
in the Gulf of Mexico during the remaining term of our agreement. If Petroleum
Geo-Services does not resume 3-D seismic data acquisition in the Gulf of Mexico
during the remaining term of our agreement, we may incur additional costs to
acquire data from other vendors, which costs could be material. Even if
Petroleum Geo-Services elects to resume 3-D seismic data acquisitions in the
Gulf of Mexico, it again could elect to cease 3-D seismic data acquisitions as a
result of a change of control of Petroleum Geo-Services or changes in Petroleum
Geo-Services' competitive, financial or technological status.
Petroleum Geo-Services also could significantly increase the acquisition or
processing of data in the Gulf of Mexico that it is not required to share with
us. For example, Petroleum Geo-Services could focus on acquiring and processing
data on an exclusive contractual basis and not for sale to multiple customers.
In addition, if Petroleum Geo-Services were to engage new marketing vendors who
would not agree to the terms of our agreement with Petroleum Geo-Services, then
we would not have access to the data marketed through those vendors. Petroleum
Geo-Services also could elect to acquire or process other seismic data,
including future generations of seismic data, to which we are not entitled or
for which our rights are limited. Our right to enhanced data also could be
adversely affected if Petroleum Geo-Services were to elect to sell the right to
enhance and market its data without retaining a material royalty or similar
interest.
NATURAL GAS AND OIL PRICES FLUCTUATE WIDELY, AND LOW PRICES COULD HAVE A
MATERIAL ADVERSE IMPACT ON OUR BUSINESS.
Our revenues, profitability and future growth depend substantially on
prevailing prices for natural gas and oil. Prices also affect the amount of
cash flow available for capital expenditures and our ability to borrow and raise
additional capital. The amount we can borrow under our credit facility is
subject to periodic redetermination based in part on changing expectations of
future prices. Lower prices may also reduce the amount of natural gas and oil
that we can economically produce.
Prices for natural gas and oil fluctuate widely. For example, natural gas and
oil prices declined significantly in 1998 and, for an extended period of time,
remained substantially below prices obtained in previous years. Among the
factors that can cause this fluctuation are:
. the level of consumer product demand;
. weather conditions;
. domestic and foreign governmental regulations;
. the price and availability of alternative fuels;
. political conditions in natural gas and oil producing regions;
. the domestic and foreign supply of natural gas and oil;
. the price of foreign imports; and
. overall economic conditions.
RESERVE ESTIMATES DEPEND ON MANY ASSUMPTIONS THAT MAY TURN OUT TO BE INACCURATE.
ANY MATERIAL INACCURACIES IN THESE RESERVE ESTIMATES OR UNDERLYING ASSUMPTIONS
WILL MATERIALLY AFFECT THE QUANTITIES AND NET PRESENT VALUE OF OUR RESERVES.
The process of estimating natural gas and oil reserves is complex. It
requires interpretations of available technical data and various assumptions,
including assumptions relating to economic factors.
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Any significant inaccuracies in these interpretations or assumptions could
materially affect the estimated quantities and net present value of reserves
shown in this prospectus.
In order to prepare these estimates, we must project production rates and
timing of development expenditures. We must also analyze available geological,
geophysical, production and engineering data, and the extent, quality and
reliability of this data can vary. The process also requires economic
assumptions such as natural gas and oil prices, drilling and operating expenses,
capital expenditures, taxes and availability of funds. Therefore, estimates of
natural gas and oil reserves are inherently imprecise.
Actual future production, natural gas and oil prices, revenues, taxes,
development expenditures, operating expenses and quantities of recoverable
natural gas and oil reserves most likely will vary from our estimates. Any
significant variance could materially affect the estimated quantities and
present value of reserves shown in this prospectus. In addition, we may adjust
estimates of proved reserves to reflect production history, results of
exploration and development, prevailing natural gas and oil prices and other
factors, many of which are beyond our control. At June 30, 2000, 74 percent of
our proved reserves were either proved undeveloped or proved non-producing.
Moreover, the producing wells included in our reserve report had produced for a
relatively short period of time as of June 30, 2000. Because most of our
reserve estimates are not based on a lengthy production history and are
calculated using volumetric analysis, these estimates are less reliable than
estimates based on a lengthy production history.
You should not assume that the present value of future net cash flows from our
proved reserves included or incorporated by reference in this prospectus is the
current market value of our estimated natural gas and oil reserves. In
accordance with Securities and Exchange Commission requirements, we base the
estimated discounted future net cash flows from our proved reserves on prices
and costs on the date of the estimate. Actual future prices and costs may
differ materially from those used in the net present value estimate.
A SIGNIFICANT PART OF THE VALUE OF OUR PRODUCTION AND RESERVES IS CONCENTRATED
IN A SMALL NUMBER OF OFFSHORE PROPERTIES. BECAUSE OF THIS CONCENTRATION, ANY
PRODUCTION PROBLEMS OR INACCURACIES IN RESERVE ESTIMATES RELATED TO THOSE
PROPERTIES ARE MORE LIKELY TO ADVERSELY IMPACT OUR BUSINESS.
During the first nine months of 2000, over 64 percent of our daily production
came from four of our properties in the Gulf of Mexico. If mechanical problems,
storms or other events curtailed a substantial portion of this production, our
cash flow would be adversely affected. In addition, at June 30, 2000, our
proved reserves were located on 25 discoveries in the Gulf of Mexico, with
approximately 51 percent of our proved reserves attributable to four of these
discoveries. If the actual reserves associated with any one of these four
discoveries are less than our estimated reserves, our results of operations and
financial condition could be adversely affected.
WE ARE VULNERABLE TO OPERATIONAL, REGULATORY AND OTHER RISKS ASSOCIATED WITH THE
GULF OF MEXICO BECAUSE WE CURRENTLY EXPLORE AND PRODUCE EXCLUSIVELY IN THAT
AREA.
Our operations and revenues are impacted acutely by conditions in the Gulf of
Mexico because we currently explore and produce exclusively in that area. This
concentration of activity makes us more vulnerable than many of our competitors
to the risks associated with the Gulf of Mexico, including delays and increased
costs relating to:
. adverse weather conditions;
. drilling rig and other oilfield services; and
. compliance with environmental and other laws and regulations.
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Recently, higher prices for natural gas and oil have led to greater demand for
drilling rig and other oilfield services. As a result, we have experienced
increasing costs and reduced availability of these services.
RELATIVELY SHORT PRODUCTION PERIODS FOR GULF OF MEXICO PROPERTIES SUBJECT US TO
HIGHER RESERVE REPLACEMENT NEEDS, REQUIRE SIGNIFICANT CAPITAL EXPENDITURES TO
REPLACE PRODUCTION AND MAY IMPAIR OUR ABILITY TO REDUCE PRODUCTION DURING
PERIODS OF LOW NATURAL GAS AND OIL PRICES.
Production of reserves from reservoirs in the Gulf of Mexico generally
declines more rapidly than from reservoirs in many other producing regions of
the world. This results in recovery of a relatively higher percentage of
reserves from properties in the Gulf of Mexico during the initial few years of
production. As a result, our reserve replacement needs from new prospects are
greater and require us to incur significant capital expenditures to replace
production.
Also, our revenues and return on capital will depend significantly on prices
prevailing during these relatively short production periods. Our potential need
to generate revenues to fund ongoing capital commitments or reduce indebtedness
may limit our ability to slow or shut-in production from producing wells during
periods of low prices for natural gas and oil.
THE FAILURE TO REPLACE OUR RESERVES WOULD ADVERSELY AFFECT OUR PRODUCTION AND
CASH FLOWS.
Our future natural gas and oil production depends on our success in finding or
acquiring additional reserves. If we fail to replace reserves, our level of
production and cash flows would be adversely impacted. In general, production
from natural gas and oil properties declines as reserves are depleted, with the
rate of decline depending on reservoir characteristics. Our total proved
reserves decline as reserves are produced unless we conduct other successful
exploration and development activities or acquire properties containing proved
reserves, or both. Our ability to make the necessary capital investment to
maintain or expand our asset base of natural gas and oil reserves would be
impaired to the extent cash flow from operations is reduced and external sources
of capital become limited or unavailable. We may not be successful in exploring
for, developing or acquiring additional reserves. If we are not successful, our
future production and revenues will be adversely affected.
HEDGING OUR PRODUCTION HAS LIMITED AND MAY CONTINUE TO LIMIT OUR POTENTIAL GAINS
FROM INCREASES IN COMMODITY PRICES OR RESULT IN LOSSES.
To reduce our exposure to fluctuations in the prices of natural gas and oil,
we enter into hedging arrangements with respect to a portion of our expected
production. Hedging arrangements expose us to risks in some circumstances,
including the following:
. production is less than expected;
. the other party to the hedging contract defaults on its contract obligations;
or
. there is a change in the expected differential between the underlying price
in the hedging agreement and actual prices received.
These hedging arrangements have limited and may continue to limit the benefit
we could receive from increases in the prices for natural gas and oil. The fair
market value of our hedges on September 30, 2000 was a liability of
approximately $21.6 million. The estimated intrinsic value of our open collar
arrangements as of September 30, 2000 was equal to an unrealized loss of
approximately $8.7 million for the last three months of 2000 and an unrealized
loss of approximately $8.4 million in 2001 using NYMEX natural gas and oil
prices as of September 29, 2000. However, if we choose not to engage in hedging
arrangements in the future, we may be more adversely affected by changes in
natural gas and oil prices than our competitors who engage in hedging
arrangements.
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THE NATURAL GAS AND OIL BUSINESS INVOLVES MANY OPERATING RISKS THAT CAN CAUSE
SUBSTANTIAL LOSSES.
The natural gas and oil business involves a variety of operating risks,
including:
. fires;
. explosions;
. blow-outs and surface cratering;
. uncontrollable flows of underground natural gas, oil and formation water;
. natural disasters;
. pipe or cement failures;
. casing collapses;
. embedded oilfield drilling and service tools;
. abnormally pressured formations; and
. environmental hazards such as natural gas leaks, oil spills, pipeline
ruptures and discharges of toxic gases.
If any of these events occur, we could incur substantial losses as a result
of:
. injury or loss of life;
. severe damage to and destruction of property, natural resources and
equipment;
. pollution and other environmental damage;
. clean-up responsibilities;
. regulatory investigation and penalties;
. suspension of our operations; and
. repairs to resume operations.
If we experience any of these problems, it could affect well bores, platforms,
gathering systems and processing facilities, which could adversely affect our
ability to conduct operations.
Offshore operations are also subject to a variety of operating risks peculiar
to the marine environment, such as capsizing, collisions and damage or loss from
hurricanes or other adverse weather conditions. These conditions can cause
substantial damage to facilities and interrupt production. As a result, we
could incur substantial liabilities that could reduce or eliminate the funds
available for exploration, development or leasehold acquisitions, or result in
loss of equipment and properties.
We do not carry business interruption insurance. For some risks, we may not
obtain insurance if we believe the cost of available insurance is excessive
relative to the risks presented. In addition, pollution and environmental risks
generally are not fully insurable. If a significant accident or other event
occurs and is not fully covered by insurance, it could adversely affect our
operations.
EXPLORATION FOR NATURAL GAS AND OIL IN THE DEEP WATERS OF THE GULF OF MEXICO
INVOLVES GREATER OPERATIONAL AND FINANCIAL RISKS THAN EXPLORATION IN SHALLOWER
WATERS, AND OUR EXPANSION INTO THE DEEP WATER COULD RESULT IN SUBSTANTIAL
LOSSES.
As part of our strategy, we explore for natural gas and oil in the deep waters
of the Gulf of Mexico where operations are more difficult and costly than in
shallower waters. Our deep water drilling and operations require the
application of recently developed technologies that involve a higher risk of
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mechanical failure. We have experienced and will continue to experience
significantly higher drilling costs for our deep water prospects. Furthermore,
the deep waters of the Gulf of Mexico lack the physical and oilfield service
infrastructure present in the shallower waters of the Gulf of Mexico. As a
result, deep water operations may require a significant amount of time between a
discovery and the time that we can market the natural gas or oil, increasing
both the financial and operational risk involved with these operations.
WE CANNOT CONTROL THE ACTIVITIES ON PROPERTIES WE DO NOT OPERATE.
Other companies operate some of the properties in which we have an interest.
As a result, we have a limited ability to exercise influence over operations for
these properties or their associated costs. Our dependence on the operator and
other working interest owners for these projects and our limited ability to
influence operations and associated costs could materially adversely affect the
realization of our targeted returns on capital in drilling or acquisition
activities. The success and timing of our drilling and development activities
on properties operated by others therefore depend on a number of factors that
are outside of our control, including:
. timing and amount of capital expenditures;
. the operator's expertise and financial resources;
. approval of other participants in drilling wells; and
. selection of technology.
OUR SUCCESS DEPENDS ON OUR CHIEF EXECUTIVE OFFICER AND OTHER KEY PERSONNEL, THE
LOSS OF WHOM COULD DISRUPT OUR BUSINESS OPERATIONS.
We depend to a large extent on the efforts and continued employment of our
President and Chief Executive Officer, Roger L. Jarvis, and other key personnel.
If Mr. Jarvis or these other key personnel resign or become unable to continue
in their present role and if they are not adequately replaced, our business
operations could be adversely affected.
WE MAY HAVE DIFFICULTY FINANCING OUR PLANNED GROWTH.
We have experienced and expect to continue to experience substantial capital
expenditure and working capital needs, particularly as a result of our drilling
program. In the future, we may require additional financing, in addition to
cash generated from our operations, to fund our planned growth. We cannot be
certain that additional financing will be available to us on acceptable terms or
at all. In the event additional capital resources are unavailable, we may
curtail our drilling, development and other activities or be forced to sell some
of our assets on an untimely or unfavorable basis.
COMPETITION IN OUR INDUSTRY IS INTENSE, AND WE ARE SMALLER AND HAVE A MORE
LIMITED OPERATING HISTORY THAN MOST OF OUR COMPETITORS IN THE GULF OF MEXICO.
We compete with major and independent natural gas and oil companies for
property acquisitions. We also compete for the equipment and labor required to
operate and develop properties. Most of our competitors have substantially
greater financial and other resources than us. As a result, in the deep water
where exploration is more expensive, our competitors may be better able to
withstand sustained periods of unsuccessful drilling. In addition, larger
competitors may be able to absorb the burden of any changes in federal, state
and local laws and regulations more easily than we can, which would adversely
affect our competitive position. These competitors may be able to pay more for
exploratory prospects and productive natural gas and oil properties and may be
able to define, evaluate, bid for and purchase a
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greater number of properties and prospects than we can. Our ability to explore
for natural gas and oil prospects and to acquire additional properties in the
future will depend on our ability to conduct operations, to evaluate and select
suitable properties and to consummate transactions in this highly competitive
environment. In addition, most of our competitors have been operating in the
Gulf of Mexico for a much longer time than we have and have demonstrated the
ability to operate through industry cycles.
OUR COMPETITORS MAY USE SUPERIOR TECHNOLOGY WHICH WE MAY BE UNABLE TO AFFORD OR
WHICH WOULD REQUIRE COSTLY INVESTMENT BY US IN ORDER TO COMPETE.
Our industry is subject to rapid and significant advancements in technology,
including the introduction of new products and services using new technologies.
As our competitors use or develop new technologies, we may be placed at a
competitive disadvantage, and competitive pressures may force us to implement
new technologies at a substantial cost. In addition, our competitors may have
greater financial, technical and personnel resources that allow them to enjoy
technological advantages and may in the future allow them to implement new
technologies before we can. We cannot be certain that we will be able to
implement technologies on a timely basis or at a cost that is acceptable to us.
One or more of the technologies that we currently use or that we may implement
in the future may become obsolete, and we may be adversely affected. For
example, marine seismic acquisition technology has been characterized by rapid
technological advancements in recent years and further significant technological
developments could substantially impair our 3-D seismic data's value.
A SMALL NUMBER OF CUSTOMERS PURCHASE ALL OF OUR NATURAL GAS PRODUCTION. AS A
RESULT, IF THESE CUSTOMERS DEFAULT ON THEIR PAYMENT OBLIGATIONS, OUR NEAR-TERM
EARNINGS AND CASH FLOWS WOULD BE ADVERSELY AFFECTED.
As of November 1, 2000, two customers purchase all of our natural gas
production at current market prices. The terms of our arrangements require our
customers to pay us within 60 days after we deliver our production. As a result,
if our customers were to default on their payment obligations to us, our near-
term earnings and cash flows would be adversely affected.
WE ARE SUBJECT TO COMPLEX LAWS AND REGULATIONS, INCLUDING ENVIRONMENTAL
REGULATIONS, THAT CAN ADVERSELY AFFECT THE COST, MANNER OR FEASIBILITY OF DOING
BUSINESS.
Exploration for and development, production and sale of natural gas and oil in
the U.S. and especially in the Gulf of Mexico are subject to extensive federal,
state and local laws and regulations, including environmental laws and
regulations. We may be required to make large expenditures to comply with
environmental and other governmental regulations. Matters subject to regulation
include:
. discharge permits for drilling operations;
. drilling bonds;
. reports concerning operations; and
. taxation.
Under these laws and regulations, we could be liable for personal injuries,
property damage, oil spills, discharge of hazardous materials, remediation and
clean-up costs and other environmental damages. We do not believe that full
insurance coverage for all potential environmental damages is available at a
reasonable cost. Failure to comply with these laws and regulations also may
result in the suspension or termination of our operations and subject us to
administrative, civil and criminal penalties. Moreover, these laws and
regulations could change in ways that substantially increase our costs. For
example, Congress or the Minerals Management Service could decide to limit
exploratory drilling or natural gas
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production in some areas of the Gulf of Mexico. Accordingly, any of these
liabilities, penalties, suspensions, terminations or regulatory changes could
materially and adversely affect our financial condition and results of
operations.
PETROLEUM GEO-SERVICES, WARBURG, PINCUS VENTURES AND OUR MANAGEMENT OWN A
SIGNIFICANT AMOUNT OF COMMON STOCK, GIVING THEM INFLUENCE OR CONTROL IN
CORPORATE TRANSACTIONS AND OTHER MATTERS, AND THE INTERESTS OF WARBURG, PINCUS
VENTURES OR PETROLEUM GEO-SERVICES COULD DIFFER FROM THOSE OF OTHER
STOCKHOLDERS.
Prior to the sale of any shares of common stock by Petroleum Geo-Services in
connection with this prospectus, Warburg, Pincus Ventures, Petroleum Geo-
Services, and our executive officers beneficially own approximately 51 percent
of our outstanding shares of common stock. After the sale of all of the shares
of common stock held by Petroleum Geo-Services in connection with this
prospectus, Warburg, Pincus Ventures and our executive officers will
beneficially own approximately 32 percent of our outstanding shares of common
stock. As a result, these stockholders are in a position to significantly
influence or control the outcome of matters requiring a stockholder vote,
including the election of directors, the adoption of an amendment to our
certificate of incorporation or bylaws and the approval of mergers and other
significant corporate transactions. In addition, representatives of Petroleum
Geo-Services and Warburg, Pincus Ventures currently constitute a majority of our
board of directors. Their control of Spinnaker may delay or prevent a change of
control of Spinnaker and may adversely affect the voting and other rights of
other stockholders.
Furthermore, conflicts of interest could arise in the future between
Spinnaker, on the one hand, and Warburg, Pincus Ventures or Petroleum Geo-
Services, on the other hand, concerning, among other things, potential
competitive business activities or business opportunities. Except for the
limited restrictions placed on Petroleum Geo-Services in our data agreement with
Petroleum Geo-Services, neither Warburg, Pincus Ventures nor Petroleum Geo-
Services are restricted from competitive natural gas and oil exploration and
production activities or investments. Warburg, Pincus Ventures currently has
significant equity interests in other public and private natural gas and oil
companies. The interests of Warburg, Pincus Ventures or Petroleum Geo-Services
could differ from those of our other stockholders.
SUBSTANTIALLY ALL OF OUR OUTSTANDING SHARES MAY BE SOLD INTO THE MARKET IN THE
NEAR FUTURE. THIS COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DROP
SIGNIFICANTLY, EVEN IF OUR BUSINESS IS DOING WELL.
The market price of our common stock could drop due to sales of a large number
of shares of our common stock in the market or the perception that such sales
could occur. This could make it more difficult to raise funds through future
offerings of common stock.
OUR CERTIFICATE OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS THAT COULD
DISCOURAGE AN ACQUISITION OR CHANGE OF CONTROL OF SPINNAKER.
Our certificate of incorporation authorizes our board of directors to issue
preferred stock without stockholder approval. If our board of directors elects
to issue preferred stock, it could be more difficult for a third party to
acquire control of us, even if that change of control might be beneficial to
stockholders. In addition, provisions of the certificate of incorporation and
bylaws, such as no stockholder action by written consent and limitations on
stockholder proposals at meetings of stockholders, could also make it more
difficult for a third party to acquire control of us. Please read "Description
of Capital Stock" for additional details concerning the provisions of our
certificate of incorporation and bylaws.
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FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus, including information
incorporated by reference, contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The forward-looking statements speak only as
of the date made. The forward-looking statements may be identified by the use
of the words "believe," "expect," "anticipate," "will," "contemplate," "would"
and similar expressions that contemplate future events. These future events
include the following matters:
. financial position;
. business strategy;
. budgets;
. amount, nature and timing of capital expenditures;
. drilling of wells;
. natural gas and oil reserves;
. timing and amount of future production of natural gas and oil;
. operating costs and other expenses;
. cash flow and anticipated liquidity;
. prospect development and property acquisitions; and
. marketing of natural gas and oil.
Numerous important factors, risks and uncertainties may affect our operating
results, including:
. the risks associated with exploration;
. our ability to find, acquire, market, develop and produce new properties;
. natural gas and oil price volatility;
. uncertainties in the estimation of proved reserves and in the projection of
future rates of production and timing of development expenditures;
. operating hazards attendant to the natural gas and oil business;
. downhole drilling and completion risks that are generally not recoverable
from third parties or insurance;
. potential mechanical failure or under-performance of significant wells;
. climatic conditions;
. availability and cost of material and equipment;
. delays in anticipated start-up dates;
. actions or inactions of third-party operators of our properties;
. our ability to find and retain skilled personnel;
. availability of capital;
. the strength and financial resources of our competitors;
. regulatory developments;
. environmental risks; and
. general economic conditions.
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Any of the factors listed above and other factors contained in this prospectus
or in our periodic reports filed with the Securities and Exchange Commission and
incorporated by reference in this prospectus could cause our actual results to
differ materially from the results implied by these or any other forward-looking
statements made by us or on our behalf. We cannot assure you that our future
results will meet our expectations. You should pay particular attention to the
cautionary statements described under "Risk Factors."
USE OF PROCEEDS
Spinnaker will not receive any proceeds from the sale of the shares of
common stock by the selling stockholder.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $0.01 per share, and 10,000,000 shares of preferred stock, par value
$0.01 per share. As of November 28, 2000, we had outstanding 26,276,334 shares
of common stock and no shares of preferred stock.
COMMON STOCK
Subject to any special voting rights of any series of preferred stock that
we may issue in the future, each share of common stock has one vote on all
matters voted on by our stockholders, including the election of our directors.
No share of common stock affords any cumulative voting or preemptive rights or
is convertible, redeemable, assessable or entitled to the benefits of any
sinking or repurchase fund. Holders of common stock will be entitled to
dividends in the amounts and at the times declared by our board of directors in
its discretion out of funds legally available for the payment of dividends.
Holders of common stock will share equally in our assets on liquidation
after payment or provision for all liabilities and any preferential liquidation
rights of any preferred stock then outstanding. All outstanding shares of
common stock are fully paid and non-assessable.
PREFERRED STOCK
At the direction of our board, we may issue shares of preferred stock from
time to time. Our board of directors may, without any action by holders of the
common stock:
. adopt resolutions to issue preferred stock in one or more classes or series;
. fix or change the number of shares constituting any class or series of
preferred stock; and
. establish or change the rights of the holders of any class or series of
preferred stock.
The rights any class or series of preferred stock may include:
. general or special voting rights;
. preferential liquidation or preemptive rights;
. preferential cumulative or noncumulative dividend rights;
. redemption or put rights; and
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. conversion or exchange rights.
We may issue shares of or rights to purchase preferred stock, the terms of
which might:
. adversely affect voting or other rights evidenced by, or amounts otherwise
payable with respect to, the common stock;
. discourage an unsolicited proposal to acquire us; or
. facilitate a particular business combination involving us.
Any of these actions could discourage a transaction that some or a majority of
our stockholders might believe to be in their best interests or in which our
stockholders might receive a premium for their stock over its then market price.
REGISTRATION RIGHTS
We, Petroleum Geo-Services, Warburg, Pincus Ventures and some of our other
stockholders are parties to a registration rights agreement. That agreement
grants Petroleum Geo-Services and Warburg, Pincus Ventures the right to require
us to file a registration statement covering all or part of their shares of
common stock at our expense under some circumstances, subject to the
following restrictions:
. we are not required to register the shares if Petroleum Geo-Services or
Warburg, Pincus Ventures proposes to sell them at an aggregate price to the
public of less than $20.0 million;
. we are not required to effect more than one requested registration for an
underwritten offering in any six-month period; and
. we generally are not required to effect more than two requested registrations
for underwritten offerings and more than one requested registration covering
the resale of securities for either Petroleum Geo-Services or Warburg, Pincus
Ventures unless we are then eligible to register the requested sale on
Form S-3.
Some of our stockholders also have rights to include their shares at our
expense, under some circumstances, in a registration statement filed by us for
purposes of a public offering. An underwriter participating in these offerings
may limit the number of shares offered, and the number will be allocated first
to us, then to participating stockholders on a pro rata basis.
SELLING STOCKHOLDER
On October 25, 2000, we received written notice of a demand by Petroleum
Geo-Services requesting us to register under the registration rights agreement
described under "Description of Capital Stock - Registration Rights" all shares
of our common stock held by Seismic Energy Holdings, Inc., a wholly owned
subsidiary of Petroleum Geo-Services. In this prospectus, we refer to Petroleum
Geo-Services and Seismic Energy Holdings, Inc. collectively as the "selling
stockholder" or, unless the context otherwise requires, as "Petroleum Geo-
Services." As of November 28, 2000, the selling stockholder owned an aggregate
of 5,388,743 shares of our common stock, which represents approximately 21% of
our outstanding common stock.
The selling stockholder is obligated to bear all expenses incurred with the
registration of the shares of our common stock held by the selling stockholder;
provided that we are obligated to pay any internal expenses we incur in
connection with this registration, such as the salaries of our officers and
directors.
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PLAN OF DISTRIBUTION
Shares may be sold or distributed from time to time by Petroleum Geo-
Services and, to the extent permitted by our registration rights agreement with
Petroleum Geo-Services, by its donees or transferees and its other successors in
interest. Petroleum Geo-Services may sell its shares at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed.
Petroleum Geo-Services may accept or reject, in whole or in part, any proposed
purchase of shares, whether the purchase is to be made directly or through
agents.
Petroleum Geo-Services may offer their shares at various times in one or
more of the following transactions:
. in underwritten transactions;
. in ordinary brokers' transactions and transactions in which the broker
solicits purchasers;
. in transactions involving cross or block trades or otherwise on the New
York Stock Exchange;
. in transactions "at the market" to or through market makers in our common
stock or into an existing market for the common stock;
. in other ways not involving market makers or established trading markets,
including direct sales of the shares to purchasers or sales of the shares
effected through agents;
. through transactions in options, swaps or other derivatives which may or
may not be listed on an exchange;
. in privately negotiated transactions;
. in transactions to cover short sales; or
. in a combination of any of the foregoing transactions.
Petroleum Geo-Services also may sell their shares in accordance with Rule 144
under the Securities Act of 1933.
From time to time, Petroleum Geo-Services may pledge or grant a security
interest in some or all of the shares owned by them. If Petroleum Geo-Services
defaults in performance of its secured obligations, the pledged or secured
parties may offer and sell the shares from time to time by this prospectus.
Petroleum Geo-Services also may transfer and donate shares in other
circumstances. The number of shares beneficially owned by Petroleum Geo-
Services will decrease as and when it transfers or donates its shares or
defaults in performing obligations secured by its shares. The plan of
distribution for the shares offered and sold under this prospectus will
otherwise remain unchanged, except that the transferees, donees, pledgees, other
secured parties or other successors in interest will be selling stockholders for
purposes of this prospectus.
Petroleum Geo-Services may sell short the common stock. Petroleum Geo-
Services may deliver this prospectus in connection with such short sales and use
the shares offered by this prospectus to cover such short sales.
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Petroleum Geo-Services may enter into hedging transactions with broker-
dealers. The broker-dealers may engage in short sales of the common stock in
the course of hedging the positions they assume with Petroleum Geo-Services,
including positions assumed in connection with distributions of the shares by
such broker-dealers. Petroleum Geo-Services also may enter into option or other
transactions with broker-dealers that involve the delivery of shares to the
broker-dealers, who may then resell or otherwise transfer such shares. In
addition, Petroleum Geo-Services may loan or pledge shares to a broker-dealer,
which may sell the loaned shares or, upon a default by Petroleum Geo-Services of
the secured obligation, may sell or otherwise transfer the pledged shares.
Petroleum Geo-Services may use brokers, dealers, underwriters or agents to
sell its shares. The persons acting as agents may receive compensation in the
form of commissions, discounts or concessions. This compensation may be paid by
the selling stockholder or the purchasers of the shares of whom such persons may
act as agent, or to whom they may sell as principal, or both. The compensation
as to a particular person may be less than or in excess of customary
commissions. Petroleum Geo-Services and any agents or broker-dealers that
participate with Petroleum Geo-Services in the offer and sale of the shares may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933.
Any commissions they receive and any profit they realize on the resale of the
shares by them may be deemed to be underwriting discounts and commissions under
the Securities Act of 1933. Neither we nor Petroleum Geo-Services can presently
estimate the amount of such compensation.
If Petroleum Geo-Services sells shares in an underwritten offering, the
underwriters may include Credit Suisse First Boston Corporation and/or others.
The underwriters may acquire the shares for their own account and resell the
shares from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. In such event, we will set forth in a supplement to this
prospectus the names of the underwriters and the terms of the transactions,
including any underwriting discounts, concessions or commissions and other items
constituting compensation of the underwriters and broker-dealers. The
underwriters from time to time may change any public offering price and any
discounts, concessions or commissions allowed or reallowed or paid to broker-
dealers. Unless otherwise set forth in a supplement, the obligations of the
underwriters to purchase the shares will be subject to certain conditions, and
the underwriters will be obligated to purchase all of the shares specified in
the supplement if they purchase any of the shares.
We have informed Petroleum Geo-Services that during such time as it may be
engaged in a distribution of the shares Geo-Services it is required to comply
with Regulation M under the Securities Exchange Act of 1934. With exceptions,
Regulation M prohibits Petroleum Geo-Services, any affiliated purchasers and
other persons who participate in such a distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase, any
security which is the subject of the distribution until the entire distribution
is complete.
We have informed Petroleum Geo-Services that it is legally required to
deliver copies of this prospectus in connection with any sale of securities
registered hereunder in accordance with applicable prospectus delivery
requirements.
Under our registration rights agreement with Petroleum Geo-Services,
Petroleum Geo-Services is required to bear the expenses relating to this
offering, excluding any internal expenses incurred by Spinnaker for our officers
and employees performing duties in connection with this offering.
We have agreed to indemnify Petroleum Geo-Services and their respective
controlling persons against certain liabilities, including certain liabilities
under the Securities Act of 1933. We will not receive any of the proceeds from
the sale by Petroleum Geo-Services of the shares offered by this prospectus.
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This offering by Petroleum Geo-Services will terminate on the date
specified in our registration rights agreement with Petroleum Geo-Services, or,
if earlier, on the date on which Petroleum Geo-Services has sold all of its
shares.
In order to comply with certain state securities laws, if applicable, the
shares offered by this document will not be sold in a particular state unless
such shares have been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied with,
and, if so required, will only be sold in that state through registered or
licensed brokers or dealers.
The shares of common stock originally issued by Spinnaker to Petroleum Geo-
Services bear legends as to their restricted transferability. Upon the
effectiveness of the registration statement of which this prospectus is a part,
and the transfer by Petroleum Geo-Services of any of the shares pursuant
thereto, new certificates representing those shares will be issued to the
transferee, free of any such legends unless otherwise required by law.
VALIDITY OF SECURITIES
The validity of the shares offered by this prospectus has been passed upon
for Spinnaker by Vinson & Elkins L.L.P., Houston, Texas.
EXPERTS
The audited consolidated financial statements included in Spinnaker
Exploration Company's Form 10-K for the year ended December 31, 1999 have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
The estimated reserve evaluations and related calculations of Ryder Scott
Company, L.P., independent petroleum engineering consultants, included or
incorporated by reference in this registration statement have been included in
reliance on the authority of said firm as experts in petroleum engineering.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we file with the
Securities and Exchange Commission. This prospectus does not contain all of the
information contained in the registration statement and all of the exhibits and
schedules thereto. For further information about Spinnaker Exploration Company,
please see the complete registration statement. Summaries of agreements or
other documents in this prospectus are not necessarily complete. Please refer
to the exhibits to the registration statement for complete copies of such
documents.
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission under the Securities
Exchange Act of 1934. You may read and copy any document we file at the
following Securities and Exchange Commission public reference rooms:
<TABLE>
<S> <C> <C>
450 Fifth Street, N.W. Seven World Trade Center Citicorp Center
Judiciary Plaza Suite 1300 500 West Madison Street
Room 1024 New York, NY 10048 Suite 1400
Washington, D.C. 20549 Chicago, IL 60661
</TABLE>
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You may also inspect and copy our Securities and Exchange Commission
filings, the complete registration statement and other information at the
offices of the New York Stock Exchange located at 20 Broad Street, 16th Floor,
New York, New York 10005.
You may obtain information on the operation of the public reference
room in Washington, D.C. by calling the Securities and Exchange Commission
at 1-800-SEC-0330.
We file information electronically with the Securities and Exchange
Commission. Our Securities and Exchange Commission filings also are available
from the Securities and Exchange Commission's Internet site at
http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding issuers that file electronically.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we may disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus,
and information that we file later with the Securities and Exchange Commission
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the
Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until all of the securities described in
this prospectus are sold:
. The description of our common stock contained in our Registration
Statement on Form 8-A, as filed with the Securities and Exchange
Commission on July 24, 2000;
. Our Annual Report on Form 10-K for the year ended December 31, 1999; and
. Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing or telephoning us at the following address:
Spinnaker Exploration Company
1200 Smith Street, Suite 800
Houston, Texas 77002
Attention: Secretary
(713) 759-1770
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of this offering (all of which are to be paid by the selling
stockholder) are estimated to be as follows:
Securities and Exchange Commission registration fee................... $ 44,102
Legal fees and expenses............................................... 100,000
Accounting fees and expenses.......................................... 100,000
Blue Sky fees and expenses (including legal fees)..................... 7,500
Printing expenses..................................................... 120,000
Miscellaneous......................................................... 3,398
--------
TOTAL............................................................ $375,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") provides that a
corporation may 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 whether civil, criminal, administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Section 145 further
provides that a corporation similarly may indemnify any such person serving in
any such capacity who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit if
he 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 except that no
indemnification shall be made in respect of 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 Delaware Court of Chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
Spinnaker's bylaws provide that indemnification shall be to the fullest extent
permitted by the DGCL for all current or former directors or officers of
Spinnaker.
As permitted by the DGCL, the certificate of incorporation provides that
directors of Spinnaker shall have no personal liability to Spinnaker or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except (1) for any breach of the director's duty of loyalty to Spinnaker or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) for unlawful payments
of dividends or unlawful stock repurchases or
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redemptions as provided under Section 174 of the DGCL or (4) for any transaction
from which a director derived an improper personal benefit.
In addition, we have entered into indemnification agreements with our
directors and officers containing provisions which are in some respects broader
than the specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements may require us, among other
things, to indemnify our directors against certain liabilities that may arise by
reason of their status or service as directors, other than liabilities arising
from willful misconduct of culpable nature, to advance their expenses incurred
as a result of any proceeding against them as to which they could be
indemnified, and to obtain directors' insurance if available on reasonable
terms.
Howard H. Newman and Jeffrey A. Harris, each directors of Spinnaker and
Managing Directors and members of E.M. Warburg, Pincus & Co., LLC and general
partners of Warburg, Pincus & Co., are indemnified by affiliates of E.M.
Warburg, Pincus & Co., LLC and Warburg, Pincus & Co. against certain liabilities
that they may incur as a result of their serving as a director of Spinnaker.
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ITEM 16. EXHIBITS
(a) Exhibits:
3.1 -- Certificate of Incorporation of Spinnaker, as amended (incorporated
herein by reference to Exhibit 3.1 to Spinnaker's Registration
Statement on Form S-1 (Commission File No. 333-83093))
3.2 -- Restated Bylaws of Spinnaker (incorporated herein by reference to
Exhibit 3.2 to Spinnaker's Registration Statement on Form S-1
(Commission File No. 333-83093))
4.1 -- Specimen Common Stock certificate (incorporated herein by reference
to Exhibit 4.1 to Spinnaker's Registration Statement of Form S-1
(Commission File No. 333-41626))
5.1 -- Opinion of Vinson & Elkins L.L.P.
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Ryder Scott Company, L.P.
23.3 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1 hereto)
24.1* -- Power of Attorney
----------
* Previously filed as part of the signature page of the initial filing of this
Registration Statement.
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ITEM 17. UNDERTAKINGS
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 this 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 this
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 a prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
provided, however, that paragraphs (1)(i) and (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 this 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.
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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
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.
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 foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 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
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or controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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 Houston, State of Texas, on the 28th day of
November, 2000.
SPINNAKER EXPLORATION COMPANY
By: /s/ ROGER L. JARVIS
---------------------------------------
Name: Roger L. Jarvis
Title: Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated on the 28th day of November, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ ROGER L. JARVIS Chairman, President and Chief Executive Officer and
--------------------------------------------------- Director (Principal Executive Officer)
Roger L. Jarvis
/s/ JAMES M. ALEXANDER Vice President, Chief Financial Officer and Secretary
--------------------------------------------------- (Principal Financial Officer)
James M. Alexander
/s/ JEFFREY C. ZARUBA Treasurer (Principal Accounting Officer)
---------------------------------------------------
Jeffrey C. Zaruba
* Director
---------------------------------------------------
Bjarte Bruheim
* Director
---------------------------------------------------
Sheldon R. Erikson
* Director
---------------------------------------------------
Jeffrey A. Harris
* Director
---------------------------------------------------
Michael E. McMahon
* Director
---------------------------------------------------
Reidar Michaelsen
* Director
---------------------------------------------------
Howard H. Newman
* By: /s/ JAMES M. ALEXANDER
----------------------------------------------
James M. Alexander
As attorney-in-fact
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------
3.1 -- Certificate of Incorporation of Spinnaker, as amended
(incorporated herein by reference to Exhibit 3.1 to Spinnaker's
Registration Statement on Form S-1 (Commission File No. 333-
83093))
3.2 -- Restated Bylaws of Spinnaker (incorporated herein by reference to
Exhibit 3.2 to Spinnaker's Registration Statement on Form S-1
(Commission File No. 333-83093))
4.1 -- Specimen Common Stock certificate (incorporated herein by
reference to Exhibit 4.1 to Spinnaker's Registration Statement of
Form S-1 (Commission File No. 333-41626))
5.1 -- Opinion of Vinson & Elkins L.L.P.
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Ryder Scott Company, L.P.
23.3 -- Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1
hereto)
24.1* -- Power of Attorney
------------
* Previously filed as part of the signature page of the initial filing of this
Registration Statement.
II-7
