<PAGE> 1
As filed with the Securities and Exchange Commission on February 10, 1997
Registration No. _________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------
HARKEN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
-------------
DELAWARE 95-2841597
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
HARKEN ENERGY CORPORATION
5605 NORTH MACARTHUR BLVD., SUITE 400
IRVING, TEXAS 75038
(972) 753-6900
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-------------
GREGORY S. PORTER
VICE PRESIDENT - LEGAL
HARKEN ENERGY CORPORATION
5605 NORTH MACARTHUR BLVD., SUITE 400
IRVING, TEXAS 75038
(972) 753-6900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
-------------
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ] __________
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================================
Proposed Maximum Proposed Maximum
Title of each Class of Amount to be Offering Price Per Aggregate Offering Amount of
Securities to be Registered Registered Unit(1) Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 477,026 $ 3.5625 $ 1,699,405 $514.97
per share
=============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the average of the high and low sales
prices of the common stock as reported by the American Stock Exchange on
February 4, 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
477,026 Shares
HARKEN ENERGY CORPORATION
Common Stock
--------------------
The 477,026 shares (the "Shares") of common stock, par value $0.01 per
share ("Common Stock"), of Harken Energy Corporation, a Delaware corporation
("Harken" or the "Company"), offered hereby are being offered by the
stockholders of the Company named herein (the "Selling Stockholders"). The
Company will not receive any of the proceeds from the sale of the Shares, but
the Company has agreed to bear certain expenses of registration of the Shares
under the federal and state securities laws (currently estimated to be $7,000),
and of any offering and sale hereunder not including certain expenses such as
commissions and discounts of underwriters, dealers or agents. See "Selling
Stockholders" and "Use of Proceeds."
The Common Stock is traded on the American Stock Exchange, under the
symbol "HEC." On February __, 1997, the closing sales price of the Common
Stock as reported on the American Stock Exchange was $_____ per share.
The Shares may be offered and sold from time to time by the Selling
Stockholders directly or through broker-dealers or underwriters who may act
solely as agents, or who may acquire the Shares as principals. The
distribution of the Shares may be effected in one or more transactions that may
take place through the American Stock Exchange or any other national securities
exchange on which the Common Stock is approved for listing in the future,
including block trades or ordinary broker's transactions, or through privately
negotiated transactions, or through an underwritten public offering, or through
a combination of any such methods of sale, at such prices as may be obtainable.
Usual and customary or specially negotiated brokerage fees or commissions may
be paid by the Selling Stockholders in connection with such sales. See "Plan
of Distribution."
To the extent required, the specific shares of Common Stock to be sold,
the purchase price, public offering price, names of any agent, dealer or
underwriter, and any applicable commission or discount with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The aggregate proceeds to the Selling Stockholders from the sale of the Shares
will be the purchase price thereof less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of distribution not borne
by the Company.
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of any of
the Shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commission
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act. See "Plan of Distribution" for indemnification arrangements.
PROSPECTIVE INVESTORS SHOULD CONSIDER AND REVIEW THE INFORMATION UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4 PRIOR TO AN INVESTMENT IN THE
SHARES OFFERED HEREBY.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is February __, 1997.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied, at prescribed rates, at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024, as
well as at the regional offices of the Commission at Seven World Trade Center,
13th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60601. Copies of such material
may also be obtained at prescribed rates by writing to the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Common Stock is listed on the American Stock Exchange. Reports, proxy
statements and other information described above may also be inspected and
copied at the offices of the American Stock Exchange at 86 Trinity Place, New
York, New York 10006.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act, with respect
to the Shares offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Common Stock, reference is hereby made to such
Registration Statement and exhibits. Statements contained herein concerning
the provisions of any documents are necessarily summaries of those documents,
and each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission. The Registration Statement and
any amendments thereto, including exhibits filed as a part thereof, are
available for inspection and copying as set forth above.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 9
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY OTHER PERSON.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR
ANY OFFER TO OR SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed with the Commission are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K/A for the year ended
December 31, 1995;
(2) The Company's Proxy Statement for the Annual Meeting of
Stockholders of Harken held on June 11, 1996;
(3) The Company's Proxy Statement for the Special Meeting of
Stockholders of Harken to be held on December 10, 1996;
(4) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, as amended, including all
amendments and reports filed for the purpose of updating such
description;
(5) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1996;
(6) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1996;
(7) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1996;
(8) The Company's Current Report on Form 8-K dated July 10, 1996; and
(9) The Company's Current Report on Form 8-K dated July 31, 1996.
All documents filed by Harken pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of the filing of such documents. Any statement contained in this
Prospectus, in a supplement to this Prospectus or in a document incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein, or in any subsequently filed supplement to this Prospectus or
in any document that also is or is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will furnish without charge to each person to whom a copy of
this Prospectus has been delivered, upon written or oral request, a copy of any
or all documents incorporated by reference in this Prospectus, other than
exhibits to such documents unless such exhibits are specifically incorporated
by reference in such documents. Written or oral requests for such copies
should be directed to Gregory S. Porter, Harken Energy Corporation, 5605 North
MacArthur Blvd., Suite 400, Irving, Texas 75038 (Telephone: (972) 753-6900).
3
<PAGE> 5
THE COMPANY
Harken is engaged in oil and gas exploration, development and production
operations both domestically and internationally through its various wholly-
owned subsidiaries and joint venture investments. Harken's domestic operations
include oil and gas exploration and production operations in the Paradox Basin
in Utah, the Gulf Coast of Texas, the Texas Panhandle, the Magnolia region of
Arkansas and the Carlsbad region of New Mexico. Harken's international
operations include four exclusive Colombian Association Contracts between
Harken's wholly-owned subsidiary, Harken de Colombia, Ltd., and Empresa
Colombiana de Petroleos.
Harken was incorporated in 1973 in the State of California and
reincorporated in 1979 in the State of Delaware. Harken's principal offices
are located at 5605 North MacArthur Blvd., Suite 400, Irving, Texas 75038 and
its telephone number is (972) 753-6900.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider carefully all of the information set forth in this Prospectus and, in
particular, should evaluate the following risk factors.
LOSSES FROM CONTINUING OPERATIONS
Harken reported losses from continuing operations for the fiscal years
ended December 31, 1994 and 1995, and the nine months ended September 30, 1996,
in the amounts of $8,211,000, $1,625,000 and $183,000, respectively. There can
be no assurance that Harken will not continue to report losses.
DILUTION; EFFECT OF SALES OF COMMON STOCK ON MARKET PRICE
As of February 3, 1997, there were 94,124,220 shares of Common Stock
outstanding. Harken has previously registered with the Commission an aggregate
of 5,665,079 shares of Common Stock for resale by certain stockholders of the
Company, in addition to the 477,026 shares of Common Stock registered for
resale pursuant to the Registration Statement of which this Prospectus forms a
part. In addition, Harken has reserved a significant number of shares of
Common Stock for future issuance as described below. There can be no assurance
that the sale of the 5,665,079 shares of Common Stock previously registered for
resale or the issuance of the shares of Common Stock which have been reserved
for future issuance will not have a material adverse effect on the then
prevailing market price of the Common Stock. Furthermore, issuance of the
shares of Common Stock as described below could result in significant dilution
to the stockholders of the Company.
On July 30, 1996, Harken issued $40,000,000 in principal amount of its 6
1/2% Senior Convertible Notes due 2000 (the "Notes"). The Notes are
convertible into shares of Common Stock by the holders thereof at a conversion
price of $2.50 per share. The Notes are convertible at the option of Harken at
any time on or after July 30, 1997, if at any time after November 28, 1996, the
market price of the Common Stock equals or exceeds $3.38 per share in any 30
consecutive calendar day period. As of January 15, 1997, Notes in the
principal amount of $38,600,000 remained outstanding and are convertible into
15,440,000 shares of Common Stock.
In July 1996, Harken acquired certain producing oil and gas properties
pursuant to an Asset Purchase and Sale Agreement (the "EnerVest Agreement").
Pursuant to the EnerVest Agreement, Harken issued 1,550,000 shares of Common
Stock to the seller of such properties and agreed to issue an additional
1,159,091 shares of Common Stock on or about April 1997 and to issue an
additional number of shares of Common Stock, up to a maximum of 2,390,909
additional shares of Common Stock, to enable the seller of such properties to
realize $10,200,000 from the sale of all shares of Common Stock issued to such
seller.
Harken has reserved additional shares of Common Stock for issuance as
follows: (i) 3,394,074 shares of Common Stock have been reserved for issuance
upon exercise of outstanding warrants; and (ii) 5,334,300 shares of Common
Stock have been reserved for issuance upon exercise of outstanding stock
options and stock options which may be issued pursuant to Harken's existing
stock option plans.
4
<PAGE> 6
VOLATILITY OF HARKEN COMMON STOCK TRADING PRICE
The daily closing prices of the Common Stock as reported by the American
Stock Exchange has fluctuated significantly over the past 12 months, ranging
from a high of $4.38 per share to a low of $1.63 per share. Management
believes that the price fluctuations and trading activity in the Common Stock
during the past 12 months are attributable to a number of factors, including
Harken's international exploration activities. There can be no assurance that
future announcements regarding Harken's international exploration efforts will
not have a substantial adverse effect on the then prevailing market price of
the Common Stock.
CONTINGENT LIABILITIES OF HARKEN
Harken has certain contingent liabilities that could have a material
adverse effect on its financial condition if Harken were required to satisfy
these liabilities, including the following:
Harken Southwest Corporation ("HSW") owns an interest in the Aneth Gas
Plant. The Aneth Gas Plant facility was in operation for many years prior to
HSW becoming an owner. The operations at the Aneth Gas Plant previously used
open, unlined drip pits for storage of various waste products. The current
plant owners have replaced all of the open ground pits currently being used
with steel tanks. The plant owners are currently in the process of closing the
open ground pits.
Texaco, the plant's operator, received a letter from the Environmental
Protection Agency ("EPA") dated July 21, 1991 and a subsequent letter dated
June 8, 1992, in which the EPA requested certain information in order to
determine if hazardous substances had been released into the environment at the
Aneth Gas Plant. Texaco has advised HSW that certain information was supplied
to the EPA pursuant to this request. Subsequently, core samples in and around
certain pit areas were jointly taken by the EPA and Texaco. The EPA approved a
plan dated April 12, 1996 proposed by Texaco for the remediation and closure of
the pits.
An agreement has been reached between the present plant owners and the
previous owner concerning responsibility for and sharing of the cost of the pit
closures in and around the Aneth Gas Plant. Harken has accrued a liability in
its financial statements for its best estimate of its share of the remediation
cost. There can be no assurance, however, that the actual amount will not be
significantly higher than the amount that has been accrued, which could have a
material adverse effect on the financial condition of Harken.
PREFERRED STOCK AUTHORIZED FOR ISSUANCE
Harken has ten million shares of preferred stock available for issuance.
The Board of Directors is authorized to issue such preferred stock in one or
more series and to set the designations, preferences, powers and relative
rights and restrictions thereof without further approval by the stockholders of
the Company. Presently, Harken has four series of preferred stock authorized,
but no shares of preferred stock are currently outstanding. Such shares of
preferred stock, if issued, would have certain preferences over the shares of
Common Stock with respect to the payment of dividends and upon liquidation,
dissolution, winding-up and in certain instances, voting. The Board of
Directors of Harken also may authorize additional series of preferred stock in
the future that have similar or additional preferences over the shares of
Common Stock.
RISKS RELATED TO INTERNATIONAL OPERATIONS
Harken presently conducts international operations and anticipates that
it will conduct significant international operations in the future. Foreign
properties, operations or investments may be adversely affected by local
political and economic developments, exchange controls, currency fluctuations,
royalty and tax increases, retroactive tax claims, renegotiation of contracts
with governmental entities, expropriation, import and export regulations and
other foreign laws or policies governing operations of foreign-based companies,
as well as by laws and policies of the United States affecting foreign trade,
taxation and investment. In addition, as certain of Harken's operations are
governed by foreign laws, in the event of a dispute, Harken may be subject to
the exclusive jurisdiction of foreign courts or may not be successful in
subjecting foreign persons to the
5
<PAGE> 7
jurisdiction of courts in the United States. Harken may also be hindered or
prevented from enforcing its rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity. Exploration and
production activities in areas outside the United States are also subject to
the risks inherent in foreign operations, including loss of revenue, property
and equipment as a result of hazards such as expropriation, nationalization,
war, insurrection and other political risks.
Harken anticipates that full development of the oil and gas reserves in
the contract areas covered by Harken's four Colombian Association Contracts, if
any are discovered, will take several years and may require extensive
production facilities which could require significant additional capital
expenditures. The ultimate amount of such expenditures cannot be presently
predicted. Harken anticipates that amounts required to fund international
activities, including those in Colombia, will be funded from existing cash
balances, asset sales, stock issuances, production payments, operating cash
flows and potentially from industry partners; however, there can be no
assurance that Harken will have adequate funds available to it to fund its
international activities or that participation from industry partners can be
obtained. In addition, Harken faces certain deadlines for completing specific
projects required pursuant to the four Association Contracts. Failure to meet
any of such deadlines could result in Harken losing its rights to one or more
of the Association Contracts, which could have a material adverse effect on
Harken's business.
INDUSTRY RISKS
Oil and Gas Price Volatility. The revenues generated by Harken are
highly dependent upon the prices of crude oil and natural gas. Fluctuations in
the energy market make it difficult to estimate future prices of oil and
natural gas. Fluctuations in energy prices are caused by a number of factors,
including regional, domestic and international demand, energy legislation,
federal or state taxes on sales of crude oil and natural gas, production
guidelines established by the Organization of Petroleum Exporting Countries,
and the relative abundance of supplies of alternative fuel such as coal.
Additionally, changing international economic and political conditions may have
a dramatic impact upon crude oil and natural gas prices. Many of these factors
are beyond the control of Harken.
Business Risks. Harken must continually acquire or explore for and
develop new oil and gas reserves to replace those being depleted by production.
Without successful drilling or acquisition ventures, Harken's oil and gas
assets, properties and revenues derived therefrom will decline over time. To
the extent Harken engages in drilling activities, such activities carry the
risk that no commercially viable oil or gas production will be obtained. The
cost of drilling, completing and operating wells is often uncertain. Moreover,
drilling may be curtailed, delayed or canceled as a result of many factors,
including title problems, weather conditions, shortages of or delays in
delivery of equipment, as well as the financial instability of well operators,
major working interest owners and drilling and well servicing companies. The
availability of a ready market for Harken's oil and gas depends on numerous
factors beyond its control, including the demand for and supply of oil and gas,
the proximity of Harken's natural gas reserves to pipelines, the capacity of
such pipelines, fluctuation in seasonal demand, the effects of inclement
weather, and government regulation. New gas wells may be shut-in for lack of a
market until a gas pipeline or gathering system with available capacity is
extended into the area.
Operating Hazards and Uninsured Risks. The operations of Harken are
subject to the inherent risks normally associated with exploration for and
production of oil and gas, including blowouts, cratering, pollution and fires,
each of which could result in damage to or destruction of oil and gas wells or
production facilities or damage to persons and property. As is common in the
oil and gas industry, Harken is not fully insured against these risks, either
because insurance is not available or because Harken has elected to self-insure
due to high premium costs. The occurrence of a significant event not fully
insured against could have a material adverse effect on Harken's financial
condition.
Environmental Regulation. Harken's domestic activities are subject to
various Navajo, federal, state, and local laws and regulations covering the
discharge of material into the environment or otherwise relating to protection
of the environment. In particular, Harken's oil and gas exploration,
development, production, its activities in connection with storage and
transportation of liquid hydrocarbons and its use of facilities for treating,
processing, recovering, or otherwise handling hydrocarbons and wastes therefrom
are subject to
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<PAGE> 8
stringent environmental regulation by governmental authorities. In addition to
these domestic laws and regulations, Harken's international operations are
subject to the laws, regulations and governmental approvals of each foreign
country in which it conducts activities including, but not limited to,
environmental laws and regulations governing oil and gas operations. Such
domestic and foreign laws and regulations have increased the costs of planning,
designing, drilling, installing, operating and abandoning Harken's oil and gas
wells and other facilities.
Imprecise Nature of Reserve Estimates. Reserve estimates are imprecise
and may be expected to change as additional information becomes available.
Furthermore, estimates of oil and gas reserves, of necessity, are projections
based on engineering data, and there are uncertainties inherent in the
interpretation of such data as well as the projection of future rates of
production and the timing of development expenditures. Reserve engineering is
a subjective process of estimating underground accumulations of oil and gas
that cannot be measured in an exact way, and the accuracy of any reserve
estimate is a function of the quality of available data and of engineering and
geological interpretation and judgment.
Competition. The oil and gas industry is competitive in all its phases.
Competition is particularly intense respecting the acquisition of desirable
producing properties and the sale of oil and natural gas production. Harken's
competitors in oil and gas exploration, development and production include
major oil companies and numerous independent oil and gas companies, and
individual producers and operators. Many of Harken's competitors possess and
employ financial and personnel resources substantially greater than those which
are available to Harken, and may, therefore, be able to pay greater amounts for
desirable leases and to define, evaluate, bid for and purchase a greater number
of producing prospects than the financial or personnel resources of Harken will
permit.
Extensive Regulation. The production of oil and gas is subject to
extensive Navajo, federal and state laws, rules, orders and regulations
governing a wide variety of matters, including the drilling and spacing of
wells, allowable rates of production, prevention of waste and pollution and
protection of the environment. In addition to these domestic laws and
regulations, Harken's international operations are subject to the laws,
regulations and governmental approvals of each foreign country in which it
conducts activities including, but not limited to, environmental laws and
regulations governing oil and gas operations. Such laws, rules and regulations
are subject to change. Any such change in any law, rule or regulation could
have the effect of increasing the Company's cost of exploration or production
or may limit the Company's revenues by regulating the level of oil and gas
production, either of which could have a material adverse effect on the
financial condition of the Company.
USE OF PROCEEDS
Harken will not receive any part of the proceeds from the sale of Shares
by the Selling Stockholders.
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<PAGE> 9
SELLING STOCKHOLDERS
This Prospectus covers the offer and sale of the Shares by the Selling
Stockholders. Set forth below is the name of each of the Selling Stockholders,
the nature of any position, office or other material relationship that any
Selling Stockholders has had within the last three years with the Company or
any of its predecessors or affiliates, the number of shares of Common Stock
owned by each of the Selling Stockholders as of the date of this Prospectus,
the number of shares of Common Stock which may be offered by each of the
Selling Stockholders pursuant to this Prospectus, and the number of shares of
Common Stock owned by each of the Selling Stockholders upon completion of the
offering if all of the Shares held by the Selling Stockholders are sold. Any
or all of the Shares listed below may be offered for sale by the Selling
Stockholders from time to time.
<TABLE>
<CAPTION>
Percent of
Common Stock
Shares Owned Shares Shares Owned Owned After
Prior to the Offered After the the
Selling Stockholders Offering Hereby Offering(1) Offering(1)
- ------------------------------------------ --------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Rauscher Pierce & Clark (Guernsey) 1,068,015 (2) 300,000 768,015 (3)
Limited
Dalworth Capital Limited 551,445 (4) 100,000 451,445 (3)
The Royal Bank of Scotland (Jersey) 49,513 (2) 38,889 10,624 (3)
Trust Company Limited A/C J331C
Erich Perroulaz 37,037 (2) 37,037 -0- (3)
Sir Robert Clark 1,100 (2) 1,100 -0- (3)
</TABLE>
- ---------------
(1) Assumes no other disposition or acquisition of Common Stock and all
Shares included herein are sold.
(2) Represents shares issuable upon exercise of warrants.
(3) Less than 1%.
(4) Includes 391,445 shares issuable upon exercise of warrants and 160,000
shares issuable upon conversion of convertible debentures.
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<PAGE> 10
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from the sale of Common Stock
owned by the Selling Stockholders. It is anticipated that the Selling
Stockholders will offer the Shares in the manner set forth on the cover page of
this Prospectus, from time to time, directly or through broker-dealers or
underwriters who may act solely as agents or may acquire the Shares as
principals, in all cases as designated by the Selling Stockholders. Such
underwriters or broker-dealers acting either as principal or as agent, may
receive compensation in the form of usual and customary or specifically
negotiated underwriting discounts, concessions or commissions from the Selling
Stockholders or the purchasers of the securities offered hereby for whom they
may act as agent.
The net proceeds to the Selling Stockholders from the sale of Common
Stock so offered will be the purchase price of the Common Stock sold less the
aggregate agents' commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by the Company. The Selling
Stockholders and any dealers or agents that participate in the distribution of
Common Stock may be deemed to be "underwriters" within the meaning of the
Securities Act.
At any time a particular offer of Common Stock is made, to the extent
required, the specific shares of Common Stock to be sold, the purchase price,
public offering price, the names of any such agent, dealer or underwriter and
any applicable commission or discount with respect to a particular offering
will be set forth in an accompanying Prospectus Supplement. Such Prospectus
Supplement may, if necessary, be in the form of a post-effective amendment to
the Registration Statement of which this Prospectus is a part, and will be
filed with the Commission to reflect the disclosure of additional information
with respect to the distribution of such securities.
Pursuant to the terms of certain agreements between the Company and
Selling Stockholders, the Company has agreed to file a "shelf" registration
statement pursuant to Rule 415 under the Securities Act covering the sale of
shares of Common Stock held by the Selling Stockholders, and to use its
reasonable best efforts to maintain the effectiveness of any such registration
statement for no less than 180 days from the date of effectiveness of such
registration statement. In addition, the Company has agreed to bear certain
expenses of registration of the Shares under the federal and state securities
laws (currently estimated to be $7,000) and of any offering and sale hereunder
not including certain expenses such as commissions or discounts of
underwriters, dealers or agents attributable to the sale of such Common Stock.
The Company has also agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments the Selling Stockholders may be required to make in
respect thereof.
To comply with the securities laws of certain jurisdictions, the
securities offered hereby may be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the securities offered hereby may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions or an
exemption from registration or qualification is available and is complied with.
The Selling Stockholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules 10b-
6 and 10b-7, which provisions may limit the timing of purchases and sales by
the Selling Stockholders and any other such person. Furthermore, under Rule
10b-6 under the Exchange Act, any person engaged in a distribution of the
Common Stock may not simultaneously engage in market making activities with
respect to such securities for a period of two business days prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the securities offered hereby.
9
<PAGE> 11
LEGAL MATTERS
The validity of the Shares will be passed upon for Harken by Gregory S.
Porter, Esq., Vice President - Legal of Harken.
EXPERTS
The consolidated financial statements of the Company included in the
Company's Annual Report on Form 10-K/A for the year ended December 31, 1995,
and the statements of revenues and direct operating expenses of the EnerVest
Properties for the fiscal years ended May 31, 1996 and 1995, included in the
Company's Current Report on Form 8-K dated July 10, 1996, each of which is
incorporated by reference herein, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
10
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by the Company in connection with the offering
described in this Registration Statement are estimated as follows:
<TABLE>
<S> <C>
Commission Registration Fee . . . . . $ 514.97
Printing and Engraving Expenses . . . 2,000.00
Accounting Fees and Expenses . . . . 2,000.00
Blue Sky Fees and Expenses . . . . . 1,000.00
Miscellaneous . . . . . . . . . . . . 1,485.03
----------
Total . . . . . . . . . . $ 7,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of
Delaware ("Delaware Law"), a Delaware corporation may indemnify its directors,
officers, employees and agents against expenses (including attorneys fees),
judgments, fines and settlements in nonderivative suits, actually and
reasonably incurred by them in connection with the defense of any action, suit
or proceeding in which they or any of them were or are made parties or are
threatened to be made parties by reason of their serving or having served in
such capacity. Delaware law, however provides that such person must have acted
in good faith and in a manner they reasonably believed to be in or not opposed
to the best interests of the corporation, and in the case of a criminal action,
such person must have had no reasonable cause to believe his or her conduct was
unlawful. Section 145 further provides that in connection with the defense or
settlement of any action by or in the right of the corporation, a Delaware
corporation may indemnify its directors and officers against expenses actually
and reasonably incurred by them if, in connection with the matters in issue,
they acted in good faith, in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification may be made with respect to any claim, issue or matter as to
which such person has been adjudged liable for negligence or misconduct unless
the Court of Chancery or the court in which such action or suit is brought
approves such indemnification. Section 145 further permits a Delaware
corporation to grant its directors and officers additional rights of
indemnification through bylaw provisions and otherwise, and to purchase
indemnity insurance on behalf of its directors and officers. Indemnification
is mandatory to the extent a claim, issue or matter has been successfully
defended.
Article Ten of the Company's Certificate of Incorporation and Article
VII of the Company's bylaws provide, in general, that the Company shall
indemnify its directors and officers under certain of the circumstances defined
in Section 145. The Company has entered into agreements with each member of
its Board of Directors pursuant to which it will advance to each director costs
of litigation in accordance with the indemnification provisions of the
Company's Certificate of Incorporation and bylaws.
ITEM 16. EXHIBITS.
4.1 - Form of certificate representing shares of Common Stock
(filed as Exhibit 1 to Harken's Registration Statement on
Form 8-A, File No. 0-9207, and incorporated by reference
herein).
II-1
<PAGE> 13
4.2 - Certificate of the Designations, Powers, Preferences and
Rights of Series C Cumulative Convertible Preferred Stock,
$1.00 par value of Harken Energy Corporation (filed as
Exhibit 4.3 to Harken's Annual Report on Form 10-K for
fiscal year ended December 31, 1989, File No. 0-9207, and
incorporated by reference herein).
4.3 - Certificate of the Designations of Series D Preferred
Stock, $1.00 par value of Harken Energy Corporation (filed
as Exhibit 4.3 to Harken's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1995, File
No. 0-9207, and incorporated by reference herein).
*5.1 - Opinion of Gregory S. Porter, Esq.
*23.1 - Consent of Arthur Andersen LLP.
*23.2 - Consent of Gregory S. Porter, Esq. (included in opinion
filed as Exhibit 5.1).
*24.1 - Powers of Attorney.
- ---------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(b) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereto)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective Registration
Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
II-2
<PAGE> 14
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Irving, State of Texas, on February 10, 1997.
HARKEN ENERGY CORPORATION
*
---------------------------------------------
Mikel D. Faulkner, Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------- ------------------------------------- ---------------------
<S> <C> <C>
* Chairman of the Board and Chief February 10, 1997
--------------------------- Executive Officer (Principal
Mikel D. Faulkner Executive Officer)
* President and Chief Operating February 10, 1997
--------------------------- Officer and Director
Richard H. Schroeder
* Senior Vice President, Chief February 10, 1997
--------------------------- Financial Officer and Director
Bruce N. Huff (Principal Accounting Officer and
Principal Financial Officer)
* Director February 10, 1997
---------------------------
Michael M. Ameen, Jr.
* Director February 10, 1997
---------------------------
Michael R. Eisenson
</TABLE>
II-4
<PAGE> 16
<TABLE>
<S> <C> <C>
* Director February 10, 1997
---------------------------
Hobart A. Smith
* Director February 10, 1997
---------------------------
Donald W. Raymond
* Director February 10, 1997
---------------------------
Gary B. Wood
</TABLE>
*Gregory S. Porter, by signing his name hereto, does hereby sign this
Registration Statement on behalf of Harken Energy Corporation and each of the
above-named officers and directors of such Company pursuant to powers of
attorney, executed on behalf of the Company and each officer and director.
/s/ Gregory S. Porter
- ------------------------------------
Gregory S. Porter,
Attorney-in-Fact
II-5
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- -------------------- -------------------------------------------------------
<S> <C>
4.1 Form of certificate representing shares of Harken
common stock, par value $.01 per share (filed as
Exhibit 1 to Harken's Registration Statement on Form
8-A, File No. 0- 9207, and incorporated by reference
herein).
4.2 Certificate of the Designations, Powers, Preferences
and Rights of Series C Cumulative Convertible
Preferred Stock, $1.00 par value of Harken Energy
Corporation (filed as Exhibit 4.3 to Harken's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1989, File No. 0-9207, and incorporated
by reference herein).
4.3 Certificate of the Designations of Series D
Preferred Stock, $1.00 par value of Harken Energy
Corporation (filed as Exhibit 4.3 to Harken's
Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1995, File No. 0-9207, and
incorporated by reference herein).
*5.1 Opinion of Gregory S. Porter, Esq. *23.1
Consent of Arthur Andersen LLP.
*23.2 Consent of Gregory S. Porter, Esq. (included in
opinion filed as Exhibit 5.1).
*24.1 Powers of Attorney.
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
Exhibit 5.1
February 10, 1997
Harken Energy Corporation
5605 N. MacArthur Blvd
Suite 400
Irving, TX 75038
Re: Registration Statement on Form S-3
Gentlemen:
I have acted as counsel to Harken Energy Corporation, a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Act"), of the offer and sale of an
aggregate of 477,026 shares (the "Shares") of common stock, $.01 par value per
share, of the Company ("Common Stock") pursuant to a Registration Statement on
Form S-3 of the Company (the "Registration Statement") to which this opinion
letter is an exhibit. The shares are issuable upon exercise of certain
warrants (the "Warrants").
In reaching the opinion set forth herein, I have reviewed (a) the
Registration Statement, (b) the Certificate of Incorporation of the Company, as
amended, (c) the Bylaws of the Company, (d) records of proceedings of the Board
of Directors and the stockholders of the Company and (e) except as set forth
below, such other agreements, certificates of public officials and officers of
the Company, records, documents and matters of law that I deemed relevant.
Based on and subject to the foregoing and subject further to the
assumptions, exceptions and qualifications hereinafter stated, I am of the
opinion that, subject to compliance with federal and state securities laws (as
to which I express no opinion), the Shares, upon issuance in accordance with
the terms of the Warrants and upon full payment of the exercise price
therefore, will be duly authorized, validly issued, fully paid and
nonassessable.
The opinion expressed above is subject in all respects to the following
assumptions, exceptions and qualifications:
a. I have assumed that (i) all signatures on all documents examined
by me are genuine, (ii) all documents submitted to me as
originals are accurate and complete, (iii) all documents
submitted to me as copies are true and correct copies of the
originals thereof, (iv) all information submitted to me is
accurate and complete as of the date hereof, (v) all persons
executing and delivering documents reviewed by me were competent
to execute and to deliver such documents and (vi) that all
persons signing, in a representative capacity, documents reviewed
by me had authority to sign in such capacity.
b. I have assumed that there are no agreements, indentures,
mortgages, deeds of trust or instruments that affect the ability
of the Company to issue the Shares.
The opinions expressed above are limited to the laws of the State of
Texas, the General Corporation Law of the State of Delaware and the federal
laws of the United States of America. You should be aware that I am not
admitted to the practice of law in the State of Delaware and my opinion herein
as to the General Corporation
<PAGE> 2
Harken Energy Corporation
February 10, 1997
Page 2
Law of the State of Delaware is based solely upon the unofficial compilation
thereof contained in Prentice Hall Information Services Corporation Statutes.
This opinion letter may be filed as an exhibit to the Registration
Statement. In giving this consent, I do not thereby admit that I come into the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
I disclaim any duty to advise you regarding any changes in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
/s/ Gregory S. Porter
Gregory S. Porter, Esq.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated
February 28, 1996, except with regard to Note 15 as to which such date is April
18, 1996, included in Harken Energy Corporation's Form 10-K/A for the year
ended December 31, 1995, and of our report dated July 11, 1996, on the
statements of revenue and direct operating expenses of the EnerVest Properties
for the fiscal years ended May 31, 1996 and 1995 included in Harken Energy
Corporation's Form 8-K dated July 10, 1996, and to all references to our Firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
February 10, 1997
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Mikel D. Faulkner, Bruce N. Huff, Larry E. Cummings and Gregory S.
Porter, or any of them (with full power of each of them to act alone), his true
and lawful attorney-in-fact and agent, with full power of substitution, for him
and on his behalf and in his name, place and stead, in any and all capacities,
to sign, execute and file a Registration Statement on Form S-3 under the
Securities Act of 1933, as amended, and any or all amendments (including
without limitation, post-effective amendments and any amendment or amendments
increasing the amount of securities for which registration is being sought),
with all exhibits and any and all documents required to be filed with respect
thereto, with the Securities and Exchange Commission and/or any regulatory
authority relating to the registration of 472,926 shares of Common Stock, $0.01
par value, of Harken Energy Corporation and such additional shares of Common
Stock as the holders of "piggy-back" registration rights may request to be
included in such registration statement, 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 in order to effectuate the same, as fully and to all intents and
purposes as he himself might or could do of personally present, hereby
ratifying and confirming all that the said attorneys-in-fact and agents, or any
of them, or their substitute or substitutes, may lawfully do or cause to be
done.
IN WITNESS WHEREOF, this Power of Attorney has been signed by the following
persons in the capacities indicated as of the 1st day of February, 1997.
<TABLE>
<CAPTION>
NAME CAPACITIES
<S> <C>
/s/ Mikel D. Faulkner Chairman of the Board, Director and
---------------------------- Chief Executive Officer
Mikel D. Faulkner (Principal Executive Officer)
/s/ Bruce N. Huff Senior Vice President, Chief Financial
---------------------------- Officer and Director
Bruce N. Huff (Principal Financial and Accounting Officer)
/s/ Richard H. Schroeder President, Chief Operating Officer
---------------------------- and Director
Richard H. Schroeder
</TABLE>
<PAGE> 2
POWER OF ATTORNEY
February 1, 1997
Page 2
<TABLE>
<S> <C>
/s/ Michael M. Ameen, Jr. Director
----------------------------
Michael M. Ameen, Jr.
/s/ Michael R. Eisenson Director
----------------------------
Michael R. Eisenson
/s/ Hobart A. Smith Director
----------------------------
Hobart A. Smith
/s/ Donald W. Raymond Director
----------------------------
Donald W. Raymond
/s/ Gary B. Wood Director
----------------------------
Gary B. Wood
</TABLE>
