<PAGE> 1
As filed with the Securities and Exchange Commission on May 27, 1998
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
(State or other jurisdiction of
incorporation or organization)
95-2841597
(I.R.S. employer identification number)
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>
==========================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SHARES TO BE AGGREGATE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER SECURITY (2) PRICE (2) FEE (2)
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<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 5,751,073 (1) $5.375 $30,912,018 $9,368
- --------------------------------------------------------------------------------------------------------------------------
Preferred Stock Purchase Rights 5,751,073 Not Applicable Not Applicable -- (3)
==========================================================================================================================
</TABLE>
(1) Includes 5,733,073 shares of Common Stock issuable upon conversion of the
registrant's Series F Convertible Preferred Stock (the "Series F
Preferred") and upon exercise of an option granted by the registrant to
purchase shares of its Common Stock (the "Investment Option"). For
purposes of estimating the number of shares of Common Stock issuable upon
conversion of the Series F Preferred and exercise of the Investment
Option, the registrant calculated the number of shares to be issued based
upon an assumed conversion and exercise price of $5.25. As of the date
hereof, the actual conversion and exercise prices would have been $5.47.
In addition to the shares set forth in the table, the amount to be
registered under the Series F Preferred and the Investment Option includes
an indeterminate number of shares issuable upon conversion of or in
respect of the Series F Preferred and the Investment Option, as such
number may be adjusted as a result of stock splits, stock dividends and
anti-dilution provisions (including floating rate conversion prices) in
accordance with Rule 416.
(2) 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
May 22, 1998.
(3) In accordance with Rule 457(g), no additional registration fee is required
in respect of the Preferred Stock Purchase Rights.
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
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION DATED MAY 27, 1998
PROSPECTUS
5,751,073 Shares
HARKEN ENERGY CORPORATION
Common Stock
----------------------
The 5,751,073 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
Common Stock includes the preferred stock purchase rights attaching to such
stock pursuant to that certain Rights Agreement dated as of April 6, 1998, by
and between Harken and ChaseMellon Shareholder Services L.L.C. 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 $15,500). See "Selling
Stockholders" and "Use of Proceeds."
The Common Stock is traded on the American Stock Exchange, under the
symbol "HEC." On May 26, 1998, the closing sales price of the Common Stock as
reported on the American Stock Exchange was $5.25 per share.
The Shares may be offered and sold from time to time by the Selling
Stockholders or their respective pledgees, donees, transferees or other
successors in interest 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 such other market on which
the Common Stock may from time to time be trading, including block trades or
ordinary broker's transactions, or through privately negotiated transactions,
or through the writing of options on the shares or short sales, 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 May __, 1998.
<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. Such
documents are also available at the Web site maintained by the Commission
(http://www.sec.gov). 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
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<S> <C>
Available Information........................................................................ 2
Incorporation of Certain Documents by Reference.............................................. 3
The Company.................................................................................. 4
Risk Factors................................................................................. 4
Use of Proceeds.............................................................................. 9
Selling Stockholders......................................................................... 10
Plan of Distribution......................................................................... 11
Legal Matters................................................................................ 11
Experts...................................................................................... 11
</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
SELL 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.
2
<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 for the year ended December
31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(3) The Company's Proxy Statement for the Annual Meeting of Stockholders
of Harken to be held on June 15, 1998;
(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; and the description of the Company's Preferred Stock
Purchase Rights as contained in the Company's Registration Statement
on Form 8-A, filed with the Commission on April 7, 1998, including
all amendments and reports filed for the purpose of updating such
description;
(5) The Company's Current Report on Form 8-K dated April 7, 1998; and
(6) The Company's Current Report on Form 8-K dated May 27, 1998.
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 Four
Corners Area of Utah, Arizona and New Mexico, the Gulf Coast of Texas, the Texas
Panhandle, the Magnolia region of Arkansas, the Carlsbad region of New Mexico
and St. Martin and LaFourche Parishes, Louisiana. Harken's international
operations include six exclusive Colombian Association Contracts between
Harken's wholly-owned subsidiary, Harken de Colombia, Ltd., and Empresa
Colombiana de Petroleos, the state-owned oil company of the Republic of
Colombia.
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.
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 $7.50 per share to a low of $4.50 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.
LOSSES FROM CONTINUING OPERATIONS
Harken reported losses from continuing operations for the fiscal years
ended December 31, 1994, 1995 and 1996 in the amounts of $8,211,000, $1,625,000
and $341,000, respectively. For the fiscal year ended December 31, 1997 and the
three months ended March 31, 1998, Harken reported income of approximately
$189,000 and $84,000, respectively. There can be no assurance, however, that
Harken will continue to remain profitable.
POTENTIAL DILUTION; EFFECT OF SALES OF COMMON STOCK ON MARKET PRICE
As of May 26, 1998, there were 122,823,347 shares of Common Stock
outstanding. Harken has reserved a significant number of shares of Common Stock
for future issuance as described below. There can be no assurance that 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 June 11, 1997, Harken issued $70,000,000 in principal amount of its 5
1/2% Senior Convertible Notes due 2002 (the "Notes"). The Notes are convertible
into shares of Common Stock by the holders thereof at a conversion price of
$5.00 per share at any time after July 21, 1997. The Company has called for
mandatory conversion of all outstanding Notes into Common Stock to be effective
June 12, 1998. As of May 26, 1998, Notes in the principal amount of $39,270,000
remained outstanding and 7,854,000 shares of Common Stock are expected to be
issued upon conversion of such Notes.
4
<PAGE> 6
Between October 1997 and March 1998, Harken entered into three separate
Development Finance Agreements (the "Development Finance Agreements") with
institutional investors (the "Investors"), pursuant to which the Investors
provided $35 million of gross proceeds (the "Payment Amount") to Harken to
finance drilling of three prospects in Colombia. In exchange, the Investors
received the right to receive future payments from Harken based on Harken's net
profits from the three prospects (the "Participation"). The Investors have the
right, for a period of two years beginning between October 1998 and March 1999,
to convert all or part of the Participation into shares of Common Stock. The
number of shares of Common Stock to be issued upon conversion of the
Participation will be equal to the quotient of (i) the Payment Amount (less any
distributions made in respect of the Participation) plus an amount equal to 15%
interest per annum on the net Payment Amount compounded monthly (the "Invested
Amount"), divided by (ii) the market price of the Common Stock at the time of
conversion. Harken also has the right to convert the Participation into shares
of Common Stock with the number of shares of Common Stock to be issued to be
equal to the quotient of (i) the Payment Amount (less any distribution made in
respect of the Participation) plus an amount equal to 25% interest per annum on
the net Payment Amount compounded monthly, divided by (ii) the market price of
the Common Stock at the time of conversion. Harken can also elect to pay cash
upon any conversion of the Participation in lieu of issuing shares of Common
Stock. The Development Finance Agreements also require the issuance of
additional shares of Common Stock in the event of a conversion to the extent
that the Investors do not, under certain circumstances, realize the Invested
Amount from the sale of the shares of Common Stock issued upon conversion.
On April 9, 1998, Harken entered into a Securities Purchase Agreement
with RGC International Investors, LDC ("RGC"), pursuant to which Harken issued
to RGC 15,000 shares of its Series F Convertible Preferred Stock (the "Series F
Preferred") in exchange for $15,000,000. As of May 27, 1998, 15,000 shares of
Series F Preferred were issued and outstanding. The Series F Preferred is
convertible into shares of Common Stock at a conversion price based upon the
market price of the Common Stock at the time of conversion. The number of shares
of Common Stock issuable upon conversion of the Series F Preferred will also
include a premium amount equal to interest calculated on the stated value
($1,000 per share) of the Series F Preferred at 5% per annum. The Series F
Preferred does not pay dividends.
During the first six months following the issuance of the Series F
Preferred, RGC can elect to convert the shares of the Series F Preferred into
Common Stock on any day that the closing sales price of the Common Stock on the
American Stock Exchange is equal to or greater that 115% of the "Market Price."
The Market Price is equal to the lower of (a) the lowest average of the closing
bid prices of the Common Stock for any five consecutive trading days during the
22 trading days ending one trading day prior to the conversion date, or (b) the
low closing bid price of the Common Stock over the five trading days ending one
trading day prior to the conversion date.
During the first nine months following the issuance of the Series F
Preferred, the conversion price will be equal to 103% of the Market Price on the
conversion date. On January 9, 1999, the conversion price will be fixed at 90%
of the average of the closing bid prices of the Common Stock for the previous 22
trading days. On February 9, 1999, the conversion price will be fixed at 90% of
the average of the closing bid prices of the Common Stock for the previous 22
trading days if it would result in a lower conversion price than that calculated
on January 9, 1999. Any shares of Series F Preferred outstanding on April 9,
1999, will automatically be converted into shares of Common Stock at the then
applicable conversion price.
At each election to convert shares of Series F Preferred into Common
Stock, RGC will have the option to purchase from Harken for cash additional
shares of Common Stock equal to the number of shares issued on such conversion
(less any shares issued in respect of the premium amount) at a purchase price
equal to the then applicable conversion price.
As of May 27, 1998 and at an assumed conversion and exercise price of
$5.25 per share, the Series F Preferred and the related options would have been
convertible or exercisable into 5,733,073 shares of Common Stock, but this
number of shares could prove to be significantly greater in the event of a
decrease in the trading price of the Common Stock. Purchasers of Common Stock
could therefore experience substantial dilution of their investment upon
conversion of the Series F Preferred and exercise of the related options. The
shares of Common Stock into which the Series F Preferred may be converted and
for which the related options may be exercised are being registered pursuant to
this Registration Statement.
On May 20, 1998, a subsidiary of Harken acquired a majority non-operated
working interest in 33 producing oil and gas wells located in St. Martin Parish
and LaFourche Parish, Louisiana, as well as substantial additional development
and exploratory acreage. As consideration for these properties, Harken will
issue
5
<PAGE> 7
2,716,483 shares of Common Stock to the seller upon receipt of listing approval
of such shares by the American Stock Exchange, and Harken may be required to
issue additional shares of Common Stock in the future with a value of up to $4
million, or pay cash, upon the resolution of certain identified contingencies.
On May 26, 1998, Harken issued $85,000,000 in principal amount of its 5%
Senior Convertible Notes due 2003 (the "1998 Notes"). The 1998 Notes are
convertible into shares of Common Stock by the holders thereof at a conversion
price of $6.50 per share, subject to adjustment, at any time after the earlier
of the business day following the effective date of a registration statement
filed by the Company with the Commission with respect to the shares issuable
upon conversion of the 1998 Notes and the date such shares may be sold pursuant
to Rule 144 under the Securities Act or other exemption from registration under
the Securities Act. A 3% premium on the number of shares issuable upon
conversion of the 1998 Notes will be payable to holders converting 1998 Notes
prior to November 26, 1998 (the "Effective Date").
Harken can require conversion of the 1998 Notes at any time after May 26,
1999 if the average of the Market Price (as defined) of the Common Stock over
the Stock Exchange Business Days (as defined) in any 30 consecutive calendar day
period the beginning date of which is on or after May 26, 1998 and the ending
date of which is on or after the Effective Date, has equaled or exceeded 125% of
the conversion price. The 1998 Notes may be redeemed for cash at Harken's
option, upon not less than 30 days notice, at par, in whole or in part, at any
time after May 26, 2002. Commencing November 26, 2002, Harken may redeem up to
50% of the 1998 Notes for shares of Common Stock, and on May 26, 2003, Harken
may redeem all remaining 1998 Notes for shares of Common Stock. If Harken elects
to redeem the 1998 Notes for shares of Common Stock, each such note will be
redeemed for the number of shares of Common Stock equal to 110% of the sum of
the face value of the note plus interest accrued and unpaid thereon divided by
the average of the Market Price of the Common Stock over the 30 calendar day
period immediately preceding the date of notice of such redemption; provided
that if the average of the aggregate Market Price of all of the outstanding
shares of Common Stock over such 30 calendar day period is less than $500
million, each such note will be redeemed for the number of shares of Common
Stock equal to 115% of the sum of the face value of the note plus interest
accrued and unpaid thereon divided by the average of the Market Price of the
Common Stock over the 30 calendar day period immediately preceding the date of
notice of such redemption.
Harken has reserved additional shares of Common Stock for issuance as
follows: (i) 1,630,624 shares of Common Stock have been reserved for issuance
upon exercise of outstanding warrants; and (ii) 8,959,999 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.
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 six series of preferred stock authorized, and
15,000 shares of Series F Preferred Stock are currently outstanding. Any
additional 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 operations in Colombia and anticipates that it
will conduct significant operations in Colombia 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
6
<PAGE> 8
increases, retroactive tax claims, renegotiation of contracts with governmental
entities, expropriation, import and export regulations and other foreign laws or
policies governing operations of foreign-based companies, as well as by laws and
policies of the United States affecting foreign trade, taxation and investment.
In addition, as certain of Harken's operations are governed by foreign laws, in
the event of a dispute, Harken may be subject to the exclusive jurisdiction of
foreign courts or may not be successful in subjecting foreign persons to the
jurisdiction of courts in the United States. Harken may also be hindered or
prevented from enforcing its rights with respect to a governmental
instrumentality because of the doctrine of sovereign immunity. Exploration and
production activities in areas outside the United States are also subject to the
risks inherent in foreign operations, including loss of revenue, property and
equipment as a result of hazards such as expropriation, nationalization, war,
insurrection and other political risks.
Harken anticipates that full development of the oil and gas reserves in
the contract areas covered by Harken's six Colombian Association Contracts 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 without participation from industry
partners or that participation from industry partners can be obtained to fund
such international activities. In addition, Harken faces certain deadlines for
completing specific projects required pursuant to the six Colombian 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.
UNCERTAINTIES IN UNITED STATES -- COLOMBIA RELATIONS
Pursuant to the Foreign Assistance Act of 1961, the President of the
United States is required to determine whether to certify that certain countries
have cooperated with the United States, or taken adequate steps on their own, to
achieve the goals of the United Nations Convention Against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances. In 1995, 1996 and 1997, the
President did not certify Colombia. As a result, the United States imposed
substantial economic sanctions on Colombia, including the withholding of
bilateral economic assistance, the blocking of Export-Import Bank and Overseas
Private Investment Corporation loans and political risk insurance, and the entry
of the United States votes against multilateral assistance to Colombia in the
World Bank and the InterAmerican Development Bank.
The consequences of continued and successive United States
decertifications of Colombian activities are not fully known, but may include
the imposition of additional economic sanctions on Colombia in 1998 and
succeeding years. The President also has authority to impose far-reaching
economic, trade and investment sanctions on Colombia pursuant to the
International Emergency Economic Powers Act of 1978. The Colombian government's
reaction to United States sanctions could potentially include, among other
things, restrictions on the repatriation of profits and the nationalization of
Colombian assets owned by United States entities. Accordingly, imposition of the
foregoing economic and trade sanctions on Colombia could materially affect the
performance of the Common Stock and the Company's long-term financial results.
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
7
<PAGE> 9
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
and 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
shortage of available working capital, title problems, weather conditions,
environmental concern, 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
reserves to pipelines, the capacity of such pipelines, fluctuation in seasonal
demand, the effects of inclement weather, and government regulation. New wells
may be shut-in for lack of a market until a 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
and production, its activities in connection with storage and transportation of
liquid hydrocarbons and its use of facilities for treating, processing,
recovering, or otherwise handling hydrocarbons and wastes therefrom are subject
to stringent environmental regulation by governmental authorities. In addition
to these domestic laws and regulations, Harken's international operations are
subject to the laws, regulations and governmental approvals of each foreign
country in which it conducts activities including, but not limited to,
environmental laws and regulations governing oil and gas operations. The
environmental legislation of Colombia provides for restrictions and prohibitions
on spills, releases or emissions of various substances produced in association
with oil operations. Under Colombia's environmental laws, the Company is
required to submit a report evaluating the environmental impact of any actions
proposed to be taken which might have a negative impact on the environment for
approval to the Colombian Ministry of the Environment. Specifically, Harken is
required to submit environmental impact reports regarding each well Harken
proposes to drill, all seismic activities and any proposed pipelines or trucking
activity. Failure to timely receive approval of environmental reports has in the
past delayed Harken's operations and there can be no assurance that Harken will
not suffer future delays. Colombia's regulatory framework with regard to
environmental protection is not as fully developed and detailed as that which
exists in the United States. The Company intends that its operations in Colombia
will be designed to meet standard international petroleum industry practice and,
as they develop, Colombian requirements. 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 and may do so in the future.
Imprecise Nature of Reserve Estimates. Reserve estimates are imprecise
and may be expected to change as additional information becomes available.
Furthermore, estimates of oil and gas reserves, of necessity, are projections
based on engineering data, and there are uncertainties inherent in the
interpretation of such data as well as the projection of future rates of
production and the timing of development expenditures. Reserve engineering is a
subjective process of estimating underground accumulations of oil and gas that
cannot be
8
<PAGE> 10
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.
9
<PAGE> 11
SELLING STOCKHOLDERS
This Prospectus covers the offer and sale of the Shares by the Selling
Stockholders. Set forth below are the names of the Selling Stockholders, the
nature of any position, office or other material relationship that the Selling
Stockholders have 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 the
Selling Stockholders as of the date of this Prospectus, the number of shares of
Common Stock which may be offered by the Selling Stockholders pursuant to this
Prospectus, and the number of shares of Common Stock owned by 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
Shares Shares Stock
Owned Prior Shares Owned Owned
to the Offered After the After the
Selling Stockholders Offering Hereby Offering(2) Offering(2)
- --------------------------------------- ------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
RGC International Investors, LDC 5,733,073 (1) 5,733,073 (1) -0- -0-
FAISAL Finance (Switzerland) SA 18,000 18,000 -0- -0-
</TABLE>
- -------------------
(1) On April 9, 1998, Harken entered into a Securities Purchase Agreement
with RGC International Investors, LDC ("RGC"), pursuant to which Harken
issued to RGC 15,000 shares of its Series F Convertible Preferred Stock
(the "Series F Preferred") in exchange for $15,000,000. The Series F
Preferred is convertible into shares of Common Stock at a conversion
price based upon the market price of the Common Stock at the time of
conversion. The number of shares of Common Stock issuable upon conversion
of the Series F Preferred will also include a premium amount equal to
interest calculated on the stated value ($1,000 per share) of the Series
F Preferred at 5% per annum. During the first six months following the
issuance of the Series F Preferred, RGC can elect to convert the shares
of the Series F Preferred into Common Stock on any day that the closing
sales price of the Common Stock on the American Stock Exchange is equal
to or greater that 115% of the "Market Price." The Market Price is equal
to the lower of (a) the lowest average of the closing bid prices of the
Common Stock for any five consecutive trading days during the 22 trading
days ending one trading day prior to the conversion date, or (b) the low
closing bid price of the Common Stock over the five trading days ending
one trading day prior to the conversion date. During the first nine
months following the issuance of the Series F Preferred, the conversion
price will be equal to 103% of the Market Price on the conversion date.
On January 9, 1999 the conversion price will be fixed at 90% of the
average of the closing bid prices of the Common Stock for the previous 22
trading days. On February 9, 1999, the conversion price will be fixed at
90% of the average of the closing bid prices of the Common Stock for the
previous 22 trading days if it would result in a lower conversion price
than that calculated on January 9, 1999. Any shares of Series F Preferred
outstanding on April 9, 1999 will automatically be converted into shares
of Common Stock at the then applicable conversion price. At each election
to convert shares of Series F Preferred into Common Stock, RGC will have
the option to purchase (the "Investment Options") from Harken for cash
additional shares of Common Stock equal to the number of shares issued on
such conversion (less any shares issued in respect of the premium amount)
at a purchase price equal to the then applicable conversion price. The
number of shares set forth in the table above with respect to RGC
represents an estimate of the number of shares of Common Stock that will
be offered by it based upon an assumed conversion and exercise price of
$5.25. The actual number of shares of Common Stock issuable upon
conversion of the Series F Preferred and RGC's Investment Option is
indeterminate and subject to adjustment, and could be materially less or
more than such estimated number, depending on factors that cannot be
predicted by the Company at this time, including, among other factors,
the future market price of the Common Stock. The actual number of shares
of Common Stock offered hereby and included in the Registration Statement
of which this Prospectus is a part, includes such indeterminate number of
additional shares of Common Stock as may become issuable upon conversion
of the Series F Preferred and exercise of the related options to prevent
dilution resulting from stock splits, stock dividends or similar
transactions in accordance with Rule 416 under the Securities Act or by
reason of changes in the conversion price of the Series F Preferred in
accordance with the terms thereof. Pursuant to the terms of the Series F
Preferred and the Investment Options, generally, the shares of Series F
Preferred are convertible and the Investment Options are exercisable by
any holder only to the extent that the number of shares of Common Stock
thereby issuable, together with the number of shares of Common Stock
owned by such holder and its affiliates (but not including shares of
Common Stock underlying unconverted shares of Series F Preferred or
unexercised portions of the Investment Options) would not exceed 4.9% of
the then outstanding Common Stock as determined in accordance with
Section 13(d) of the Exchange Act. Accordingly, the number of shares of
Common Stock set forth in the table for RGC may exceed the number of
shares of Common Stock that RGC could own beneficially at any given time
through its ownership of the Series F Preferred and the Investment
Options. In that regard, beneficial ownership of RGC set forth in the
table is not determined in accordance with Rule 13d-3 under the Exchange
Act.
10
<PAGE> 12
(2) Assumes no other disposition or acquisition of Common Stock and that all
Shares included herein are sold.
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.
The Shares being offered by the Selling Stockholders or their respective
pledgees, donees, transferees or other successors in interest, will be sold in
one or more transactions (which may involve block transactions) on the
American Stock Exchange or on such other market on which the Common Stock may
from time to time be trading, in privately-negotiated transactions, through the
writing of options on the Shares, short sales or any combination thereof. The
sale price to the public may be the market price prevailing at the time of
sale, a price related to such prevailing market price or such other price as
the Selling Stockholders determine from time to time. The Shares may also be
sold pursuant to Rule 144. The Selling Stockholders shall have the sole and
absolute discretion not to accept any purchase offer or make any sale of Shares
if they deem the purchase price to be unsatisfactory at any particular time.
The Selling Stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the Shares directly
to market makers acting as principals and/or broker-dealers acting as agents
for themselves or their customers. It is possible that a Selling Stockholder
will attempt to sell shares of Common Stock in block transactions to market
makers or other purchasers at a price per share which may be below the then
market price. There can be no assurance that all or any of the Shares offered
hereby will be issued to, or sold by, the Selling Stockholders.
The Selling Stockholders, alternatively, may sell all or any part of the
Shares offered hereby through an underwriter. No Selling Stockholder has
entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into. If a Selling
Stockholder enters into such an agreement or agreements, the relevant details
will be set forth in a supplement or revisions to this Prospectus.
The Selling Stockholders and any other persons participating in the sale
or distribution of the Shares will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders or any other such person. The foregoing may affect the
marketability of the Shares.
Pursuant to 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 two years 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 $15,500). The Company has also agreed to indemnify
the Selling Stockholders, or their transferees or assigns, 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.
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 for the year ended December 31, 1997, which
is incorporated by reference herein, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are
11
<PAGE> 13
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
12
<PAGE> 14
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....... $ 9,368.00
Printing and Engraving Expenses 2,000.00
Accounting Fees and Expenses...... 2,000.00
Blue Sky Fees and Expenses........ 1,000.00
Legal Fees........................ 900.00
Miscellaneous..................... 232.00
-----------
Total.......... $ 15,500.00
===========
</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.
II-1
<PAGE> 15
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).
4.2 - Rights Plan dated as of April 6, 1998, by and between Harken
Energy Corporation and ChaseMellon Shareholder Services
L.L.C. (filed as Exhibit 4 to Harken's Current Report on
Form 8-K dated April 7, 1998, file No. 0-9207, and
incorporated by reference herein).
4.3 - Certificate of Designations of Series E Junior Participating
Preferred Stock (filed as Exhibit B to Exhibit 4 to Harken's
Current Report on Form 8-K dated April 7, 1998, file No. 0-
9207, and incorporated by reference herein).
4.4 - Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock (filed as Exhibit 4.8
to Harken's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998, file No. 0-9207, and
incorporated by reference herein).
*5.1 - Opinion of Gregory S. Porter, Esq.
10.1 - Securities Purchase Agreement dated as of April 9, 1998, by
and between Harken Energy Corporation and RGC International
Investors, LDC (filed as Exhibit 10.1 to Harken's Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
1998, file No. 0-9207, and incorporated by reference
herein).
*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
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
II-2
<PAGE> 16
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.
(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> 17
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 May 27, 1998.
HARKEN ENERGY CORPORATION
/s/ Mikel D. Faulkner
----------------------------------------
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>
/s/ Mikel D. Faulkner Chairman of the Board and Chief May 27, 1998
- -------------------------- Executive Officer (Principal
Mikel D. Faulkner Executive Officer)
* Vice Chairman and Director May 27, 1998
- --------------------------
Richard H. Schroeder
* President and Chief Operating May 27, 1998
- -------------------------- Officer and Director
Bruce N. Huff
* President of Harken International, May 27, 1998
- -------------------------- Ltd. and Director
Stephen C. Voss
* Director May 27, 1998
- --------------------------
Gary R. Petersen
</TABLE>
II-4
<PAGE> 18
<TABLE>
<S> <C> <C>
* Director May 27, 1998
- --------------------------
Michael M. Ameen, Jr.
Director May 27, 1998
Michael R. Eisenson
* Director May 27, 1998
- --------------------------
Hobart A. Smith
*
- -------------------------- Director May 27, 1998
Donald W. Raymond
* Director May 27, 1998
- --------------------------
Gary B. Wood
/s/ A. Wayne Hennecke Vice President of Finance and Chief May 27, 1998
- -------------------------- Financial Officer (Principal
A. Wayne Hennecke Accounting Officer and Principal
Financial Officer
</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
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Exhibit Numbered Page
- -------------- ------------------------------------------------------ ----------------
<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 Rights Plan dated as of April 6, 1998, by and between Harken
Energy Corporation and ChaseMellon Shareholder Services
L.L.C. (filed as Exhibit 4 to Harken's Current Report on
Form 8-K dated April 7, 1998, file No. 0-9207, and
incorporated by reference herein).
4.3 Certificate of Designations of Series E Junior Participating
Preferred Stock (filed as Exhibit B to Exhibit 4 to Harken's
Current Report on Form 8-K dated April 7, 1998, file No.
0-9207, and incorporated by reference herein).
4.4 Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock (filed as Exhibit 4.8
to Harken's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998, file No. 0-9207, and
incorporated by reference herein).
*5.1 Opinion of Gregory S. Porter, Esq.
10.1 Securities Purchase Agreement dated as of April 9, 1998, by
and between Harken Energy Corporation and RGC International
Investors, LDC (filed as Exhibit 10.1 to Harken's Quarterly
Report on Form 10-Q for the quarterly period ended March 31,
1998, file No. 0-9207, and incorporated by reference
herein).
*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
May 27, 1998
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 5,751,073 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 include 5,733,073 shares of Common Stock that
are being registered pursuant to a Securities Purchase Agreement (the
"Securities Purchase Agreement") dated as of April 9, 1998, by and between the
Company and RGC International Investors, LDC ("RGC"), which requires the
registration of shares of Common Stock issuable upon exercise of the Company's
Series F Convertible Preferred Stock (the "Preferred Shares") and shares of
Common Stock which may be issued to RGC pursuant to options granted to RGC under
the Securities Purchase Agreement (the "Option Shares").
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 that are currently outstanding, have
been duly authorized and validly issued and are fully paid and nonassessable. I
am further of the opinion that the Shares, upon issuance in accordance with the
terms of the Securities Purchase Agreement and the Certificate of Designations,
Preferences and Rights of Series F Convertible Preferred Stock, and the Option
Shares, upon issuance in accordance with the terms of the Securities Purchase
Agreement and upon full payment for the purchase price thereof, 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
<PAGE> 2
Harken Energy Corporation
May 27, 1998
Page 2
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 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 March
17, 1998, included in Harken Energy Corporation's Form 10-K for the year ended
December 31, 1997, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
May 27, 1998
<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 5,751,073 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 if 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 15th day of May, 1998.
NAME CAPACITIES
/s/ Mikel D. Faulkner Chairman of the Board, Director and
-------------------------- Chief Executive Officer
Mikel D. Faulkner (Principal Executive Officer)
/s/ Bruce N. Huff President and Chief Operating Officer and
-------------------------- Director
Bruce N. Huff
/s/ Richard H. Schroeder Vice Chairman and Director
--------------------------
Richard H. Schroeder
<PAGE> 2
POWER OF ATTORNEY
May 15, 1998
Page 2
/s/ Stephen C. Voss President of Harken International, Ltd.
-------------------------- and Director
Stephen C. Voss
/s/ Gary R. Petersen Director
--------------------------
Gary R. Petersen
/s/ Michael M. Ameen, Jr. Director
--------------------------
Michael M. Ameen, Jr.
-------------------------- 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
/s/ A. Wayne Hennecke Vice President of Finance and Chief
-------------------------- Financial Officer (Principal Accounting
A. Wayne Hennecke Officer and Principal Financial Officer)
