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As filed with the Securities and Exchange Commission on June 4, 1999
Registration No. ________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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HARKEN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 95-2841597
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
HARKEN ENERGY CORPORATION
16285 PARK TEN PLACE, SUITE 600
HOUSTON, TEXAS 77084
(281) 717-1300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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KAREN S. BUSTAMANTE
SENIOR COUNSEL
HARKEN ENERGY CORPORATION
16285 PARK TEN PLACE, SUITE 600
HOUSTON, TEXAS 77084
(281) 717-1300
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
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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>
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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 (1) PRICE (1) FEE (1)
===================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 1,121,738 $1.938 $2,173,928.24 $604.35
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Preferred Stock Purchase Rights 1,121,738 Not Applicable Not Applicable -- (2)
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</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
June 1, 1999.
(2) 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
SUBJECT TO COMPLETION DATED JUNE 4, 1999
PROSPECTUS
1,121,738 Shares
HARKEN ENERGY CORPORATION
Common Stock
Lambortine Holdings Ltd. is offering for sale an aggregate of
1,121,738 shares of common stock of Harken Energy Corporation. Lambortine's
shares of common stock being offered for sale include preferred stock purchase
rights attached to the common stock under Harken's Stockholder Rights Plan.
Harken will not receive any of the proceeds from the sale of the 1,121,738
shares of common stock.
The common stock is traded on the American Stock Exchange, under the
symbol "HEC." On June 1, 1999, the closing sales price of the common stock was
$1.938 per share.
Lambortine will receive the purchase price of the shares of common
stock sold less any commissions and underwriters' discounts. Lambortine will be
responsible for any commissions or underwriters' discounts.
PROSPECTIVE INVESTORS SHOULD CONSIDER AND REVIEW THE INFORMATION UNDER
THE HEADING "RISK FACTORS" BEGINNING ON PAGE 3 PRIOR TO INVESTING IN THE COMMON
STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------
The date of this prospectus is June __, 1999.
The information in this prospectus is not complete and may be changed.
Lambortine may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is
not an offer to sell these securities and neither we nor Lambortine are
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
The Company .................................................................3
Risk Factors ................................................................3
Safe Harbor for Forward Looking Statements ..................................9
Where You Can Get More Information ..........................................9
Use of Proceeds ............................................................10
Information About Lambortine ...............................................11
Plan of Distribution .......................................................12
Legal Matters ..............................................................13
Experts ....................................................................13
</TABLE>
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YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS PROSPECTUS AND THE
ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN GET MORE
INFORMATION." WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH
DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT
INFORMATION, YOU SHOULD NOT RELY ON IT. NEITHER WE NOR LAMBORTINE ARE MAKING AN
OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS
NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS AND
THE ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN GET MORE
INFORMATION" WAS ACCURATE ON THE DATE ON THE FRONT COVER OF THE PROSPECTUS
ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PROSPECTS
MAY HAVE CHANGED SINCE THAT DATE.
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THE COMPANY
Harken explores for, develops and produces oil and gas both
domestically and internationally. Harken's domestic operations are primarily
located 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 in
Louisiana. Harken's international operations are primarily concentrated in the
Republic of Colombia and the Republic of Costa Rica.
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 16285 Park Ten Place, Suite 600, Houston Texas 77084 and its
telephone number is (281) 717-1300.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider carefully all of the information in this prospectus and should
evaluate the following risk factors.
THE TRADING PRICE OF HARKEN COMMON STOCK MAY BE SIGNIFICANTLY AFFECTED BY THE
RESULTS OF DRILLING ACTIVITY IN COLOMBIA AND COSTA RICA
Harken believes that the price of the common stock may fluctuate
significantly based upon the success or failure of each well that Harken drills
in Colombia and Costa Rica. Based in part on the results of such drilling
activity and on the significant decline in the market price of crude oil, the
market price of Harken's common stock declined significantly in 1998. During
this period, Harken's common stock ranged from a high of $7.38 per share to a
low of $1.56 per share.
HARKEN HAS A HISTORY OF LOSSES AND MAY SUFFER LOSSES IN THE FUTURE
Harken has reported losses in four out of the last five years,
including a loss of $52.456 million for the year ended 1998. Harken has
reported cumulative losses of $62.7 million over the last five years. Harken's
ability to generate net income is strongly affected by the market price of
crude oil and natural gas. If the market price of crude oil and natural gas
remains low or declines, Harken may report additional losses in the future.
HARKEN'S FAILURE TO COMPLY WITH THE TERMS OF ITS COLOMBIAN ASSOCIATION
CONTRACTS MAY RESULT IN THE TERMINATION OF OR LOSS OF RIGHTS UNDER THESE
CONTRACTS, WHICH WOULD NEGATIVELY AFFECT HARKEN'S BUSINESS AND STOCK PRICE
The terms of Harken's Colombian Association Contracts require Harken
to drill a number of wells during 1999. Harken does not currently plan to drill
enough wells in 1999 to satisfy all of its current contractual obligations.
Harken is currently negotiating with Ecopetrol, the Colombian state-owned oil
company, to modify some of its drilling obligations.
If Ecopetrol does not agree to modify the work obligations, and unless
Harken receives an extension of the existing deadlines, Harken will not be in
compliance with the terms of the Association Contracts. If Harken does not
comply with the terms of the Association Contracts, Ecopetrol could terminate
one or more Association Contracts. If Ecopetrol were to terminate one of
Harken's Association Contracts, Harken would lose all of the reserves
associated with the Association Contract and all of its investment in that
Association Contract. If Harken is able to negotiate a modification of the work
obligations, Harken may be
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required to surrender a significant portion of the acreage relating to the
Alcaravan, Bocachico and Cambulos Contracts. If these negotiations are not
successful, and unless Harken receives an extension of the existing deadlines,
Harken's business, financial condition and results of operations, as well as
its stock price, may be adversely affected. For more information on the
specific contract terms and obligations, see the "International Exploration and
Development Operations - Colombia" section of Harken's Annual Report on Form
10-K, which is incorporated by reference in this prospectus.
HARKEN MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING FOR ITS INTERNATIONAL
ACTIVITIES, WHICH COULD RESTRICT ITS OPERATIONS
Harken anticipates that full development of its existing and future
oil and gas discoveries in Colombia and Costa Rica will take several years and
may require extensive production and transportation facilities requiring
significant additional capital expenditures. If Harken is unable to timely
obtain adequate funds to finance these investments, it could limit or
substantially delay Harken's ability to develop its oil and gas reserves. In
such a case, Harken's business and results of operations could suffer.
Harken cannot predict the ultimate amount of expenditures for its
international operations. Harken anticipates that amounts required to fund its
international activities, will be funded from its existing cash balances, asset
sales, stock issuances, production payments, operating cash flows and
potentially from industry partners. Harken can not assure you that it will have
adequate funds available to it to fund its international activities.
HARKEN MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK WHICH MAY DILUTE THE VALUE
OF HARKEN COMMON STOCK TO CURRENT STOCKHOLDERS AND MAY ADVERSELY AFFECT THE
MARKET PRICE OF HARKEN'S COMMON STOCK
Harken may be required to issue up to approximately 29.4 million
shares of common stock as a result of its outstanding warrants, stock options,
and convertible notes. If Harken issues additional shares, it could result in
significant dilution in your ownership position in Harken. In addition, the
issuance of a significant number of additional shares of common stock could
have an adverse effect on the market price of the common stock.
HARKEN'S DEVELOPMENT FINANCE AGREEMENTS MAY REQUIRE IT TO ISSUE A POTENTIALLY
UNLIMITED NUMBER OF ADDITIONAL SHARES OF ITS COMMON STOCK, WHICH MAY DILUTE THE
VALUE OF HARKEN COMMON STOCK TO CURRENT STOCKHOLDERS AND MAY ADVERSELY AFFECT
THE MARKET PRICE OF ITS COMMON STOCK
Harken has entered into three separate Development Finance Agreements
with institutional investors. These Development Finance Agreements may require
Harken to issue additional shares, which could result in significant dilution
in your ownership position in Harken and may adversely affect the market price
of Harken common stock.
The institutional investors provided funds to Harken to finance the
drilling of three prospects in Colombia, in exchange for a net profits interest
in the prospects. Harken and the institutional investors each have the right to
convert the net profits interest into shares of Harken common stock. The number
of shares of common stock which may be issued upon conversion of the net
profits interest is based upon the market price of the common stock at the time
of conversion. Based upon the current market price of Harken common stock of
$1.875 per share, if the institutional investors elected to convert the net
profits interest into shares of common stock, Harken would be required to issue
approximately 10.8 million shares of common stock. The institutional investors
will be entitled to receive more shares of Harken common stock
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as the market price of Harken common stock falls. There is no ceiling on the
number of common shares the institutional investors can receive upon conversion
of their net profits interest.
In April and May, 1999, certain institutional investors converted
their net profits interest into approximately 8.9 million shares of Harken
common stock, including the 1,121,738 shares of common stock covered by this
propectus. The issuance of these shares will dilute your ownership position in
Harken and may adversely affect the market price of Harken common stock. You
can find additional details regarding the Development Finance Agreements in
Harken's Annual Report on Form 10-K.
HARKEN'S OPERATIONS IN COLOMBIA, COSTA RICA AND OTHER FOREIGN COUNTRIES WILL BE
SUBJECT TO POLITICAL, ECONOMIC AND OTHER UNCERTAINTIES
Harken conducts significant operations in Colombia and Costa Rica, and
will conduct operations in other foreign countries. At December 31, 1998,
approximately 83% of Harken's proved reserves were related to Harken's
Colombian operations. In addition, Harken anticipates focusing substantially
all of its exploratory efforts in the next several years in Colombia and Costa
Rica. Harken may also operate in other countries in the future. Operations in
foreign countries, particularly in the oil and gas business, are subject to
political, economic and other uncertainties, including:
o the risk of war, revolution, border disputes, expropriation,
renegotiation or modification of existing contracts, import,
export and transportation regulations and tariffs;
o taxation policies, including royalty and tax increases and
retroactive tax claims;
o exchange controls, currency fluctuations and other uncertainties
arising out of foreign government sovereignty over Harken's
international operations;
o laws and policies of the United States affecting foreign trade,
taxation and investment; and
o the possibility of having to be subject to the exclusive
jurisdiction of foreign courts in connection with legal disputes
and the possible inability to subject foreign persons to the
jurisdiction of courts in the United States.
Central and South America and other regions of the world have a
history of political and economic instability. This instability could result in
new governments or the adoption of new policies that might assume a
substantially more hostile attitude toward foreign investment. In an extreme
case, such a change could result in termination of contract rights and
expropriation of foreign-owned assets. These uncertainties could adversely
affect Harken's interests.
IF OIL AND GAS PRICES DECREASE FURTHER, HARKEN MAY BE REQUIRED TO TAKE
ADDITIONAL WRITEDOWNS
Harken must periodically review the carrying value of its oil and gas
properties under applicable accounting rules. These rules require a writedown
of the carrying value of oil and gas properties if the carrying value exceeds
the applicable estimated future net revenues.
As a result of the sharp decline in world-wide oil prices experienced
during 1998, at September 30, 1998, Harken recognized a non-cash charge in the
amount of approximately $27 million. Additionally, at December 31, 1998, Harken
recognized an additional non-cash charge in the amount of approximately $23
million.
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If oil and gas prices decrease further from price levels at December
31, 1998, Harken could be required to take an additional non-cash charge to
earnings related to the carrying value of its oil and gas properties. Whether
Harken will be required to take such a charge will depend on the prices for oil
and gas at the end of any quarter and the effect of reserve additions or
revisions and capital expenditures during such quarter.
IF ESTIMATES OF HARKEN'S OIL AND GAS RESERVE INFORMATION ARE INACCURATE,
HARKEN'S FINANCIAL CONDITION MAY SUFFER
Harken's proved oil and gas reserve information described in our
Annual Report on Form 10-K is based upon criteria mandated by the SEC and
represents only estimates. Harken's actual production, revenues and
expenditures with respect to such oil and gas reserves will likely be different
from estimates and the differences may be material. If estimates of oil and gas
reserves are greater than actual amounts, or if actual production costs and
expenditures are greater than estimates, Harken's business, financial
condition, and results of operations may be negatively affected.
Petroleum engineering is a subjective process of estimating
underground accumulations of oil and gas that cannot be measured in an exact
manner. Estimates of economically recoverable oil and gas reserves and of
future net cash flows necessarily depend upon a number of variable factors and
assumptions.
Because all reserve estimates are to some degree subjective, each of
the following items may differ materially from those assumed in estimating
reserves:
o the quantities of oil and gas that are ultimately recovered;
o the production and operating costs incurred;
o the amount and timing of future development expenditures; and
o future oil and gas sales prices.
Furthermore, different reserve engineers may make different estimates
of reserves and cash flows based on the same available data.
The estimated discounted future net cash flows described in our Annual
Report on Form 10-K should not be considered as the current market value of the
estimated oil and gas reserves attributable to Harken's properties from proved
reserves because such estimates are based on prices and costs as of the date of
the estimate, while actual future prices and costs may be materially higher or
lower.
IF THE UNITED STATES IMPOSES ECONOMIC OR TRADE SANCTIONS ON COLOMBIA, HARKEN'S
OPERATIONS IN COLOMBIA MAY BE ADVERSELY AFFECTED
The United States has imposed economic and trade sanction on Colombia
in the past, and may impose sanctions on Colombia in the future. The President
of the United States is required to determine whether foreign countries have
cooperated with the United States to prevent drug trafficking. In 1995, 1996
and 1997, the President determined that Colombia had not taken sufficient steps
to prevent drug trafficking. As a result, the United States imposed economic
sanctions on Colombia, including withholding bilateral economic assistance,
blocking Export-Import Bank and Overseas Private Investment Corporation loans
and political risk insurance, and voting against multilateral assistance to
Colombia in the World Bank and the
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InterAmerican Development Bank. In 1998, the President determined that Colombia
had taken sufficient steps to prevent drug trafficking and the economic
sanctions were lifted.
If the United States were to impose sanctions on Colombia, it could
affect Harken's ability to obtain the financing it needs in order to develop
its Colombian properties. The imposition of sanctions on Colombia could also
cause Colombia to retaliate against Harken by nationalizing Harken's Colombian
assets. Accordingly, imposition of the foregoing economic and trade sanctions
on Colombia could materially affect the performance of Harken's common stock
and its long-term financial results. We can not assure you the United States
will not impose sanctions on Colombia in the future.
HARKEN COULD SUFFER LOSSES FROM EXCHANGE RATE FLUCTUATIONS
Beginning with the fourth quarter of 1998, Harken began accounting for
its Colombian operations using the U.S. dollar as its functional currency. The
costs associated with Harken's exploration efforts in Colombia have typically
been denominated in U.S. dollars. Harken expects that a substantial portion of
its Colombian revenues in 1999 will be denominated in Colombian pesos and a
substantial portion of Harken's future Colombian revenues may be denominated in
Colombian pesos. To the extent that the amount of Harken's revenues denominated
in Colombian pesos is greater than the amount of costs denominated in Colombian
pesos, Harken could suffer a loss if the value of the Colombian peso were to
drop relative to the value of the U.S. dollar, which could have a material
adverse effect on Harken's results of operations.
HARKEN'S OIL AND GAS OPERATIONS IN LESS DEVELOPED OIL AND GAS INDUSTRIES SUCH
AS COLOMBIA AND COSTA RICA INVOLVE SUBSTANTIAL COSTS AND ARE SUBJECT TO VARIOUS
ECONOMIC RISKS
The oil and gas industries in Colombia and Costa Rica are not as
developed as the oil and gas industry in the U.S. As a result, Harken's
drilling and development operations may take longer to complete and may cost
more than similar operations in the U.S.
Harken's oil and gas operations will be subject to the economic risks
typically associated with exploration, development and production activities,
including the necessity of significant expenditures to locate and acquire
producing properties and to drill exploratory wells. In conducting exploration
and development activities, the presence of unanticipated pressure or
irregularities in formations, miscalculations or accidents may cause Harken's
exploration, development and production activities to be unsuccessful. This
could result in a total loss of Harken's investment. In addition, the cost and
timing of drilling, completing and operating wells is often uncertain.
DRILLING OIL AND GAS WELLS IN COLOMBIA AND COSTA RICA COULD BE HINDERED BY
HURRICANES AND OTHER OPERATING RISKS
Harken's operations in Colombia and Costa Rica are subject to risks
from hurricanes. Damage caused by hurricanes or other operating hazards could
result in substantial losses to Harken. The occurrence of such an event that is
not fully covered by insurance could have a material adverse effect on the
financial position and results of operations of Harken.
HARKEN MAY ISSUE SHARES OF PREFERRED STOCK WITH GREATER RIGHTS THAN ITS COMMON
STOCK
Harken is permitted under its charter to issue up to ten million
shares of preferred stock. Harken can issue shares of its preferred stock in
one or more series and can set the terms of the preferred stock without seeking
any further approval from you. Any preferred stock that is issued by Harken may
rank ahead of its
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common stock in terms of dividend priority, liquidation premiums and may have
greater voting rights than its common stock. Harken does not currently have any
shares of preferred stock outstanding.
FUTURE ACQUISITIONS MAY DILUTE YOUR PERCENTAGE OWNERSHIP IN HARKEN OR REQUIRE
SUBSTANTIAL EXPENDITURES
Harken's strategic plan includes the acquisition of additional
reserves, including through business combination transactions. Harken may not
be able to consummate future acquisitions on favorable terms. Additionally,
future acquisitions may not achieve favorable financial results.
Future acquisitions may involve the issuance of shares of Harken
common stock, which could have a dilutive effect on the current stockholders of
Harken. Furthermore, acquisitions may require substantial financial
expenditures that will need to be financed through cash flow from operations or
future debt and equity offerings by Harken. Harken may not be able to acquire
companies or oil and gas properties using its equity as currency. In the case
of cash acquisitions, Harken may not be able to generate sufficient cash flow
from operations or obtain debt or equity financing sufficient to fund future
acquisitions of reserves.
HARKEN FACES STRONG COMPETITION FROM LARGER OIL AND GAS COMPANIES
The exploration and production business is highly competitive. Many of
Harken's competitors have substantially larger financial resources, staffs and
facilities than Harken. Harken's competitors in Colombia and Costa Rica include
such major oil and gas companies as Amoco BP, Exxon, Mobil, Texaco, Conoco,
Shell and Arco. These major oil and gas companies are often better positioned
to obtain the rights to exploratory acreage that Harken competes for.
GOVERNMENT AGENCIES IN COLOMBIA AND COSTA RICA CAN INCREASE HARKEN'S COSTS AND
CAN TERMINATE OR SUSPEND OPERATIONS
In Costa Rica and Colombia, the laws governing the oil and gas
industry require Harken to obtain an environmental permit or approval prior to
conducting seismic operations, drilling a well or constructing a pipeline. The
process of obtaining an environmental permit has delayed Harken's operations in
the past, and could do so again in the future. Compliance with these laws and
regulations may increase Harken's costs of operations, as well as further
restricting its activities.
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SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
We believe that certain statements contained or incorporated by
reference in this prospectus are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and are
considered prospective. The following statements are or may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995:
o statements before, after or including the words "may," "will,"
"could," "should," "believe," "expect," "future," "potential,"
"anticipate," "intend," "plan," "estimate" or "continue" or the
negative or other variations of these words; and
o other statements about matters that are not historical facts.
We may be unable to achieve the future results covered by the
forward-looking statements. The statements are subject to risks, uncertainties
and other factors that could cause actual results to differ materially from the
future results that the statements express or imply. See "Risk Factors." Please
do not put undue reliance on these forward-looking statements, which speak only
as of the date of this prospectus.
WHERE YOU CAN GET MORE INFORMATION
Harken files reports, proxy statements, and other information with the
Securities and Exchange Commission. Such reports, proxy statements and other
information concerning Harken can be read and copied at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference room.
The SEC maintains an Internet site at http://www.sec.gov that contains reports,
proxy statements and other information regarding issuers that file information
electronically, including Harken. Harken's common stock is listed on the
American Stock Exchange. These reports, proxy statements and other information
can also be read and copied at the offices of the American Stock Exchange at 86
Trinity Place, New York, New York 10006.
The SEC allows Harken to "incorporate by reference" the information it
files with the SEC. This permits Harken to disclose important information to
you by referencing these filed documents. Any information referenced this way
is considered part of this prospectus, and any information filed with the SEC
after the date on the cover of this prospectus will automatically be deemed to
update and supercede this information. Harken incorporates by reference the
following documents which have been filed with the SEC:
(1) Annual Report on Form 10-K for the year ended December 31, 1998;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
(3) Proxy Statement for the Annual Meeting of Stockholders of Harken
to be held on June 22, 1999; and
(4) The description of the common stock contained in Harken'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 Harken's Preferred Stock
Purchase Rights as contained in Harken'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.
Harken also incorporates by reference any future filings made with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until
Lambortine sells all of the shares of common stock.
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This prospectus is part of a registration statement filed with the
SEC. This prospectus does not contain all the information contained in the
registration statement. The full registration statement can be obtained from the
SEC. This prospectus contains a general description of Harken and the securities
being offered for sale. You should read this prospectus together with the
additional information incorporated by reference.
You can request a copy of any document incorporated by reference in
this prospectus in writing or by phone. Requests for copies should be directed
to Karen S. Bustamante, Harken Energy Corporation, 16285 Park Ten Place, Suite
600, Houston, Texas 77084 (Telephone: (281) 717-1300). Copies of any document
incorporated by reference, other than exhibits to such documents, unless such
documents are specifically incorporated by reference into the documents that
this prospectus incorporates, will be provided at no cost to you.
USE OF PROCEEDS
Harken will not receive any part of the proceeds from the sale of
shares of common stock by Lambortine.
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INFORMATION ABOUT LAMBORTINE
This prospectus covers the offer and sale of 1,121,738 shares of
common stock by Lambortine Holdings, Ltd. The 1,121,738 shares of common stock
were issued to Lambortine when Lambortine converted a net profits interest it
held in three of Harken's Colombian prospects. In December 1997, Harken and
Lambortine entered into a Development Finance Agreement. Under the Development
Finance Agreement, Lambortine initially provided $2 million to Harken in
exchange for the net profits interest. The Development Finance Agreement gave
Lambortine the right to convert the net profits interest into shares of Harken
common stock. In May 1999, Lambortine elected to convert the net profits
interest into 1,121,738 shares of Harken common stock.
Harken has agreed to file a "shelf" registration statement with the
SEC pursuant to Rule 415 under the Securities Act covering the sale of shares
of common stock held by Lambortine, and to use its reasonable best efforts to
maintain the effectiveness of any such registration statement for no less than
one year from the date of effectiveness of such registration statement. In
addition, Harken has agreed to bear certain expenses of registration of the
shares of common stock under the federal and state securities laws (currently
estimated to be $7,000). Harken has also agreed to indemnify Lambortine, or
their transferees or assigns, against liabilities under the Securities Act, or
to contribute to payments Lambortine may be required to make.
Other that the net profits interest Lambortine held, Lambortine has
not had any position, office or other material relationship with Harken in the
last three years. The chart below describes the number of shares of common
stock owned by Lambortine, the number of shares of common stock which may be
offered for sale by Lambortine, and the number of shares of common stock
Lambortine will own if all of the shares of common stock held by Lambortine are
sold. Any or all of the shares listed below may be offered for sale by
Lambortine from time to time.
<TABLE>
<CAPTION>
Shares Percent of
Owned Prior Shares Shares Common Stock
to the Offered Owned After Owned After
Selling Stockholder Offering Hereby the Offering(1) the Offering(1)
- ------------------- ------------ -------- --------------- ---------------
<S> <C> <C> <C> <C>
Lambortine Holdings, Ltd. 1,121,738 1,121,738 -0- -0-
</TABLE>
- -------------------
(1) Assumes no other disposition or acquisition of common stock and
all shares of common stock are sold.
11
<PAGE> 13
PLAN OF DISTRIBUTION
Harken will not receive any proceeds from the sale of common stock
owned by Lambortine. It is anticipated that Lambortine will offer the shares of
common stock for sale from time to time, directly or through broker-dealers or
underwriters who may act solely as agents or may acquire the shares of common
stock as principals, in all cases as designated by Lambortine. 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 Lambortine
or the purchasers of the 1,121,738 shares of common stock offered in this
prospectus for whom they may act as agent.
The net proceeds to Lambortine from the sale of common stock 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 Harken. Lambortine 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, and if
required by SEC rules and regulations, 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 commission or discount with will be
described in an accompanying prospectus supplement. The prospectus supplement
may 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 SEC.
The shares of common stock being offered by Lambortine will be sold in
one or more transactions on the American Stock Exchange or on any other market
on which the common stock may be trading, in privately-negotiated transactions,
through the writing of options on the shares of common stock, short sales. The
sale price to the public may be the market price prevailing at the time of
sale, or a different price negotiated by Lambortine. The shares of common stock
may also be sold pursuant to Rule 144. Lambortine shall have the sole and
absolute discretion not to accept any purchase offer or make any sale of shares
of common stock if they deem the purchase price to be unsatisfactory.
Lambortine, alternatively, may sell all or any part of the 1,121,738
shares of common stock offered in this prospectus through an underwriter.
Lambortine have not entered into any agreement with a prospective underwriter
and there is no assurance that any such agreement will be entered into. If
Lambortine enter into such an agreement, the relevant details will be set forth
in a supplement or revisions to this prospectus.
Lambortine and any others persons participating in the sale or
distribution of the shares of common stock will be subject to applicable
provisions of the Securities Exchange Act of 1934 and the rules and regulations
passed by the SEC, may limit the timing of purchases and sales of any of the
shares of common stock by Lambortine or any other such person. This may affect
the marketability of the shares of common stock.
12
<PAGE> 14
LEGAL MATTERS
The validity of the shares of common stock will be passed upon for
Harken Energy Corporation by Karen S. Bustamante, Esq., Senior Counsel of
Harken.
EXPERTS
Arthur Andersen LLP has audited Harken's financial statements. Arthur
Andersen LLP are independent public accounts. Harken's financial statements,
and Arthur Andersen LLP's report on the financial statements are included in
Harken's Annual Report on Form 10-K for the year ended December 31, 1998, and
have been incorporated by reference in this prospectus.
13
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by Harken in connection with the offering
described in this Registration Statement are estimated as follows:
<TABLE>
<S> <C>
Commission Registration Fee $ 604.35
Printing and Engraving Expenses 2,000.00
Accounting Fees and Expenses 2,000.00
Blue Sky Fees and Expenses 1,000.00
Miscellaneous 1,395.65
----------
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 Harken's Certificate of Incorporation and Article VII
of Harken's bylaws provide, in general, that Harken shall indemnify its
directors and officers under certain of the circumstances defined in Section
145. Harken 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 Harken's
Certificate of Incorporation and bylaws.
II-1
<PAGE> 16
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).
*5.1 - Opinion of Karen S. Bustamante, Esq.
*23.1 - Consent of Arthur Andersen LLP.
*23.2 - Consent of Karen S. Bustamante, 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
represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective Registration Statement;
II-2
<PAGE> 17
(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.
(d) The undersigned Registrant hereby undertakes:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
II-3
<PAGE> 18
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 Houston, State of Texas, on June 4, 1999.
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 June 4, 1999
- ------------------------------- Executive Officer (Principal
Mikel D. Faulkner Executive Officer)
* Vice Chairman and Director June 4, 1999
- -------------------------------
Richard H. Schroeder
* President, Chief Financial Officer and June 4, 1999
- ------------------------------- Director (Principal Accounting Officer
Bruce N. Huff and Principal Financial Officer)
* Executive Vice President, Chief June 4, 1999
- ------------------------------- Operating Officer and Director
Stephen C. Voss
</TABLE>
II-4
<PAGE> 19
<TABLE>
<S> <C> <C>
* Director June 4, 1999
- -------------------------------
Gary R. Petersen
* Director June 4, 1999
- -------------------------------
Michael M. Ameen, Jr.
Director
- -------------------------------
Michael R. Eisenson
Director
- -------------------------------
Hobart A. Smith
Director
- -------------------------------
Donald W. Raymond
Director
- -------------------------------
Gary B. Wood
</TABLE>
*Karen S. Bustamante, by signing her 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 Harken and each officer and director.
/s/ Karen S. Bustamante
- -----------------------
Karen S. Bustamante,
Attorney-in-Fact
<PAGE> 20
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Exhibit Numbered Page
- ---------- ------- -------------
<S> <C> <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).
* 5.1 Opinion of Karen S. Bustamante, Esq.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Karen S. Bustamante, Esq. (included in
opinion filed as Exhibit 5.1).
*24.1 Powers of Attorney.
</TABLE>
- ---------
* Filed herewith
<PAGE> 1
EXHIBIT 5.1
June 4, 1999
Harken Energy Corporation
16285 Park Ten Place
Suite 600
Texas, TX 77084
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 1,121,738 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.
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 have been duly authorized and
validly issued and are 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, and (v) all
persons executing and delivering documents reviewed by me were
competent to execute and to deliver such documents.
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.
<PAGE> 2
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.
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/ Karen S. Bustamante
Karen S. Bustamante
<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 19, 1999, included in Harken Energy Corporation's Form 10-K for the
year ended December 31, 1998, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
June 4, 1999
<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 Karen S.
Bustamante, 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 1,121,738 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 1st day of June, 1999.
<TABLE>
<CAPTION>
NAME CAPACITIES
<S> <C>
/s/ Mikel D. Faulkner Chairman of the Board, Director and
----------------------------- Chief Executive Officer (Principal
Mikel D. Faulkner Executive Officer)
/s/ Bruce N. Huff President, Chief Financial Officer and
----------------------------- Director, (Principal Accounting Officer and
Bruce N. Huff Principal Financial Officer)
</TABLE>
<PAGE> 2
POWER OF ATTORNEY
June 1, 1999
Page 2
<TABLE>
<S> <C>
/s/ Richard H. Schroeder Vice Chairman and Director
-----------------------------
Richard H. Schroeder
/s/ Stephen C. Voss Executive Vice President, Chief
----------------------------- Operating Officer 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
Director
-----------------------------
Hobart A. Smith
Director
-----------------------------
Donald W. Raymond
Director
-----------------------------
Gary B. Wood
</TABLE>
