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As filed with the Securities and Exchange Commission on April 2, 1999
Registration No. 333-71751
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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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
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)
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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: [ ]
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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: [ ]
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If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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SUBJECT TO COMPLETION DATED APRIL 2, 1999
PROSPECTUS
1,350,000 Shares
HARKEN ENERGY CORPORATION
Common Stock
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Parkcrest Explorations, Ltd. is offering for sale 1,350,000 shares of
common stock of Harken Energy Corporation. Parkcrest'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 1,350,000 shares of common stock.
The common stock is traded on the American Stock Exchange, under the
symbol "HEC." On March 31, 1999, the closing sales price of the common stock was
$1.625 per share.
Parkcrest will receive the purchase price of the shares of common stock
sold less any commissions and underwriters' discounts. Parkcrest will be
responsible for any commissions or underwriters' discounts. See "Plan of
Distribution." You can find more information about Parkcrest in this document
under the heading "Information About Parkcrest."
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.
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The date of this prospectus is April __, 1999.
The information in this prospectus is not complete and may be changed.
Parkcrest 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 Parkcrest are soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
The Company .................................................3
Risk Factors ................................................3
Where You Can Get More Information .........................10
Use of Proceeds ............................................10
Information About Parkcrest ................................11
Plan of Distribution .......................................12
Legal Matters ..............................................12
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 PARKCREST 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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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.
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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 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 in this prospectus and should evaluate
the following risk factors.
VOLATILITY IN THE TRADING PRICE OF HARKEN'S COMMON STOCK MAY HARM ITS
STOCKHOLDERS
Harken believes that the price of the common stock is significantly
affected by the price of crude oil and natural gas. If the market price of crude
oil declines in the future, the market price of Harken's common stock could also
decline. Throughout 1998, the market price of crude oil declined significantly,
and the market price of Harken's common stock declined as well. During this
period, Harken's common stock fluctuated significantly, ranging from a high of
$7.38 per share to a low of $1.56 per share. Harken also 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.
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
1998. 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.
IF HARKEN IS NOT IN COMPLIANCE WITH THE TERMS OF ITS COLOMBIAN ASSOCIATION
CONTRACTS, HARKEN'S BUSINESS AND STOCK PRICE MAY SUFFER
The terms of Harken's Colombian Association Contracts require Harken to
drill a number of wells during 1999. 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 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 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.
While Harken believes that it will be successful in negotiating a
modification of its work 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
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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 required to surrender a significant portion of the
acreage relating to the Alcaravan, Bocachico and Cambulos Contracts.
HARKEN MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING FOR ITS INTERNATIONAL
ACTIVITIES, WHICH COULD RESTRICT ITS OPERATIONS
Harken anticipates that full development of its oil and gas reserves 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 EFFECT THE MARKET
PRICE OF HARKEN'S COMMON STOCK
Harken may be required to issue up to approximately 26 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 also has entered into three separate Development Finance
Agreements with institutional investors. 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 $1.625, if the institutional
investors elected to convert the net profits interest into shares of common
stock, Harken would be required to issue approximately 25.4 million shares of
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
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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.
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.
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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,
including the following:
o historical production from the area compared with production from
other producing areas;
o the assumed effects of regulations by governmental agencies;
o assumptions concerning future oil and gas prices; and
o assumptions concerning future operating costs, severance and excise
taxes, development costs and workover and remedial costs.
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 discounted future net cash flows described in 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. As required
by the SEC, the estimated discounted future net cash flows from proved reserves
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. Actual future net
cash flows also will be affected by factors such as:
o the amount and timing of actual production;
o supply and demand for oil and gas;
o increases or decreases in consumption; and
o changes in governmental regulations or taxation.
In addition, the 10% discount factor, which is required by the SEC to be
used to calculate discounted future net cash flows for reporting purposes, is
not necessarily the most appropriate discount factor based on interest rates in
effect from time to time and risks associated with Harken or the oil and gas
industry in general.
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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 the 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 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 INVOLVE SUBSTANTIAL COSTS AND ARE SUBJECT TO
VARIOUS ECONOMIC RISKS
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. In particular, 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.
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DRILLING OIL AND GAS WELLS COULD INVOLVE BLOWOUTS, HURRICANES, ENVIRONMENTAL
HAZARDS AND OTHER OPERATING RISKS
Harken's business involves certain operating hazards such as well
blowouts, cratering, explosions, uncontrollable flows of oil, gas or well
fluids, fires, formations with abnormal pressures, pollution, releases of toxic
gas and other environmental hazards and risks. Any of these operating hazards
could result in substantial losses to Harken.
In addition, Harken may be liable for environmental damages caused by
previous owners of property purchased by Harken or its predecessors. As a
result, substantial liabilities to third parties or governmental entities may be
incurred. The payment of these amounts could reduce or eliminate the funds
available for exploration, development or acquisitions. These reductions in
funds could result in a loss of Harken's properties.
In accordance with customary industry practices, Harken maintains
insurance against some, but not all, of such risks and losses. The occurrence of
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 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.
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GOVERNMENT AGENCIES CAN INCREASE HARKEN'S COSTS AND CAN TERMINATE OR SUSPEND
OPERATIONS
Harken's business is subject to foreign, federal, state and local laws
and regulations relating to the exploration for, and the development, production
and transportation of, oil and gas, as well as environmental and safety matters.
Many of these laws and regulations have become stricter in recent years,
including imposing greater liability on a larger number of potentially
responsible parties. Compliance with these stricter laws and regulations may
increase Harken's costs of operations, as well as further restricting its
activities.
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.
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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 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) Proxy Statement for the Annual Meeting of Stockholders of Harken held
on June 15, 1998; and
(3) 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 Parkcrest
sells all of the shares of common stock.
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
Gregory S. Porter, Harken Energy Corporation, 5605 North MacArthur Blvd., Suite
400, Irving, Texas 75038 (Telephone: (972) 753-6900). 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 Parkcrest.
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INFORMATION ABOUT PARKCREST
This prospectus covers the offer and sale of 1,350,000 shares of common
stock by Parkcrest Explorations, Ltd, a British Colombia, Canada corporation,
whose common stock is traded on the Alberta Stock Exchange. Harken issued such
shares to Parkcrest as a result of a transaction that was consummated on
December 31, 1998.
Parkcrest and Harken initially entered into an agreement in January 1997.
Parkcrest paid 1/3 of the cost of the initial well on the Palo Blanco prospect
located on Harken's Alcaravan acreage in Colombia, plus certain others fees, and
received a 25% beneficial interest in the Palo Blanco prospect, plus rights to
participate in other prospects on the Alcaravan Contract and Miradores Contract
acreage. The initial well on the Palo Blanco prospect, the Estero #1, was
successful. In order to develop the Palo Blanco field, Harken drilled a second
well, the Estero #3, and has constructed a 2.3 mile pipeline to connect the Palo
Blanco field to the existing crude oil pipeline.
The costs to develop the Palo Blanco field have been substantial, and
Parkcrest's portion of such costs exceeded their cash resources. Harken
initially entered into a loan agreement with Parkcrest to finance Parkcrest's
share of the development costs, while Parkcrest sought other sources of
additional financing. Harken loaned Parkcrest approximately $2.2 million under
this loan agreement. Parkcrest was unable to secure other sources of capital.
Harken then offered to purchase or "reacquire" Parkcrest's 25% beneficial
interest for shares of Harken's common stock. The number of shares of common
stock to be issued to Parkcrest was the subject of arms length negotiation
between Harken and Parkcrest. In making its offer to Parkcrest, Harken based its
offer on the amount of outstanding debt of Parkcrest to Harken, the amount of
proved reserves that had been attributed to the Palo Blanco field, and the
market price of the common stock at such time.
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 Parkcrest, 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 $12,000). Harken has also agreed to indemnify Parkcrest, or
their transferees or assigns, against liabilities under the Securities Act, or
to contribute to payments Parkcrest may be required to make.
Other that the interest Parkcrest held in the Alcaravan and Miradores
Contracts, Parkcrest 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 Parkcrest, the number of shares of
common stock which may be offered for sale by Parkcrest, and the number of
shares of common stock Parkcrest will own if all of the shares of common stock
held by Parkcrest are sold. Any or all of the shares listed below may be offered
for sale by Parkcrest from time to time.
<TABLE>
<CAPTION>
Percent of
Common Stock
Shares Owned Shares Shares Owned Owned After
Prior to the Offered After the the Offering(1)
Selling Stockholder Offering Hereby Offering(1)
- ------------------------------------------- ---------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Parkcrest Explorations, Ltd. 1,350,000 1,350,000 -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 Parkcrest. It is anticipated that Parkcrest 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 Parkcrest. 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 Parkcrest or the
purchasers of the 1,350,000 shares of common stock offered in this prospectus
for whom they may act as agent.
The net proceeds to Parkcrest 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. Parkcrest 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 Parkcrest, 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 Parkcrest. The shares of common stock may
also be sold pursuant to Rule 144. Parkcrest 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.
Parkcrest, alternatively, may sell all or any part of the 1,350,000
shares of common stock offered in this prospectus through an underwriter.
Parkcrest has not entered into any agreement with a prospective underwriter and
there is no assurance that any such agreement will be entered into. If Parkcrest
enters into such an agreement, the relevant details will be set forth in a
supplement or revisions to this prospectus.
Parkcrest 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 Parkcrest or any other such person.
This may affect the marketability of the shares of common stock.
LEGAL MATTERS
The validity of the shares of common stock will be passed upon for Harken
by Gregory S. Porter, Esq., Vice President - Legal of Harken.
12
<PAGE> 14
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.............. $ 818.18
Printing and Engraving Expenses.......... 2,000.00
Accounting Fees and Expenses............. 2,000.00
Legal Fees............................... 5,000.00
Blue Sky Fees and Expenses............... 1,000.00
Miscellaneous............................ 1,181.82
----------
Total............................... $12,000.00
==========
</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 Gregory S. Porter, Esq.
*23.1 - Consent of Arthur Andersen LLP.
*23.2 - Consent of Gregory S. Porter, Esq. (included in opinion
filed as Exhibit 5.1).
24.1 - Powers of Attorney (previously filed).
- ---------------------
* 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;
(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;
II-2
<PAGE> 17
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 Irving, State of Texas, on April 2, 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 April 2, 1999
- -------------------------------- Executive Officer (Principal
Mikel D. Faulkner Executive Officer)
* Vice Chairman and Director April 2, 1999
- -------------------------------
Richard H. Schroeder
* President, Chief Financial Officer and April 2, 1999
- ------------------------------- Director (Principal Accounting Officer
Bruce N. Huff and Principal Financial Officer)
* Executive Vice President, Chief April 2, 1999
- ------------------------------- Operating Officer and Director
Stephen C. Voss
* Director April 2, 1999
- ------------------------------
Gary R. Petersen
</TABLE>
II-4
<PAGE> 19
<TABLE>
<S> <C> <C>
* Director April 2, 1999
- ------------------------------
Michael M. Ameen, Jr.
* Director April 2, 1999
- ------------------------------
Michael R. Eisenson
* Director April 2, 1999
- ------------------------------
Hobart A. Smith
* Director April 2, 1999
- ------------------------------
Donald W. Raymond
* Director April 2, 1999
- ------------------------------
Gary B. Wood
</TABLE>
*Gregory S. Porter, by signing his name hereto, does hereby sign this
Registration Statement on behalf of Harken Energy Corporation and each of the
above-named officers and directors of such Company pursuant to powers of
attorney, executed on behalf of Harken and each officer and director.
/s/ Gregory S. Porter
- ------------------------------
Gregory S. Porter,
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 Gregory S. Porter, Esq.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Gregory S. Porter, Esq. (included in opinion filed
as Exhibit 5.1).
24.1 Powers of Attorney (previously filed).
</TABLE>
- ----------
* Filed herewith
<PAGE> 1
Exhibit 5.1
April 2, 1999
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 1,350,000 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.
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.
<PAGE> 2
This opinion letter may be filed as an exhibit to the Registration
Statement. In giving this consent, I do not thereby admit that I come into the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
I disclaim any duty to advise you regarding any changes in, or to
otherwise communicate with you with respect to, the matters addressed herein.
Very truly yours,
/s/ Gregory S. Porter
Gregory S. Porter, Esq.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated
February 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
April 1, 1999
