<PAGE> 1
As filed with the Securities and Exchange Commission on May 30, 2000
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)
KAREN KERR-JOHNSON
ASSISTANT GENERAL 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>
=================================================================================================================================
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)
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<S> <C> <C> <C> <C>
Common Stock, par value $0.01 per share 2,461,538 $0.75 $1,846,153.50 $489.23
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Preferred Stock Purchase Rights 2,461,538 Not Applicable Not Applicable --(2)
=================================================================================================================================
</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
May 25, 2000.
(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 MAY 30, 2000
PROSPECTUS
2,461,538 Shares
HARKEN ENERGY CORPORATION
Common Stock
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The Stockholders of Harken Energy Corporation described in this prospectus
are offering for sale 2,461,538 shares of common stock of Harken Energy
Corporation. The selling stockholders' 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 2,461,538 shares of common stock.
The common stock is traded on the American Stock Exchange, under the symbol
"HEC." On May 25, 2000, the closing sales price of the common stock was $0.75
per share.
The selling stockholders will receive the purchase price of the shares of
common stock sold less any commissions and underwriters' discounts. The selling
stockholders 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 May___, 2000.
The information in this prospectus is not complete and may be changed. The
selling stockholders 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 the selling
stockholders nor we 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>
<CAPTION>
Page
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<S> <C>
The Company............................................. 3
Risk Factors............................................ 3
Safe Harbor for Forward-Looking Statements.............. 8
Where You Can Get More Information...................... 8
Use of Proceeds......................................... 9
Information About the Selling Stockholders.............. 10
Plan of Distribution.................................... 11
Legal Matters........................................... 11
Experts................................................. 12
</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 THE SELLING STOCKHOLDERS NOR WE
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, in
portions of West Texas and 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 1999. Between
December 31, 1999 and May 25, 2000, Harken's common stock has ranged from a high
of $1.50 per share to a low of $0.5625 per share.
THE SECURITIES AND EXCHANGE COMMISSION IS REVIEWING A RECENT FILING OF A HARKEN
REGISTRATION STATEMENT
In connection with Harken's recent filing of a registration statement on
Form S-3, the Securities and Exchange Commission has issued a comment letter
disagreeing with Harken's classification of its reserves in Colombia as proved.
Gaffney, Cline & Associates, Harken's independent reserve engineers, classified
these reserves as proved in the reserve report for the year ended December 31,
1999 issued for Harken, which was used in the preparation of Harken's financial
statements as of December 31, 1999. Harken has reviewed the comments with
Gaffney, Cline & Associates and both Gaffney, Cline and Associates and Harken
believe that such reserves are properly classified as proved. However, if these
reserves are ultimately reclassified as not proved, Harken's Colombian proved
reserves will be materially reduced, which could result in a write-down of
Harken's Colombian capitalized property costs.
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.
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<PAGE> 5
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, as amended, 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.
HARKEN HAS A HISTORY OF LOSSES AND MAY SUFFER LOSSES IN THE FUTURE
Harken has reported losses in each of the last five years, including a loss
of $12.7 million for the year ended 1999. Harken has reported cumulative losses
of $70.7 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 declines, Harken may report
additional losses in the future.
STATUS OF COMPLIANCE WITH THE TERMS OF COLOMBIAN ASSOCIATION CONTRACTS
Terms of each of the Association Contracts commit Harken to perform certain
activities in accordance with a prescribed timetable. Failure by Harken to
perform those activities as required could result in Harken losing its rights
under the particular Association Contract, which could potentially have a
material adverse effect on Harken's business. As of May 24, 2000, Harken was in
compliance with the requirements of each of the Association Contracts, as
amended.
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.
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<PAGE> 6
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 37 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.
There are currently several registration statements with respect to the
common stock that are effective, pursuant to which certain selling stockholders
of the Company may sell up to an aggregate of 37,653,702 shares of common stock.
If the selling stockholders named in such registration statements sell all of
the shares of common stock registered pursuant to such registration statements,
such sales could cause an adverse effect on the market price of the common
stock.
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, 1999,
approximately 69% of Harken's proved reserves were related to Harken's Colombian
operations. 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.
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IF OIL AND GAS PRICES DECREASE, 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. 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 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 InterAmerican Development Bank. In 1998, the
President determined that Colombia had taken sufficient steps to prevent drug
trafficking and the economic sanctions were lifted and have not been reinstated.
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 cannot assure you the United States will not
impose sanctions on Colombia in the future.
HARKEN COULD SUFFER LOSSES FROM EXCHANGE RATE FLUCTUATIONS
Harken accounts 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 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.
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<PAGE> 8
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 common stock in terms of dividend priority or 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, 1999; and
(2) 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 the selling
stockholders sell 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.
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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 Kerr-Johnson, 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 the selling stockholders.
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INFORMATION ABOUT WESTGATE INTERNATIONAL, L. P.
AND THE LIVERPOOL LIMITED PARTNERSHIP
This prospectus covers the offer and sale of an aggregate of 2,461,538
shares of common stock by Westgate International, L. P., a Cayman Islands
limited partnership and The Liverpool Limited Partnership, a Bermuda limited
partnership, which are collectively referred to in this prospectus as "Selling
Stockholders". The Selling Stockholders are private investment firms. Harken
issued such shares to the Selling Stockholders as a result of a transaction that
was entered into on May 24, 2000.
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 the Selling Stockholders, 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 $4,000.00). Harken has also agreed to
indemnify the Selling Stockholders, their transferees or assigns, against
liabilities under the Securities Act, or to contribute to payments the Selling
Stockholders may be required to make.
Other than the Notes held by the Selling Stockholders, the Selling
Stockholders have 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 the Selling Stockholders, the number of shares
of common stock which may be offered for sale by the Selling Stockholders and
the number of shares of common stock the Selling Stockholders will own if all of
the shares of common stock held by the Selling Stockholders are sold. Any or all
of the shares listed below may be offered for sale by the Selling Stockholders
from time to time.
<TABLE>
<CAPTION>
Percent of
Shares Owned Shares Shares Owned Common Stock
Prior to the Offered After the Owned After the
Selling Stockholder Offering Hereby Offering(1) Offering(1)
<S> <C> <C> <C> <C>
Westgate International, L. P. 1,230,769 1,230,769 -0- -0-
The Liverpool Limited Partnership 1,230,769 1,230,769 -0- -0-
</TABLE>
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(1) Assumes no other disposition or acquisition of common stock and all shares
of common stock are sold.
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PLAN OF DISTRIBUTION
Harken will not receive any proceeds from the sale of common stock owned by
the Selling Stockholders. It is anticipated that the Selling Stockholders will
offer the shares 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 the Selling
Stockholders. Such underwriters or broker-dealers acting either as principal or
as agent, may receive compensation in the form of usual and customary or
specifically negotiated underwriting discounts, concessions or commissions from
the Selling Stockholders or the purchasers of the 2,461,538 shares of common
stock offered in this prospectus for whom they may act as agent.
The net proceeds to the Selling Stockholders 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. The Selling Stockholders and any dealers
or agents that participate in the distribution of common stock may be deemed to
be "underwriters" within the meaning of the Securities Act.
At any time a particular offer of common stock is made, 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 the Selling Stockholders will
be sold in one or more transactions, which may include block 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 or any combination thereof. The sale
price to the public may be the market price prevailing at the time of sale, or a
different price negotiated by the Selling Stockholders. The shares of common
stock may also be sold pursuant to Rule 144. The Selling Stockholders shall have
the sole and absolute discretion not to accept any purchase offer or make any
sale of shares of common stock if they deem the purchase price to be
unsatisfactory.
The Selling Stockholders, alternatively, may sell all or any part of the
2,461,538 shares of common stock offered in this prospectus through an
underwriter. The Selling Stockholders have not entered into any agreement with a
prospective underwriter and there is no assurance that any such agreement will
be entered into. If the Selling Stockholders enter into such an agreement, the
relevant details will be set forth in a supplement or revisions to this
prospectus.
The Selling Stockholders and any other persons participating in the sale or
distribution of the shares 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 the Selling Stockholders 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
Energy Corporation by Karen Kerr-Johnson, Assistant General Counsel of Harken.
11
<PAGE> 13
EXPERTS
The consolidated financial statements and financial statements incorporated
in this Form S-3 by reference have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of such Firm
as experts in accounting and auditing in giving said reports.
Certain of Harken's oil and gas reserves in Colombia have been reviewed by
its independent reserve engineers, Gaffney, Cline & Associates, Inc., as stated
in their report thereon. Harken's disclosures of its oil and gas reserves in
Colombia included in its Form 10-K for the period ending December 31, 1999, have
been presented in reliance upon the authority of such firm as experts in
petroleum engineering.
12
<PAGE> 14
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 $ 489.23
Printing and Engraving Expenses $ 500.00
Accounting Fees and Expenses $2500.00
Blue Sky Fees and Expenses -0-
Miscellaneous $ 510.77
---------
Total $4,000.00
=========
</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> 15
ITEM 16. EXHIBITS.
4.1 - Form of certificate representing shares of common stock (filed as
Exhibit 1 to Harken's Registration Statement on Form 8-A, File
No. 0-9207, and incorporated by reference herein).
4.2 - Rights Plan dated as of April 6, 1998, by and between Harken
Energy Corporation and ChaseMellon Shareholder Services L.L.C.
(filed as Exhibit 4 to Harken's Current Report on Form 8-K dated
April 7, 1998, file No. 0-9207, and incorporated by reference
herein).
4.3 - Certificate of Designations of Series E Junior Participating
Preferred Stock (filed as Exhibit B to Exhibit 4 to Harken's
Current Report on Form 8-K dated April 7, 1998, file No. 0-9207,
and incorporated by reference herein).
*5.1 - Opinion of Karen Kerr-Johnson
*23.1 - Consent of Arthur Andersen LLP.
*23.2 - Consent of Gaffney, Cline & Associates, Inc.
*23.3 - Consent of Karen Kerr-Johnson (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;
(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> 16
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> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on May 30, 2000.
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 May 30, 2000
-------------------------- Executive Officer (Principal Executive
Mikel D. Faulkner Officer)
* President, Chief Financial Officer and May 30, 2000
-------------------------- Director (Principal Accounting
Bruce N. Huff Officer and Principal Financial
Officer)
* Executive Vice President, Chief May 30, 2000
-------------------------- Operating Officer and Director
Stephen C. Voss
* Director May 30, 2000
--------------------------
Gary R. Petersen
* Director May 30, 2000
--------------------------
Michael M. Ameen, Jr.
* Director May 30, 2000
--------------------------
Hobart A. Smith
* Director May 30, 2000
--------------------------
Donald W. Raymond
</TABLE>
II-4
<PAGE> 18
<TABLE>
<S> <C> <C>
* Director May 30, 2000
--------------------------
Gary B. Wood
* Director May 30, 2000
--------------------------
Larry Akers
</TABLE>
*Karen Kerr-Johnson, 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 Kerr-Johnson
----------------------
Karen Kerr-Johnson,
Attorney-in-Fact
II-5
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Exhibit Numbered Page
----------- ----------------------------------------------------------------- -------------
<S> <C> <C>
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 Kerr-Johnson
*23.1 - Consent of Arthur Andersen LLP.
*23.2 - Consent of Gaffney, Cline & Associates, Inc.
*23.3 - Consent of Karen Kerr-Johnson (included in opinion filed as
Exhibit 5.1).
*24.1 - Powers of Attorney.
* Filed herewith.
</TABLE>
