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As filed with the Securities and Exchange Commission on August 29, 2000
Registration No. 333-34830
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE 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
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: [ ]
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 AUGUST 29, 2000
PROSPECTUS
2,740,131 Shares
HARKEN ENERGY CORPORATION
Common Stock
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The selling stockholder of Harken Energy Corporation described in this
prospectus is offering for sale 2,740,131 shares of common stock of Harken
Energy Corporation. The selling stockholder'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 2,740,131 shares of common stock.
The selling stockholder may offer its shares from time to time in open
market transactions on the American Stock Exchange or in private transactions,
at prevailing market prices or at privately negotiated prices. The selling
stockholder may effect such transactions by selling the shares to or through
broker-dealers. These broker-dealers, if used, may receive discounts,
concessions or commissions from the selling stockholder or from the purchaser of
the shares. The selling stockholder will receive the purchase price of the
shares of common stock sold less any such discounts, concessions or commissions.
The selling stockholder will be responsible for any such discounts, concessions
or commissions.
The common stock is traded on the American Stock Exchange, under the
symbol "HEC." On August 28, 2000, the closing sales price of the common stock
was $0.875 per share. Harken's principal offices are located at 16285 Park Ten
Place, Suite 600, Houston Texas 77084, and its telephone number is (281)
717-1300.
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 August ___, 2000.
The information in this prospectus is not complete and may be changed.
The selling stockholder 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
stockholder nor we 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
----
<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 Stockholder.................................................................. 10
Plan of Distribution....................................................................................... 11
Legal Matters.............................................................................................. 12
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 STOCKHOLDER 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 the market price of Harken's common stock declined significantly in
1999. Between December 31, 1999 and August 29, 2000, Harken's common stock has
ranged from a high of $1.50 per share to a low of $0.5625 per share.
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/A, is based upon criteria mandated by the Securities and
Exchange Commission ("SEC") and represents only estimates. Harken's actual
production, revenues and expenditures with respect to such oil and gas reserves
will likely be different from estimates and the differences may be material. If
estimates of oil and gas reserves are greater than actual amounts, or if actual
production costs and expenditures are greater than estimates, Harken's business,
financial condition, and results of operations may be negatively affected.
Petroleum engineering is a subjective process of estimating underground
accumulations of oil and gas that cannot be measured in an exact manner.
Estimates of economically recoverable oil and gas reserves and of future net
cash flows necessarily depend upon a number of variable factors and assumptions.
Because all reserve estimates are to some degree subjective, each of the
following items may differ materially from those assumed in estimating reserves:
o the quantities of oil and gas that are ultimately recovered;
o the production and operating costs incurred;
o the amount and timing of future development expenditures; and
o future oil and gas sales prices.
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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/A 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 $12.8 million for the year ended 1999. Harken has reported cumulative
losses of $70.9 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.
IF HARKEN FAILS TO COMPLY WITH THE TERMS OF AN ASSOCIATION CONTRACT, IT COULD
LOSE ITS RIGHTS UNDER THAT ASSOCIATION CONTRACT
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 August 29, 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/A, which is incorporated by reference in
this prospectus.
HARKEN MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING FOR ITS INTERNATIONAL
ACTIVITIES, WHICH COULD RESTRICT ITS OPERATIONS
Harken anticipates that full development of its existing and future oil
and gas discoveries in Colombia and Costa Rica will take several years and may
require extensive production and transportation facilities requiring significant
additional capital expenditures. If Harken is unable to timely obtain adequate
funds to finance these investments, it could limit or substantially delay
Harken's ability to develop its oil and gas reserves. In such a case, Harken's
business and results of operations could suffer.
Harken cannot predict the ultimate amount of expenditures for its
international operations. Harken anticipates that amounts required to fund its
international activities will be funded from its existing cash balances, asset
sales, stock issuances, production payments, operating cash flows and
potentially from industry partners. Harken can not assure you that it will have
adequate funds available to it to fund its international activities.
HARKEN MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK WHICH MAY DILUTE THE VALUE OF
HARKEN COMMON STOCK TO CURRENT STOCKHOLDERS AND MAY ADVERSELY AFFECT THE MARKET
PRICE OF HARKEN'S COMMON STOCK
Harken may be required to issue up to approximately 32 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.
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There are currently several registration statements with respect to the
common stock that are or will become effective, pursuant to which certain
selling stockholders of the Company may sell up to an aggregate of 20,959,773
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 61% 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.
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 sanctions 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
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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.
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. Although Harken does
not currently have any shares of preferred stock outstanding, it is currently
contemplating the issuance of shares of preferred stock in private placement
transactions exempt from registration under the Securities Act of
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1933. If issued, this preferred stock will have rights senior to the common
stock with respect to dividends and liquidation. In addition, such preferred
stock may be convertible into shares of common stock. If so, and the shares are
converted into common stock, this may dilute the value of common stock to
current stockholders and adversely affect the market price of Harken's common
stock.
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
SEC. 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;
(2) Amended Annual Report on Form 10-K/A for the year ended December
31, 1999;
(3) Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
(4) Amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31,2000;
(5) Quarterly Report on Form 10-Q for the quarter ended June 30, 2000;
and
(6) 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
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prospectus contains a general description of Harken and the securities being
offered for sale. You should read this prospectus together with the additional
information incorporated by reference.
You can request a copy of any document incorporated by reference in this
prospectus in writing or by phone. Requests for copies should be directed to
Karen 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
exhibits 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 stockholder.
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INFORMATION ABOUT THE SELLING STOCKHOLDER
This prospectus covers the offer and sale of 2,740,131 shares of common
stock by Crescent International. In March 1998, Harken and Crescent
International entered into a Development Finance Agreement. Under the
Development Finance Agreement, Crescent International initially provided $3
million to Harken in exchange for the net profits interest in certain Colombian
prospects held by Harken. The Development Finance Agreement gave Crescent
International the right to convert the net profits interest into shares of
Harken common stock. In April 1999, Crescent International elected to convert a
portion of its net profits interest into 1,316,829 shares of Harken common
stock. The Development Finance Agreement further entitled Crescent International
to additional shares of Harken common stock to the extent Crescent International
did not realize its Invested Amount from the sale of the 1,316,829 shares of
Harken common stock it received upon conversion. In March 2000, 1,457,390 shares
of Harken common stock were issued to Crescent International pursuant to this
provision of the Development Finance Agreement. In addition, in March 2000,
Crescent International elected to convert the remaining portion of its net
profits interest into 1,282,741 shares of Harken common stock.
For more information on the specific terms of the Development Finance
Agreement, see "Notes to Consolidated Financial Statements, Note 7 - Development
Finance and Operating Agreements" in Harken's Annual Report on Form 10-K/A,
which is incorporated by reference in this prospectus.
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 Crescent International, 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 Crescent International, or its transferees or assigns, against
liabilities under the Securities Act, or to contribute to payments Crescent
International may be required to make.
Other that the net profits interest Crescent International held, Crescent
International 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 Crescent International, the number of shares of
common stock which may be offered for sale by Crescent International, and the
number of shares of common stock Crescent International will own if all of the
shares of common stock held by Crescent International are sold. Any or all of
the shares listed below may be offered for sale by Crescent International 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>
Crescent International S.A 2,740,131 2,740,131 -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 Crescent International Ltd. It is anticipated that Crescent International
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
Crescent. 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
Crescent or the purchasers of the 2,740,131 shares of common stock offered in
this prospectus for whom they may act as agent.
The net proceeds to Crescent International, Ltd. 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. Crescent International 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 Crescent International 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 Crescent International. The shares of common stock
may also be sold pursuant to Rule 144. Crescent International 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.
Crescent International alternatively may sell all or any part of the
2,740,131 shares of common stock offered in this prospectus through an
underwriter. Crescent International have not entered into any agreement with a
prospective underwriter and there is no assurance that any such agreement will
be entered into. If Crescent International enters into such an agreement, the
relevant details will be set forth in a supplement or revisions to this
prospectus.
Crescent International 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, which may limit the timing of purchases and sales of any of
the shares of common stock by Crescent International or any other such person.
This may affect the marketability of the shares of common stock.
11
<PAGE> 13
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.
EXPERTS
The consolidated financial statements incorporated by reference in this
Form S-3 have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said 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/A 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 $ 658.05
Printing and Engraving Expenses 500.00
Accounting Fees and Expenses 2,500.00
Blue Sky Fees and Expenses -0-
Miscellaneous 341.95
----------
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 Harken common
stock, par value $.01 per share (filed as Exhibit 1 to
Harken's Registration Statement on Form 8-A, File No.
0-9207, and incorporated by reference herein).
4.2 - Certificate of Designations, Powers, Preferences and Rights
of Series A Cumulative Convertible Preferred Stock, $1.00
par value, of Harken Energy Corporation (filed as Exhibit
4.1 to Harken's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, File No. 0-9207, and
incorporated by reference herein).
4.3 - Certificate of Designations, Powers, Preferences and Rights
of Series B Cumulative Convertible Preferred Stock, $1.00
par value, of Harken Energy Corporation (filed as Exhibit
4.2 to Harken's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, File No. 0-9207, and
incorporated by reference herein).
4.4 - Certificate of the Designations, Powers, Preferences and
Rights of Series C Cumulative Convertible Preferred Stock,
$1.00 par value of Harken Energy Corporation (filed as
Exhibit 4.3 to Harken's Annual Report on Form 10-K for
fiscal year ended December 31, 1989, File No. 0-9207, and
incorporated by reference herein).
4.5 - Certificate of the Designations of Series D Preferred Stock,
$1.00 par value of Harken Energy Corporation (filed as
Exhibit 4.3 to Harken's Quarterly Report on Form 10-Q for
the fiscal quarter ended September 30, 1995, File No.
0-9207, and incorporated by reference herein).
4.6 - Rights Agreement, dated as of April 6, 1999, by and between
Harken Energy Corporation and ChaseMellon Shareholder
Services L.L.C., as Rights Agent (filed as Exhibit 4 to
Harken's Current Report on Form 8-K dated April 7, 1999,
File No. 0-9207, and incorporated by reference herein).
4.7 - 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, 1999, File No.
0-9207, and incorporated by reference herein).
4.8 - Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock (filed as Exhibit 4.8
to Harken's Quarterly Report on Form 10-Q for the period
ended March 31, 1999, 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.
----------
* Previously filed.
** Filed herewith.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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:
II-2
<PAGE> 16
(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 of 1933;
(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 thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, 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.
II-3
<PAGE> 17
(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-4
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on August 29, 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 August 29, 2000
--------------------------------- Executive Officer (Principal
Mikel D. Faulkner Executive Officer)
* President, Chief Operating August 29, 2000
--------------------------------- Officer and Director (Principal
Bruce N. Huff Accounting Officer and Principal
Financial Officer)
* Vice Chairman and Director August 29, 2000
---------------------------------
Stephen C. Voss
Director August 29, 2000
---------------------------------
J. William Petty
* Director August 29, 2000
---------------------------------
Michael M. Ameen, Jr.
* Director August 29, 2000
---------------------------------
Hobart A. Smith
* Director August 29, 2000
---------------------------------
Gary B. Wood
* Director August 29, 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>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 Form of certificate representing shares of Harken
common stock, par value $.01 per share (filed as
Exhibit 1 to Harken's Registration Statement on Form
8-A, File No. 0-9207, and incorporated by reference
herein).
4.2 Certificate of Designations, Powers, Preferences and
Rights of Series A Cumulative Convertible Preferred
Stock, $1.00 par value, of Harken Energy Corporation
(filed as Exhibit 4.1 to Harken's Annual Report on Form
10-K for the fiscal year ended December 31, 1989, File
No. 0-9207, and incorporated by reference herein).
4.3 Certificate of Designations, Powers, Preferences and
Rights of Series B Cumulative Convertible Preferred
Stock, $1.00 par value, of Harken Energy Corporation
(filed as Exhibit 4.2 to Harken's Annual Report on Form
10-K for the fiscal year ended December 31, 1989, File
No. 0-9207, and incorporated by reference herein).
4.4 Certificate of the Designations, Powers, Preferences
and Rights of Series C Cumulative Convertible Preferred
Stock, $1.00 par value of Harken Energy Corporation
(filed as Exhibit 4.3 to Harken's Annual Report on Form
10-K for fiscal year ended December 31, 1989, File No.
0-9207, and incorporated by reference herein).
4.5 Certificate of the Designations of Series D Preferred
Stock, $1.00 par value of Harken Energy Corporation
(filed as Exhibit 4.3 to Harken's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30,
1995, File No. 0-9207, and incorporated by reference
herein).
4.6 Rights Agreement, dated as of April 6, 1999, by and
between Harken Energy Corporation and ChaseMellon
Shareholder Services L.L.C., as Rights Agent (filed as
Exhibit 4 to Harken's Current Report on Form 8-K dated
April 7, 1999, File No. 0-9207, and incorporated by
reference herein).
4.7 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, 1999, File No. 0-9207, and incorporated by
reference herein).
4.8 Certificate of Designations, Preferences and Rights of
Series F Convertible Preferred Stock (filed as Exhibit
4.8 to Harken's Quarterly Report on Form 10-Q for the
period ended March 31, 1999, 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.
----------
* Previously filed.
** Filed herewith.
</TABLE>
