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PROSPECTUS
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-26241
1,808,690 SHARES
HarCor Energy, Inc.
COMMON STOCK, $.10 PAR VALUE
____________________
All of the shares of Common Stock offered hereby (the "Shares") are being
sold by certain stockholders (the "Selling Stockholders") of HarCor Energy,
Inc. ("HarCor" or the "Company"). See "Selling Stockholders." The Company
will not receive any proceeds from the sale of the Shares by the Selling
Stockholders.
The Common Stock is quoted on the NASDAQ National Market under the Symbol
"HARC." On May 7, 1997, the last reported sales price for the Common Stock
on the NASDAQ National Market was $6.06 per share. The Shares of Common Stock
offered hereby may be sold from time to time in ordinary brokerage transactions
on the NASDAQ National Market, in the over-the-counter market or in privately
negotiated transactions, through agents or directly to one or more purchasers,
at the prevailing market price, at prices related to such prevailing market
prices, at fixed prices which may be changed or at negotiated prices. The
Selling Stockholders may effect such transactions by selling the Shares of
Common Stock offered hereby to or through agents, underwriters or registered
broker-dealers, and such persons may require compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or the
purchaser of such Shares of Common Stock.
All expenses of registration incurred in connection with the Shares of
Common Stock offered hereby will be paid by the Company. All selling and other
expenses incurred by the Selling Stockholders will be paid by the Selling
Stockholders. The Company has agreed to indemnify the Selling Stockholders
against certain liabilities under the Securities Act of 1933, as amended.
See "Risk Factors" on page 3 for a discussion of certain factors that
should be considered by prospective investors.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
____________________
The date of this Prospectus is May 7, 1997
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No dealer, salesperson or any other person has been authorized to give any
information or to make any representation contained or incorporated by
reference in this Prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the Company
or any Selling Stockholder. This Prospectus does not constitute an offer to
sell or a solicitation of any offer to buy any securities other than the Common
Stock offered by this Prospectus, or an offer to sell or a solicitation of an
offer to buy the Common Stock in any jurisdiction to or from any person to whom
it is unlawful to make such offer or solicitation in such jurisdiction. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048 and CitiCorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained by mail from the Public Reference Section of the
Commission at 450 West Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding issuers that
file electronically with the Commission (http: //www.sec.gov).
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which were omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission
are not necessarily complete, and in each instance reference is made to the
copy of such document so filed. Each such statement is qualified in its
entirety by such reference.
The Common Stock is traded on the NASDAQ National Market and such reports,
proxy and information statements and other information concerning the Company
are available at the offices of the NASDAQ located at 1735 K Street, N.W.,
Washington, D.C. 20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents previously filed by the Company with the Commission
are incorporated herein by reference: (i) the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (the "Form 10-K"), as amended by
Amendment No. 1 on Form 10K/A thereto and (ii) the description of the Company's
Common Stock contained in the Registration Statement on Form S-1 (No.
333-04987) filed with the Commission on July 9, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the securities offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of the Registration Statement or this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person,
a copy of any or all of the documents which are incorporated by reference
herein, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests should be
directed to the Office of the Corporate Secretary, HarCor Energy, Inc., 4400
Post Oak Parkway, Suite 2220, Houston, Texas 77027 (Telephone number
(713) 916-1804).
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RISK FACTORS
Prospective investors should carefully consider the following factors
regarding an investment in the Common Stock.
LEVERAGE AND DEBT SERVICE
As of December 31, 1996, the Company's total long-term debt and
stockholders' equity are approximately $54.1 million and $29.8 million,
respectively. As a result of the Company's indebtedness: (i) the Company
incurs significant interest expense and principal repayment obligations in
connection with its outstanding indebtedness; (ii) the Company's ability to
obtain additional financing in the future, as needed, may be limited; (iii) the
Company's leveraged position and the covenants contained in certain of its debt
agreements could limit the Company's ability to expand and compete; and (iv)
the Company's substantial leverage may make it more vulnerable to economic
downturns, limit its ability to withstand competitive pressures and reduce its
flexibility in responding to changing business and economic conditions.
The Company's ability to pay interest and principal on its outstanding
indebtedness and to satisfy its other debt obligations depends upon its future
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond its
control. The Company anticipates that its operating cash flow, together with
borrowings available under its $15 million credit facility (the "Credit
Facility") with Internationale Nederlanden Capital (U.S.) Corporation ("ING
Capital"), will be sufficient to meet its operating needs and to service its
debt requirements as they become due. However, if the Company is unable to
service its indebtedness, it will be forced to pursue one or more alternative
strategies such as selling assets, curtailing its development drilling
activities, restructuring or refinancing its indebtedness or seeking additional
equity capital. There can be no assurance that any of these strategies could
be effected on satisfactory terms, if at all. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition -- Liquidity and
Capital Resources" ("MD&A"), in the Company's Form 10-K Annual Report for the
year ended December 31, 1996 (the "1996 10-K"), incorporated herein by
reference.
CAPITAL EXPENDITURES FOR UNDEVELOPED PROPERTIES
As of December 31, 1996, approximately 69% of the Company's total proved
reserves on a BOE basis were classified as proved undeveloped. Recovery of
such reserves will require significant capital expenditures and successful
drilling operations. Based on the Company's estimates, aggregate capital
expenditures by the Company of approximately $64 million, including $59 million
on the San Joaquin Basin properties, will be required to develop such
undeveloped reserves, of which $18 million are expected to be incurred during
1997. The Company intends to finance the development of its properties out of
cash from operations and, to the extent necessary, borrowings under the Credit
Facility. There can be no assurance that the Company's estimates of capital
expenditures will prove accurate, that such sources of financing will be
sufficient to fully fund the Company's planned development activities or that
the development activities will be either successful or completed in accordance
with the Company's development schedule. Additionally, any decrease in oil and
gas prices or any increase in the costs of development of the Company's
properties could result in a significant reduction in the number of wells
expected to be drilled.
RISK OF EXPLORATORY DRILLING ACTIVITIES
The ability of the Company to add resources in a cost-effective manner will
be in part dependent upon the success of its exploratory drilling program.
Although the Company has significant experience in the development and
production of oil and natural gas, the Company has a limited history of
conducting exploratory drilling. In that regard, the ability of the Company to
pursue its exploratory drilling program is dependent on a number of factors,
including (i) favorable results of 3-D seismic surveys, (ii) the availability
of leases on favorable terms and permitting for the prospects, (iii) the
availability of future capital resources by the Company and the other
participants for the purchasing of leases and the drilling of prospects, (iv)
the approval of other participants in the purchasing of leases and the drilling
of wells on the prospects and (v) the economic conditions at the time of
drilling, including the prevailing and anticipated prices for natural gas.
Additionally, although the Company's prospects are located within geographic
areas in which significant quantities or natural gas equivalents have been
produced, the proximity to other successful exploratory or development wells
provides no assurance that any particular well will be successful due to the
complex faulting and fracturing of oil and gas formations and the inherent
risks and uncertainties of exploratory drilling. Exploratory drilling is
subject to numerous risks, including the risk that no commercially productive
oil and natural gas reservoirs will be encountered. The cost of drilling,
completing and operating wells is often uncertain, and drilling operations may
be curtailed, delayed or canceled as a result of a variety of factors,
including unexpected formation and drilling conditions, compliance with
governmental requirements and
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shortages or delays in the delivery of equipment. In addition, the Company's
strategy of focusing on exploratory drilling for larger reserves using 3-D
seismic and CAEX technology requires greater pre-drilling expenditures than
alternative forms of traditional drilling strategies. Although the Company
believes that its use of 3-D seismic and CAEX technology will increase the
probability of success of its exploratory wells, and should reduce average
finding costs through the elimination of prospects that might otherwise be
drilled solely on the basis of 2-D seismic data and other traditional methods,
unsuccessful wells are likely to occur and there can be no assurance as to the
future success of the Company's drilling program, especially in light of the
Company's limited exploratory drilling experience. See Items 1 and 2 in the
1996 10-K.
HISTORY OF LOSSES
For its fiscal years ended December 31, 1991, 1992, 1993, 1994, 1995 and
1996, the Company incurred operating losses (before dividends and accretion on
preferred stock) of $1,461,000, $1,414,000, $1,041,000, $939,000, $4,618,000
and $1,798,000, respectively. There can be no assurance that the Company will
be profitable in the future. See MD&A and the Consolidated Financial
Statements and Notes thereto in the 1996 10-K, incorporated herein by
reference.
VOLATILITY OF OIL AND GAS PRICES AND MARKETS
The Company's revenues and earnings are dependent upon prevailing prices
for oil and gas. The prices for oil and gas historically have been volatile
and are subject to wide fluctuations in response to changes in the supply of
and demand for oil and gas, market uncertainties and a variety of additional
factors beyond the control of the Company. These factors include the level of
consumer product demand, weather conditions, domestic and foreign governmental
regulation, political conditions in the Middle East, the foreign supply of oil
and gas, the price and availability of alternative fuels and overall oil and
gas market conditions. It is impossible to predict future oil and gas price
movements with any certainty. Although the Company hedges a substantial
portion of its production which provides some protection from price declines,
any substantial or extended decline in the price of oil and gas would have a
material adverse effect on the Company's financial condition and results of
operations, as well as reduce the amount of the Company's oil and gas that
could be produced economically. The monthly average posted price for West Texas
Intermediate crude oil (the "WTI price") varied during 1996 from a high of
$23.38 per Bbl in December 1996, to a low of $17.20 per Bbl in February 1996.
The monthly average price for 40(degree) gravity crude oil in the Lost Hills
Field (the location of most of the Company's San Joaquin Basin properties) as
stated in the Texaco Trading and Transportation Inc. Market Determined Crude
Oil Price Bulletin varied during 1996 from a high of $23.39 per Bbl in December
1996 to a low of $17.29 per Bbl in February 1996. Market prices received for
crude oil sold in California have in the recent past been generally lower than
WTI prices for similar quality oil as a result of certain market and regulatory
conditions peculiar to the California market, including (i) the lack of
pipelines to transport large quantities of oil produced in California to other
states which limits the ability of producers to respond to price imbalances
between California and other domestic markets and (ii) fewer independent
refiners in California than in other oil producing states which results in less
competition among crude oil purchasers in California than in other domestic
markets. The posted price for gas at Henry Hub, Louisiana ("Henry Hub price")
varied during 1996 from a high of $3.88 per MMBtu in December 1996 to a low of
$1.83 per MMBtu in October 1996. The Southern California border monthly average
price for natural gas as stated in the Natural Gas Intelligence Gas Price Index
varied during 1996 from a high of $3.70 per MMBtu in December 1996 to a low of
$1.29 per MMBtu in May 1996. Due to fairly stable demand as a result of stable
weather conditions in California, gas prices in California do not generally
experience fluctuations during the winter and summer months as large as those
experienced by Henry Hub prices.
Declines in oil and gas prices, if sustained, could require a write down of
the book value of the Company's oil and gas properties unless the Company has
sufficient net additions in reserves and/or production to offset the decline in
oil and gas prices. Such declines, if sustained, could also result in a
reduction of the Company's borrowing base under its Credit Facility, requiring
the Company to repay the amount by which outstanding advances exceed the
redetermined borrowing base.
RISKS OF FIXED PRICE SALES AND HEDGING CONTRACTS
The Company manages the risk associated with fluctuations in the price of
gas and to a lesser extent oil, primarily through certain fixed price sales and
hedging contracts. The Company's price risk management strategy reduces the
Company's sensitivity to changes in market prices of oil and gas, but is
subject to a number of other risks. If the Company's reserves are not produced
at the rates estimated by the Company due to inaccuracies in the reserve
estimation process, operational difficulties or regulatory limitations, the
Company would be required to satisfy its obligations under fixed price sales
and hedging contracts on potentially unfavorable terms without the ability to
hedge such risk through sales of
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comparable quantities of its own production. Further, the terms under which
the Company enters into fixed price sale and hedging contracts are based on
assumptions and estimates of numerous factors such as cost of production and
pipeline and other transaction costs to delivery points. Substantial
variations between the assumptions and estimates used by the Company and actual
results experienced could materially adversely affect the Company's anticipated
profit margins and its ability to mange in the future the risk associated with
fluctuations in oil and gas prices. Additionally, the fixed price sales and
hedging contacts limit the benefits the Company will realize if actual prices
rise above the contract prices.
In addition, fixed price sales and hedging contracts are subject to the
risk that the counterpart may prove unable or unwilling to perform its
obligations under such contracts. Currently, an affiliate of ING Capital is
the counterpart for a significant portion of the Company's hedging contracts.
Although the Company has not experienced and does not anticipate significant
nonperformance by counterparties, such significant nonperformance could have a
material adverse financial effect on the Company.
In 1996, the Company had approximately 51% of its oil production and
approximately 56% of its gas production committed to sales and hedging
contracts.
RELIANCE ON ESTIMATES OF PROVED RESERVES
There are numerous uncertainties inherent in estimating quantities of
proved oil and gas reserves, including many factors beyond the control of the
Company. Certain events, including changes in oil and gas prices, production,
acquisitions and future drilling and development, could result in increases or
decreases in estimated proved quantities of oil and gas reserves. In addition,
estimates of the Company's quantities of proved oil and gas reserves, future
net revenues from proved reserves and the present value thereof are based on
certain assumptions regarding future oil and gas prices, production levels and
operating and development costs that may not prove to be correct. In
particular, estimates of proved oil and gas reserves, future net revenues from
proved reserves and the present value thereof for the Company's oil and gas
properties as of December 31, 1996 included in the 1996 10-K are based on the
assumption that future oil and gas prices remain the same as oil and gas prices
at December 31, 1996. As of December 31, 1996, the average sales prices used
for purposes of such estimates were $23.74 per Bbl of oil and $4.14 per Mcf of
gas with respect to the San Joaquin Basin properties and $23.36 per Bbl of oil
and $3.59 per Mcf of gas with respect to the Company's other properties in the
aggregate. Average oil prices with respect to the San Joaquin Basin properties
and the Company's other properties were, for the year ended December 31, 1996,
higher than oil prices at December 31, 1996, with average and year-end oil
prices realized by the Company being $20.30 per Bbl and $19.68 per Bbl,
respectively. Average gas prices for the San Joaquin Basin properties and the
Company's other properties were, for the year ended December 31, 1996, lower
than those received at year-end 1996, with average and year-end gas prices
realized by the Company being $1.98 per Mcf and $2.09 per Mcf, respectively.
Also assumed is the Company's planned expenditures of approximately $64 million
in future capital expenditures, including $59 million on the San Joaquin Basin
properties, necessary to develop and realize the value of its proved
undeveloped reserves. Any significant variance in these assumptions could
materially affect the estimated quantity and value of reserves set forth
herein. See MD&A.
DEPENDENT ON LOCAL OPERATORS
None of the Company's oil and gas properties are operated by the Company.
As a result, the Company has limited control over the manner in which
operations are conducted on such properties, including the safety and
environmental standards used in connection therewith. Pursuant to the
operating agreements governing operations on the properties in which the
Company has an interest, the Company maintains significant influence or control
over the nature and timing of exploration and development activities on the
majority of its properties. Such agreements do not, however, allow the Company
such influence or control with respect to a portion of its properties; in such
cases, the operators of such properties generally have control with respect to
the nature and timing of exploration or development activities. In such
instances, the operators of such properties could undertake exploration or
development projects at a time when the Company does not have the funds
required to finance its share of the costs of such projects. In such event,
pursuant to the operating agreements relating to properties in which the
Company has an interest, the other parties to such agreements who fund their
shares of the cost of such a project are generally entitled to receive all cash
flow from such project, subject to rights of third party royalty or other
interest owners, until they have recovered a multiple of the costs of such
project (usually 300% to 400%) prior to the Company's receipt of any production
or revenues from such project or, in the event drilling is necessary to
maintain certain leasehold interests, the Company may be required to forfeit
its interests in such projects. Conversely, the operators of such properties
could refuse to initiate exploration or development projects, in which case the
Company would be required to propose such activities and may be required to
proceed with such activities at much higher levels of
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participation than expected and without receiving any funding from the other
interest owners, or the operators may initiate exploration or development
projects on a slower schedule than that preferred by the Company. Any of these
events could have a significant effect on the Company's anticipated exploration
and development activities and financing thereof. See MD&A.
OPERATING HAZARDS AND UNINSURED RISKS
The Company's operations are subject to risks inherent in the oil and gas
industry, such as blowouts, cratering, explosions, uncontrollable flows of oil,
gas or well fluids, fires, pollution and other environmental risks. These
risks could result in substantial losses to the Company due to injury and loss
of life, severe damage to and destruction of property and equipment, pollution
and other environmental damage and suspension of operations. In accordance
with customary industry practice, the Company is not fully insured against all
risks incident to its business. Because of the nature of industry hazards, it
is possible that liabilities for pollution and other damages arising from a
major occurrence could exceed insurance coverage or policy limits. Any such
liabilities could have a materially adverse effect on the Company.
CERTAIN BUSINESS RISKS
The Company intends to continue acquiring oil and gas properties. Although
the Company performs a review of the properties to be acquired that it believes
is consistent with industry practices, such reviews are inherently incomplete.
Generally, it is not feasible to review in-depth every individual property
involved in each acquisition. Ordinarily, the Company will focus its review
efforts on the higher-valued properties and will sample the remainder.
However, even an in-depth review of all properties and records may not
necessarily reveal existing or potential problems nor will it permit a buyer to
become sufficiently familiar with the properties to assess fully their
deficiencies and capabilities. Inspections may not always be performed on
every well, and environmental problems, such as ground water contamination, are
not necessarily observable even when an inspection is undertaken. Furthermore,
the Company must rely on information, including financial, operating and
geological information, provided by the seller of the properties without being
able to verify fully all such information and without the benefit of knowing
the history of operations of all such properties.
In addition, a high degree of risk of loss of invested capital exists in
almost all exploration and development activities which the Company undertakes.
No assurance can be given that oil or gas will be discovered to replace
reserves currently being developed, produced and sold, or that if oil or gas
reserves are found, they will be of a sufficient quantity to enable the Company
to recover the substantial sums of money incurred in their acquisition,
discovery and development. Drilling activities are subject to numerous risks,
including the risk that no commercially productive oil or gas reservoirs will
be encountered. The cost of drilling, completing and operating wells is often
uncertain. The Company's operations may be curtailed, delayed or canceled as a
result of numerous factors including title problems, weather conditions,
compliance with governmental requirements and shortages or delays in the
delivery of equipment. The availability of a ready market for the Company's
gas production depends on a number of factors, including, without limitation,
the demand for and supply of natural gas, the proximity of gas reserves to
pipelines, the capacity of such pipelines and government regulations. See MD&A
and Items 1 and 2 in the 1996 10-K.
DEPENDENT ON KEY PERSONNEL
The success of the Company will depend almost entirely upon the ability of
a small group of key executives to manage the business of the Company. Should
one or more of these executives leave the Company or become unable to perform
his duties, no assurance can be given that the Company will be able to attract
competent new management. The Company maintains a $10 million key man life
insurance policy on Mark G. Harrington, the proceeds of which are payable to
the Company.
COMPETITION
The acquisition, exploration and development of oil and gas properties is a
highly competitive business. Many companies and individuals are engaged in the
business of acquiring interests in and developing onshore oil and gas
properties in the United States. The industry is not dominated by any single
competitor or a small number of competitors. The Company competes with major
and independent oil and gas companies for the acquisition of desirable oil and
gas properties, as well as for the equipment and labor required to operate and
develop such properties. Many of these competitors have financial and other
resources substantially in excess of those available to the Company. Such
competitive disadvantages could adversely affect the Company's ability to
acquire desirable properties or to develop existing properties.
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GOVERNMENTAL REGULATION
The Company's business is subject to certain federal, state and local laws
and regulations relating to the exploration for and development and production
of oil and gas, as well as environmental and safety matters. Such laws and
regulations have generally become more stringent in recent years, often
imposing greater liability on a larger number of potentially responsible
parties. Because the requirements imposed by such laws and regulations are
frequently changed, the Company is unable to predict the ultimate cost of
compliance with such requirements and their effect on the Company. See Item 1
of the 1996 10-K.
POSSIBLE SALE OF COMPANY
In March 1997, the Company announced that it had engaged a group of
investment bankers to pursue a possible sale of the Company in order to
maximize shareholder returns. Following the announcement, the market price of
the Company's Common Stock quoted on The NASDAQ Stock Market increased from
$5.06 per share (the closing price on March 4, 1997, the day prior to the
announcement) to a high of $6.88 per share on March 7, 1997; and on May 7,
1997, the quoted closing price was $6.06 per share. There can be no assurances
that this process will, in fact, result in a sale of the Company. In the event
that the Company is sold, there can be no assurances as to the amount or form
of consideration that the Company's shareholders would receive in such a
transaction or that the value of such consideration would be as high as the
recent market prices for the Company's Common Stock. The Company intends to
continue conducting its business without regard to any potential outcome of a
proposed sale.
THE COMPANY
The Company's principal executive offices are located at 4400 Post Oak
Park, Suite 2220, Houston, Texas 77027, and its telephone number at such
address is (713) 961-1804.
USE OF PROCEEDS
All proceeds from the sale of shares of Common Stock offered hereby will go
to the Selling Stockholders. The Company will not receive any consideration
for the shares of the Common Stock registered hereunder.
SELLING STOCKHOLDERS
This Prospectus relates to the periodic offer and sale of up to 1,808,690
Shares by the Selling Stockholders listed below. Of the Shares offered hereby,
(i) 112,500 Shares and 37,500 Shares are issuable to Bankers Trust Securities
Corp. and Internationale Nederlanden (U.S.) Securities Corporation (an
affiliate of ING Capital), respectively, upon exercise of warrants held by such
holders which were received as compensation for services rendered in connection
with the Company's sale of 65,000 units consisting of $65 million aggregate
principal amount of 14.78% Senior Notes due 2002 and warrants to purchase
1,430,000 shares of Common Stock (the "Note Warrants"), (ii) 55,000 Shares were
issued to ING Capital for services rendered in connection with various Company
financings, (iii) 148,690 Shares are issuable upon exercise of a warrant held
by ING Capital which it received as compensation in connection with
establishing a $2.7 million credit facility for the Company in November, 1989,
(iv) 25,000 Shares were issued to First Union Corporation upon the exercise of
a warrant issued for services rendered in connection with a Company financing,
and (v) the remaining 1,430,000 Shares are issuable pursuant to the exercise of
the Note Warrants by the holders thereof. ING Capital is the Company's lender
under its Credit Facility.
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The following table sets forth the names of the Selling Stockholders, the
number of shares of Common Stock owned by each of them as of the date of this
Prospectus and the number of Shares covered by this Prospectus. Except for the
relationships described above, none of the Selling Stockholders had, as of the
date of this Prospectus, any relationship with the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF SHARES NUMBER OF SHARES OF OF COMMON STOCK
OF COMMON STOCK COMMON STOCK TO BE OWNED AFTER
OWNED PRIOR TO OFFERED COMPLETION OF
NAME OFFERING HEREUNDER OFFERING
---- ---------------- ------------------- -----------------
<S> <C> <C> <C>
BT Securities Corporation............................. 200,500 200,500 -0-
First Union Corporation. ............................. 25,000 25,000 -0-
International Nederlanden (U.S.) Capital Corporation.. 291,190 241,190 50,000
Bank of New York...................................... 330,000 330,000 -0-
Brown Brothers Harriman & Co. ........................ 55,000 55,000 -0-
The Chase Manhattan Bank.............................. 275,000 275,000 -0-
Chemical Bank......................................... 132,000 132,000 -0-
Citibank, N.A. ....................................... 253,000 253,000 -0-
State Street Bank & Trust Co.-Fiduciary............... 55,000 55,000 -0-
Investors Bank & Trust/M.F. Custody................... 88,000 88,000 -0-
State Street Bank & Trust Co.-Custodian............... 44,000 44,000 -0-
First Trust National Association...................... 110,000 110,000 -0-
</TABLE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that the Shares
may from time to time be offered for sale either directly by the Selling
Stockholders or through underwriters, dealers or agents or on any exchange on
which the Shares may from time to time be traded, or in independently
negotiated transactions or otherwise; provided that such transactions will not
include an underwritten public offering. The Shares may be sold at market
prices prevailing at the time of sale or at negotiated prices. The Selling
Stockholders and any underwriters, dealers or agents that participate in
distribution of the Shares may be deemed to be underwriters, and any profit on
sale of the shares by them and any discounts, commissions or concessions
received by any underwriter, dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act. The methods by which the
Shares may be sold include (a) a block trade (which may involve crosses) in
which the broker or dealer so engaged will attempt to sell the securities as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its own account pursuant to this
Prospectus; (c) exchange distributions and/or secondary distributions in
accordance with the rules of the NASDAQ/NMS; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (e)
privately negotiated transactions.
The Company has agreed to register for sale under the Securities Act and
certain state securities laws the Shares and to indemnify the Selling
Stockholder, its directors, officers and employees and each person who
participates as an underwriter, broker or dealer in the offering or sale of the
Shares, against certain civil liabilities, including certain liabilities under
the Securities Act.
There can be no assurances that the Selling Stockholders will sell any or
all of the Shares offered hereunder.
8
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon for
the Company by Vinson & Elkins L.L.P.
EXPERTS
The audited consolidated financial statements incorporated by reference in
this Prospectus and elsewhere in the Registration Statement, to the extent and
for the periods indicated in their report, have been audited by Arthur Andersen
LLP, independent public accountants as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
Information set forth in this Prospectus relating to the Company's
estimated proved oil and gas reserves at December 31, 1996, the related
calculations of future net production revenues and the net present value
thereof have been derived from independent petroleum engineering reports
prepared by Ryder Scott Company and Huddleston & Co., independent petroleum
engineers.
9
<PAGE>
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No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company, by any Selling Stockholder or underwriter. Neither
the delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that there has been no change in the affairs
of the Company since the date hereof. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities covered
hereby in any jurisdiction or to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
_____________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 1
Incorporation of Certain Information
by Reference....................... 1
Risk Factors.......................... 2
The Company........................... 6
Use of Proceeds....................... 6
Selling Stockholders.................. 6
Plan of Distribution.................. 7
Legal Matters......................... 8
Experts............................... 8
</TABLE>
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HARCOR ENERGY, INC.
1,808,690 Shares
Common Stock
($.10 Par Value)
Prospectus
May 7, 1997
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