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As filed with the Securities and Exchange Commission on December 19, 1997
Registration No. 333-
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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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PLAINS RESOURCES INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-2898764
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1600 SMITH STREET
HOUSTON, TEXAS 77002
(713) 654-1414
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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MICHAEL R. PATTERSON
VICE PRESIDENT AND GENERAL COUNSEL
PLAINS RESOURCES INC.
1600 SMITH STREET
HOUSTON, TEXAS 77002
(713) 654-1414
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copy to:
JOHN A. WATSON
FULBRIGHT & JAWORSKI L.L.P.
1301 MCKINNEY, SUITE 5100
HOUSTON, TEXAS 77010-3095
(713) 651-5151
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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. [_]
<TABLE>
<CAPTION>
Calculation of Registration Fee
======================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE PER UNIT OFFERING PRICE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1) (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.10 per share 1,232,000 shares $17.25 $21,252,000 $6,270
======================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
based upon the average of the high and low per shares sales prices of
Common Stock as reported by the American Stock Exchange on December 17,
1997, which was $17.25.
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any State.
SUBJECT TO COMPLETION, DATED DECEMBER 19, 1997
PROSPECTUS
[PLAINS RESOURCES LOGO APPEARS HERE]
COMMON STOCK
1,232,000 SHARES
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This Prospectus has been prepared for use in connection with the proposed sale
by a holder thereof (the "Selling Stockholder") of an aggregate of 1,232,000
shares (the "Shares") of common stock, par value $.10 per share (the "Common
Stock"), of Plains Resources Inc. (the "Company"). The Shares may be sold from
time to time by or for the account of the Selling Stockholder in the over-the-
counter market, on the American Stock Exchange ("AMEX") or otherwise at prices
and on terms then prevailing or at prices related to the then current market
price, directly or through agents designated from time to time, or through
dealers or underwriters to be designated or in negotiated transactions. The
Shares may be sold by any one or more of the following methods: (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 account
pursuant to this Prospectus; (c) exchange distributions and/or secondary
distributions in accordance with the rules of the AMEX; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; or (e)
privately negotiated transactions. To the extent required by applicable law,
the specific Shares to be sold, the names of the Selling Stockholder, the
respective purchase prices and public offering prices, the names of any such
agent, dealer or underwriter and any applicable commissions or discounts with
respect to a particular offer will be set forth in an accompanying Prospectus
Supplement. See "Plan of Distribution."
The Common Stock is traded on the AMEX under the symbol "PLX". On December
17, 1997, the last reported sale price for the Common Stock on the American
Stock Exchange was $17.25 per share.
The Company will receive no portion of the proceeds of the sale of the Shares
offered hereby and will bear certain of the expenses incident to their
registration. See "Plan of Distribution" and "Selling Stockholder."
---------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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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.
____________________, 199__
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the "SEC")
in Washington, D.C., a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the securities offered by this Prospectus. Certain of the
information contained in the Registration Statement is omitted from this
Prospectus in accordance with the rules and regulations of the SEC, and
reference is hereby made to the Registration Statement and exhibits and
schedules relating thereto for further information with respect to the Company
and the securities offered by this Prospectus. 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, proxy
statements and other information with the SEC. Such reports, proxy statements
and other information are available for inspection at, and copies of such
materials may be obtained upon payment of the fees prescribed therefor by the
rules and regulations of the SEC from, the SEC at its principal offices located
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and the Regional Offices of the SEC located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and at 7 World Trade Center, New York, New
York 10048. In addition, such materials filed electronically by the Company
with the SEC are available at the SEC's World Wide Web site at
http://www.sec.gov. The Common Stock is traded on the American Stock Exchange,
and such reports, proxy statements and other information may be inspected at the
offices of the American Stock Exchange, Inc., 86 Trinity Place, New York, New
York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K (Commission file No. 0-9808) for the
fiscal year ended December 31, 1996, the Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1997, June 30, 1997 and September 30,
1997, and the description of the Company's Common Stock contained in its Form
8-A filed on February 2, 1990, are hereby incorporated by reference in this
Prospectus.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, after the date of this Prospectus and prior to the
termination of the offering of the securities offered by this Prospectus, shall
be deemed to be incorporated by reference in this Prospectus and be a part
hereof from the date of filing of such documents. Any statement contained in
this Prospectus or in a document incorporated or deemed to be incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained in this
Prospectus, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference, 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 this Prospectus.
The Company undertakes to provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon written or oral request of any such
person, a copy of any or all of the documents incorporated by reference herein,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to:
Investor Relations Department, 1600 Smith Street, Suite 1500, Houston, Texas
77002, telephone (713) 654-1414.
CERTAIN DEFINITIONS
As used in this Prospectus, "Mcf" means thousand cubic feet, "Bcf" means
billion cubic feet, "Bbl" means barrel, "MMBbl" means million barrels, "BOE"
means net barrel of oil equivalent and "MCFE" means Mcf of natural gas
equivalent. Natural gas equivalents and crude oil equivalents are determined
using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or
natural gas liquids. "Present Value of Proved Reserves" means the present value
(discounted at 10%) of estimated future cash flows from proved oil and natural
gas reserves reduced by estimated future operating expenses, development
expenditures and abandonment costs (net of salvage value) associated therewith
(before income taxes), calculated using product prices in effect on the date of
determination, and "Standardized Measure" is such amount further reduced by the
present value (discounted at 10%) of estimated future income taxes on such cash
flows. "NYMEX" means New York Mercantile Exchange.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes set forth and incorporated by
reference in this Prospectus. As used herein, the terms "Company" and "Plains"
mean Plains Resources Inc. and its subsidiaries, except as the context may
otherwise require. Certain terms used but not defined in the following summary
are defined elsewhere in this Prospectus, including certain terms relating to
the oil and natural gas industry defined under "Certain Definitions".
THE COMPANY
Plains is an independent energy company engaged in the acquisition,
exploitation, development, exploration and production of crude oil and natural
gas and the marketing, transportation, terminalling and storage of crude oil.
The Company's upstream oil and natural gas activities are focused in the Los
Angeles Basin (the "LA Basin") and the Arroyo Grande Field of California, the
Sunniland Trend of South Florida (the "Sunniland Trend"), and the Illinois Basin
in southern Illinois (the "Illinois Basin"). The Company's midstream marketing,
terminalling and storage activities are concentrated in Oklahoma, Texas and the
Gulf Coast area of Louisiana. Plains' upstream operations contributed
approximately 90% of the Company's EBITDA for the fiscal year ending December
31, 1996, while the Company's midstream activities accounted for the remainder.
The Company has experienced significant growth over the last five years. From
December 31, 1991, to December 31, 1996, the Company's proved reserve volumes
increased from 14 million BOE to 122 million BOE, its Present Value of Proved
Reserves increased from $72 million to $765 million and its Standardized Measure
increased from $70 million to $579 million. Over the same period, the Company
has added 136 million BOE of proved reserves at an aggregate average finding and
development cost of $2.24 per BOE ($0.37 per MCFE), replacing production by
approximately 600%. During 1996, the Company's net production averaged
approximately 17,500 BOE per day and its unit gross profit (gross margin less
upstream general and administrative expenses) averaged $8.44 per BOE ($1.41 per
MCFE). EBITDA increased 580% from $9 million in 1991 to $61 million (before
nonrecurring items) in 1996, and cash provided by operating activities before
changes in assets and liabilities increased 670% from $6 million in 1991 to $44
million (before non-recurring items) in 1996.
The Company's significant increase in proved reserves, production and cash
flow from oil and natural gas producing activities is attributable to the
acquisition and subsequent exploitation of its LA Basin, Sunniland Trend and
Illinois Basin properties. These three core areas are comprised primarily of
crude oil properties with established production histories and collectively
account for approximately 98% of the Company's year-end 1996 proved reserves and
99% of its 1996 production. The Company believes these properties include a
significant inventory of exploitation and development opportunities, which are
expected to contribute to the Company's anticipated future growth in production
and reserves. The Company operates and owns a 100% working interest in its
major producing fields in each of these areas, which enables the Company to
control the exploitation of such properties. On a BOE basis, at December 31,
1996, the Company's proved reserves were approximately 95% crude oil and natural
gas liquids, with a proved reserves to production ratio of approximately 19
years. Approximately 74% of the Company's proved reserves at December 31, 1996,
were classified as proved developed.
The Company's marketing effort involves purchasing crude oil from other
producers and marketing it to the refining sector. The Company aggregates these
purchased volumes with its own production at major crude oil interchanges and
trading locations, which enables it to obtain higher prices for its own
production while realizing profits on the production purchased from others. The
Company owns and operates a two million barrel, above ground crude oil storage
and terminalling facility in Cushing, Oklahoma (the "Cushing Terminal"), the
United States' largest inland crude oil interchange and trading location. This
facility enhances the ability of the Company to profit from its marketing
activities by allowing the Company to take advantage of certain time and quality
arbitrage opportunities and make or take physical delivery of crude oil at
Cushing, the NYMEX designated delivery location. The Company's midstream
activities have expanded significantly during the last several years, with
midstream gross margin (revenues less direct expenses of purchases,
transportation, storage and terminalling) having increased approximately 672%
from $1.2 million in 1991 to $9.5 million in 1996.
The Company's upstream and midstream business activities focus on crude oil as
the primary product. As a result of inefficiencies existing in the crude oil
markets and the U.S. pipeline and transportation infrastructure, management
believes its ability to compete is enhanced by the alternatives afforded by its
proprietary access to the Cushing Terminal. The Company's crude oil marketing
expertise allows it to obtain higher prices for the Company's existing
production by reducing quality and location pricing differentials. The Company
believes that such expertise also may provide it with
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a competitive advantage in making acquisitions by enabling it to identify
potential crude oil price enhancements for targeted properties.
BUSINESS STRATEGY
The Company's business strategy is to increase its proved reserves and cash
flow by exploiting and producing oil and natural gas from its existing
properties, acquiring underdeveloped oil properties and exploring for
significant new sources of reserves. The Company concentrates its exploitation
efforts on mature crude oil producing properties that it believes to be
underdeveloped and that meet the Company's other targeted criteria. Generally,
such properties were previously owned by major integrated or large independent
oil and natural gas companies, have produced significant volumes since initial
discovery and have significant estimated remaining reserves in place.
Management believes that it has developed a proven record in acquiring and
exploiting underdeveloped crude oil properties where it believes substantial
reserve additions and cash flow increases can be made through improved
production practices and recovery techniques and relatively low risk development
drilling. An integral component of the Company's exploitation effort is to
increase unit operating margins, and therefore cash flow, by reducing unit
production expenses and increasing wellhead price realizations. The Company
seeks to complement these exploitation efforts by pursuing certain higher risk
exploration opportunities which offer potentially higher rewards. The Company
also seeks to capitalize on midstream opportunities that exist as a result of
inefficiencies within the crude oil markets and the U.S. pipeline and
transportation infrastructure. The Company's marketing of its own crude oil
production takes advantage of the marketing expertise attributable to its
midstream activities. As part of its business strategy, the Company
periodically evaluates, and from time to time has elected to sell, certain of
its mature producing properties that it considers to be nonstrategic or fully
valued. Such sales enable the Company to focus on its core properties, maintain
financial flexibility, control overhead and redeploy the sales proceeds to
activities that have potentially higher financial returns.
Consistent with its strategy of exploiting mature, underdeveloped crude oil
properties, the Company's three core properties were all added since mid-1992,
and the Company has sold substantially all of the producing properties that it
owned prior to such time. Since such time through December 31, 1996, the
Company has expended approximately $185 million of direct capital to acquire and
exploit its three core properties. For this same period, cumulative operating
cash flow and proceeds from minor property sales from these three core areas
aggregated $156 million. At December 31, 1996, the estimated remaining future
net revenues and Present Value of Proved Reserves for these properties were $1.6
billion and $750 million, respectively. The benchmark NYMEX crude oil spot
price ("NYMEX Crude Oil Price") at December 31, 1996, was $25.92 per barrel.
Such price at December 16, 1997, was $18.17 per barrel.
In order to manage its exposure to commodity price risk, the Company routinely
hedges a portion of its crude oil production. For the fourth quarter of 1997,
the Company has entered into various fixed price and floating price collar
arrangements. Such arrangements generally provide the Company with downside
price protection on approximately 14,000 barrels of oil per day at a NYMEX
benchmark price of approximately $19.00 per barrel, but permit the Company to
receive the benefit of increases in the NYMEX benchmark price up to $24.00 per
barrel on 4,000 of such barrels. Thus, based on the Company's average third
quarter 1997 oil production rate, these arrangements generally provide the
Company with downside price protection for 76% of its production and upside
price participation for 46% of its production up to $24.00 per barrel, while 24%
of such production and excess volumes, if any, remain unhedged. In addition,
the Company also has fixed price arrangements on approximately 12,000 barrels
per day for 1998 at a NYMEX benchmark price of approximately $19.80 per barrel.
The hedge prices are before deductions for quality and area differentials.
1997 PROPERTY ACQUISITIONS
In March, 1997, the Company completed the acquisition of Chevron USA's
interest in the Montebello Field for $25 million, effective February 1, 1997.
The assets acquired consist of a 100% working interest and a 99.2% net revenue
interest in 55 producing oil wells and related facilities and also includes
approximately 450 acres of surface fee lands (the "Montebello Acquisition").
The Montebello Field, which is located approximately 15 miles from the Company's
existing LA Basin operations, has produced approximately 108 MMBbls of oil and
100 Bcf of natural gas since its discovery in 1917. As of December 16, 1997,
the field was producing approximately 960 barrels of oil and 700 Mcf of natural
gas per day. The Company's independent reservoir engineers estimate the
property's proved reserves as of the acquisition date, at approximately 23
MMBbls of oil equivalent.
In November, 1997, the Company acquired a 100% working interest and a 94%
revenue interest in the Arroyo Grande Field in San Luis Obispo County,
California (the "Arroyo Grande Acquisition") from the Selling Stockholder and
another subsidiary of Shell Oil Company (collectively "Shell"). The Arroyo
Grande field was discovered in 1906 and has produced approximately 10 MMBbls of
crude oil or approximately 5% of the estimated original oil in place. The
assets
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acquired include surface and development rights to approximately 1,000 acres
included in the 1,500 acre unit. The field is under continuous steam injection
and as of the acquisition date was producing approximately 1,600 barrels
(approximately 1,500 barrels net to the Company's interest) of approximately 14
degree API gravity oil per day from 70 wells. The aggregate consideration for
the Arroyo Grande Acquisition consisted of (i) rights to a non-producing
property interest conveyed to Shell, (ii)the issuance of 46,600 shares of Series
D Cumulative Convertible Preferred Stock (the "Series D Preferred Stock") with
an aggregate stated value of $23.3 million, and (iii) a 5 year warrant to
purchase 150,000 shares of Common Stock at $25 per share (the "Warrant"). No
proved reserves had been assigned to the rights to the property interest
conveyed.
The Company intends to aggressively exploit these properties acquired in 1997
to evaluate additional reserve potential which was identified during its
acquisition analyses. In addition, the Company's exploitation plans for these
properties target improving the unit gross margin by decreasing unit production
expenses and increasing production volumes through production enhancement
activities similar to those employed in its other California properties.
RISK FACTORS
Prospective investors should be aware of the effect on the Company of the
risks presented by (i) the volatility of oil and natural gas prices, (ii) the
possible inability of the Company to continue to replace its reserves, (iii) the
costs and uncertainties relating to oil and natural gas exploration and
development and (iv) the substantial capital requirements associated with the
Company's business strategy and the possibility that the Company will not be
able to finance such requirements. See "Risk Factors".
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus includes "forward-looking statements" within the meaning of
various provisions of the Securities Act and the Exchange Act. All statements,
other than statements of historical facts, included in this Prospectus which
address activities, events or developments that the Company expects or
anticipates will or may occur in the future, including such things as estimated
future net revenues from oil and natural gas reserves and the present value
thereof, future capital expenditures (including the amount and nature thereof),
business strategy and measures to implement strategy, competitive strengths,
goals, expansion and growth of the Company's business and operations, plans,
references to future success, references to intentions as to future matters and
other such matters are forward-looking statements. These statements are based
on certain assumptions and analyses made by the Company in light of its
experience and its perception of historical trends, current conditions and
expected future developments as well as other factors it believes are
appropriate under the circumstances. However, whether actual results and
developments will conform with the Company's expectations and predictions is
subject to a number of risks and uncertainties, including the risk factors
discussed in this Prospectus, general economic, market or business conditions,
the opportunities (or lack thereof) that may be presented to and pursued by the
Company, competitive actions by other oil and natural gas companies, changes in
laws or regulations, and other factors, many of which are beyond the control of
the Company. Consequently, all of the forward-looking statements made in this
Prospectus are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequences to or effects on the Company or its business or
operations.
SALES BY SELLING STOCKHOLDER
The Shares to be sold pursuant to this Prospectus are to be acquired by the
Selling Stockholder from time to time upon conversion of shares of the Series D
Preferred Stock, the exchange of any dividend arrearage thereon and the exercise
of the Warrant. The Company will not receive any of the proceeds from the sale
of the Shares.
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RISK FACTORS
Each investor should carefully examine this entire Prospectus and should
give particular attention to the risk factors set forth below.
MARKET CONDITIONS AND VOLATILITY OF OIL AND NATURAL GAS PRICES
The revenues generated by the Company's operations are highly dependent
upon the prices of, and demand for, oil and natural gas. Historically, the
prices for oil and natural gas have been volatile and are likely to continue to
be volatile in the future. The price received by the Company for its oil and
natural gas production and the level of such production are subject to wide
fluctuations and depend on numerous factors beyond the Company's control,
including seasonality, the condition of the United States economy (particularly
the manufacturing sector), foreign imports, political conditions in other oil-
producing and natural gas-producing countries, the actions of the Organization
of Petroleum Exporting Countries and domestic government regulation, legislation
and policies. Decreases in the prices of oil and natural gas have had, and
could have in the future, an adverse effect on the carrying value of the
Company's proved reserves and the Company's revenues, profitability and cash
flow. In this regard, it should be noted that oil prices at December 31, 1996,
upon which estimated proved reserve volumes, the Present Value of Proved
Reserves and the Standardized Measure as of such date are based, were at the
highest year-end level since 1990. At December 31, 1996, the NYMEX Crude Oil
Price was $25.92 per barrel, 33% higher than the $19.55 per barrel price at
December 31, 1995. On December 16, 1997, the NYMEX Crude Oil Price was $18.17
per barrel. Although the Company is not currently experiencing any significant
involuntary curtailment of its crude oil or natural gas production, market,
logistic, economic and regulatory factors may in the future materially affect
the Company's ability to sell its crude oil and natural gas production.
In order to manage its exposure to price risks in the marketing of its oil
and natural gas, the Company from time to time enters into fixed price delivery
contracts, floating price collar arrangements, financial swaps and oil and
natural gas futures contracts as hedging devices. To ensure a fixed price for
future production, the Company may sell a futures contract and thereafter either
(i) make physical delivery of its product to comply with such contract or (ii)
buy a matching futures contract to unwind its futures position and sell its
production to a customer. These same techniques are also utilized to manage
price risk for certain production purchased from customers of the Company's
marketing subsidiary, Plains Marketing & Transportation Inc. Such contracts may
expose the Company to the risk of financial loss in certain circumstances,
including instances where production is less than expected, the Company's
customers fail to purchase or deliver the contracted quantities of oil or
natural gas, or a sudden, unexpected event materially impacts oil or natural gas
prices. Such contracts may also restrict the ability of the Company to benefit
from unexpected increases in oil and natural gas prices.
OPERATING HAZARDS AND UNINSURED RISKS
The Company's operations are subject to all of the risks normally incident
to the exploration for and the production of oil and natural gas, including
blowouts, cratering, oil spills and fires, each of which could result in damage
to or destruction of oil and natural gas wells, production facilities or other
property, or injury to persons. The relatively deep drilling conducted by the
Company from time to time involves increased drilling risks of high pressures
and mechanical difficulties, including stuck pipe, collapsed casing and
separated cable. The Company's operations in the LA Basin, including
transportation of crude oil by pipelines within the city of Los Angeles, are
especially susceptible to damage from earthquakes and involve increased risks of
personal injury, property damage and marketing interruptions because of the
population density of the area. Although the Company maintains insurance
coverage considered to be customary in the industry, it is not fully insured
against certain of these risks, including, in certain instances, earthquake risk
in the LA Basin, either because such insurance is not available or because of
high premium costs. The occurrence of a significant event that is not fully
insured against could have a material adverse effect on the Company's financial
position.
SUBSTANTIAL CAPITAL REQUIREMENTS
The Company makes, and plans to continue to make, substantial capital
expenditures for the acquisition, exploitation, development, exploration and
production of oil and natural gas reserves. Historically, the Company has
financed these expenditures primarily with cash generated by operations, bank
borrowings and the sale of subordinated notes, common stock and preferred stock.
The Company believes that it will have sufficient cash provided by operating
activities and borrowings under its revolving credit facility (the "Revolving
Credit Facility") to fund such planned capital expenditures. If revenues or the
Company's borrowing base decrease as a result of lower oil and natural gas
prices, operating difficulties or declines in reserves, the Company may have
limited ability to expend the capital necessary to
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undertake or complete future acquisition and exploitation programs. There can be
no assurance that additional debt or equity financing or cash generated by
operations will be available to meet these requirements.
BUSINESS RISKS
The Company must continually acquire, explore for, develop or exploit new
oil and natural gas reserves to replace those produced or sold. Without
successful drilling, acquisition or exploitation operations, the Company's oil
and natural gas reserves and revenues will decline. Drilling activities are
subject to numerous risks, including the risk that no commercially viable oil or
natural gas production will be obtained. The decision to purchase, explore,
exploit or develop an interest or property will depend in part on the evaluation
of data obtained through geophysical and geological analyses and engineering
studies, the results of which are often inconclusive or subject to varying
interpretations. The cost of drilling, completing and operating wells is often
uncertain. Drilling may be curtailed, delayed or canceled as a result of many
factors, including title problems, weather conditions, compliance with
government permitting requirements, shortages of or delays in obtaining
equipment, reductions in product prices or limitations in the market for
products. The availability of a ready market for the Company's oil and natural
gas production also depends on a number of factors, including the demand for and
supply of oil and natural gas and the proximity of reserves to pipelines or
trucking and terminal facilities. Natural gas wells may be shut in for lack of
a market or due to inadequacy or unavailability of natural gas pipeline or
gathering system capacity.
Substantially all of the Company's LA Basin crude oil and natural gas
production and Illinois Basin oil production are transported by pipelines owned
by third parties. The inability or unwillingness of these pipelines to provide
transportation services to the Company for a reasonable fee could cause the
Company to seek transportation alternatives, which in turn could result in
increased transportation costs to the Company or involuntary curtailment of a
significant portion of its crude oil and natural gas production.
EFFECTS OF LEVERAGE
As of September 30, 1997, the Company's total long-term debt and
stockholders' equity were $283 million and $107 million, respectively. In
addition, the Company may incur additional indebtedness under its credit
facilities. The Company's Revolving Credit Facility currently consists of a
$165 million borrowing base, of which approximately $77.3 million was
outstanding as of November 30, 1997.
The Company's level of indebtedness will have several important effects on
its future operations, including the following: (i) a substantial portion of
the Company's cash flow from operations must be dedicated to the payment of
interest on its indebtedness and will not be available for other purposes; (ii)
covenants contained in the Company's debt obligations will require the Company
to meet certain financial tests, and other restrictions will limit its ability
to borrow additional funds or to dispose of assets and may affect the Company's
flexibility in planning for, and reacting to, changes in its business, including
possible acquisition activities; and (iii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate purposes or other purposes may be impaired.
Moreover, future acquisition and exploitation activities may require the Company
to alter its capitalization significantly, which may, in the case of the
issuance of additional securities, be dilutive to holders of Common Stock. The
Company's ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. There can be no assurance that the Company's business will continue to
generate cash flow at or above current levels. If the Company is unable to
generate sufficient cash flow from operations in the future to service its debt,
it may be required to refinance all or a portion of its existing debt or to
obtain additional financing. There can be no assurance that any such
refinancing would be possible or that any additional financing could be
obtained.
UNCERTAINTIES IN ESTIMATING RESERVES AND FUTURE NET CASH FLOWS
There are numerous uncertainties inherent in estimating quantities and
values of proved reserves and in projecting future rates of production and
timing of development expenditures, including many factors beyond the control of
the Company. Reserve engineering is a subjective process of estimating the
recovery from underground accumulations of oil and natural gas that cannot be
measured in an exact manner, and the accuracy of any reserve estimate is a
function of the quality of available data and of engineering and geological
interpretation and judgment. Because all reserve estimates are to some degree
speculative, the quantities of oil and natural gas that are ultimately
recovered, production and operating costs, the amount and timing of future
development expenditures and future oil and natural gas sales prices may all
differ from those assumed in the estimation process. In addition, different
reserve engineers may make different estimates of reserve quantities and cash
flows based upon the same available data. Therefore, the Present Value of
Proved Reserves and Standardized Measure set forth in this Prospectus represent
estimates only and should not be construed as the current
7
<PAGE>
market value of the estimated oil and natural gas reserves attributable to the
Company's properties. In this regard, it should be noted that oil prices at
December 31, 1996, upon which estimated proved reserve volumes, the Present
Value of Proved Reserves and the Standardized Measure as of such date are based,
were at the highest year-end level since 1990. At December 31, 1996, the NYMEX
Crude Oil Price was $25.92 per barrel, 33% higher than the $19.55 per barrel
price at December 31, 1995. On December 16, 1997, the NYMEX Crude Oil Price was
$18.17 per barrel. In this regard, the information set forth in this Prospectus
includes revisions of certain reserve estimates attributable to proved
properties included in the preceding year's estimates. Such revisions reflect
additional information from subsequent activities, production history of the
properties involved and any adjustments in the projected economic life of such
properties resulting from changes in product prices. Any downward revisions
could adversely affect the Company's financial condition, borrowing base under
the Revolving Credit Facility, future prospects and market value of its
securities.
GOVERNMENT REGULATION
The Company's business is regulated by, and must be conducted in compliance
with, certain federal, state and local laws and regulations relating to the
development, production, marketing, pricing, transportation and storage of oil
and natural gas. The Company's business is also subject to extensive and
changing environmental and safety laws and regulations governing plugging and
abandonment, the discharge of materials into the environment or otherwise
relating to environmental protection. Certain of the Company's properties are
located in environmentally sensitive areas that require special permits to
drill. There can be no assurance that present or future regulation will not
adversely affect the operations of the Company.
COMPETITION
The oil and natural gas industry is highly competitive. The Company's
competitors for the acquisition, exploration, exploitation and development of
oil and natural gas properties, the purchasing and marketing of oil and the
crude oil storage and terminalling business, and for capital to finance such
activities, include companies that have greater financial and personnel
resources available to them than the Company. The Company's ability to acquire
additional properties and to discover reserves in the future will be dependent
upon its ability to evaluate and select suitable properties and to consummate
transactions in a highly competitive environment.
SELLING STOCKHOLDER
The following table sets forth the beneficial ownership of Common Stock
held by the Selling Stockholder, immediately prior to and upon completion of
this offering.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE OFFERING AFTER OFFERING
------------------------ ---------------------
NUMBER PERCENTAGE SHARES TO NUMBER PERCENTAGE
NAME OF SHARES OF CLASS BE SOLD OF SHARES OF CLASS
---- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Shell Land & Energy Company.. 1,232,000(1) 6.9% 1,232,000 -0- -0-
</TABLE>
(1) Consists of 932,000 shares issuable upon conversion of the Series D
Preferred Stock, 150,000 shares issuable upon the exchange of dividend
arrearage which may accrue upon the Series D Preferred Stock, and
150,000 shares issuable upon the exercise of the Warrant.
The Selling Stockholder acquired beneficial ownership of the Shares as part
of the consideration paid by the Company for the Arroyo Grande Acquisition.
Such consideration consisted of rights to a non-producing property interest,
46,600 shares of Series D Preferred Stock and the Warrant to purchase 150,000
shares of Common Stock. Each share of Series D Preferred Stock is currently
convertible, at the holder's option, into 20 shares of Common Stock. If not
previously redeemed or converted, on September 1, 2012 each share of Series D
Preferred Stock will automatically convert into 20 shares of Common Stock.
Assuming all shares of Series D Preferred Stock are then outstanding, at the
current conversion ratio, such automatic conversion would result in the issuance
of 932,000 shares of Common Stock to the Selling Stockholder. In addition, at
the option of a majority in interest of the record holders of Series D Preferred
Stock, any dividend arrearage on such preferred stock may be exchanged into
shares of Common Stock, the number of which shall be determined by dividing the
total amount of such dividend arrearage by the per share market price of the
Common Stock on the date of such exchange. While the Company does not
anticipate that dividend arrearages will accrue on the Series D Preferred Stock,
pursuant to an agreement with the Selling Stockholder, the Shares include
150,000 shares of Common Stock that may be issued in exchange for future
dividend arrearages, if any.
8
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by or for the account of the
Selling Stockholder pursuant to this Prospectus or pursuant to Rule 144 under
the Securities Act. Sales of Shares pursuant to this Prospectus may be effected
in the over-the-counter market, on the AMEX or otherwise at prices and on terms
then prevailing or at prices related to the then current market price (in each
case as determined by the Selling Stockholder), directly or through agents
designated from time to time, or through dealers or underwriters to be
designated or in negotiated transactions. The Shares may be sold by any one or
more of the following methods: (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 account pursuant to this Prospectus; (c)
exchange distributions and/or secondary distributions in accordance with the
rules of the AMEX; (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; (e) privately negotiated transactions. To the
extent required by applicable law, the specific Shares to be sold, the name of
the Selling Stockholder, the respective purchase prices and public offering
prices, the names of any such agent, dealer or underwriter and any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying Prospectus Supplement. The Selling Stockholder may effect such
transactions by selling Shares directly to other purchasers, through agents or
through broker-dealers, and any such agents or broker-dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from such Selling Stockholder, from purchasers of Shares for whom they act as
agents, or from both sources (and such compensation may be in excess of
customary commissions). The Selling Stockholder and any broker-dealers that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with such sales, and any
commissions, and any profit on the resale of Shares, received by the Selling
Stockholder and any such broker-dealers may be deemed to be underwriting
discounts and commissions.
The Company will bear all costs and expenses incurred by it in connection
with the registration of the sale of Shares pursuant to this Prospectus, but
will not be responsible for any commissions, underwriting discounts or similar
amounts payable in respect of any such sale.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Michael R. Patterson, Esq., its general
counsel. Mr. Patterson beneficially owns 138,749 shares of Common Stock
(including vested and unvested options).
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31,
1996, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
RESERVE ENGINEERS
Information relating to the estimated proved reserves of oil and natural
gas and the related estimates of future net revenues and present values thereof
for certain periods included and incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1996 and in the
Notes to Consolidated Financial Statements of the Company in each Annual Report,
has been prepared by Netherland, Sewell & Associates, Inc., H. J. Gruy and
Associates, Inc., and Ryder Scott Company, independent petroleum engineers and
is incorporated by reference herein in reliance upon the authority of such firms
as experts in petroleum engineering.
9
<PAGE>
========================= ======================
No dealer, salesman, or other person has
been authorized to give any information or
to make any representations not contained
in this Prospectus, and, if given or made,
such information or representations must 1,232,000 Shares
not be relied upon as having been
authorized by the Company or any Selling
Stockholder or underwriter. This
Prospectus does not constitute an offer to [PLAINS RESOURCES LOGO
sell, or a solicitation of an offer to APPEARS HERE]
buy, the securities offered hereby in any
jurisdiction where, or to any person to
whom, it is unlawful to make such offer or
solicitation. The delivery of this COMMON STOCK
Prospectus at any time and any sale made
hereunder does not imply that the
information contained or incorporated by
reference herein is correct as of any time
subsequent to its date.
_________________________
______________________
TABLE OF CONTENTS PROSPECTUS
PAGE
Available Information..................... 2 __________________, 199__
Incorporation of Certain Documents........ 2
Certain Definitions....................... 2
Prospectus Summary........................ 3
Risk Factors.............................. 6 ____________________________
Selling Stockholder....................... 8
Plan of Distribution...................... 9
Legal Matters............................. 9
Experts................................... 9
Reserve Engineers......................... 9
========================= ======================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of estimated expenses incurred by the Company
in connection with the Common Stock being registered hereby, other than
underwriting discounts and commissions.
Securities and Exchange Commission Registration Fee ...... $ 6,270
American Stock Exchange Listing Fees ..................... 17,500
Legal Fees and Expenses .................................. 1,000
Accounting Fees and Expenses ............................. 2,000
Miscellaneous ............................................ 1,230
---------
Total .................................................. $ 28,000
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Company's Certificate of Incorporation provides that
the Company shall indemnify to the full extent authorized or permitted by law
any person made, or threatened to be made, a party to any action, suit or
proceeding (whether civil, criminal or otherwise) by reason of fact that he, his
testator or intestate, is or was a director or officer of the Company or by
reason of the fact that such director or officer, at the request of the Company,
is or was serving any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, in any capacity. The rights to
indemnification set forth above are not exclusive of any other rights to which
such person may be entitled under any statute, provision of the Company's
Certificate of Incorporation or bylaws, agreements, vote of stockholders or
disinterested directors or otherwise.
Additionally, Article VIII of the Company's Bylaws provides for mandatory
indemnification to at least the extent specifically allowed by Section 145 of
the General Corporation Law of the State of Delaware (the "GCL"). The Bylaws
generally follow the language of Section 145 of the GCL, but in addition specify
that any director, officer, employee or agent may apply to any court of
competent jurisdiction in the State of Delaware for indemnification to the
extent otherwise permissible under the Bylaws, notwithstanding any contrary
determination denying indemnification made by the Board, by independent legal
counsel, or by the stockholders, and notwithstanding the absence of any
determination with respect to indemnification. The Bylaws also specify certain
circumstances in which a finding is required that the person seeking
indemnification acted in good faith, for purposes of determining whether
indemnification is available. Under the Bylaws, a person shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, or, with respect to any criminal
action or proceeding, to have had no reasonable cause to believe his conduct was
unlawful, if his action is based on the records or books of account of the
Company or another enterprise, or on information supplied to him by the officers
of the Company or another enterprise in the course of their duties, or on the
advice of legal counsel for the Company or another enterprise or on information
or records given or reports made to the Company or another enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Company or another enterprise.
Pursuant to Section 145 of the GCL, the Company generally has the power to
indemnify its current and former directors, officers, employees and agents
against expenses and liabilities incurred by them in connection with any suit to
which they are, or are threatened to be made, a party by reason of their serving
in such positions so long as they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, the best interests of the
Company, and with respect to any criminal action, they had no reasonable cause
to believe their conduct was unlawful. With respect to suits by or in the right
of the Company, however, indemnification is generally limited to attorneys' fees
and other expenses and is not available if such person is adjudged to be liable
to the Company unless the court determines that indemnification is appropriate.
The statute expressly provides that the power to indemnify authorized thereby is
not exclusive of any rights granted under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise. The Company also has the
power to purchase and maintain insurance for such persons.
The above discussion of the Company's Certificate of Incorporation and
Bylaws and Section 145 of the GCL is not intended to be exhaustive and is
qualified in its entirety by each of such documents and such statute.
The Company has entered into employment agreements containing
indemnification provisions with Mr. Armstrong, its President and Chief Executive
Officer and Mr. Egg, its Senior Vice President. Pursuant to such agreements,
the Company has agreed to indemnify and hold each officer harmless to the
fullest extent permitted by law, from any loss, damage or liability incurred in
the course of his employment. The amount paid by the Company is reducible by
the amount of insurance paid to or on behalf of each officer with respect to any
event giving rise to
II-1
<PAGE>
indemnification. Each officer's right to indemnification is to survive his death
or termination of employment and the termination of his employment agreement.
The Board has authorized an employment agreement with Mr. Harry N. Pefanis,
Senior Vice President of the Company, which, as authorized, will have
indemnification provisions substantially the same as those of Messrs.
Armstrong's and Egg's agreements described above.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1 - Second Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995).
3.2 - Bylaws of the Company, as amended to date (incorporated by
reference to Exhibit 3(b) to the Company's Annual Report on Form
10-K for the year ended December 31, 1993).
3.3 - Certificate of Designation, Preferences and Rights of Series D
Cumulative Convertible Preferred Stock (incorporated by reference
to Exhibit 3(c) to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997).
4.1 - Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4 to the Company's Form S-1 Registration Statement (Reg.
No. 33-33986)).
4.2 - Warrant dated November 12, 1997, to Shell Land & Energy Company
for the purchase of 150,000 shares of Common Stock (incorporated
by reference to Exhibit 4(d) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997).
+5 - Opinion of Michael R. Patterson, Esq.
+23.1 - Consent of Michael R. Patterson, Esq. (contained in Exhibit 5).
+23.2 - Consent of Price Waterhouse LLP.
+23.3 - Consent of Netherland, Sewell & Associates, Inc.
+23.4 - Consent of H.J. Gruy and Associates, Inc.
+23.5 - Consent of Ryder Scott Company.
+24 - Powers of Attorney (included at page II-4 of this Registration
Statement as originally filed).
- -------------------
+ Filed herewith.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
(a) 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 thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
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 paragraph (a)(1)(i) and
(a)(1)(ii) do not apply if 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 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.
(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.
(b) 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 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 deemed
to be the initial bona fide offering thereof.
(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 foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC 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.
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Michael R. Patterson and Phillip D.
Kramer, and each of them, either one of whom may act without joinder of the
other, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all pre- and post- effective amendments
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or the
substitute or substitutes of any or all of them, may lawfully do or cause to be
done by virtue hereof.
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 the 18th day of December,
1997.
PLAINS RESOURCES INC.
By: /s/ GREG L. ARMSTRONG
--------------------------------------------------------
Greg L. Armstrong, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons, in the
capacities indicated on the 18th day of December, 1997.
Signature Capacity
--------- --------
/s/ GREG L. ARMSTRONG President, Chief Executive Officer and
- ------------------------------- Director (Principal Executive Officer)
Greg L. Armstrong
/s/ JERRY L. DEES Director
- -------------------------------
Jerry L. Dees
/s/ TOM H. DELIMITROS Director
- -------------------------------
Tom H. Delimitros
/s/ CYNTHIA A. FEEBACK Controller and Principal Accounting
- ------------------------------- Officer (Principal Accounting Officer)
Cynthia A. Feeback
/s/ WILLIAM M. HITCHCOCK Director
- -------------------------------
William M. Hitchcock
II-4
<PAGE>
/s/ PHILLIP D. KRAMER Senior Vice President, Treasurer and
- ------------------------------- Chief Financial Officer (Principal
Phillip D. Kramer Financial Officer)
/s/ DAN M. KRAUSSE Chairman of the Board and Director
- -------------------------------
Dan M. Krausse
/s/ JOHN H. LOLLAR Director
- -------------------------------
John H. Lollar
/s/ ROBERT V. SINNOTT Director
- -------------------------------
Robert V. Sinnott
/s/ J. TAFT SYMONDS Director
- -------------------------------
J. Taft Symonds
II-5
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER
- ------
3.1 - Second Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995).
3.2 - Bylaws of the Company, as amended to date (incorporated by reference
to Exhibit 3(b) to the Company's Annual Report on Form 10-K for the
year ended December 31, 1993).
3.3 - Certificate of Designation, Preferences and Rights of Series D
Cumulative Convertible Preferred Stock (incorporated by reference to
Exhibit 3(c) to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997).
4.1 - Specimen Common Stock Certificate (incorporated by reference to
Exhibit 4 to the Company's Form S-1 Registration Statement (Reg. No.
33-33986)).
4.2 - Warrant dated November 12, 1997, to Shell Land & Energy Company for
the purchase of 150,000 shares of Common Stock (incorporated by
reference to Exhibit 4(d) to the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997).
+5 - Opinion of Michael R. Patterson, Esq.
+23.1 - Consent of Michael R. Patterson, Esq. (contained in Exhibit 5).
+23.2 - Consent of Price Waterhouse LLP.
+23.3 - Consent of Netherland, Sewell & Associates, Inc.
+23.4 - Consent of H.J. Gruy and Associates, Inc.
+23.5 - Consent of Ryder Scott Company.
+24 - Powers of Attorney (included at page II-4 of this Registration
Statement as originally filed).
- -----------
+ Filed herewith
<PAGE>
EXHIBIT 5
December 18, 1997
Plains Resources Inc.
1600 Smith, Suite 1500
Houston, Texas 77002
Gentlemen:
I have acted as counsel for Plains Resources Inc., a Delaware corporation
(the "Company"), in connection with the registration under the Securities Act of
1933, as amended (the "Act"), of (i) 150,000 shares of the Company's common
stock, $.10 par value (the "Common Stock"), issuable upon the exercise of a
Warrant for the Purchase of Shares of Common Stock issued to Shell Land & Energy
Company, as holder (the "Warrant"), and (ii) 1,082,000 shares of Common Stock
issuable upon the conversion of shares of the Company's Series D Cumulative
Convertible Preferred Stock (the "Series D Preferred Stock") or the exchange of
dividend arrearages on the Series D Preferred Stock, such shares to be offered
upon the terms and conditions set forth in the Registration Statement on Form S-
3 (the "Registration Statement") relating thereto filed with the Securities and
Exchange Commission.
In connection therewith, I have examined originals or copies certified or
otherwise identified to my satisfaction of the Warrant, the Second Restated
Certificate of Incorporation of the Company, the Bylaws of the Company,
corporate proceedings with respect to the Warrant, the Series D Preferred Stock
and the registration of the shares of Common Stock and such other documents and
instruments as I have deemed necessary or appropriate for the expression of the
opinions expressed herein.
Based on the foregoing, I am of the opinion that:
1. The Company has been duly organized and is validly existing in good
standing under the laws of the State of Delaware.
2. 150,000 of the shares of Common Stock proposed to be sold pursuant to
the Registration Statement, when issued in accordance with the terms
and conditions of the Warrant, will be duly and validly issued and
fully paid and nonassessable.
3. 1,082,000 of the shares of Common Stock proposed to be sold pursuant
to the Registration Statement, when issued in accordance with the
terms and conditions of the Series D Preferred Stock, will be duly and
validly issued and fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus included in the Registration Statement.
Sincerely,
/s/ MICHAEL R. PATTERSON
--------------------------------------
Michael R. Patterson
Vice President and General Counsel
MRP/mnc
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
February 10, 1997 appearing on page F-2 of Plains Resources Inc.'s Annual Report
on Form 10-K for the year ended December 31, 1996. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
/s/ PRICE WATERHOUSE LLP
-------------------------------------
Price Waterhouse LLP
Houston, Texas
December 18, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reserve report to the interest of Plains Resources
Inc. and Subsidiary (collectively, the Company) dated January 31, 1997,
relating to the estimated quantities of certain of the Company's proved reserves
of oil and gas and the related estimates of future net revenue and present
values thereof for certain periods, included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996, as well as in the Notes to the
Consolidated Financial Statements of the Company in such annual report. We also
consent to the reference to us under the heading "Reserve Engineers" in such
Registration Statement.
NETHERLAND, SEWELL & ASSOCIATES, INC.
/s/ NETHERLAND, SEWELL & ASSOCIATES, INC.
-----------------------------------------
Dallas, Texas
December 17, 1997
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS
H. J. Gruy and Associates, Inc. hereby consents to the incorporation by
reference in this Registration Statement on Form S-3 of our reserve report dated
February 7, 1997, relating to the estimated quantities of certain of the
Company's proved reserves of oil and gas and the related estimates of future net
revenue and present values thereof for certain periods, included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996, as
well as in the Notes to the Consolidated Financial Statements of the Company in
such annual report. We also consent to the reference to us under the heading
"Reserve Engineers" in such Registration Statement.
H. J. GRUY AND ASSOCIATES, INC.
/s/ H. J. GRUY AND ASSOCIATES, INC.
------------------------------------
Houston, Texas
December 15, 1997
<PAGE>
EXHIBIT 23.5
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reserve report dated February 4, 1997, relating to
the estimated quantities of certain of the Company's proved reserves of oil and
gas and the related estimates of future net revenue and present values thereof
for certain periods, included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996, as well as in the Notes to the Consolidated
Financial Statements of the Company in such annual report. We also consent to
the reference to us under the heading "Reserve Engineers" in such Registration
Statement.
RYDER SCOTT COMPANY PETROLEUM ENGINEERS
/s/ RYDER SCOTT COMPANY PETROLEUM ENGINEERS
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Houston, Texas
December 18, 1997
