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As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_______
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)
500 Dallas, Suite 700
Houston, Texas 77002
(713) 654-1414
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
_______________
Michael R. Patterson
Vice President and General Counsel
Plains Resources Inc.
500 Dallas, Suite 700
Houston, Texas 77002
(713) 654-1414
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_______________
Copy To:
John A. Watson
Fulbright & Jaworski L.L.P.
1301 Mckinney, Suite 5100
Houston, Texas 77010-3095
(713) 651-5151
_______________
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 statements 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 this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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<CAPTION>
Calculation of Registration Fee
===========================================================================================================================
Proposed Maximum Amount Of
Title of Each Class of Amount to be Proposed Maximum Aggregate Offering registration Fee
Securities to be Registered Registered Offering price per Unit (1) Price (1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.10 per share 5,469,776 shares $13.00 $71,107,088 $18,773
===========================================================================================================================
</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 March 29, 2000,
which was $13.00.
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.
================================================================================
Subject to Completion, Dated March 31, 2000
<PAGE>
PROSPECTUS
[LOGO OF PLAINS RESOURCES]
Common Stock
5,469,776 Shares
____________________
This prospectus relates to the offer and sale of up to 5,469,776 shares of
Plains Resources Inc. common stock by some of our stockholders. These shares of
common stock are not currently outstanding, but may be issued in the future upon
conversion of our Series F preferred stock by the selling stockholders. We will
not receive any proceeds from any of these sales.
Our common stock is traded on the American Stock Exchange under the symbol
"PLX." The closing price on March 29, 2000, as reflected on the American Stock
Exchange, was $13.00 per share.
____________________
For information concerning certain risks relating to an investment in Plains
Resources Inc. common stock see "Risk Factors" beginning on page 8.
____________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
____________________
March 31, 2000
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TABLE OF CONTENTS
<TABLE>
<S> <C>
ABOUT PLAINS RESOURCES INC.......................................... 2
RISK FACTORS........................................................ 8
SELLING STOCKHOLDERS................................................ 11
PLAN OF DISTRIBUTION................................................ 13
WHERE YOU CAN FIND MORE INFORMATION................................. 14
LEGAL MATTERS....................................................... 15
EXPERTS............................................................. 15
RESERVE ENGINEERS................................................... 15
</TABLE>
ABOUT PLAINS RESOURCES INC.
What Is Our Business?
We are an independent energy company that acquires, exploits, develops,
explores and produces crude oil and natural gas. Through our majority ownership
in Plains All American Pipeline, L.P. ("PAA"), we are also engaged in the
midstream activities of marketing, transportation, terminalling and storage of
crude oil. Our upstream crude oil and natural gas activities are focused in
California in the Los Angeles Basin, the Arroyo Grande Field, and the Mt. Poso
Field, offshore California in the Point Arguello Field, the Sunniland Trend of
South Florida and the Illinois Basin in southern Illinois. Our midstream
activities are concentrated in California, Texas, Oklahoma, Louisiana and the
Gulf of Mexico.
One of our wholly owned subsidiaries, Plains All American Inc., is both the
general partner and majority owner of PAA. Because it holds the general partner
interest and owns approximately 18.2 million common and subordinated units,
Plains All American Inc. holds an approximate 54% interest in PAA. For financial
statement purposes, the assets, liabilities and earnings of PAA are included in
our consolidated financial statements, with the public unitholders' interest
reflected as a minority interest. The following chart sets forth the
organization relationship of our upstream and midstream subsidiaries:
[PLAINS RESOURCES ORGANIZATIONAL CHART]
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What Are Our Upstream Activities?
Our upstream business strategy is to increase our proved reserves and cash
flow by:
. exploiting and producing crude oil and associated natural gas from our
existing properties;
. acquiring additional underdeveloped crude oil properties; and
. exploring for significant new sources of reserves.
We concentrate our acquisition and exploitation efforts on mature but
underdeveloped crude oil producing properties that meet our targeted criteria.
Generally, the properties that we consider acquiring and exploiting are owned by
major integrated or large independent oil and natural gas companies and have
produced significant volumes since initial discovery and also have significant
estimated remaining reserves in place. Our management believes that it has
developed a proven record in acquiring and exploiting underdeveloped crude oil
properties where we can make substantial reserve additions and cash flow
increases by implementing improved production practices and recovery techniques
and by relatively low risk development drilling. An integral component of our
exploitation effort is to increase unit operating margins, and therefore cash
flow, by reducing unit production expenses and increasing wellhead price
realizations.
We seek to complement these efforts by committing a minor portion of our
capital to pursue higher risk exploration opportunities that offer potentially
higher rewards in areas synergistic to our acquisition and exploitation
activities. As part of our business strategy, we periodically evaluate selling,
and from time to time have sold, certain of our mature producing properties that
we consider to be nonstrategic or fully valued. These sales enable us to focus
on our core properties, maintain our financial flexibility, control our overhead
and redeploy the sales proceeds to activities that have potentially higher
financial returns. We are able to take advantage of the marketing expertise that
PAA has developed through our marketing agreement with PAA under which PAA is
the exclusive purchaser/marketer of all our equity crude oil production.
During the five-year period ended December 31, 1999, we incurred aggregate
acquisition, exploitation, development, and exploration costs of approximately
$436.6 million, resulting in proved crude oil and natural gas reserve additions
(including revisions of estimates but excluding production) of approximately
204.9 million BOE, or $2.13 per BOE, through implementation of this business
strategy. We spent approximately 97% of this capital in acquisition,
exploitation and development activities and we spent approximately 3% on our
exploration activities.
To manage our exposure to commodity price risk, our upstream business
routinely hedges a portion of its crude oil production. For 2000, we have
entered into various arrangements under which we will receive an average minimum
NYMEX West Texas Intermediate ("WTI") crude oil price of approximately $16.00
per barrel on 18,500 barrels per day (equivalent to 79% of fourth quarter 1999
crude oil production levels). Approximately 10,000 barrels per day of the
volumes that we have hedged in 2000 will participate in price increases above
the $16.00 floor price, subject to a ceiling limitation of approximately $19.75
per barrel. For 2001, we have entered into arrangements under which we will
receive an average minimum NYMEX WTI price of $18.75 per barrel on 3,000 barrels
per day. The 2001 hedges participate in price increases and are not subject to a
ceiling limitation. All of our NYMEX WTI crude oil prices are before quality and
location differentials. Our management intends to continue to maintain hedging
arrangements for a significant portion of our production. These contracts may
expose us to the risk of financial loss in certain circumstances.
What Are Our Midstream Activities?
We conduct our midstream activities through PAA, which was formed in 1998
to acquire and operate the business and assets of our wholly owned midstream
subsidiaries. PAA engages in interstate and intrastate crude oil transportation,
terminalling and storage, as well as crude oil gathering and marketing
activities. In 1999, PAA grew through acquisitions and internal development to
become one of the largest transporters, terminal operators, gatherers
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and marketers of crude oil in the United States. PAA currently transports,
terminals, gathers and markets an aggregate of approximately 650,000 barrels of
crude oil per day. Its operations are concentrated in California, Texas,
Oklahoma, Louisiana and the Gulf of Mexico.
Our midstream business strategy is to capitalize on the regional crude oil
supply and demand imbalances that exist in the continental United States by
combining the strategic location and unique capabilities of our transportation
and terminalling assets with our extensive marketing and distribution expertise
to generate sustainable earnings and cash flow for PAA's unitholders. We intend
to execute our midstream business strategy by:
. increasing and optimizing the amount of crude oil we transport on our
various pipeline and gathering assets;
. realizing cost efficiencies through operational improvements and
potential strategic alliances;
. utilizing our Cushing Terminal and other assets to service the needs
of refiners and to profit from merchant activities that take advantage
of crude oil pricing and quality differentials; and
. pursuing strategic and accretive acquisitions of crude oil pipeline
assets, gathering systems and terminalling and storage facilities that
complement our existing asset base and distribution capabilities.
Our midstream operations can be categorized into two primary business
activities:
Crude Oil Pipeline Transportation.
Our activities from pipeline operations generally consist of transporting
third-party volumes of crude oil for a tariff, as well as merchant activities
designed to capture location and quality price differentials. We own and operate
several pipeline systems including:
. a segment of the All American Pipeline that extends approximately 140
miles from Las Flores, California to Emidio, California. In March
2000, we sold the 1,089 mile segment of the All American Pipeline that
extends from Emidio, California to McCamey, Texas;
. the San Joaquin Valley Gathering System in California;
. the West Texas Gathering System, the Spraberry Pipeline System, and
the East Texas Pipeline System, which are all located in Texas;
. the Sabine Pass Pipeline System in southwest Louisiana and southeast
Texas;
. the Ferriday Pipeline System in eastern Louisiana and western
Mississippi; and
. the Illinois Basin Pipeline System in southern Illinois.
Terminalling and Storage Activities and Gathering and Marketing Activities.
We own and operate a state-of-the-art, 3.1 million barrel, above-ground
crude oil terminalling and storage facility at Cushing, Oklahoma, the largest
crude oil trading hub in the United States and the designated delivery point for
NYMEX crude oil futures contracts. We also have an additional 6.6 million
barrels of terminalling and storage capacity in our other facilities, including
tankage associated with our pipeline and gathering systems. Our terminalling and
storage operations generate revenue through a combination of storage and
throughput fees. Our storage facilities also complement our merchant activities.
We own or lease approximately 280 trucks, 325 tractor-trailers and 290
injection stations, which we use in our gathering and marketing activities. Our
gathering and marketing operations include:
. the purchase of crude oil at the wellhead and the bulk purchase of
crude oil at pipeline and terminal facilities;
. the transportation of crude oil on trucks, barges or pipelines; and
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. the subsequent resale or exchange of crude oil at various points along
the crude oil distribution chain.
All American Pipeline Linefill Sale and Asset Disposition
We initiated the sale of approximately 5.2 million barrels of crude oil
linefill from the All American Pipeline in November 1999. This sale was
substantially completed in February 2000. The linefill was located in the
segment of the All American Pipeline that extends from Emidio, California, to
McCamey, Texas. Except for minor third party volumes, one of our subsidiaries
has been the sole shipper on this segment of the pipeline since its predecessor
acquired the line from the Goodyear Tire & Rubber Company in July 1998. Proceeds
from the sale of the linefill were approximately $100 million, net of associated
costs, and were used for working capital purposes. We estimate that we will
recognize a total gain of approximately $44.0 million in connection with the
sale of linefill. As of December 31, 1999, we had delivered approximately 1.8
million barrels of linefill and recognized a gain of $16.5 million.
On March 24, 2000, we completed the sale of the above referenced segment of
the All American Pipeline to a unit of El Paso Energy Corporation for total
proceeds of $129.0 million. The proceeds from the sale were used to reduce
outstanding debt. Our net proceeds are expected to be approximately $124.0
million, net of associated transaction costs and estimated costs to remove
certain equipment. We estimate that we will recognize a gain of approximately
$20.0 million in connection with the sale. During 1999, we reported gross margin
of approximately $5.0 million from volumes transported on the segment of the
line that was sold.
We Recently Experienced a Large Unauthorized Crude Oil Trading Loss
In November 1999, we discovered that a former employee of PAA had engaged
in unauthorized trading activity, resulting in losses of approximately $162.0
million ($174.0 million, including estimated associated costs and legal
expenses). A full investigation into the unauthorized trading activities by
outside legal counsel and independent accountants and consultants determined
that the vast majority of the losses occurred from March through November 1999,
and the impact warranted a restatement of previously reported financial
information for 1999 and 1998. Because the financial statements of PAA are
consolidated with our financial statements, adverse effects on the financial
statements of PAA directly affect our consolidated financial statements. As a
result, we have restated our previously reported 1999 and 1998 results to
reflect the losses incurred from these unauthorized trading activities.
Normally, as PAA purchases crude oil, it establishes a margin by selling
crude oil for physical delivery to third-party users or by entering into a
future delivery obligation with respect to futures contracts. The employee in
question violated PAA's policy of maintaining a position that is substantially
balanced between crude oil purchases and sales or future delivery obligations.
The unauthorized trading and associated losses resulted in a default of certain
covenants under PAA's credit facilities and significant short-term cash and
letter of credit requirements.
Although one of our wholly-owned subsidiaries is the general partner of and
owns 54% of PAA, the trading losses do not affect the operations or assets of
our upstream business. The debt of PAA is nonrecourse to us. In addition, our
indirect ownership in PAA does not collateralize any of our credit facilities.
Our $225.0 million credit facility is collateralized by our oil and natural gas
properties.
In December 1999, PAA executed amended credit facilities and obtained
default waivers from all of its lenders. The amended credit facilities:
. waived defaults under covenants contained in the existing credit
facilities;
. increased availability under PAA's letter of credit and borrowing
facility from $175.0 million in November 1999 to $295.0 million in
December 1999, $315.0 million in January 2000, and thereafter
decreasing to $239.0 million in February through April 2000, to $225.0
million in May and June 2000 and to $200.0 million in July 2000
through July 2001;
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. required the lenders' consent prior to the payment of distributions to
unitholders;
. prohibited contango inventory transactions subsequent to January 20,
2000; and
. increased interest rates and fees under certain of the facilities.
PAA paid approximately $13.7 million to its lenders in connection with the
amended credit facilities. This amount was capitalized as debt issue costs and
will be amortized over the remaining term of the amended facilities. In
connection with the amendments, we loaned approximately $114.0 million to PAA.
This subordinated debt is due not later than November 30, 2005. We financed the
$114.0 million that we loaned PAA with:
. the issuance of a new series of our 10% convertible preferred stock
for proceeds of $50.0 million;
. cash distributions of approximately $9.0 million made in November 1999
to PAA's general partner; and
. $55.0 million of borrowings under our revolving credit facility.
In the period immediately following the disclosure of the unauthorized
trading losses, a significant number of PAA's suppliers and trading partners
reduced or eliminated the open credit previously extended to PAA. Consequently,
the amount of letters of credit PAA needed to support the level of its crude oil
purchases then in effect increased significantly. In addition, PAA's cost of
obtaining letters of credit increased under the amended credit facility. In many
instances PAA arranged for letters of credit to secure its obligations to
purchase crude oil from its customers, which increased its letter of credit
costs and decreased its unit margins. In other instances, primarily involving
lower margin wellhead and bulk purchases, certain of PAA's purchase contracts
were terminated. As a result of these changes, aggregate volumes purchased are
expected to decrease by 150,000 barrels per day, consisting primarily of lower
unit margin purchases. Approximately 50,000 barrels per day of the decrease is
related to barrels gathered at producer lease locations and 100,000 barrels per
day is attributable to bulk purchases. As a result of the increase in letter of
credit costs and reduced volumes, annual EBITDA is expected to be adversely
affected by approximately $5.0 million, excluding the positive impact of current
favorable market conditions. EBITDA means earnings before interest expense,
income taxes, depreciation, depletion and amortization.
We have taken appropriate and aggressive steps within our organization to
enhance our processes and procedures to prevent future unauthorized trading. One
of such steps includes the creation of a new professional risk management
position. This risk manager has direct responsibility and authority for our
trading controls and procedures and other aspects of corporate risk management.
However, we can give no assurance that such steps will detect and prevent all
violations of our trading policies and procedures, particularly if deception or
other intentional misconduct is involved.
Texas Securities Litigation.
On November 29, 1999, a class action lawsuit was filed in the United States
District Court for the Southern District of Texas entitled Di Giacomo v. Plains
All American Pipeline, L.P., et al. The suit alleged that Plains All American
Pipeline, L.P. and certain of the general partner's officers and directors
violated federal securities laws, primarily in connection with unauthorized
trading by a former employee. An additional nineteen cases were filed in the
Southern District of Texas, some of which name the general partner and us as
additional defendants. Plaintiffs allege that the defendants are liable for
securities fraud violations under Rule 10b-5 and Section 20(a) of the Securities
Exchange Act of 1934 and for making false registration statements under Sections
11 and 15 of the Securities Act of 1933. The court has consolidated all
subsequently filed cases under the first filed action described above. Two
unopposed motions are currently pending to appoint lead plaintiffs. These
motions ask the court to appoint two distinct lead plaintiffs to represent two
different plaintiff classes: (1) purchasers of our common stock and options and
(2) purchasers of PAA's common units. Once lead plaintiffs have been appointed,
the plaintiffs will file their consolidated amended complaints. No answer or
responsive pleading is due until thirty days after a consolidated amended
complaint is filed.
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Delaware Derivative Litigation.
On December 3, 1999, two derivative lawsuits were filed in the Delaware
Chancery Court, New Castle County, entitled Susser v. Plains All American Inc.,
et al and Senderowitz v. Plains All American Inc., et al. These suits, and three
others which were filed in Delaware subsequently, named the general partner, its
directors and certain of its officers as defendants, and allege that the
defendants breached the fiduciary duties that they owed to Plains All American
Pipeline, L.P. and its unitholders by failing to monitor properly the activities
of its employees. The derivative complaints allege, among other things, that
Plains All American Pipeline, L.P. has been harmed due to the negligence or
breach of loyalty of the officers and directors that are named in the lawsuits.
These cases are currently in the process of being consolidated. No answer or
responsive pleading is due until these cases have been consolidated and a
consolidated complaint has been filed.
We intend to vigorously defend the claims made in the Texas securities
litigation and the Delaware derivative litigation. However, there can be no
assurance that we will be successful in our defense or that these lawsuits will
not have a material adverse effect on our financial position or results of
operation.
We, in the ordinary course of business, are a claimant and/or a defendant
in various other legal proceedings in which our exposure, individually and in
the aggregate, is not considered material.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This prospectus and the documents we have incorporated by reference into
this prospectus include "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 and the
documents we have incorporated by reference into this prospectus that address
activities, events or developments that we expect or anticipate 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 our business and operations, plans, references to future success,
references to intentions as to future matters and other such matters are
forward-looking statements. We base these statements on assumptions and
analyses that we made in light of our experience and our perception of
historical trends, current conditions and expected future developments as well
as other factors we believe are appropriate. But whether actual results and
developments will conform with our 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 us, competitive
actions by other oil and natural gas companies, changes in laws or regulations
and other factors, many of which we do not control. Consequently, we qualify
all of the forward-looking statements that we make in this prospectus and the
documents that we have incorporated by reference into this prospectus by these
cautionary statements, we cannot assure you that the results or developments
that we anticipate will occur will be realized or, even if substantially
realized, will impact and affect us or our business or operations as we expect
that they will.
We were incorporated under the laws of the State of Delaware in 1976. Our
executive offices are located at 500 Dallas, Suite 700, Houston, Texas 77002,
and our telephone number is (713) 654-1414.
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RISK FACTORS
You should carefully consider the following risk factors, together with
other information contained or incorporated by reference in this prospectus, in
evaluating whether to invest in our shares.
Risks Inherent In Our Operations.
Market Conditions And The Volatility Of Oil And Natural Gas Prices May
Materially Affect Our Revenues.
The revenues that our operations generate highly depend on 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 prices that we receive for our oil and natural gas production and
the level of such production are subject to wide fluctuations and depend on
numerous factors that we do not 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 our proved reserves and our revenues,
profitability and cash flow. Although we are not currently experiencing any
significant involuntary curtailment of our natural-gas production, market,
economic and regulatory factors may in the future materially affect our ability
to sell our natural-gas production.
Revenues From Our Midstream Segment May Experience Financial Losses From
Price Changes.
Any event that disrupts our anticipated physical supplies of crude oil may
expose us to risk of loss resulting from price changes. Generally, it is our
policy that as PAA purchases crude oil, it establishes a margin by selling crude
oil for physical delivery to third-party users, such as independent refiners or
major oil companies, or by entering into a future delivery obligation with
respect to futures contracts on the NYMEX. Through these transactions, we seek
to maintain a position that is substantially balanced between crude-oil
purchases, on the one hand, and sales or future delivery obligations, on the
other hand. Our policy is not to acquire and hold crude oil, futures contracts
or derivative products for the purpose of speculating on price changes. As
discussed more fully above, we discovered in November 1999 that this policy was
violated by one of our former employees, which resulted in a loss of
approximately $162 million ($174 million, including estimated associated costs
and legal expenses). We have taken steps within our organization to enhance our
processes and procedures to prevent future unauthorized trading. However, we
can give no assurance that such steps will detect and prevent all violations of
our trading policies and procedures, particularly if deception or other
intentional misconduct is involved. Also, our price risk management strategies
cannot eliminate all price risks. For example, if we inaccurately forecast the
shut-in of production or other supply interruptions as the result of depressed
oil prices, mechanical interruptions, abrupt production declines or
apportionment of pipeline space on common-carrier pipelines, we may be unable to
meet our supply commitments with the barrels purchased at the wellhead. We would
be forced to make purchases elsewhere to meet our commitments, and if prices
change adversely, our margins also may be adversely affected. Moreover, we will
be exposed to some risks that are not hedged, including certain basis risks,
such as the risk that price differentials between delivery points, delivery
periods or types of crude oil will change and price risks on certain portions of
our inventory. For accounting purposes, we may record losses on a portion of the
unhedged inventory due to market-price declines, although such losses would have
no impact on our cash flow as long as we are not forced to liquidate such
inventory.
Operating Hazards And Uninsured Risks May Have A Material Adverse Affect On
Our Financial Position.
Our operations are subject to all of the risks normally incident to the
exploration for and the production of crude oil and natural gas, including
blowouts, cratering, oil spills and fires, each of which could result in damage
to or destruction of crude oil and natural gas wells, production facilities or
other property, or injury to persons. The relatively deep drilling conducted by
us from time to time involves increased drilling risks of high pressures and
mechanical difficulties, including stuck pipe, collapsed casing and separated
cable. Our operations in California, including
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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 we maintain insurance coverage
considered to be customary in the industry, we are not fully insured against
certain of these risks, including, in certain instances, earthquake risk in
California, 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 our financial position.
A pipeline may experience damage as a result of an accident or other
natural disaster. These hazards can cause personal injury and loss of life,
severe damage to and destruction of property and equipment, pollution or
environmental damages and suspension of operations. We maintain insurance of
various types that we consider to be adequate to cover our operations and
properties. The insurance covers all of our assets in amounts considered
reasonable. The insurance policies are subject to deductibles that we consider
reasonable and not excessive. Our insurance does not cover every potential risk
associated with operating pipelines, including the potential loss of significant
revenues. Consistent with insurance coverage generally available to the
industry, our insurance policies provide limited coverage for losses or
liabilities relating to pollution, with broader coverage for sudden and
accidental occurrences.
The occurrence of a significant event not fully insured or indemnified
against, or the failure of a party to meet its indemnification obligations,
could materially and adversely affect our operations and financial condition. We
believe that we are adequately insured for public liability and property damage
to others with respect to our operations. With respect to all of our coverage,
no assurance can be given that we will be able to maintain adequate insurance in
the future at rates we consider reasonable.
Certain Business Risks Of Our Upstream Segment May Affect Our Financial
Position.
We 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, our oil and natural-gas
reserves and revenues will decline. Drilling activities are subject to numerous
risks, including the risk that we will not obtain any commercially viable oil or
natural-gas production. Whether we decide 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. We may have to curtail, delay or cancel drilling if a number of
events occur, 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 our 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.
Our Midstream Segment Has Certain Business Risks.
Our midstream operations depend on demand for crude oil by refiners in the
Midwest and on the Gulf Coast. Any decrease in this demand could adversely
affect our business. Demand also depends on the ability and willingness of
shippers having access to our transportation assets to satisfy their demand by
deliveries through those assets. Any decrease in this demand could adversely
affect our business. Demand for crude oil depends on the impact of future
economic conditions, fuel conservation measures, alternative fuel requirements,
governmental regulation or technological advances in fuel economy and energy
generation devices, all of which could reduce demand.
How much profit our gathering and marketing activities generate depends
primarily on the volumes of crude oil that we purchase and gather. To maintain
the volumes of crude oil that we purchase, we must continue to contract for new
supplies of crude oil to offset those volumes lost from natural declines in
crude-oil production caused by depleting wells or volumes lost to competitors.
We encounter particular difficulty in replacing lost volumes of crude
9
<PAGE>
oil when crude-oil production is low and competition to gather available
production is intense. Generally, because producers experience inconveniences in
switching crude-oil purchasers, such as delays in receiving proceeds while
awaiting the preparation of new division orders, producers typically do not
change purchasers on the basis of minor variations in price. Thus, we may
experience difficulty acquiring crude oil at the wellhead in areas where there
are existing relationships between producers and other gatherers and purchasers
of crude oil.
Sustained low crude-oil prices could lead to a decline in drilling activity
and production levels or the shutting-in or abandonment of marginal wells. To
the extent that low crude-oil prices result in lower volumes of crude oil
available for purchase at the wellhead, we may experience lower margins in our
midstream segment as competition for available crude oil intensifies. In
addition, a sustained depression in crude-oil prices could result in the
bankruptcy of some producers. Although bankruptcy proceedings are not likely to
terminate production from oil wells, they may disrupt purchasing arrangements
and have other adverse consequences. Alternatively, sustained high crude-oil
prices can limit the volume of crude oil that we purchase if sufficient credit
support for our activities is unavailable.
Uncertainties In Estimating Reserves And Future Net Cash Flows May Affect
The Value Of Our Oil And Gas Properties.
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 that we do not
control. 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
these estimates. In addition, different reserve engineers may make different
estimates of reserve quantities and cash flows based on the same available data.
Therefore, the present value of proved reserves set forth or incorporated by
reference in this prospectus only represents estimates and should not be
construed as the current market value of the estimated oil and natural-gas
reserves attributable to our properties. In this regard, the information set
forth or incorporated by reference 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 our
financial condition, borrowing base under the Revolving Credit Facility, future
prospects and market value of our securities.
Our Midstream Transportation Business Depends On California Crude Oil
Supplies.
A significant portion of the gross margin of PAA is derived from the Santa
Ynez and Point Arguello fields located offshore California. For the year ended
December 31, 1999, gross revenues less fuel and power expenses were $30.6
million from Santa Ynez and $10.6 million from Point Arguello. PAA has entered
into contracts with the producers of most of the production from these fields
under which they have agreed to ship all of their production from these fields
on the All American Pipeline through August 2007. But they are not obligated to
produce or ship any minimum volumes. Volumes received from the Santa Ynez and
Point Arguello fields have declined from 92,000 and 60,000 average daily
barrels, respectively, in 1995 to 59,000 and 20,000 average daily barrels,
respectively, for the year ended December 31, 1999. We expect that there will
continue to be natural production declines from each of these fields. In
addition, if production is disrupted in these fields because of production
problems, transportation problems or other reasons, then it would have a
material adverse effect on our midstream business.
We Hedge Some Of Our Crude Oil Production.
To manage our exposure to commodity price risk, we routinely enter into
hedging arrangements under which
10
<PAGE>
we hedge a portion of our crude-oil production. See "About Plains Resources,
Inc.--What Are Our Upstream Activities?" These hedging arrangements provide us
some protection if crude-oil prices decline below the prices at which these
hedging arrangements are set. But these hedging arrangements also expose us to
the risk that we will receive lower prices for our hedged production than we
could otherwise realize if crude-oil prices rise above the prices at which these
hedging arrangements are set.
We Are Subject To Particular Government Regulations.
Our business is regulated by certain federal, state and local laws and
regulations relating to the development, production, marketing, pricing,
transportation and storage of oil and natural gas. Our business is also subject
to extensive and changing environmental and safety laws and regulations that
govern the plugging and abandonment of oil wells, the discharge of materials
into the environment and other activities relating to environmental protections.
Certain of our properties are located in environmentally sensitive areas that
require special permits to drill.
Costs and liabilities could arise under increasingly strict environmental
and safety laws, including regulations and enforcement policies, or claims for
damages to property or persons resulting from our operations. If we cannot
recover such resulting costs through insurance or increased revenues, then our
results from operations could be adversely affected. The production,
transportation and storage of crude oil results in a risk that crude oil and
other hydrocarbons may be suddenly or gradually released into the environment,
potentially causing substantial expenditures for a response action, significant
government penalties, liability for natural-resources damages to government
agencies, personal injury or property damages to private parties and significant
business interruption.
We Are In A Competitive Industry.
The oil-and-natural-gas industry is highly competitive. We compete to
acquire, explore, exploit and develop oil and natural-gas properties, to
purchase and market oil and obtain crude-oil storage and terminalling business,
and to obtain sufficient capital to finance these activities. Our competitors
include companies that have greater financial and personnel resources than we
do. Our ability to acquire additional properties and to discover reserves in the
future depends on our ability to evaluate and select suitable properties and to
consummate transactions in a highly competitive environment.
PAA competes with foreign oil imports and other pipelines that serve the
California market and the refining centers in the Midwest and on the Gulf Coast.
It also encounters intense competition in its terminalling and storage
activities and gathering and marketing activities.
SELLING STOCKHOLDERS
The selling stockholders are the holders of our Series F preferred stock.
The selling stockholders include transferees, donees, pledgees or other
successors selling shares received from a selling stockholder named below after
the date of this prospectus. The selling stockholders bought 50,000 shares of
our Series F preferred stock in December 1999. The selling stockholders may
acquire more shares of our Series F preferred stock if we choose to pay future
dividends as additional shares of preferred stock.
The selling stockholders may acquire the common stock offered by this
prospectus if they convert their Series F preferred stock into common stock. As
of March 27, 2000, they have the right to convert each share of the Series F
preferred stock into 81.63 shares of our common stock. As of March 27, 2000, if
the selling stockholders converted all of their preferred stock into common
stock, they would own approximately 4,081,633 shares of our common stock which
represents 18.5% of our common stock currently outstanding. Any additional
shares of Series F preferred stock that they receive as dividends may also be
converted into common stock.
11
<PAGE>
The selling stockholders may also acquire the common stock offered by this
prospectus if we exchange shares of our common stock for the Series F preferred
stock. We have the right to exchange shares of our common stock for the Series F
preferred stock in certain circumstances.
We have the option to redeem the preferred stock after December 15, 2003.
The redemption price is initially 110% of the stated value of $1,000 per share.
That percentage declines over time. On December 15, 2007 we must redeem each
outstanding share of Series F preferred stock for $1,000 per share.
The following table sets forth the name of each selling stockholder, the
number of shares of common stock beneficially owned by each selling stockholder
as of March 27, 2000, and the number of shares of common stock that may be
offered by each selling stockholder pursuant to this prospectus. For purposes
of estimating the number of shares of common stock to be offered in this
prospectus, we have assumed that the selling stockholders could receive stock
dividends after March 27, 2000, of up to 17,005 shares of Series F preferred
stock, which, as of March 27, 2000, would be convertible into 1,388,164 shares
of common stock. But since we cannot predict whether any stock dividends of
Series F preferred stock will be distributed in the future, we cannot predict
the number of shares of common stock that will be beneficially owned by each
selling stockholder from time to time during the offering under this prospectus.
Any of the shares listed below may be offered for sale by a selling stockholder
from time to time and therefore we cannot estimate the number of shares that
will be beneficially owned by each selling stockholder upon termination of this
offering. The table also sets forth information regarding any position, office
or any other material relationship that any selling stockholder had with us
within the past three years.
<TABLE>
<CAPTION>
Percentage Of
Number of Shares of Common Stock Shares To Be
Common Stock held held by each Offered Office, Position or
By each Selling selling Pursuant To This Relationship With
Stockholder Stockholder Prospectus Plains Resources
==============================================================================================================================
<S> <C> <C> <C> <C>
EnCap Energy Capital Fund III , L.P.................... 1,568,853 8.0 1,092,048 (1)
EnCap Energy Capital Fund III-B, L.P................... 1,186,496 6.2 825,918 (1)
BOCP Energy Partners, L.P.............................. 383,873 2.1 267,210 (1)
Energy Capital Investment Company PLC.................. 553,980 3.0 385,619 (1)
Kayne Anderson Energy Fund, L.P........................ 1,785,500 9.1 546,978 (2)
Kayne Anderson Diversified Capital Partners, L.P....... 952,978 5.3 109,396 (2)
Kayne Anderson Non-Traditional Investments, L.P........ 742,942 4.1 109,396 (2)
Arbco Associates, L.P.................................. 1,282,064 6.9 382,885 (2)
Kayne Anderson Capital Partners, L.P................... 301,062 1.7 27,349 (2)
Kayne Anderson Offshore Limited........................ 118,827 0.7 10,940 (2)
Kayne Anderson Capital Income Partners (Q.P.) L.P...... 81,633 0.5 109,396 (2)
Hallco, Inc............................................ 163,265 0.9 218,791
Buena Vista Four Associates............................ 47,616 0.3 54,698
Michael Targoff Insurance Trust UAD 1/3/90............. 50,816 0.3 54,698
Michael B. Targoff..................................... 121,697 0.7 54,698
Newberg Family Trust DTD 12/18/90...................... 81,633 0.5 109,396
EOS Partners, L.P...................................... 255,165 1.4 218,791
Richard A. Kayne....................................... 200,110 1.1 213,321 (2)
John E. Anderson....................................... 244,898 1.4 328,183 (2)
Strome Offshore Limited................................ 530,878 2.9 218,791 (3)
Strome Hedgecap Fund L.P............................... 292,634 1.6 92,986 (3)
Strome Hedgecap Limited................................ 51,218 0.3 16,409 (3)
Thomas T. Hacking...................................... 18,327 0.1 21,879
</TABLE>
12
<PAGE>
______________________
(1) These selling stockholders are affiliates of Encap Investments L.C.
Collectively, such selling stockholders beneficially own 3,693,202 shares
of common stock (which includes shares of common stock issuable upon
conversion of our Series F preferred stock and our Series G preferred
stock), which constitutes approximately 17.1 % of our common stock.
(2) These selling stockholders are affiliates or clients of Kayne Anderson
Investment Management Inc. Robert V. Sinnott, a Vice President of Kayne
Anderson, is also one of our directors. Collectively, such selling
stockholders beneficially own 5,710,014 shares of common stock (which
includes shares of common stock issuable upon conversion of our Series F
preferred stock and our Series G preferred stock and the exercise of
warrants), which constitutes approximately 29.7 % of our common stock.
(3) These selling stockholders are affiliates of Strome Susskind Investment
Management L.P. Collectively, these selling stockholders beneficially own
874,730 shares of common stock (which includes shares of common stock
issuable upon conversion of our Series F preferred stock and our Series G
preferred stock), which constitutes approximately 4.8 % of our common
stock.
PLAN OF DISTRIBUTION
We have been advised by the selling stockholders that the shares offered by
this prospectus may be sold from time to time by or for the account of the
selling stockholders pursuant to this prospectus or pursuant to Rule 144 under
the Securities Act of 1933. Sales of shares pursuant to this prospectus may be
made in the over-the-counter market, on the American Stock Exchange 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 stockholders). Sales may
be made 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 block trade (which may involve crosses) in which the seller's broker
or dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
. purchases by a broker or dealer as principal and resale by the broker
or dealer for their account pursuant to this prospectus;
. exchange distributions and/or secondary distributions in accordance
with the rules of the American Stock Exchange;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. privately negotiated transactions;
. through put or call options transactions; and
. through short sales.
If applicable law requires, we will add a supplement to this prospectus to
disclose the following information about any particular offering:
. the specific shares to be sold;
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<PAGE>
. the names of the selling stockholders;
. the purchase prices and public offering prices;
. the names of any agent, dealer or underwriter making a sale of the
shares; and
. any applicable commissions or discounts.
The selling stockholders may sell shares directly to other purchasers,
through agents or through broker-dealers. Any selling agents or broker-dealers
may receive compensation in the form of underwriting discounts, concessions or
commissions from the selling stockholders, from purchasers of shares for whom
they act as agents, or from both sources. That compensation may be in excess of
customary commissions.
The selling stockholders 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 of 1933 in connection with the sales. Any commissions, and
any profit on the resale of shares, received by the selling stockholders and any
such broker-dealers may be deemed to be underwriting discounts and commissions.
We have been advised by each of the selling stockholders that they have not, as
of the date of this prospectus, entered into any arrangement with any agent,
broker or dealer for the sale of the shares.
Pursuant to the agreement relating to the purchase of our Series F
preferred stock by the selling stockholders, we have agreed to indemnify each
selling stockholder and any underwriter of the shares, as well as such
underwriter's officers, partners and directors and each person controlling such
underwriter, against certain liabilities, including liabilities arising under
the Securities Act of 1933. The selling stockholders have agreed to indemnify
us and any underwriter of the shares, as well as such underwriter's officers,
directors, and each person who controls such underwriter, against certain
liabilities, including liabilities arising under the Securities Act of 1933.
We may suspend the use of this prospectus and any supplements hereto in
certain circumstances due to pending corporate developments, public filings with
the Securities Exchange Commission or similar events.
We will pay all costs and expenses incurred by us in connection with the
registration of the sale of shares pursuant to this prospectus. We will not be
responsible for any commissions, underwriting discounts or similar charges on
sales of the shares.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings (File
No. 0-9808) that we will make with the SEC under Sections 13(a), 13(c), 14 or
15(d)of the Securities Exchange Act of 1934:
. Annual Report on Form 10-K for the fiscal year ended December 31,
1999; and
. The description of Plains Resources Inc. common stock contained in our
Form 8-A filed February 2, 1990
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<PAGE>
You may obtain a free copy of these filings by writing or telephoning our
Investor Relations Department at the following address:
500 Dallas Street, Suite 700
Houston, Texas 77002
Telephone (713) 654-1414.
This prospectus is part of a registration statement that we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide information other than that
provided in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front of the document.
LEGAL MATTERS
Michael R. Patterson, Esq., our general counsel, will issue an opinion to
us about the legality of our common stock. Mr. Patterson beneficially owns
138,316 shares of our common stock.
EXPERTS
The financial statements incorporated in this Registration Statement by
reference to the Annual Report on Form 10-K of Plains Resources Inc. for the
year ended December 31, 1999 have been so incorporated in reliance on the report
(which contains a statement relating to the Company's restatement as described
in Note 3 to the financial statements) of PricewaterhouseCoopers 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 has been prepared by H. J. Gruy and Associates, Inc.,
Netherland, Sewell & Associates, Inc. and Ryder Scott Company, L.P., independent
petroleum engineers, and we have incorporated it by reference into this
prospectus in reliance on the authority of those firms as experts in petroleum
engineering.
15
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is a statement of estimated expenses that we incurred in
connection with the common stock being registered hereby, other than
underwriting discounts and commissions.
Securities and Exchange Commission Registration Fee $18,773
American Stock Exchange Listing Fees 17,500
Legal Fees and Expenses 10,000
Accounting Fees and Expenses 2,000
Miscellaneous 6,727
Total $55,000
=======
Item 15. Indemnification of Directors and Officers
Article Tenth of our Second Restated Certificate of Incorporation provides
that we 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 one of our directors or officers or by reason of the
fact that such director or officer, at our request, 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 our Second Restated Certificate of Incorporation or
bylaws, agreements, vote of stockholders or disinterested directors or
otherwise.
Additionally, Article VIII of our 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 our board of directors, 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 our best interests, 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 our records or books of account or those of another
enterprise, or on information supplied to him by our officers or those of
another enterprise in the course of their duties, or on the advice of our legal
counsel or that of another enterprise or on information or records given or
reports made to us or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable care by
us or another enterprise.
Pursuant to Section 145 of the GCL, we generally have the power to
indemnify our 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, our best interests, 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 our right, however,
indemnification is generally limited to attorneys' fees and other expenses and
is not available if such person is adjudged to be liable to us 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. We also have the power to purchase
II-1
<PAGE>
and maintain insurance for such persons.
The above discussion of our Second Restated 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.
We have entered into employment agreements containing indemnification
provisions with Mr. Greg L. Armstrong, our President and Chief Executive
Officer, and Harry N. Pefanis, our Executive Vice President - Midstream.
Pursuant to such agreements, we have agreed to indemnify and hold them harmless
to the fullest extent permitted by law, from any loss, damage or liability
incurred in the course of their employment. The amount paid by us is reducible
by the amount of insurance paid to or on their behalf with respect to any event
giving rise to indemnification. Their right to indemnification is to survive
their death or termination of employment and the termination of their employment
agreement. Our board of directors has also authorized an employment agreement
with Mr. William C. Egg, Jr., our Executive Vice President and Chief Operating
Officer -Upstream, which, as authorized, will have indemnification provisions
substantially the same as Messrs. Armstrong's and Pefanis' 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,
19 95).
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 F Cumulative Convertible Preferred Stock
(incorporated by reference to Exhibit 3(d) to the Company's
Annual Report on Form 10-K filed on March 30, 2000).
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 -- Stock Purchase Agreement dated as of December 15,1999, by
and among the Company and the Purchasers named therein for
the issuance of Series F Cumulative Convertible Preferred
Stock (incorporated by reference to Exhibit 4(g) to the
Company's Annual Report on Form 10-K filed on Marh 30,
2000).
+5.1 -- Opinion of Michael R. Patterson, Esq.
+23.1 -- Consent of Michael R. Patterson, Esq. (contained in
Exhibit 5).
+23.2 -- Consent of PricewaterhouseCoopers 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, L.P.
II-2
<PAGE>
+24.1 -- Powers of Attorney (included at page II-4 of this
Registration Statement as originally filed).
+ Filed herewith.
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
of 1933 (the "Securities Act"); (ii) to reflect in this prospectus any
facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) that,
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 Securities Exchange Act of 1934 (the "Exchange
Act") that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each 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 that 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 Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. If 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, then 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.
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<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 30th day of March,
2000.
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 30th day of March, 2000.
Signature Capacity
--------- --------
/s/ Greg L. Armstrong President, Chief Executive Officer and
---------------------
Greg L. Armstrong Director (Principal Executive Officer)
/s/ Jerry L. Dees Director
-----------------
Jerry L. Dee
/s/ Tom H. Delimitros Director
---------------------
Tom H. Delimitros
II-4
<PAGE>
/s/ Cynthia A. Feeback Vice President - Accounting and Assistant
----------------------
Cynthia A. Feeback Treasurer (Principal Accounting Officer)
/s/ William M. Hitchcock Director
------------------------
William M. Hitchcock
/s/ Phillip D. Kramer Executive Vice President, Treasurer and Chief
---------------------
Phillip D. Kramer Financial Officer (Principal Financial
Officer)
Chairman of the Board and Director
/s/ Dan M. Krausse 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 F
Cumulative Convertible Preferred Stock (incorporated by reference to
Exhibit 3(d) to the Company's Annual Report on Form 10-K filed on
March 30, 2000).
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 -- Stock Purchase Agreement dated as of December 15, 1999, by and among
the Company and the Purchasers named therein for the issuance of
Series F Cumulative Convertible Preferred Stock (incorporated by
reference to Exhibit 4(g) to the Company's Annual Report on Form 10-K
filed on March 30, 2000).
+5.1 -- Opinion of Michael R. Patterson, Esq.
+23.1 -- Consent of Michael R. Patterson, Esq. (contained in Exhibit 5).
+23.2 -- Consent of PricewaterhouseCoopers 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, L.P.
+24.1 -- Powers of Attorney (included at page II-4 of this Registration
Statement as originally filed).
+ Filed herewith.
<PAGE>
EXHIBIT 5.1
March 31, 2000
Plains Resources Inc.
500 Dallas, Suite 700
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 5,469,776 shares (the "Shares") of the
Company's common stock, $.10 par value (the "Common Stock"), issuable upon the
conversion or exchange of shares of the Company's Series F Cumulative
Convertible Preferred Stock (the "Series F 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 Second Restated Certificate of
Incorporation of the Company, the Bylaws of the Company, corporate proceedings
with respect to the Series F 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. 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 F 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 this prospectus included in the Registration Statement.
Sincerely,
/s/ Michael R. Patterson
---------------------------------------
Michael R. Patterson
Vice President and General Counsel
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 29, 2000 relating to the
financial statements, which appears in Plains Resources Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1999. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
By: /s/ PRICEWATERHOUSECOOPERS L.L.P.
------------------------------------
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
March 30, 2000
<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 reports to the interest of Plains Resources
Inc. and subsidiaries, Calumet Florida, Inc. and Arguello Inc. (collectively,
the "Company") dated February 21, 2000 and March 7, 2000, 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, 1999, 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 "Experts" in such Registration Statement.
NETHERLAND, SEWELL & ASSOCIATES, INC.
By: /s/ Frederic D. Sewell
-------------------------------------
Frederic D. Sewell
President
Dallas, Texas
March 29, 2000
<PAGE>
EXHIBIT 23.4
CONSENT OF H.J. GRUY AND ASSOCIATES, INC.
-----------------------------------------
We hereby consent to the use of the name H. J. Gruy and Associates, Inc.
and references to H. J. Gruy and Associates, Inc. and to inclusion of and
references to our two reports, or information contained herein, both dated March
10, 2000, prepared for Stocker Resources, Inc. in the Registration Statement on
Form S-3 of Plains Resources Inc. for the filing dated March 31, 2000.
H. J. GRUY AND ASSOCIATES, INC.
By: /s/ Marilyn Wilson
------------------------------------
Marilyn Wilson, PE
President and Chief Operating Officer
Houston, Texas
March 29, 2000
<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 reports to the interest of Plains Resources
Inc. and its subsidiary Plains Illinois Inc. (collectively, the "Company")
dated March 2, 2000, March 3, 2000 and March 8, 2000, 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, 1999, 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, L.P.
By: /s/ Ryder Scott Company, L.P.
------------------------------------------
Houston, Texas
March 29, 2000
