Filed pursuant to Rule 424(b)(1) Registration No. 33-59199
PROSPECTUS
2,623,260 Shares
CAIRN ENERGY USA, INC.
Common Stock
This Prospectus relates to an aggregate of 2,623,260 shares
(the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of Cairn Energy USA, Inc., a Delaware
corporation (the "Company"), that are being offered for sale by
Cairn Energy PLC, a Scottish corporation (the "Selling
Stockholder"). The Company will receive no part of the proceeds
of such sales. The expenses (other than commissions and
discounts of underwriters, brokers, dealers or agents) incurred
in connection with this offering are expected to be approximately
$78,000. Substantially all of such expenses will be paid by the
Company.
The Company's Common Stock is traded on the NASDAQ Stock
Market National Market ("NNM") under the symbol "CEUS." On
June 16, 1995, the closing price for the Common Stock on the NNM
was $10.
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
Under- Proceeds
Price To writing To Selling
Public Discount(1) Stockholder(2)
<S> <C> <C> <C>
Per Share $10.00 $0.25 $9.75
Total $26,232,600 $655,815 $25,576,785
</TABLE>
(1) The Company and the Selling Stockholder have agreed to
indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(2) For acting as agent on behalf of the Selling Stockholder,
Societe Generale Strauss Turnbull Securities Limited will
receive from the Selling Stockholder a commission of 1% of
<PAGE>
the net proceeds to the Selling Stockholder. See
"Underwriting."
The Shares are offered, subject to prior sale, when, as and if
delivered to and accepted by the Underwriters and subject to
their right to reject any order in whole or in part. It is
expected that delivery of the Shares will be made against payment
therefor on or about June 22, 1995.
Morgan Keegan & Company, Inc. SOUTHCOAST CAPITAL
C o r p o r a t i o n
The date of this Prospectus is June 19, 1995.
<PAGE>
THE COMPANY
The registrant, Cairn Energy USA, Inc., a Delaware corporation
(the "Company"), was incorporated on May 5, 1981 in Delaware as
"Omni Exploration, Inc." On September 29, 1992, Cairn Energy
USA, Inc., an oil and gas exploration and development company and
wholly-owned subsidiary of Cairn Energy PLC, a Scottish
corporation (the "Selling Stockholder"), merged with and into the
registrant with the registrant being the survivor (the "Merger").
Pursuant to the Merger, the registrant changed its name to "Cairn
Energy USA, Inc." As used in this Prospectus, "Omni" refers to
Omni Exploration, Inc. prior to the Merger, "Cairn USA" refers to
the corporation prior to the Merger that merged into Omni
Exploration, Inc. and the "Company" refers to the surviving
corporation in the Merger. Because Omni was the reporting
company under the federal securities laws and the surviving
corporation in the Merger (but was not the survivor for
accounting purposes), all references to the Company prior to
September 29, 1992 are to Omni, except for financial data and oil
and gas information. As a result of the accounting treatment of
the Merger, all financial data and oil and gas information of the
Company prior to September 29, 1992 are the historical financial
data and oil and gas information of Cairn USA.
The Company's principal executive offices are located at 8235
Douglas Avenue, Suite 1221, Dallas, Texas 75225 and its
telephone number is (214) 369-0316.
SELLING STOCKHOLDER
As of the date of this Prospectus, the Selling Stockholder
owned 2,623,260 shares, or approximately 15.5% of the 16,983,150
shares of Common Stock issued and outstanding. Assuming all
Shares offered hereby are actually sold, the Selling Stockholder
will no longer hold any shares of Common Stock.
Of the 16,983,150 shares of Common Stock issued and
outstanding, 1,000,000 shares (the "Escrow Shares") were issued
to Phemus Corporation ("Phemus") in connection with the October
1994 acquisition (the "Smith Acquisition") of substantially all
the oil and gas assets (the "Smith Assets") of Smith Offshore
Exploration Company II ("Smith") and are being held in escrow.
Phemus, a Massachusetts corporation that is a subsidiary of the
President and Fellows of Harvard College (a Massachusetts non-
profit educational corporation) and the successor in interest to
Smith, is entitled to notice of all meetings of the Company's
stockholders and to vote all Escrow Shares on all matters
submitted to the Company's stockholders for a vote. The Escrow
Shares, however, are deemed not to be outstanding for financial
reporting purposes. The Smith Assets will be valued as of
June 30, 1995, unless extended under certain circumstances until
December 31, 1995. Following the completion of the valuation
process, the Escrow Shares will be released to Phemus or returned
to the Company. See "Acquisition of Smith Offshore Exploration
Company II" at page 4 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
<PAGE>
Prior to the Merger, Cairn USA was a wholly-owned subsidiary
of the Selling Stockholder. From time to time prior to the
Merger, Cairn USA obtained funds through borrowings from third
parties and borrowings and capital contributions from the Selling
Stockholder. Effective December 31, 1991, the Selling
Stockholder converted the unpaid principal balance of its loans
to Cairn USA, an aggregate of approximately $12,400,000, to
additional paid-in capital. The accrued and unpaid interest on
the converted principal of these promissory notes was not,
however, converted to additional paid-in capital, and as of June
30, 1993, the Company owed the Selling Stockholder approximately
$2,600,000 for this interest. In connection with the Merger, PLC
received 7,992,260 shares of Common Stock and 200,000 shares of
Series A Preferred Stock constituting approximately 95.4% of the
issued and outstanding capital stock of the Company. The Company
paid the accrued and unpaid interest on the converted principal
of the promissory notes to the Selling Stockholder from the
proceeds of the Company's July 1993 public offering of Common
Stock, which yielded net proceeds to the Company of approximately
$17,100,000. The Company also used an additional $3,600,000 of
such proceeds to redeem from the Selling Stockholder all of the
Company's then outstanding Series A Preferred Stock.
In connection with the Smith Acquisition, the Company and the
Selling Stockholder entered into a registration rights agreement
(the "PLC Registration Rights Agreement") pursuant to which the
Selling Stockholder has the right to up to five demand
registrations under the Securities Act of the Common Stock it
holds. Each demand registration must relate to the offering and
sale of at least 1,000,000 shares of Common Stock. The Company
is not obligated to effect any Securities Act registration with
respect to which the registration request is made within six
months of the termination of a prior demand registration of the
Selling Stockholder or a piggyback registration in which there
was no reduction in the number of securities requested by the
Selling Stockholder to be included in such registration. In
addition, the Company will not be obligated to register the sale
of shares by the Selling Stockholder under the Securities Act
that may be sold through an exemption from registration available
pursuant to Rule 144(k) promulgated under the Securities Act.
The Selling Stockholder also has piggyback registration rights to
include shares in certain Securities Act registration statements
filed by the Company.
The Company shall pay all expenses relating to demand
registrations and piggyback registrations (including the
reasonable fees and expenses of counsel to the Selling
Stockholder), except for underwriting discounts and commissions
attributable to the sale of shares of Common Stock by the Selling
Stockholder.
The Selling Stockholder may assign its registration rights to
any one or more transferees; provided, however, that no
transferee of the Selling Stockholder may assign or transfer
rights under the PLC Registration Rights Agreement without the
prior written consent of the Company. See "Registration Rights
Relating to Common Stock" at page 18 of the Company's Proxy
<PAGE>
Statement relating to its 1995 annual meeting (the "Proxy
Statement").
In connection with the Smith Acquisition, the Company and the
Selling Stockholder entered into a participation agreement (the
"Participation Agreement"). Pursuant to the Participation
Agreement, the Selling Stockholder or an affiliate of the Selling
Stockholder has the right under certain circumstances to acquire
an interest in certain oil and gas prospects to be acquired by
the Company in the future in the continental United States or in
the Gulf of Mexico. If the Selling Stockholder is entitled under
the Participation Agreement to acquire such interest, the Selling
Stockholder will be required to purchase such interest at the
same price as the Company has determined that it will offer such
interest to industry participants. The Participation Agreement
became effective upon the consummation of the Smith Acquisition.
As of the date of this Prospectus, the Company has entered into
no transactions with the Selling Stockholder under the
Participation Agreement.
Recent Sales of Shares by the Selling Stockholder
On July 8, 1994, the Selling Stockholder sold 824,000 shares
of Common Stock it held at a price of $7.50 per share pursuant to
a registration statement on Form S-3 under the Securities Act,
(Registration No. 33-80526). Mr. J. Munro M. Sutherland, a then-
Director of the Selling Stockholder and a Director and Senior
Vice President of the Company, purchased 12,000 shares of Common
Stock from the Selling Stockholder in that offering.
On October 10, 1994, in connection with the Smith Acquisition,
the Selling Stockholder sold 2,000,000 shares of Common Stock to
Phemus at a price of $7.50 per share in cash.
On October 18, 1994 the Selling Stockholder sold 1,926,000
shares of Common Stock at a price of $7.00 per share pursuant to
a registration statement on Form S-3 under the Securities Act
(Registration No. 33-84206).
In March 1995, the Selling Stockholder sold 162,000 shares and
7,000 shares of Common Stock at prices of $8 and $8 per share,
respectively, in sales pursuant to Rule 144 under the Securities
Act.
RECENT DEVELOPMENTS
East Cameron Blocks 331/332
At the end of May, gross production from the Company's largest
recent development project on East Cameron Blocks 331/332 had
reached 103 MMcf of gas and 9,400 barrels of oil and condensate
with eight of the nine wells on production. The remaining well
is expected to be on production prior to the end of the month.
Company owns a 40% interest in the shallower zone of Block 331
and a 20% interest in the deeper zone of both blocks.
<PAGE>
Approximately 80% of the proved reserves are located in the
deeper zone.
East Cameron Block 356
The Company has recently participated in a successful
exploration well on East Cameron Block 356. The well has been
suspended after encountering hydrocarbon-bearing sands based on
wireline log analysis and formation test information. Additional
drilling is expected on this block later in the year. The
Company owns a 37.5% working interest in this block.
Smith Assets
On the Smith Assets, there is currently, or has been recently,
drilling activity on three blocks, Eugene Island Block 59,
Mustang Island Block 858 and Vermilion Block 203.
Eugene Island Block 59
An exploration well drilled on Eugene Island Block 59 was
unsuccessful and has been plugged and abandoned. The Company
will seek to clarify the prospectivity of the block with the aid
of a 3-D survey. The Company owns a 25% working interest in this
block.
Mustang Island Block 858
On Mustang Island Block 858, the second well drilled by the
Company, the A-3, has been suspended pending completion
operations The original well drilled on the block, which was
drilled before the Company acquired its interest in this block,
Mustang Island 858 A-1, has been tied back. It is expected that
testing operations on the Mustang Island 858 A-2 well will
commence prior to the end of the month. The Company owns a 17.5%
working interest in this block.
Vermilion Block 203
The first of the exploration wells drilled by the Company to
target certain shallow formations on Vermilion Block 203
encountered several productive sand intervals as indicated by
wireline log analysis. The well has been suspended pending
completion operations. A second exploratory well targeting
shallow horizons is currently drilling. It is expected that a
well to target deeper formations on the block will be spud in the
third quarter of this year. The Company owns a 50% working
interest in this block.
<PAGE>
Lease Sale
The Company, together with partners, bid on eighteen blocks at
the Gulf of Mexico Central Area lease sale which was held on
May 10, 1995. Of these bids, thirteen were high bids and to date
five of the blocks have been awarded to the Company and its
partners. The decisions by the MMS on the awarding of the
remaining eight blocks is expected to be made in the next two
months. If all of the leases in which the Company or its bidding
group was high bid are awarded, the Company's net share of the
lease bonuses will be $2.5 million. This amount is consistent
with the Company's expected expenditures for the lease sale. The
expenditures for the lease sale will be funded from cash flow
from operations and from amounts available under the Company's
existing credit facility.
Property Sales
On June 6, 1995 the Company entered into an agreement to sell
most of the properties which it owns in Texas and Oklahoma with
effect from April 1, 1995, for a consideration of $1.77 million.
At January 1, 1995, the properties had reserves of approximately
123 MBbl barrels of oil and 2.1 Bcf of gas and had a Discounted
Present Value of $2.03 million. Completion of the sale, which is
still subject to due diligence and certain customary conditions,
is expected before the end of June.
UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, the Selling Stockholder, acting through its agent,
Societe Generale Strauss Turnbull Securities Limited, has agreed
to sell to each of the Underwriters named below, and each such
Underwriter has severally agreed to purchase from the Selling
Stockholder, the respective number of shares of Common Stock set
forth opposite its name below:
Number of Shares
Underwriter of Common Stock
Morgan Keegan & Company, Inc. . . . . . . 1,511,630
Southcoast Capital Corporation . . . . . . 1,111,630
Total . . . . . . . . . . . . . . . . . 2,623,260
The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and
that the Underwriters are committed to take and pay for all the
Shares offered hereby, if any are taken.
The Underwriters propose to offer the Shares directly to the
public at the public offering price set forth on the cover page
of this Prospectus. After the Shares of Common Stock are
released for sale to the public, the offering price and other
selling terms may, from time to time, be varied by the
Underwriters. For acting as agent on behalf of the Selling
Stockholder, Societe Generale Strauss Turnbull Securities Limited
<PAGE>
will receive from the Selling Stockholder a commission of 1% of
the net proceeds to the Selling Stockholder.
Each of the Underwriters makes a market in the Common Stock.
During the two business days immediately prior to the offer and
sale of the Common Stock, however, regulations under the Exchange
Act impose restrictions on the market-making activities of the
Underwriters.
The Company and the Selling Stockholder have agreed to
indemnify the several Underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in
respect thereof.
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby is being
passed upon for the Company by Jenkens & Gilchrist, a
Professional Corporation, Dallas, Texas. Certain legal matters
relating to the offering will be passed on for the Selling
Stockholder by Cox & Smith Incorporated, San Antonio, Texas.
Certain matters of Scottish law relating to the offering will be
passed on for the Selling Stockholder by Shepherd & Wedderburn
W.S., Edinburgh, Scotland. Certain legal matters relating to the
offering will be passed on for the Underwriters by Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., New Orleans,
Louisiana.
EXPERTS
The consolidated financial statements of the Company included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon,
included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
The audited financial statements of Smith that are included in
the Company's Prospectus dated October 11, 1994 and in the
Company's Proxy Statement relating to a special meeting of
stockholders held on October 10, 1994 have been audited by Arthur
Andersen, LLP, independent public accountants, as set forth in
their report thereon, included therein and incorporated herein by
reference in reliance upon the authority of said firm as experts
in giving said reports.
The estimated reserve review of Ryder Scott included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994 and incorporated by reference in this Prospectus has
been included herein in reliance upon the authority of that firm
as an expert in petroleum engineering.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Exchange Act and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements
and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: The Chicago
Regional Office, Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and the New
York Regional Office, 7 World Trade Center, 12th Floor, New York,
New York 10007, at prescribed rates. Such reports, proxy
statements and other information concerning the Company can also
be inspected at the offices of the National Association of
<PAGE>
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act with respect to
the Common Stock offered hereby (the "Registration Statement").
This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules
thereto. Such additional information can be obtained from the
Commission's principal office in Washington, D.C. Statements in
this Prospectus concerning provisions of documents filed with the
Registration Statement as exhibits are necessarily summaries of
such documents, and each statement is qualified in its entirety
by reference to the copy of the applicable document filed with
the Commission.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents or portions thereof filed by the
Company are hereby incorporated by reference in this Prospectus:
(i) the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, filed with the Commission on
March 15, 1995, and Amendment Number 1 thereto on Form
10-K/A, filed with the Commission on April 10, 1995;
(ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, filed with the Commission
on May 2, 1995;
(iii) the Company's Proxy Statement for its 1995 Annual
Meeting, filed with the Commission on April 4, 1995;
(iv) the Financial Statements of Smith Offshore Exploration
Company II and the Pro Forma Combined Financial
Statements contained in the Company's Proxy Statement
for its Special Meeting of Stockholders held October 10,
1994, filed with the Commission on September 19, 1994;
(v) the Financial Statements of Smith Offshore Exploration
Company II contained in the Prospectus dated October 11,
1994, filed with the Commission on October 13, 1994
pursuant to Rule 424(b) and included in the Company's
Registration Statement on Form S-3 (Registration No. 33-
84206); and
(vi) the description of the Common Stock set forth in the
Registration Statement on Form 8-A, filed with the
Commission on January 29, 1982, including any amendment
or report filed for the purpose of updating such
description.
In addition, all documents subsequently filed by the Company
pursuant to Sections 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 Common Stock made hereby shall be
deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for the purposes of this Prospectus to
the extent that a statement contained herein or in any
subsequently filed document which is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Prospectus.
The Company will provide without charge to each person to whom
a copy of this Prospectus is delivered, upon oral or written
request of such person, a copy of any and all of the documents
incorporated by reference herein (other than exhibits and
<PAGE>
schedules to such documents, unless such exhibits or schedules
are specifically incorporated by reference into such documents).
Such requests should be directed to A. Allen Paul, Vice
President-Finance, Cairn Energy USA, Inc., 8235 Douglas Avenue,
Suite 1221, Dallas, Texas 75225 or by telephone at (214) 369-
0316.
<PAGE>
No dealer, salesperson or any other person has been authorized
to give any information or to make any representation in
connection with this Offering other than those contained in this
Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to
sell or solicitation of any offer to buy by anyone in any
jurisdiction in which such offers or solicitation is not
authorized, or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom
it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale hereunder shall, under
any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof or
that the information contained herein is correct as of any time
subsequent to its date.
TABLE OF CONTENTS
Page
The Company . . . . . . . . . . . . . . . . . . . . . . . . . 2
Selling Stockholder . . . . . . . . . . . . . . . . . . . . . 2
Recent Developments . . . . . . . . . . . . . . . . . . . . . 4
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . 5
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . 6
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Available Information . . . . . . . . . . . . . . . . . . . . 6
Additional Information . . . . . . . . . . . . . . . . . . . 6
Documents Incorporated By Reference . . . . . . . . . . . . . 7
<PAGE>
2,623,260 Shares
CAIRN ENERGY USA, INC.
Common Stock
PROSPECTUS
Morgan Keegan & Company, Inc.
SOUTHCOAST CAPITALC o r p o r a t i o n
June 19, 1995
<PAGE>
