<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
Castle Energy Corporation
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
the Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------
2) Form, Schedule of Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
May 15, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
("Annual Meeting") of Castle Energy Corporation (the "Company") to be held on
Thursday, June 29, 2000, at 9:30 A.M., Eastern Daylight Time, at the Radnor
Hotel, 591 E. Lancaster Avenue, St. Davids, Pennsylvania.
At the Annual Meeting, you will be asked to consider and vote upon two
matters: a proposal to elect the nominees named in the accompanying Proxy
Statement as Directors to serve for the period indicated and a proposal to
reappoint KPMG Peat Marwick LLP as the Company's independent auditors for the
fiscal year ending September 30, 2000.
Whether or not you are personally able to attend the Annual Meeting,
please complete, sign, date and return the enclosed proxy as soon as possible.
This action will not limit your rights to vote in person if you wish to attend
the Annual Meeting.
A copy of the Company's annual report on Form 10-K for the year ended
September 30, 1999 was previously sent to you.
I look forward to seeing you at the Annual Meeting.
Sincerely,
/s/JOSEPH L. CASTLE II
Joseph L. Castle II
Chairman and Chief Executive Officer
<PAGE>
CASTLE ENERGY CORPORATION
Notice of Annual Meeting of Stockholders
to be held on June 29, 2000
May 15, 2000
To The Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Castle Energy Corporation, a Delaware corporation (the
"Company"), will be held at The Radnor Hotel, 591 E. Lancaster Avenue, St.
Davids, Pennsylvania, on Thursday, June 29, 2000 at 9:30 A.M., Eastern Daylight
Time, for the following purposes:
1. To elect the nominees named in the Proxy Statement as Directors to
serve for the period indicated and until their successors have been elected.
2. To consider and take action upon a proposal to reappoint KPMG Peat
Marwick LLP as the Company's independent accountants for the fiscal year ending
September 30, 2000.
3. To transact any other business as may properly come before the
Annual Meeting.
Stockholders of record at the close of business on May 5, 2000 will be
entitled to notice of and to vote at the Annual Meeting.
The Company's Annual Report to Stockholders for the fiscal year ended
September 30, 1999 was previously sent to the stockholders.
A complete list of stockholders entitled to vote at the Annual Meeting
will be kept at the office of the Company, One Radnor Corporate Center, Suite
250, 100 Matsonford Road, Radnor, Pennsylvania 19087, for examination by any
stockholder, during ordinary business hours, for a period of not less than ten
days prior to the Annual Meeting.
By Order of the Board of Directors
/s/JOSEPH L. CASTLE II
Joseph L. Castle II
Chairman and Chief Executive Officer
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
SELF-ADDRESSED RETURN ENVELOPE FURNISHED FOR THAT PURPOSE AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON,
YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY
STATEMENT.
<PAGE>
PROXY STATEMENT FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
June 29, 2000
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors of Castle
Energy Corporation, a Delaware corporation (the "Company"), to be voted at the
Annual Meeting of Stockholders to be held on June 29, 2000 and any adjournment
or adjournments thereof (the "Annual Meeting"). When such proxy is properly
executed and returned, the shares of the Company's Common Stock, par value $.50
per share ("Common Stock"), it represents will be voted at the Annual Meeting as
directed. If no specification is indicated, the shares will be voted "FOR" the
election of the nominees to serve as Director for the term designated and "FOR"
the reappointment of KPMG Peat Marwick LLP as the Company's independent
accountants for the fiscal year ending September 30, 2000. Any stockholder
granting a proxy has the power to revoke it at any time prior to its exercise by
notice of revocation to the Company in writing, by voting in person at the
Annual Meeting or by execution of a later dated proxy; provided, however, that
such action is taken in sufficient time to permit the necessary examination and
tabulation of the subsequent proxy or revocation before the vote is taken.
The shares entitled to vote at the Annual Meeting consist of shares of
Common Stock, with each holder of record as of the close of business on May 5,
2000 (the "Record Date") entitled to one vote for each such share held. As of
the Record Date hereof there were 6,817,887 shares of Common Stock outstanding
and entitled to vote at the Annual Meeting. This Proxy Statement and
accompanying proxy are being sent to stockholders of the Company on or about May
15, 2000.
The address of the Company's principal executive offices is One Radnor
Corporate Center, Suite 250, 100 Matsonford Road, Radnor, Pennsylvania 19087,
and the telephone number is (610) 995-9400.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
INTRODUCTION...................................................................................... 1
PRINCIPAL HOLDERS OF VOTING SECURITIES............................................................ 3
SECURITY OWNERSHIP OF MANAGEMENT.................................................................. 4
DIRECTORS AND EXECUTIVE OFFICERS.................................................................. 5
EXECUTIVE COMPENSATION............................................................................ 7
Summary Compensation.......................................................................... 7
Option Grants in Last Fiscal Year (Year Ended September 30, 1999)............................. 7
Aggregate Option Exercises In Last Fiscal Year and Fiscal Year End Option Values.............. 7
Employment Agreements......................................................................... 8
Severance/Retention Agreements................................................................ 8
Section 16(a) Beneficial Ownership Reporting Compliance....................................... 8
Compensation Committee Interlocks and Insider Participation................................... 9
Board Compensation Committee Report on Executive Compensation................................. 9
Performance Graphs............................................................................ 11
BOARD OF DIRECTORS AND BOARD COMMITTEES........................................................... 14
Fiscal 1999 Board Meetings.................................................................... 14
Board Committees.............................................................................. 14
Compensation of Directors..................................................................... 14
PROPOSAL TO ELECT DIRECTORS....................................................................... 15
PROPOSAL TO REAPPOINT INDEPENDENT ACCOUNTANTS..................................................... 16
OTHER MATTERS..................................................................................... 16
VOTE REQUIRED..................................................................................... 16
STOCKHOLDER PROPOSALS............................................................................. 16
EXPENSES OF SOLICITATION.......................................................................... 17
</TABLE>
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<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth, as of May 5, 2000, the names of all
persons who were known by the Company to be the beneficial owners (as defined in
the rules of the Securities and Exchange Commission (the "Commission")), of more
than five percent of the shares of Common Stock of the Company:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address of Beneficial Owner Beneficial Ownership(1) Class(1)
- ------------------------------------ --------------------------- --------
<S> <C> <C>
Joseph L. Castle II and Sally W. Castle 1,644,024(2) 23.77%
One Radnor Corporate Center, Suite 250
100 Matsonford Road
Radnor, Pennsylvania 19087
FMR Corp. 1,196,250(3) 17.55%
82 Devonshire Street
Boston, Massachusetts 02109
Kestrel Investment Management 878,100(4) 12.88%
411 Borel Avenue, Suite 403
San Mateo, California 94402
Dimension Fund Advisors, Inc. 408,450(4) 5.99%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401-1038
</TABLE>
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(1) Based on a total of 6,817,887 shares of Common Stock issued and
outstanding as of May 5, 2000. On January 31, 2000, the Company effected a
stock split in the form of a two hundred percent stock dividend on all
outstanding common shares. The result was the number of outstanding common
shares tripled effective January 31, 2000. In calculating each respective
holder's percentage ownership and beneficial ownership in the table above,
shares of Common Stock which the holder has the right to acquire within 60
days are included.
(2) Joseph L. Castle II and Sally W. Castle are husband and wife. As such,
each is deemed to beneficially own 1,644,024 shares of Common Stock which
consists of (a) 1,434,699 shares of Common Stock owned by Mr. Castle, (b)
111,825 shares of Common Stock owned by Mrs. Castle and (c) 97,500 shares
of Common Stock issuable upon exercise of options which are exercisable
within 60 days by Mr. Castle at $4.08 per share.
(3) These shares are beneficially owned by Fidelity Management & Research
Company as a result of its serving as investment adviser to various
investment companies registered under Section 8 of the Investment Company
Act of 1940 and as investment adviser to certain other funds which are
generally offered to limited groups of investors. Based on information
furnished by stockholder as of December 31, 1999, the most recent date as
of which such information was so furnished.
(4) Based on information furnished by stockholder as of December 31, 1999, the
most recent date as of which such information was so furnished.
-3-
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of May 5, 2000, the shares of Common
Stock beneficially owned by each executive officer named in the Summary of
Compensation Table below (the "Named Executives"), by each director of the
Company and by the directors and executive officers of the Company as a group,
with sole voting and investment power unless otherwise indicated:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership (1) Class (1)(2)
- ------------------------------------------------------------- ------------------------ -------------
<S> <C> <C>
Joseph L. Castle II.......................................... 1,644,024(3) 23.77%
Richard E. Staedtler......................................... 150,150(4) 2.15%
Martin R. Hoffmann........................................... 96,000(5) 1.39%
Timothy M. Murin............................................. 90,675(6) 1.31%
Sidney F. Wentz.............................................. 90,000(7) 1.30%
John P. Keller............................................... 81,000(8) 1.18%
Russell S. Lewis............................................. 17,000(9) -
All directors and executive officers
as a group (8 persons)....................................... 2,168,849 29.12%
</TABLE>
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(1) Based on a total of 6,817,887 shares of Common Stock issued and
outstanding as of May 5, 2000. On January 31, 2000, the Company effected a
stock split in the form of a two hundred percent stock dividend on all
outstanding common shares. The result was the number of outstanding common
shares tripled effective January 31, 2000. In calculating each respective
holder's percentage ownership and beneficial ownership in the table above,
shares of Common Stock which the holder has the right to acquire within 60
days are included.
(2) Percentages of less than one percent are omitted.
(3) Joseph L. Castle II and Sally W. Castle are husband and wife. As such,
each is deemed to beneficially own 1,644,024 shares of Common Stock.
Represents (a) 1,434,699 shares of Common Stock owned by Mr. Castle and
111,825 shares of Common Stock owned by Mrs. Castle and (b) 97,500 shares
of Common Stock issuable upon exercise of options which are exercisable
within 60 days by Mr. Castle at $4.08 per share.
(4) Represents 150 shares of Common Stock owned by Mr. Staedtler and 150,000
shares of Common Stock issuable upon exercise of options which are
exercisable within 60 days at $4.38 per share.
(5) Represents 6,000 shares of Common Stock owned by an individual retirement
account for the benefit of Mr. Hoffmann, 15,000 shares of Common Stock
issuable upon exercise of options which are exercisable within 60 days at
$3.75 per share, 15,000 shares of Common Stock issuable upon exercise of
options which are exercisable within 60 days at $3.71 per share, 15,000
shares of Common Stock issuable upon exercise of options which are
exercisable within 60 days at $3.79 per share, 15,000 shares of Common
Stock issuable upon exercise of options, which are exercisable within 60
days at $4.50 per share, 15,000 shares of Common Stock issuable upon
exercise of options, which are exercisable within 60 days at $5.75 per
share and 15,000 shares of Common Stock issuable upon exercise of options,
which are exercisable within 60 days at $8.58 per share.
(6) Represents 8,175 shares of Common Stock owned by Mr. Murin, 7,500 shares
of Common Stock issuable upon exercise of options which are exercisable
within 60 days at $3.42 per share and 75,000 shares of Common Stock
issuable upon exercise of options which are exercisable within 60 days at
$5.75 per share.
-4-
<PAGE>
(7) Represents 15,000 shares of Common Stock issuable upon exercise of options
which are exercisable within 60 days at $3.75 per share, 15,000 shares of
Common Stock issuable upon exercise of options which are exercisable
within 60 days at $3.71 per share, 15,000 shares of Common Stock issuable
upon exercise of options which are exercisable within 60 days at $3.79 per
share, 15,000 shares of Common Stock issuable upon exercise of options
which are exercisable within 60 days at $4.50 per share, 15,000 shares of
Common Stock issuable upon exercise of options, which are exercisable
within 60 days at $5.75 per share and 15,000 shares of Common Stock
issuable upon exercise of options, which are exercisable within 60 days at
$8.58 per share.
(8) Represents 6,000 shares of Common Stock owned by Mr. Keller and 30,000
shares of Common Stock issuable upon exercise of options which are
exercisable within 60 days at $3.79 per share, 15,000 shares of Common
Stock issuable upon exercise of options, which are exercisable within 60
days at $4.50 per share, 15,000 shares of Common Stock issuable upon
exercise of options, which are exercisable within 60 days at $5.75 per
share and 15,000 shares of Common Stock issuable upon exercise of options,
which are exercisable within 60 days at $8.58 per share.
(9) Represents 17,000 shares of Common Stock owned by Mr. Lewis.
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning the directors and
executive officers of the Company and its significant subsidiaries as of May 5,
2000:
<TABLE>
<CAPTION>
Named Directors and Executive
Officers of the Company Age Position(s)
- ----------------------------- --- -----------
<S> <C> <C>
Joseph L. Castle II .................... 67 Chairman of the Board and Chief Executive Officer of the
Company
Sidney F. Wentz......................... 68 Director
Martin R. Hoffmann...................... 68 Director
John P. Keller.......................... 60 Director
Richard E. Staedtler.................... 55 Director, Chief Financial Officer and Chief Accounting
Officer
Russell S. Lewis........................ 45 Director
William C. Liedtke III.................. 48 Vice President and General Counsel
Executive Officer of Significant
Subsidiaries of the Company
- --------------------------------
Timothy M. Murin........................ 44 President of Castle Exploration Company, Inc. ("CECI")
and Castle Texas Production L.P. ("CTPLP") and Castle
Offshore LLC ("COLLC") subsidiaries of the Company
</TABLE>
A description of the business experience of each of the directors and
executive officers of the Company and the executive officer of significant
subsidiaries of the Company is as follows:
Directors and Executive Officers of the Company
Joseph L. Castle II has been a Director of the Company since 1985. Mr.
Castle is the Chairman of the Board of Directors and Chief Executive Officer of
the Company, having served as Chairman from December 1985 through May 1992 and
since December 20, 1993. Mr. Castle also served as President of the Company from
December 1985 through December 20, 1993, when he reassumed his position as
Chairman of the Board. Previously, Mr. Castle was Vice President of Philadelphia
National Bank; a corporate finance partner at Butcher and Sherrerd; an
investment banking
-5-
<PAGE>
firm, and a Trustee of The Reading Company. Mr. Castle has worked in the energy
industry in various capacities since 1971. Mr. Castle is a director of Comcast
Corporation and Charming Shoppes, Inc.
Sidney F. Wentz has been a director of the Company since June 1995. Mr.
Wentz was Chairman of the Board of The Robert Wood Johnson Foundation, the
nation's largest health care philanthropy from June 1989 until his retirement in
1999. Commencing in 1967, he held several positions with Crum and Forster, an
insurance holding company, retiring as Chairman and Chief Executive Officer in
1988. Previously, he was an attorney with the law firm of White & Case and then
Corporate Attorney for Western Electric Company/AT&T. Mr. Wentz is a director of
Ace Limited, a Bermuda-based insurance company and the Bank of Somerset Hills,
and a trustee of Drew University.
Martin R. Hoffmann has been a director of the Company since June 1995.
Mr. Hoffmann is of counsel to the Washington, D.C. office of the law firm of
Skadden, Arps, Slate, Meagher & Flom LLP. He was a Senior Visiting Fellow at the
Center for Technology, Policy and Industrial Development of the Massachusetts
Institute of Technology from May 1993 to May 1995 and a private business
consultant since 1993. From 1989 to 1993, Mr. Hoffmann served as Vice President
and General Counsel of Digital Equipment Corporation. Prior to assuming this
position, Mr. Hoffmann practiced law as Managing Partner of the Washington, D.C.
office of Gardner, Carton and Douglas from 1977 to 1989. Mr. Hoffmann also
served in various capacities at the United States Department of Defense,
including General Counsel from 1974 to 1975 and Secretary of the Army from 1975
to 1977. He is a Director of Seachange International, Inc. of Maynard,
Massachusetts.
John P. Keller has been a director of the Company since April 1997.
Since 1972, Mr. Keller has served as the President of Keller Group, Inc., a
privately-held corporation with subsidiaries in Ohio, Pennsylvania and Virginia.
In 1993 and 1994, Mr. Keller also served as the Chairman of American Appraisal
Associates, an appraisal company. Mr. Keller is also a director of A.M. Castle &
Co. and Old Kent Financial Corporation.
Richard E. Staedtler has been a director of the Company since May 1997
and has been Senior Vice President and Chief Financial Officer of the Company
since November 1994. Mr. Staedtler served as a director of the Company from 1986
through September 1992, and as Chief Financial Officer of the Company from 1984
through June 1993, when he formed Terrapin Resources, Inc. to purchase Minden
Energy Corporation, then a wholly-owned subsidiary of the Company. Mr. Staedtler
also serves as President of Terrapin, which previously provided certain
administrative services to the Company until June 30, 1998.
Russell S. Lewis has been a director of the Company since April 11,
2000. From 1994 to 1999, Mr. Lewis was the Chief Executive Officer of TransCore,
a company which sells and installs electronic toll collection systems. Since
1999, Mr. Lewis has been the owner and President of Lewis Capital Group, a
company investing in and providing consulting services to growth-oriented
companies.
William C. Liedtke III was appointed Vice President and General Counsel
of the Company on February 1, 2000. From April 1999 to January 2000, Mr. Liedtke
was President of WCLIII, Inc. He served as Chief Executive Officer of Redeco
Energy Inc. from October 1997 to March 1999, having previously served as its
Vice President and Chief Operating Officer since February 1995. Mr. Liedtke has
served as an Independent General Partner of Merrill Lynch Oklahoma Venture
Partners LP from August 1999 to the present.
Executive Officer of Significant Subsidiaries of the Company
Timothy M. Murin has been the President of CECI since June 1993. From
August 1986 to June 1993, Mr. Murin served as the Vice President - Exploration
and Production of CECI and thereafter as President of CECI. From August 3, 1993
until January 1997 and from May 1997 to the present, Mr. Murin has been
President of CTPLP. From December 1999 until the present Mr. Murin has also been
President of COLLC.
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<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes all compensation earned by the Company's
Chief Executive Officer and each of the other executive officers whose total
annual salary and bonus exceeded $100,000 for the fiscal year ended September
30, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------------
Annual Compensation Securities
Fiscal Year -------------------------------------- Underlying All Other
Ended Other Annual Options/ Compensation
Name and Principal Position September 30, Salary($) Bonus($) Compensation(2) SARs(#) ($) (1)
- ------------------------------ ------------- --------- -------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Joseph L. Castle II................. 1999 $362,500 $378,513 $5,400
Chairman of the Board, 1998 356,875 126,171 6,234
Chief Executive Officer 1997 356,250 $800,000 6,868
and Director of the
Company
Richard E. Staedtler................ 1999 251,674 50,000 182,817 7,534
Director of the Company 1998 229,168 50,000 60,939 6,875
Chief Financial Officer 1997 200,833 25,000 6,213
Chief Accounting Officer
Timothy M. Murin.................... 1999 150,834 27,500 81,252 5,571
President of Castle Exploration 1998 108,333 20,000 27,084 25,000 3,521
CECI, CTPLP and COLLC 1997 95,413 25,000 591
</TABLE>
- ---------------------
(1) Represents Company matching contributions under the Company's 401(k) Plan.
(2) Represents payments made pursuant to agreements with the Company. See
"Severance/Retention Agreements."
Option Grants in Last Fiscal Year
No options were granted to the Named Executive Officers during the
fiscal year ended September 30, 1999.
Aggregate Option Exercises In Last Fiscal Year And Fiscal Year End Option Values
The following table shows certain information regarding option
exercises during the fiscal year ended September 30, 1999, the total number of
unexercised options held at September 30, 1999 by the Named Executive Officers
and the values for unexercised "in-the-money" options, which represent the
positive spread between the exercise price of such stock options and the fair
market value of the shares of Common Stock as of September 30, 1999, which was
$5.67 per share.
-7-
<PAGE>
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options at Options at
Fiscal Year-End Fiscal Year-End
Shares Value (#) ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) $ Unexercisable Unexercisable
- ------------------------------- -------------- -------- -------------- -------------
<S> <C> <C> <C> <C>
Joseph L. Castle II............ 97,500/- $154,375/-
Richard E. Staedtler........... 75,000 $184,600 150,000/- $193,750/-
Timothy M. Murin............... 82,500/- $ 16,875/-
</TABLE>
Employment Agreements
Under the terms of his deferred compensation/retirement agreement, Mr.
Joseph L. Castle II, Chairman and Chief Executive Officer, was entitled to an
$848,000 benefit at September 30, 1996. In June 1997, the Compensation Committee
changed the compensation base upon which the $848,000 benefit was computed,
resulting in an increase in such benefit by $157,000 to $1,005,000 as of
September 30, 1997. In October 1997, the Company paid Mr. Castle $285,456. In
October 1998, the Company paid Mr. Castle $302,163. The Company paid the
remaining $417,381 in October 1999.
Severance/Retention Agreements
The Company entered into severance agreements with Messrs. Castle,
Staedtler and Murin in June 1996 during the period when the Company sought to
sell its assets to outside parties. Pursuant to the terms of the severance
agreements, each officer was entitled to severance compensation in the event the
Company sold substantially all of its assets and the purchaser did not retain
such Named Executive Officer. Severance compensation under such circumstances
was equal to one-month's salary for each full year of service with the Company
and/or its subsidiaries. In addition, the severance agreements included a
retention provision whereby such Named Executive Officers were entitled to
receive such retention compensation if they remained with the Company through
June 1, 1998 - whether or not they were subsequently terminated. For the period
from June 1, 1998 to May 31, 1999 Messrs. Castle, Staedtler and Murin received
such retention pay.
The Company entered into severance agreements with Messrs. Staedtler
and Murin in June 1999. These severance agreements provide for a year's
severance compensation in the event substantially all of the Company's assets
are sold and the named executive is terminated as a result of such sale.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and owners of more
than 10% of any class of the Company's securities registered pursuant to Section
12 of the Exchange Act to file reports of ownership and changes in ownership
with the Commission. The Commission's rules also require such persons to furnish
the Company with a copy of all Section 16(a) reports that they file. Based
solely upon a review of the copies of the reports and written representations
furnished to the Company, all such reporting persons complied with such
reporting obligations during the fiscal year ended September 30, 1999.
-8-
<PAGE>
Compensation Committee Interlocks and Insider Participation
For the fiscal year ended September 30, 1999, the Compensation
Committee consisted of Sidney F. Wentz, Chairman, Martin R. Hoffmann and John P.
Keller. All three members are outside directors of the Company.
Board Compensation Committee Report on Executive Compensation
Overall Policy. This report is provided by the Compensation Committee
to assist stockholders in understanding the Compensation Committee's objectives
and procedures in establishing the compensation of the Company's Chief Executive
Officer and other executive officers.
The Company's executive compensation programs are designed to retain
and reward executives who are successful in helping the Company achieve its
business objectives. The key components of the executive compensation program
are base salary, annual incentive awards and equity participation. These
components are administered with the goal of providing total compensation that
is competitive with compensation levels in the external marketplace. The program
also recognized meaningful differences in individual performance. Each year the
Compensation Committee reviews the elements of executive compensation to insure
that the total compensation program, and each of its elements, meet the overall
objectives discussed above.
Base Salary. Executive officers' salaries (and salary increases, which
are reviewed annually) are determined on a subjective basis with consideration
given to the level of job responsibility, the competitiveness of the executives'
salaries to the external marketplace and the degree to which the executive's
individual objectives have been achieved. Individual objectives vary by business
unit and strategic business goals. These factors are not considered on any
formula basis.
Bonus Program. Bonus payments are subjectively determined and are
designed to reward and encourage individual excellence. In determining whether
to award a discretionary bonus, the Compensation Committee considers the
individual's special achievements, such as his contribution to actions taken
during the past year that contribute to the strategic growth, profitability and
competitiveness of the Company. Bonus payments tend to reflect results of the
most recent fiscal year and thus emphasize achievement of short-term business
plans. In addition, special bonuses are considered for exceptional efforts made
during the year in connection with a particular transaction or business
situation.
Equity Participation. The Compensation Committee believes that it is in
the Company's best interests to grant stock options from time-to-time to
executive officers in order to align the interests of those executive officers
with the stockholders and to maximize long-term stockholder value. The purpose
of the Company's 1992 Executive Equity Incentive Plan (the "Incentive Plan"),
approved by the stockholders of the Company in May 1993, is to increase the
ownership of Common Stock of the Company by those key employees who contribute
to the continued growth, development and financial success of the Company and
its subsidiaries and to attract and retain key employees and reward them for the
Company's profitable performance. The Incentive Plan is administered by the
Compensation Committee.
Actual individual awards are subjectively determined based on
marketplace competitive practices and on such factors as the recipient's
position, annual salary and individual and Company performance as well as
historical equity grants and ownership positions. The Compensation Committee
believes that equity participation helps create a long-term partnership between
management/owners and other stockholders. The policy of granting stock options
and encouraging stock ownership has played a strong part in retaining an
excellent team of executives and managers.
Compensation of the Chief Executive Officer. The Compensation Committee
considers the same factors described above in determining the salary of Mr.
Castle, the Chairman and Chief Executive Officer of the Company. Mr. Castle's
salary earned in fiscal 1999 was $362,500 versus $356,875 in fiscal 1998. In
June 1999, the Compensation Committee increased Mr. Castle's annual salary from
$360,000 to $375,000. In addition, Mr. Castle earned retention pay of $378,513
in fiscal 1999 (see "Severance/Retention Agreement").
Mr. Castle was not granted any stock options in fiscal 1999.
-9-
<PAGE>
In addition to the foregoing, Mr. Castle was paid $285,456 in October
1997, $302,163 in October 1998 and $417,381 in October 1999 under his deferred
compensation/retirement plan. Such payments were due to Mr. Castle at September
30, 1997 (see "Employment Agreements").
The Compensation Committee believes that performance based bonuses and
stock options should constitute a significant portion of Mr. Castle's total
compensation. The Compensation Committee based the award of Mr Castle's
retention and deferred compensation largely upon Mr. Castle's efforts in the
Company's sale of its Rusk County, Texas oil and gas and pipeline assets to
Union Pacific Resources Corporation in May 1997. This sale resulted in a gain of
$19,667,000 for the Company.
Tax Deductibility of Executive Compensation. The Omnibus Budget
Reconciliation Act (OBRA) of 1993 added Section 162(m) to the Internal Revenue
Code. This section eliminates a company's tax deduction for any compensation
over one million dollars paid to any one of the Named Executive Officers,
subject to several statutory exceptions. The Company desires to preserve the tax
deductibility of all compensation paid to its executive officers and other
members of management. The Company and its subsidiaries did not pay any of the
Named Executive Officers over one million dollars in fiscal 1999.
Compensation Committee:
Martin R. Hoffmann
John P. Keller
Sidney F. Wentz (Chairman)
-10-
<PAGE>
Performance Graphs
The Company is currently engaged in only one segment of the petroleum
industry - exploration and production. Until May 31, 1999, the Company was also
engaged in the natural gas marketing segment of the petroleum industry. The
dominant segment in fiscal 1999 was natural gas marketing which accounted for
approximately 87% of consolidated revenues for the fiscal year ended September
30, 1999.
As a result of the foregoing, performance graphs are presented for both
the natural gas marketing and exploration and the production segments. Since the
Company has not engaged in natural gas marketing activities since May 1999, and
has no current natural gas marketing prospects, the first graph is expected to
be most relevant to past operations. Conversely, since the Company has spent
approximately $31,000,000 to acquire and drill oil and gas properties in the
eighteen months ended March 31, 2000, the second graph is expected to have more
relevance to future operations.
-11-
<PAGE>
Comparison of Five Year-Cumulative Total Returns(1)
Among the Company, the NASDAQ Stock Market
(U.S. Companies Only) and the Company's Natural
Gas Marketing Peer Group(2)
<TABLE>
<CAPTION>
Castle Energy Corporation NASDAQ Stock Market Self-Determined Peer Group
<S> <C> <C> <C>
09/30/94 $100 $100 $100
10/31/94 $93.75 $101.951 $96.585
11/30/94 $79.688 $98.571 $93.023
12/30/94 $71.875 $98.878 $90.663
01/31/95 $73.438 $99.398 $89.655
02/28/95 $62.5 $104.622 $92.673
03/31/95 $50.781 $107.728 $96.23
04/28/95 $53.125 $111.12 $101.54
05/31/95 $55.078 $113.995 $102.565
06/30/95 $64.844 $123.224 $104.878
07/31/95 $60.156 $132.274 $107.103
08/31/95 $54.688 $134.959 $107.955
09/29/95 $59.375 $138.067 $112
10/31/95 $44.531 $137.272 $108.492
11/30/95 $50.781 $140.492 $116.734
12/29/95 $55.762 $139.749 $121.449
01/31/96 $48.438 $140.448 $125.519
02/29/96 $49.219 $145.802 $127.631
03/29/96 $57.813 $146.292 $136.207
04/30/96 $75 $158.411 $140.674
05/31/96 $67.188 $165.678 $143.515
06/28/96 $64.063 $158.21 $142.149
07/31/96 $64.063 $144.126 $135.867
08/30/96 $58.203 $152.21 $142.408
09/30/96 $53.906 $163.845 $147.047
10/31/96 $52.344 $162.031 $156.006
11/29/96 $58.984 $172.084 $171.598
12/31/96 $67.188 $171.941 $176.95
01/31/97 $73.438 $184.142 $177.816
02/28/97 $64.063 $173.957 $180.254
03/31/97 $68.75 $162.617 $174.226
04/30/97 $67.578 $167.679 $173.337
05/30/97 $79.688 $186.672 $182.672
06/30/97 $83.594 $192.407 $173.474
07/31/97 $80.565 $212.684 $181.341
08/29/97 $88.463 $212.377 $184.85
09/30/97 $90.043 $224.968 $197.144
10/31/97 $89.363 $213.246 $206.467
11/28/97 $87.767 $214.376 $209.003
12/31/97 $88.964 $210.682 $223.26
01/30/98 $86.296 $217.349 $216.105
02/27/98 $101.620 $237.789 $234.645
03/31/98 $112.911 $246.567 $235.206
04/30/98 $119.499 $250.721 $233.743
05/29/98 $130.880 $236.801 $232.577
06/30/98 $126.815 $253.340 $231.696
07/31/98 $113.472 $250.377 $221.097
08/31/98 $112.653 $200.887 $160.690
09/30/98 $115.111 $228.773 $201.035
10/30/98 $124.805 $238.655 $196.933
11/30/98 $125.632 $262.796 $197.797
12/31/98 $115.713 $296.889 $200.751
01/29/99 $108.440 $340.063 $205.866
02/26/99 $107.606 $309.584 $228.155
03/31/99 $106.772 $332.097 $244.981
04/30/99 $103.169 $341.425 $291.318
05/28/99 $122.118 $333.571 $315.939
06/30/99 $121.276 $363.350 $273.048
07/30/99 $117.205 $358.071 $281.478
08/31/99 $114.232 $372.259 $279.364
09/30/99 $115.506 $371.687 $261.250
</TABLE>
This performance graph sets forth a comparison of cumulative total return since
September 30, 1994 among the Company, the NASDAQ stock market (Market Index for
U.S. Companies only) and a Peer Group of natural gas marketing companies whose
operations are comparable to the Company's continuing operations.
- --------
(1) Assumes $100 invested on September 30, 1994 in the Company's Common Stock,
the Nasdaq Stock Market (Market Index for U.S. Companies only) and the Peer
Group (as hereinafter defined).
(2) The Peer Group selected by the Company in 1999 is comprised of the
following companies, all of which are involved in natural gas marketing:
Mitchell Energy & Development Corp., Tejas Gas Corp. Development, Western
Gas Resources Inc., Dynegy Inc., Aquila Gas Pipeline Corp., the Williams
Companies and Kinder Morgan Inc., Kansas, Inc. In 1998 the Peer Group
selected was the same.
-12-
<PAGE>
Comparison of Five Year-Cumulative Total Returns(1)
Among the Company, the NASDAQ Stock Market
(U.S. Companies Only) and Public Crude Petroleum
and Natural Gas Companies (SIC Codes 1310-1319)
<TABLE>
<CAPTION>
Crude Petroleum and
Castle Energy Corporation NASDAQ Stock Market Natural Gas Companies
<S> <C> <C> <C>
9/30/94 $100 $100 $100
10/31/94 $93.750 $101.951 $102.362
11/30/94 $79.688 $98.571 $96.801
12/30/94 $71.875 $98.878 $95.338
1/31/95 $73.438 $99.398 $89.047
2/28/95 $62.5 $104.622 $88.785
3/31/95 $50.781 $107.728 $93.667
4/28/95 $53.125 $111.12 $94.419
5/31/95 $55.078 $113.995 $95.942
6/30/95 $64.844 $123.224 $95.805
7/31/95 $60.156 $132.274 $95.906
8/31/95 $54.688 $134.959 $94.514
9/29/95 $59.375 $138.067 $97.017
10/31/95 $44.531 $137.272 $91.964
11/30/95 $50.781 $140.492 $93.598
12/29/95 $55.762 $139.749 $100.189
1/31/96 $48.438 $140.448 $103.737
2/29/96 $49.219 $145.802 $106.247
3/29/96 $57.813 $146.292 $103.887
4/30/96 $75 $158.411 $112.971
5/31/96 $67.188 $165.678 $120.415
6/28/96 $64.063 $158.21 $126.095
7/31/96 $64.063 $144.126 $118.28
8/30/96 $58.203 $152.21 $118.602
9/30/96 $53.906 $163.845 $129.595
10/31/96 $52.344 $162.031 $135.593
11/29/96 $58.984 $172.084 $141.194
12/31/96 $67.188 $171.941 $144.813
1/31/97 $73.438 $184.142 $147.251
2/28/97 $64.063 $173.957 $123.821
3/31/97 $68.75 $162.617 $126.333
4/30/97 $67.578 $167.679 $119.502
5/30/97 $79.688 $186.672 $131.211
6/30/97 $83.594 $192.407 $139.97
7/31/97 $80.565 $212.684 $139.955
8/29/97 $88.463 $212.377 $150.859
9/30/97 $90.043 $224.968 $172.375
10/31/97 $89.363 $213.246 $170.015
11/28/97 $87.767 $214.376 $153.378
12/31/97 $88.964 $210.682 $138.017
1/30/98 $86.296 $217.349 $130.99
2/27/98 $101.62 $237.789 $130.646
3/31/98 $112.911 $246.567 $140.158
4/30/98 $119.499 $250.721 $140.384
5/29/98 $130.88 $236.801 $127.836
6/30/98 $126.815 $253.34 $123.867
7/31/98 $113.472 $250.377 $107.468
8/31/98 $112.653 $200.887 $83.253
9/30/98 $115.111 $228.773 $91.793
10/30/98 $124.805 $238.655 $89.830
11/30/98 $125.632 $262.796 $77.346
12/31/98 $115.713 $296.889 $66.954
1/29/99 $108.440 $340.063 $65.089
2/26/99 $107.606 $309.584 $55.570
3/31/99 $106.772 $332.097 $61.707
4/30/99 $103.169 $341.425 $68.505
5/28/99 $122.118 $333.571 $68.426
6/30/99 $121.276 $363.350 $72.595
7/30/99 $117.205 $358.071 $76.717
8/31/99 $114.232 $372.259 $77.011
9/30/99 $115.506 $371.687 $77.719
</TABLE>
This performance graph sets forth a comparison of cumulative total return
since September 30, 1994 among the Company, the NASDAQ stock market (Market
Index for U.S. Companies only) and public crude petroleum and natural gas
companies (SIC 1310-1319).
- --------
(1) Assumes $100 invested on September 30, 1994 in the Company's Common Stock,
the NASDAQ Stock Market (Market Index for U.S. Companies only) and Peer
Group Comprised of all Public Crude Petroleum and Natural Gas Companies
(SIC Codes 1310-1319).
-13-
<PAGE>
BOARD OF DIRECTORS AND BOARD COMMITTEES
Fiscal 1999 Board Meetings
The Board of Directors of the Company held nine meetings during the fiscal
year ended September 30, 1999. During such fiscal year, each of the incumbent
directors attended not less than 75% of the total number of meetings of the
Board of Directors and of the Committees of the Board of Directors on which such
director served.
Board Committees
The Audit Committee consists of Mr. Hoffmann (Chairman), Mr. Wentz and
Mr. Keller. All three Audit Committee members are outside directors. The
functions of the Audit Committee are to: (a) recommend the appointment of the
Company's independent public accountants; (b) review the financial reports of
the Company; (c) monitor the effectiveness of the independent audit; (d) assure
that the scope and implementation of the independent audit is not restricted or
the independence of the independent accountants compromised; (e) review the
independent accountants' reports to management on internal controls and
recommend such actions as may be appropriate; and (f) review and approve the
engagement by management of all non-audit and special services involving, in the
aggregate, fees in excess of $15,000 per year. The Audit Committee held one
meeting during the fiscal year ended September 30, 1999.
The Company has not established a nominating committee.
The Compensation Committee consists of Mr. Wentz (Chairman), Mr.
Hoffmann and Mr. Keller. All three Compensation Committee members are outside
directors. The Compensation Committee establishes overall compensation programs
and policies for the Company. The Compensation Committee monitors the selection
and performance as well as reviews and approves the compensation of key
executives, and administers the Incentive Plan. The Compensation Committee held
one meeting during the fiscal year ended September 30, 1999.
Compensation of Directors
All of the outside directors are paid director's fees of $32,000 per
year. In addition, all outside directors receive fees for attending meetings of
the board of directors. The fee per meeting is $1,500. Committee members also
receive a $500 fee for attending each committee meeting.
In addition, each outside director is granted an option to purchase
15,000 shares of Common Stock each calendar year under the Company's 1992
Executive Equity Incentive Plan. The option is granted on the first business day
of each calendar year. The exercise price for such options is the closing price
of the Company's stock on the date of grant. The option is exercisable six
months after it is granted. In January 2000, the Company issued to each of
Messrs. Hoffmann, Wentz and Keller options to purchase 15,000 shares of Common
Stock at $8.58 per share. The options expire in ten years.
-14-
<PAGE>
PROPOSAL TO ELECT DIRECTORS
At the Annual Meeting, the Stockholders will be asked to elect two
directors, constituting one class of directors, to serve for the term indicated
and until such director's successor are elected and qualified. In the
unanticipated event that one or both of the nominees for director becomes
unavailable, it is intended that proxies will be voted for such substitute
nominees as may be designated by the Board of Directors.
The Company's Bylaws, as amended, provide that the number of directors
of the Company shall be not less than four, nor more than nine, as shall be
determined by the Board of Directors. Both the Bylaws and the Company's
Certificate of Incorporation also provide that the directors shall be divided
into three classes, each class to consist of, as nearly as possible, one third
of the number of directors who constitute the entire Board. At each annual
meeting of stockholders of the Company, successors to the class of directors
whose term expires at such meeting shall then be elected for a three-year term.
The Bylaws further provide that if the number of directors is changed, any
increase or decrease shall be apportioned among the classes so as to maintain
the number of directors in each class as nearly equal as possible.
The shares represented by the enclosed Proxy will be voted as directed.
If no choice is specified in the Proxy, the shares represented by the enclosed
Proxy will be voted "For" the nominees set forth below. The Board of Directors
recommends voting "FOR" the nominees to serve in the class indicated.
Information concerning the nominees for the class of directors to be
elected, as well as those continuing directors not standing for election at the
Annual Meeting, is set forth below:
The following individuals are nominated to serve as directors in the
class whose term will expire at the Annual Meeting in the year 2003:
John P. Keller has been a director of the Company since April 1997.
Since 1972, Mr. Keller has served as the President of Keller Group, Inc., a
privately-held corporation with subsidiaries in Ohio, Pennsylvania and Virginia.
In 1993 and 1994, Mr. Keller also served as the Chairman of American Appraisal
Associates, an appraisal company. Mr. Keller is also a director of A.M. Castle &
Co. and Old Kent Financial Corporation.
Richard E. Staedtler has been a director of the Company since May 1997
and has been Senior Vice President and Chief Financial Officer of the Company
since November 1994. Mr. Staedtler served as a director of the Company from 1986
through September 1992, and as Chief Financial Officer of the Company from 1984
through June 1993, when he formed Terrapin Resources, Inc. ("Terrapin") to
purchase Minden Energy Corporation, then a wholly-owned subsidiary of the
Company. Mr. Staedtler also serves as President of Terrapin, which previously
provided certain administrative services to the Company until June 30, 1998.
The following individuals are directors whose term will expire at the
2001 Annual Meeting.
Joseph L. Castle II has been a Director of the Company since 1985. Mr.
Castle is the Chairman of the Board of Directors and Chief Executive Officer of
the Company, having served as Chairman from December 1985 through May 1992 and
since December 20, 1993. Mr. Castle also served as President of the Company from
December 1985 through December 20, 1993 when he reassumed his position as
Chairman of the Board. Previously, Mr. Castle was Vice President of Philadelphia
National Bank; a corporate finance partner at Butcher and Sherrerd, an
investment banking firm, and a Trustee of The Reading Company. Mr. Castle has
worked in the energy industry in various capacities since 1971. Mr. Castle is a
director of Comcast Corporation and Charming Shoppes, Inc.
Sidney F. Wentz has been a director of the Company since June 1995. Mr.
Wentz was Chairman of the Board of The Robert Wood Johnson Foundation, the
nation's largest health care philanthropy from June 1989 until his retirement in
June 1999. Commencing in 1967, he held several positions with Crum and Forster,
an insurance holding company, retiring as Chairman and Chief Executive Officer
in 1988. Previously, he was an attorney with the law firm of White & Case and
then Corporate Attorney for Western Electric Company/AT&T. Mr. Wentz is a
director of Ace Limited, a Bermuda-based insurance company and the Bank of
Somerset Hills, and a trustee of Drew University.
-15-
<PAGE>
The following individuals are directors whose terms will expire at the
2002 Annual Meeting:
Martin R. Hoffmann has been a director of the Company since June 1995.
Mr. Hoffmann is of counsel to the Washington, D.C. office of the law firm of
Skadden, Arps, Slate, Meagher & Flom LLP. He was a Senior Visiting Fellow at the
Center for Technology, Policy and Industrial Development of the Massachusetts
Institute of Technology from May 1993 to May 1995 and a private business
consultant since 1993. From 1989 to 1993, Mr. Hoffmann served as Vice President
and General Counsel of Digital Equipment Corporation. Prior to assuming this
position, Mr. Hoffmann practiced law as Managing Partner of the Washington, D.C.
office of Gardner, Carton and Douglas from 1977 to 1989. Mr. Hoffmann also
served in various capacities at the United States Department of Defense,
including General Counsel from 1974 to 1975 and Secretary of the Army from 1975
to 1977. He is a Director of Seachange International, Inc. of Maynard,
Massachusetts.
Russell S. Lewis has been a director of the Company since April 11,
2000. From 1994 to 1999, Mr. Lewis was the Chief Executive Officer of TransCore,
a company which sells and installs electronic toll collection systems. Since
1999, Mr. Lewis has been the owner and President of Lewis Capital Group, a
company investing in and providing consulting services to growth-oriented
companies.
PROPOSAL TO REAPPOINT INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the accounting firm of KPMG Peat
Marwick LLP ("KPMG") to be the Company's independent accountants to audit the
books and records of the Company and its subsidiaries for the fiscal year ending
September 30, 2000. The firm has no material relationship with the Company and
is considered well qualified. Should the stockholders of the Company not ratify
the selection of KPMG or should the fees proposed by KPMG become excessive or
the services provided by KPMG become unsatisfactory, the selection of another
firm of independent certified public accountants will be undertaken by the Board
of Directors.
Representatives of KPMG are expected to be present at the Annual
Meeting, and will have an opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
The shares represented by the enclosed Proxy will be voted as directed.
If no choice is specified in the Proxy, the shares represented by the enclosed
Proxy will be voted "FOR" the selection of KPMG as the Company's independent
accountants. The Board of Directors recommends a vote "FOR" the proposal to
ratify the selection of KPMG as the Company's independent accountants.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. Should any other matter be properly raised at the Annual
Meeting, however, it is the intention of each of the persons named in the Proxy
to vote in accordance with his judgment as to each such matter raised.
VOTE REQUIRED
The two nominees within the class of directors for election to the
Board of Directors at the Annual Meeting who receive the greatest number of
votes for director, a quorum being present, shall become the directors for such
class. The affirmative vote of the holders of a majority of the Common Stock
present in person or by proxy and entitled to vote at the Annual Meeting is
required to ratify the selection of KPMG as the independent accountants of the
Company. Abstentions and non-votes will not be tabulated as negative votes with
respect to any matter presented at the Annual Meeting, but will be included in
computing the number of shares of Common Stock present for purposes of
determining the presence of a quorum for the Annual Meeting.
STOCKHOLDER PROPOSALS
Any proposals of stockholders which are intended to be presented at the
2001 Annual Meeting of Stockholders must be received by the Secretary of the
Company by January 15, 2001 for consideration for inclusion in the Proxy
-16-
<PAGE>
Statement. In addition, the persons named as proxies on the form of proxy mailed
in connection with the solicitation of proxies on behalf of the Company's Board
of Directors for use at the 2001 Annual Meeting of Stockholders will be
authorized to vote in their own discretion on any stockholder proposal not
included in the Company's Proxy Statement if the Company does not receive
written notice of such proposal by April 1, 2001. Such proxy holders' authority
to vote in their discretion on stockholder purposes as to which the Company does
receive notice by April 1, 2001 will be determined in accordance with the rules
of the Securities and Exchange Commission.
EXPENSES OF SOLICITATION
The cost of this solicitation of proxies will be borne by the Company.
Solicitation will be made initially by mail. The directors and officers and
other employees of the Company may, without compensation other than their usual
compensation, solicit proxies by mail, telephone, telegraph or personal
interview. The Company will also reimburse brokerage firms, banks, voting
trustees, nominees and other recordholders for their reasonable out-of-pocket
expenses in forwarding proxy materials to the beneficial owners of Common Stock.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOSEPH L. CASTLE II
JOSEPH L. CASTLE II
Chairman and Chief Executive Officer
Radnor, Pennsylvania
May 15, 2000
-17-
<PAGE>
CASTLE ENERGY CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - JUNE 29, 2000
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Castle Energy Corporation, a Delaware
corporation, (the "Company") hereby appoints Joseph L. Castle and Richard E.
Staedtler, and each of them, attorneys and proxies, with full power of
substitution, to vote all of the shares of Common Stock of the Comany that the
undersigned may be entitled to vote at the Annual Meeting of the Stockholders of
Castle Energy Corporation to be held on Thursday, June 29, 2000 at 9:30 a.m.,
Eastern Daylight Time, at The Radnor Hotel, 591 E. Lancaster Avenue, St. Davids,
Pennsylvania, and at any adjournment or postponement thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(Continued and to be signed on reverse side)
<PAGE>
Please mark your
/ X / votes as in this
example using
dark ink only.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
"FOR" THE NOMINEES AND THE PROPOSAL LISTED BELOW
For
Nominee Withhold
1. Election of Nominees |_| |_|
|_| |_|
(INSTRUCTION: To withhold authority Nominee: John P. Keller
to vote for any individual nominee, Nominee: Richard E. Staedtler
strike a line through the nominee's
name in the list at the right.)
For Against Abstain
2. PROPOSAL TO APPOINT |_| |_| |_|
KPMG Peat Marwick
LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2000.
3. In his discretion either proxy is authorized
to vote upon such other business as may
properly come before the meeting.
This proxy when properly executed will be
voted in the manner directed herein by the
undersigned stockholder. If no direction is
made, this proxy will be voted FOR the
nominees for election as directors and FOR
Proposal 2
Date , 2000
- -------------------------------------------- ------------------
Signature
Date , 2000
- -------------------------------------------- ------------------
Signature if Held Jointly
Please sign exactly as name appears on the certificate or certificates
representing shares to be voted by the proxy, as shown on the label above. When
signing as executor, administrator, attorney, trustee or guardian, please give
full title as such. If a corporation, please sign full corporation name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person(s).
