AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 1999
FILE NO. 333-71685
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TEXOIL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
NEVADA 88-0177083
(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. Employer Identification No.)
OR ORGANIZATION)
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110 CYPRESS STATION DRIVE, SUITE 220
HOUSTON, TEXAS 77090-1629
(281) 537-9920
(Address including zip code, and telephone number,
including area code of principal executive offices)
FRANK A. LODZINSKI, PRESIDENT
110 Cypress Station Drive, Suite 220
Houston, Texas 77090-1629
(281)-537-9920
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
WITH A COPY TO:
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME
TO TIME AFTER EFFECTIVENESS
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post effective, amendment filed pursuant to Rule 462(b) 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. [_]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE(1)
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TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE REGISTRATION FEE
SHARE (2) OFFERING PRICE(2) (3)
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<S> <C> <C> <C>
Common Stock, par $0.01 40,903,462 $0.766 $31,332,052 N/A
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(1) Estimated in accordance with Rule 457 solely for the purpose of calculating
the registration fee.
(2) Based on average closing bid and ask prices on May 14, 1999.
(3) A registration fee of $11,693 was paid with the initial filing on February
1, 1999 based on a price of $0.969 per share. No additional registration
fee is due.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant will file a
further amendment which specifically states that this Registration Statement
will thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement will become effective
on such date as the SEC, acting pursuant to said Section 8(a), may determine.
AMENDING: PART I - PROSPECTUS
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Prospectus SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
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Dated: May 24, 1999
[LOGO GRAPHIC OMITTED]
TEXOIL, INC.
110 Cypress Station Drive, No. 220
Houston, Texas 77090-1629
(281) 537-9920
40,903,462
SHARES
Common Stock
RED HERRING LEGEND
You should read this prospectus and any supplement carefully before you
invest.
The Common Stock is traded on the Boston Stock Exchange and on the NASDAQ
under the symbol "TXLI".
This Prospectus is a Secondary Offering for existing shareholders. It is
being filed so existing shareholders can trade the stock they own, or may own on
exercise of options and warrants. Selling security holders will sell their
Common Stock into the market directly and the Company will receive no proceeds
on those sales. If outstanding options and warrants are exercised, net proceeds
to Texoil would be $4,635,422.00. There is no underwriting arrangement.
The securities offered in this prospectus involve a high degree of risk.
Please read the section "Risk Factors" beginning on page 6.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
This prospectus is dated May 24, 1999.
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TABLE OF CONTENTS
PAGE
----
About This Prospectus........................................... 5
Incorporation By Reference...................................... 5
Prospectus Summary.............................................. 5
The Company .................................................... 6
Use of Proceeds................................................. 6
Risk Factors ................................................... 6
Available Information........................................... 14
Determination of Offering Price................................. 15
Dilution........................................................ 16
Description of Capital Stock.................................... 18
Nevada Business Corporation Act
And the Articles and Bylaws..................................... 18
General................................................... 18
Business Combinations..................................... 19
Directors Duties.......................................... 19
Board of Directors........................................ 19
Shareholder Proposals and Director Nominations............ 19
Meetings of Shareholders.................................. 20
Amendment of Articles and Bylaws.......................... 20
Indemnification........................................... 20
Limitation of Liability................................... 20
Plan of Distribution............................................ 20
Legal Opinions.................................................. 21
Experts......................................................... 21
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission ("SEC") utilizing a "shelf" registration
process. Under this shelf process, selling security holders may, over the next
two years, sell the securities described in this prospectus in a series of
offerings up to a total of 40,903,462 shares. This total consists of 36,846,244
shares currently issued and 4,057,218 shares issuable under options and
warrants. The dollar amount of the offering will depend on the market price of
the shares when they are sold. This prospectus only concerns the common stock of
Texoil, Inc. As required, we will provide a prospectus supplement to add, update
or change information contained in this prospectus. You should read this
prospectus and any prospectus supplement together with additional information
described under the heading "Available Information".
We are participating in the SEC's plain-English program. This program is
intended to make prospectuses and other information more understandable to the
general investor. We believe we have included all information material to
investors. Certain details that may be material for specific investment purposes
have not been included. To see more detail, you should read the exhibits filed
with this registration statement.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them. "Incorporate by reference" means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus. 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 made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until we sell all of the securities included in
this offering.
o Annual Report on Form 10-KSB for the year ended December 31, 1998;
o Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999;
o Current Report on Form 8-K/A-1 filed with the SEC on January 8, 1999.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Texoil, Inc.
110 Cypress Station Drive, Suite No. 220
Houston, Texas 77090-1629
Phone: (281) 537-9920 Fax: (281)537-8324
e-mail: [email protected]
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else 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 or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
PROSPECTUS SUMMARY
This summary is qualified by more detailed information appearing in other
sections of this prospectus. The other information is important, so please read
this prospectus carefully. This prospectus is a
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secondary offering which provides existing shareholders the ability to sell
their common stock in the open market. Shareholders may sell their shares
directly into the market at the current market price. You should refer to "Plan
of Distribution" on page 21 for further information.
THE COMPANY
Texoil, Inc., (sometimes referred to as "Texoil," the "Company," "we" or
"us") is a Nevada corporation headquartered in Houston, Texas. Our operating
subsidiaries are Cliffwood Oil & Gas Corp. and Cliffwood Production Co. Both
operating subsidiaries are Texas corporations.
Texoil is an independent energy company that acquires and develops oil and
gas reserves. Our program includes purchases of reserves, re-engineering,
development, and exploration activities. Our activities are currently focused in
Texas, South Louisiana and the Texas Gulf Coast.
USE OF PROCEEDS
We are filing this registration statement to provide existing shareholders
the ability to trade shares they currently own or that they may own if they
exercise their options or warrants. We will not receive any proceeds from the
sale of any securities being registered that are currently outstanding. If
outstanding options and warrants are exercised, net proceeds to Texoil would be
$4,635,422. Any proceeds received by Texoil resulting from the exercise of
options and warrants will be used for general corporate purposes.
RISK FACTORS
Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should carefully consider
these risk factors, together with all the other information included or
incorporated by reference in this prospectus, before you decide whether to
purchase shares of our common stock.
Some of the information in this prospectus contains forward-looking
statements that involve substantial risks and uncertainties. We believe it is
important to communicate our expectations to our investors. However, there may
be events in the future that we are not able to accurately predict or over which
we have no control. The risk factors listed in this section, as well as any
cautionary language in this prospectus, provide examples of risks, uncertainties
and events that may cause our actual results to differ materially from the
expectations we describe in the forward- looking statements. Before you invest
in our common stock, you should be aware that the occurrence of the events
described in these risks factors and elsewhere in this prospectus could have a
material adverse effect on our business, results of operations, and financial
condition.
FORWARD-LOOKING INFORMATION MAY DIFFER
This Prospectus contains "forward- looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. You can identify these statements
by forward-looking words such as "may," "will," "expect," "anticipate,"
"believe," "estimate" and "continue" or similar words. You should
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read statements that contain these words carefully because they (1) discuss our
future expectations; (2) contain projections of our future results of operations
or of our financial condition; or (3) state other "forward-looking" information.
All statements in this report are forward-looking statements other than those
statements of historical facts. Examples of content that contain forward-looking
statements are as follows:
o Texoil's financial position, reserve quantities and net present values;
o Business strategy, plans, objectives, expectations, intent, and beliefs of
management of the Company for future operations;
o Capital expenditures; and
o Covenant compliance.
Texoil believes that the expectations reflected in the forward-looking
statements and the basis of the assumptions of such forward-looking statements
are reasonable. However, Texoil cannot assure that such expectations and
assumptions are correct. Important factors that could cause actual results to
differ from Texoil's expectations are discussed throughout the "Risk Factors"
section. Forward-looking statements are not guarantees of future performance.
OIL AND GAS PRICES MAY DECLINE
Any sizable and extended decline in the price of oil or gas would have a
harmful effect on the following:
o Texoil's quantities of proved reserves;
o The carrying value of such proved reserves;
o Borrowing capacity;
o Texoil's ability to obtain additional capital; and
o Texoil's revenues, cash flows and profitability from operations.
Texoil's financial condition, operating results, future growth, and the carrying
value of its oil and gas properties are affected by current prices of oil and
gas. Texoil's ability to maintain or increase its borrowing capacity and to
obtain additional capital on attractive terms is also largely dependent upon oil
and gas prices. Prices for oil and gas can change drastically due to factors
beyond Texoil's control. Some factors that Texoil cannot control include the
following:
o Weather conditions in the United States;
o The condition of the United States and/or world economy;
o The actions of the Organization of Petroleum Exporting Countries ("OPEC");
o Political stability in the Middle East and elsewhere;
o The foreign supply of oil and gas;
o The availability of alternate fuel sources.
VALUE OF ASSETS MAY BE WRITTEN DOWN
The SEC requires companies using the full-cost accounting rules to assess
their investments in oil and gas properties for recoverability on a quarterly
basis. The purpose is to confirm that estimated discounted future net revenues
(PV-10 value) from estimated proved reserves on an after-tax basis exceed the
capitalized costs of oil and gas properties and deferred taxes carried on its
balance sheet. This "ceiling test" must generally be performed using oil and gas
prices at the end of the applicable period. Texoil took a write-down in 1998. A
write-down would not affect cash flow from operating activities, but it would
decrease earnings.
DEBT REPAYMENT MAY BE ACCELERATED
A reduction in the value of Texoil's oil and gas properties could result in a
decrease of the Company's borrowing base. Texoil could be required to repay a
portion of the
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outstanding debt if the borrowing base is reduced below the amount required in
its financing agreements. Texoil could be required to find new or different
sources of capital to make this debt repayment.
ESTIMATED RESERVES AND FUTURE REVENUES MAY PROVE INACCURATE
Texoil's proved developed and undeveloped oil and gas reserves are estimates
based on reserve reports prepared by independent petroleum engineers. These
estimates are based on specific pricing assumptions at a particular point in
time, which may no longer be correct. Texoil's estimated reserves can be greatly
affected by changes in pricing assumptions. Since December 31, 1997, oil and gas
prices have generally declined. At December 31, 1998, the price of West
Texas/New Mexico Intermediate ("WTI") crude oil was quoted on the New York
Mercantile Exchange at $12.05 per barrel ("Bbl"). The comparable price at
December 31, 1997, was $17.64 per Bbl. Natural gas was quoted at $1.95 per
million British thermal unit ("MMBtu") at December 31, 1998, and $2.25 per MMBtu
at December 31, 1997. Estimating reserves requires substantial judgment on the
part of the petroleum engineers, resulting in imprecise determinations,
particularly with respect to new discoveries. Estimates of reserves and future
net revenues prepared by different petroleum engineers may vary substantially,
depending in part on the assumptions made, and may be subject to material
adjustment. The Company cannot be assured that the pricing and production
assumptions will be realized. Estimates of proved reserves may vary from year to
year reflecting changes in the price of oil and gas and results of drilling
activity during the intervening period. Reserves previously classified as proved
undeveloped, may be completely removed from the proved reserves classification
in a subsequent year as a consequence of negative results from additional
drilling or product price declines which make such undeveloped reserves
uneconomical to develop. Conversely, successful development and/or increases in
product prices may result in additions to proved reserves. Estimates of proved
undeveloped reserves are, by their nature, much less certain than proved
developed reserves. Consequently, the accuracy of engineering estimates is not
assured.
HEDGING ACTIVITIES MAY LIMIT FUTURE REVENUE
In an attempt to reduce its sensitivity to natural gas price volatility,
Texoil has entered into hedging transactions ("hedging"). Additionally, we have
hedged our interest rate exposure by an interest rate swap. Hedging on gas fixes
prices over a predetermined period of time for a portion of its gas production.
Hedging interest rates substitutes a fixed rate for a floating rate. If Texoil's
reserves are not produced at rates equivalent to the hedged position, the
Company would be required to satisfy its obligation under hedging contracts on
potentially unfavorable terms. Also, Texoil would not have the ability to hedge
that risk through sales of comparable quantities of its own production. Further,
Texoil would enter into hedging contracts under terms which are based on
assumptions and estimates of numerous factors such as cost of production and
pipeline and other transportation costs to delivery points. Texoil may
experience substantial variations between the assumptions and estimates used by
the Company and actual results achieved. As a result, Texoil could be materially
adversely
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affected by its actual profit margins and its ability to manage the risk
associated with fluctuations in natural gas prices. Additionally, by hedging to
a fixed price, Texoil limits its benefits if actual prices rise above the
contract prices. Texoil is also subject to the risks that the other party may
prove unable or unwilling to perform its obligations under such hedging
contracts. Texoil could incur a material adverse financial effect if there is
any significant nonperformance. In 1998, Texoil did not hedge any of its oil or
natural gas production.
RESERVE REPLACEMENT AND GROWTH
Texoil's future performance depends upon its ability to acquire and develop
additional oil and gas reserves that are economically recoverable. Without
successful acquisition, development and exploration activities, Texoil's
reserves and revenues will decline. Prior to the merger with Cliffwood, Texoil
focused its activities almost exclusively on exploration and had only limited
success in replacing its production. New management has diversified activities
by placing greater emphasis on acquisition, re-engineering and development
activities. Although Texoil's management and business strategy, beginning in
1998, has changed, we cannot assure that the Company will be able to continue to
acquire, develop or discover additional reserves at an economical cost.
INABILITY TO REPLACE OR INCREASE RESERVES
Fluctuations in oil and gas prices can significantly impact Texoil's ability
to replace and increase its oil and gas reserves. Volatile oil and gas prices
make it difficult to estimate the value of producing properties for acquisition
or to acquire capital to drill for new reserves. Constantly changing oil and gas
prices often cause disruption in the market for oil and gas producing
properties. Consequently, buyers and sellers have difficulty agreeing on the
value of the properties. Price volatility also makes it difficult for us to
project the estimated return on investment for acquisitions, development and
exploration projects.
ON-GOING CAPITAL REQUIREMENTS
Texoil's business is capital intensive. We must reinvest significant amounts
of capital in property acquisitions, development, and exploration activities to
maintain our asset base of oil and gas reserves. Without investment, the Company
will deplete its oil and gas reserves. The Company will require significant cash
resources to successfully implement its plans for growth. Our ability to make
the necessary capital investments to maintain or expand our reserve base could
be impaired if the cash flow from operations is insufficient and external
sources of capital are limited or unavailable.
ACQUISITION OF PRODUCING PROPERTIES
Management has placed a great emphasis on the acquisition of proven
properties, particularly where such properties are currently producing and
provide the opportunity to increase production through re-engineering and
development. Texoil is competing for those properties against many better
capitalized competitors, which makes successful and profitable acquisition of
properties difficult. Assessments of potential income and liabilities are
inexact; therefore, Texoil is uncertain of future financial performance of
acquired properties. In addition, Texoil could be liable for some
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existing liabilities, including possible environmental liabilities for such
properties. Texoil cannot assure that any properties acquired by the Company
will be economically produced or developed. Uneconomical properties could have a
material adverse effect on Texoil.
RE-ENGINEERING OF PRODUCING PROPERTIES
Texoil intends to focus on re-engineering projects to improve current
production, lower operating costs and increase the return on investment of
fields or wells. Re-engineering may include the following activities:
o Well workovers;
o Recompletions of existing or untested horizons in existing well bores;
o Installation of artificial lift equipment;
o Revamping production facilities;
o Drilling and installing salt water disposal facilities; and
o Implementation or improvement of water flood or other secondary recovery
techniques.
Re-engineering usually involves the same risks as drilling but with less risk
of failure. There is always the possibility that Texoil will not achieve
projected improvements or that the results will not be sufficient to recover the
investment.
DRILLING ACTIVITIES
Texoil expects to engage in drilling operations. We are aware that
exploratory and developmental drilling involves significant economic and
operating risks. Texoil may encounter sizeable cost overruns because the cost of
drilling, completing and operating wells is almost always uncertain. Texoil may
experience drilling operation restrictions, delays or cancellations as a result
of numerous factors, many of which are beyond the Company's control. Some of the
factors include the following:
o Title or mechanical problems;
o Weather conditions; and
o Compliance with governmental requirements.
Drilling always involves the risks of blowouts, dangerous production and other
physical hazards.
INVESTMENTS SUBJECT TO MANAGEMENT BY THIRD PARTIES
Texoil owns less than 100% of the working interest in many of its oil and gas
properties. Joint operating arrangements are customary in the oil and gas
industry and are generally conducted pursuant to a joint operating agreement,
whereby a single working interest owner is designated as the operator. At
present, Texoil is the "operator" of the majority of its oil and gas properties.
Texoil is also a non-operating working interest owner in numerous wells. For
properties where Texoil owns less than 50% of the working interest, drilling and
operating decisions may not be within the Company's control. If Texoil disagrees
with the decision of a majority of working interest owners, it may be required,
among other things, to do the following:
o Postpone the proposed activity;
o Relinquish or farm-out its interest; or
o Decline to participate.
If Texoil declines to participate, it might be forced to relinquish its interest
or may be subject to certain non-consent penalties, as provided in the
applicable operating
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agreement. Such penalties typically allow participating working interest owners
to recover from the proceeds of production, if any, an amount equal to 200%-500%
of the nonparticipating working interest owner's share of the cost of such
operations.
Under most operating agreements, the operator has direct and full control
over all operations on the property and is obligated to conduct operations in a
workmanlike manner. However, the operator is usually not liable to the working
interest owners for losses sustained or for liabilities incurred, except those
resulting from its own gross negligence or willful misconduct. Each working
interest owner is generally liable for its share of the cost of developing and
operating jointly owned properties. The operator is required to pay the expenses
of developing and operating the property and will invoice working interest
owners for their proportionate share of such costs. In instances where Texoil is
a non-operating working interest owner, the Company may have a limited ability
to exercise control over operations and the associated costs of such operations.
Texoil's investment success in such non-operated activities may, therefore, be
dependent upon a number of factors that are outside of the Company's direct
control.
Operators may be granted liens on the working interests of other
non-operating owners in the well to secure the payment of amounts owed to the
operator. The bankruptcy or failure of the operator or other working interest
owners to pay vendors who have supplied goods or services applicable to wells
would most likely result in filing of mechanics' and materialmens' liens. These
liens would encumber the well and the interests of all joint owners. COMPETITION
Texoil encounters strong competition from several large oil companies and a
number of smaller privately-owned companies in acquiring properties and leases
for the exploration and development of crude oil and natural gas. The principal
competitive factors in the acquisition of such oil and gas properties include
the staff and data necessary to identify, investigate, and purchase such leases,
and the financial resources necessary to acquire and develop such leases. Our
competitors may have better financial resources, staffs, name recognition and
facilities. As a result of these and other competitive factors, Texoil's
strategy may not be successful and the Company may not be able to generate
adequate cash flow to fund operations.
REGULATION
ENVIRONMENTAL REGULATION
Texoil's operations are subject to many federal, state, and local laws,
regulations, and policies that govern environmental protection, zoning and other
matters. These laws and regulations may impose the following:
o Require that a permit be obtained before drilling begins;
o Restrict or prohibit the types, quantities and concentration of substances
that can be released into the environment in connection with drilling and
production activities;
o Prohibit or limit drilling activities on certain lands lying within wetlands
or other protected areas; and
o Impose substantial liabilities for pollution resulting from past or present
drilling and production operations.
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The primary environmental statutory and regulatory programs that affect
Texoil's operations include the following:
OIL POLLUTION ACT ("OPA") AND CLEAN WATER ACT ("CWA"). The Oil Pollution Act
of 1990 amends certain provisions of the Federal Water Pollution Control Act of
1972, commonly referred to as the Clean Water Act, and other statutes as they
pertain to the prevention of and response to oil spills into navigable waters.
Under OPA, a person owning a facility or equipment from which there is a
discharge, or threat of a discharge, of oil into or upon navigable waters and
adjoining shorelines is liable as a "responsible party" for removal costs and
damages. Federal law imposes strict, joint and several liabilities on facility
owners for containment and clean-up costs and certain other damages, including
natural resource damages, arising from a spill.
CLEAN AIR ACT ("CAA"). The Clean Air Act provides for federal, state and
local regulation of emissions of air pollutants into the atmosphere. Amendments
to the CAA contain provisions that may result in the imposition of certain
requirements for air pollution control equipment, obtaining operating permits
and approvals, and other emission-related requirements which may require Texoil
to make capital expenditures.
SUPERFUND ("CERCLA"). Liability under CERCLA extends to the following people:
o Persons who arranged for disposal of treatment of hazardous substances;
o Waste transporters who selected such facilities for treatment or disposal of
hazardous substances;
o Present owners and operators of a facility from which hazardous substances
are released;
o Owners and operators of a facility at the time any hazardous substances were
disposed; and
o Generators of hazardous substances that were released at such facility.
Under CERCLA, Texoil may be responsible for all or part of the costs to clean
up sites at which hazardous substances have been released.
RESOURCE CONSERVATION AND RECOVERY ACT ("RCRA"). RCRA is the principle
federal statute governing hazardous and solid waste generation, treatment,
storage and disposal. RCRA and state hazardous waste management programs govern
the handling and disposal of "hazardous waste." Although many of Texoil's wastes
are presently exempt from requirements applicable to hazardous wastes,
legislation has been proposed in Congress from time to time that would
reclassify certain oil and gas wastes as "hazardous wastes" under RCRA.
NORM. Oil and gas exploration and production activities have been identified
as generators of naturally-occurring radioactive materials ("NORM"). Some states
currently regulate the generation, handling and disposal of NORM due to oil and
gas exploration and production activities. Texoil does not believe that its
compliance with such regulations will have a material effect on its operations
or financial condition, but there can be no assurance in this regard.
OIL AND GAS REGULATION
The federal government and various state and local governments have adopted
laws and regulations relating to exploration and drilling for and production,
transportation and marketing of oil and natural gas. State and local laws and
regulations usually cover
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such matters as permitting and spacing of wells, unitization and pooling of oil
and gas properties, maximum and allowable production rates, environmental
protection, pollution control, taxation, bonding and insurance, surface
restoration, plugging and abandonment of wells, flaring of gas and underground
injection of saltwater and oilfield wastes.
Regulation by the federal government includes regulation of the
transportation and sale for resale of gas in interstate commerce pursuant to the
Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978. Currently,
producers may sell gas at uncontrolled market prices. In 1992, the Federal
Energy Regulatory Commission ("FERC") issued Order No. 636, which generally
required interstate pipelines to "unbundle" or separate their previously
combined services for transporting, selling, gathering and storing natural gas.
Federal, state and local governments and their agencies are constantly reviewing
the laws and regulations affecting the oil and gas industry. These reviews
frequently result in the passage of new laws and the promulgation of new
regulations affecting oil and gas producers, which could adversely affect the
profitability of Texoil.
OPERATIONAL HAZARDS AND INSURANCE
Texoil's operations are subject to all of the risks normally incident to the
production of oil and gas. Some of these risks include the following:
o Blowouts;
o Mechanical failure;
o Casing collapse; and
o Oil spills and fires.
Any one of these risks could result in severe damage to or destruction of oil
and gas wells, production facilities or other property, or injury to persons.
The energy business is also subject to environmental hazards such as oil spills,
gas leaks and ruptures and discharge of toxic substances or gases that could
expose Texoil to substantial liability due to pollution and other environmental
damage. Texoil maintains insurance coverage considered to be customary in the
industry. Although there are currently numerous sources from which such coverage
may be obtained, the following may apply to Texoil's insurance coverage:
o The insurance may not continue to be available to Texoil on commercially
reasonable terms;
o Possible types of liabilities that may be incurred by Texoil may not be
covered by the Company's insurance;
o Insurance carriers may not be able to meet their obligations under the
policies; or
o Dollar amount of the liabilities may go beyond Texoil's policy limits.
The occurrence of even a partially uninsured claim, if successful and of
significant magnitude, could have a material adverse effect on Texoil's
business, results of operations and financial position.
MARKETS FOR SHARES
Shares are traded publicly on the Boston Stock Exchange and the NASDAQ Small-
Cap Market. Such trading markets have certain minimum listing requirements which
include, among other requirements, maintenance of a minimum share price and net
worth. NASDAQ has notified Texoil that it may be delisted from the Small Cap
Market as a result of failure to maintain the minimum bid requirement. We have
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appealed the delisting, but absent success on the appeal, Texoil will begin to
trade on the over-the-counter ("OTC") bulletin board. If delisted, Texoil cannot
assure that it will be able to qualify for trading on alternative markets or be
relisted on NASDAQ.
AVAILABLE INFORMATION
We file annual, quarterly, and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at "http://www.sec.gov." You may also 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. You may obtain information on
the operation of the public reference rooms by calling the SEC at 1-800-
SEC-0330.
14
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DETERMINATION OF OFFERING PRICE
Texoil, Inc.'s Common Stock trades publicly on the Boston Stock Exchange and
the NASDAQ Small-Cap Market under the symbol "TXLI." The following table lists
high and low sales prices for the years 1996, 1997 and 1998 of the Common Stock
as reported on the NASDAQ Stock Market.
TXLI
------------------
HIGH LOW
------- ------
1996
First Quarter 1 11/16 1 3/16
Second Quarter 1 7/16 7/8
Third Quarter 1 7/8 1
Fourth Quarter 1 7/8 1 1/16
1997
First Quarter 1 7/8 1 1/16
Second Quarter 2 1/16 1 5/16
Third Quarter 1 11/16 1 5/16
Fourth Quarter 1 9/16 31/32
1998
First Quarter 1 3/8 15/16
Second Quarter 1 1/4 30/32
Third Quarter 1 1/4 13/32
Fourth Quarter 1 5/16 1/2
1999
First Quarter 1 3/32 17/32
As of March 31, 1999, approximately 907 holders of record held the Company's
Common Stock.
15
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DILUTION
This is an offering by Selling Security Holders of currently outstanding
shares and shares issuable upon the exercise of certain warrants and options. To
the extent that the Company issues shares underlying the warrants and/or options
and the book value per share is more than the exercise price per share, there
could be dilution. The exercise prices of the options and warrants range from
$.45 to $3.50.
SELLING SECURITY HOLDERS
# TEXOIL OPTIONS OR
NAME STATE SHARES WARRANTS
- ---- ----- -------- ----------
Thomas C. Bennett OK 22,471
BJH Foundation CA 157,333
John A. Brush TX 235,900
Steven C. Collins TX 6,740
Steven C. Collins TX 13,480
FBO Steven C. Collins IRA UTA Charles
Schwab & Co., Inc. CA 40,440
Marc Countiss TX - 5,000
Becky Lea Crews TX 6,740
Jerry M. Crews TX 20,220
Jerry M. Crews TX 1,368,692
FBO Jerry M. Crews, Charles Schwab & Co., Inc.
Custodian TX 260,501
Susan A. Daigle LA 372,951
Paul B. David LA 372,951
William D. Edwards TX 3,370
Energy Capital Investment Company PLC TX 641,806
EnCap Equity 1996 Limited Partnership TX 1,925,419
First Union Capital Partners, Inc. TX 2,246,671 1,128,950
Michael J. Foy CO 185,350 92,675
R. J. Glover Jr. TX 278,025
Robert J. Glover TX 395,975
Richard Jess Glover Sr. TX 497,075
John L. Graves TX 23,551 281,384
Lynn W. Graves TX 92,268
Russel J. Green LA 13,480
Charles Hainebach TX 126,038
Carolina V. Hoehn CA 76,961
Robert A. Hoehn LA 118,000
T. W. Hoehn Jr. CA 2,187,089
T. W. Hoehn III CA 604,429
Ralph D. Hollingshead TX 13,480
FBO Ralph D. Hollingshead, Charles
Schwab & Co., Inc. TX 47,180
Custodian
J. D. Hughes TX - 20,000
Hy-Bon Engineering Company, Inc. TX 224,671
Mark Jensen TX 47,180
Jay Joliat, Trustee MI 730,171
Joliat & Company, Inc. MI 112,336
Gregory K. Jones IL 96,288
Paul M. Kameny and Carol C. Kameny
Family Trust 1995 CA 458,320
Iris R. LaJoie, Trustee FL 87,620
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Robert E. LaJoie II, Trustee MI 87,620
Sandra J. LaJoie, Trustee UAD 4-11-95 MI 20,220
LaJoie Ventures, LTD. FL 842,500
Kathryn B. Lancaster, Trustee UAD 12-23-82 IN 87,620
The Lincoln National Life Insurance Co. IN 3,521,650 1,760,825
Amy M. Lodzinski TX 6,740
Michael A. Lodzinski TX 6,740
Frank A. Lodzinski TX 177,397
Frank A. Lodzinski TX 33,700
Frank Anthony Lodzinski TX 6,740
The Estate of Paschal L. Maisto MA 148,280
Ruben Medrano TX 39,022 100,000
Clarence C. Meyer TX 118,624
Gregory Mikeska TX 10,110
Francis M. Mury TX 20,220
Francis M. Mury TX 631,268
NEMA, Inc. LA 372,951
Evangeline Brooks Parten Trust of 1997 TX 40,440
Jeremy R. Parten TX 40,440
John R. Parten, Custodian for John Austin Parten TX 40,440
John R. Parten and Nancy K. Parten, JT TX 80,880
Arthur J. Price Jr. TX 6,740
Juanita Ramirez TX 3,370
Thomas A. Reiser TX 289,820
Joe C. Richardson Jr. TX - 281,384
RIMCO Partners, L. P. CT 1,351,285
RIMCO Partners, L. P. II CT 1,351,285
RIMCO Partners, L. P. III CT 579,122
RIMCO Partners, L. P. IV CT 1,544,325
Timothy S. Riordan NC 20,220
Ritchie Children's Trust TX 1,112,100
Marcia Mikeska Ritchie TX 10,110
Robert B. Rodgers NJ 141,540
Julie A. Rohrberg IN 20,220
William F. Seagle FL 121,928 50,000
Mandel C. Selber TX 13,480
Mandel C. Selber, III TX 13,480
FBO Mandel C. Selber III, Charles
Schwab & Co., Inc. Custodian TX 80,880
Silver Hill Joint Venture TX 72,455
Peggy Simpson TX 13,480
Peggy Simpson TX 281,395
William A. Stirling TX 26,960
Charles M. Strain TX 10,000
V & C Energy Limited Partnership TX 7,931,295 337,000
Arnold Van Zanten TX 67,400
Betty B. Williams TX 35,268
Walter L. Williams TX 354,994
James A. Willis TX 193,438
John O. Wolters TX 741,400
Robert W. Young TX 13,480
---------- ---------
36,846,244 4,057,218
========== =========
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DESCRIPTION OF CAPITAL STOCK
As of September 30, 1998, our authorized capital stock was 70,000,000 shares.
Those shares consisted of: (a) 10,000,000 shares of preferred stock, none of
which were outstanding; and (b) 60,000,000 shares of common stock, of which
39,285,094 shares were outstanding. This offering will register approximately
93.7% of the total number of shares issued and outstanding for sale. We are also
registering shares that could be issued upon the exercise of warrants and
options listed under "Selling Security Holders". The warrant and option holders
consist of capital providers to Cliffwood Oil & Gas Corp., who received shares
and warrants of Texoil, Inc., in the merger completed in December 1997, and
former executives of Texoil. These persons received rights to have the shares
issuable upon exercise of their warrants and options registered pursuant to the
Merger Agreement (See "Dilution").
LISTING
Texoil Inc.'s outstanding shares of common stock are listed on the Boston
Stock Exchange under the symbol "TXLI." Any additional common stock we issue
will also be listed on the Boston Stock Exchange. Additionally, the shares of
common stock are traded over the counter in the NASDAQ Small-Cap Market under
the symbol "TXLI."
DIVIDENDS
Common shareholders may receive dividends when declared by the Board of
Directors. Texoil has not paid dividends in the past and we do not plan to pay
dividends in the near future. If dividends are ever paid, they may be paid in
cash, stock or other form. The current loan agreements provide that common
shareholders may not receive dividends until we have satisfied our obligations
to creditors.
FULLY PAID
All outstanding shares of common stock are fully paid and non-assessable. Any
additional common stock we issue will also be fully paid and non-assessable.
VOTING RIGHTS
Each share of common stock is entitled to one vote in the election of
directors and other matters. Common shareholders are not entitled to pre-emptive
or cumulative voting rights.
OTHER RIGHTS
We will notify common shareholders of any shareholders' meetings according to
applicable law. If we liquidate, dissolve or wind up our business, either
voluntarily or not, common shareholders will share equally in the assets
remaining after we pay our creditors and preferred shareholders.
TRANSFER AGENTS AND REGISTRARS
ChaseMellon Shareholder Services is the transfer agent and registrar. You may
contact us at the address listed on page 2 or ChaseMellon located at the
following address:
CMSS
Securities Transfer Services
Post Office Box 3312
South Hackensack, New Jersey 07606
1-800-634-9270
NEVADA BUSINESS CORPORATION ACT
AND THE ARTICLES AND BYLAWS
GENERAL
Texoil is a Nevada corporation subject to the Nevada Business Corporation Act
(the "Nevada Act"). Provisions of the Nevada Act, in addition to provisions of
our Articles of Incorporation and Bylaws, address corporate governance issues,
including the rights of shareholders. Some of the state law provisions could
hinder management changes, while others could have
18
<PAGE>
an anti-takeover effect. Texoil has not adopted any traditional anti-takeover
mechanism in the Articles and Bylaws. The anti-takeover effect of state law may,
in some circumstances, reduce the control premium that might otherwise be
reflected in the value of our common stock.
We have summarized the key provisions below. The descriptions are not
complete. You should read the actual provisions of our Articles and Bylaws and
the Nevada Act that relate to your individual investment strategy.
BUSINESS COMBINATIONS
The Nevada Act and our Articles generally require that any merger, share
exchange or sale of substantially all of the assets of a corporation be approved
by at least a majority vote of the outstanding votes entitled to be cast by each
voting group entitled to vote. Nevada had adopted a control share law and a
business combination law that would inhibit the takeover of a Nevada
corporation. The control share law does not apply to Texoil because that statute
requires that at least 100 record holders of the Company be residents of Nevada
and that the Company transact business in Nevada. The business combination law,
however, does not have restrictions on residency, and therefore does applies to
Texoil. Under the business combination law, a business combination will be
prohibited for three years unless there is express board approval. The business
combination law automatically applies to Texoil, unless the Company opts out of
the statute and obtains shareholder approval by those shareholders protected by
the statute. Texoil has not opted out of the business combination provision.
In addition to these two statutes directly related to takeovers, there are
other factors under the articles of incorporation and provisions of Nevada law
that may affect the outcome of a takeover. The Board of Directors of Texoil is
not staggered. A shareholders' rights plan is not in place. Written consents by
less than 100% of the shareholders are possible under Nevada law.
It is difficult to determine whether these provisions would deter or assist
in the takeover of Texoil, but generally, these factors would facilitate a
takeover.
DIRECTORS' DUTIES
Under Nevada law, the Board of Directors is charged with the traditional
fiduciary duties, and duties to conduct the business of the Company in a prudent
manner. Nevada has authorized the Board of Directors to consider other
constituencies besides the shareholders in considering the maximization of
benefits to the Nevada corporation. The Board may consider employees, suppliers,
creditors and customers, the economy of the state of Nevada and the nation, the
interests of the community and society and long-term as well as short-term
benefits to the corporation. Nevada believes that the ability to consider other
constituencies will assist management in resisting a takeover.
BOARD OF DIRECTORS
Members of Texoil's Board of Directors serve for one year or until their
successor is elected.
SHAREHOLDER PROPOSAL AND DIRECTOR NOMINATIONS
Texoil's shareholders may submit shareholder proposals and nominate
candidates for the Board of Directors if the shareholders follow advance notice
procedures described in the proxy materials published each year in connection
with the Annual Meeting. There are no special provisions in Texoil's Bylaws.
To nominate directors, shareholders must submit a written notice to Texoil's
corporate secretary at least 60 days before a scheduled meeting. The notice must
include the following information:
o Name and address of the shareholder;
o Name and address of the nominee;
o Description of any arrangements between the shareholder and the nominee;
o Information about the nominee required by the SEC;
19
<PAGE>
o Written consent of the nominee to serve as a director; and
o Any other material information.
Shareholder proposals must be submitted to Texoil's corporate secretary at
least 120 days before the first anniversary of the date of our last annual
meeting. The notice must include the following information:
o Description of the proposal;
o Reasons for presenting the proposal at the annual meeting;
o Text of any resolutions to be presented;
o Shareholder's name and address;
o Number of shares held by the Shareholder; and
o Any material interest of the shareholder in the proposal.
Director nominations and shareholder proposals that are late or do not
include all required information may be rejected. This could prevent
shareholders from bringing certain matters before an annual or special meeting,
including making nominations for directors. Shareholders are entitled to
directly solicit the other shareholders of the Company under applicable federal
proxy rules. If they do so, the shareholders do not have to use the proxy of the
Company, but may prepare their own proxy and request a list of record holders of
Company common stock.
MEETINGS OF SHAREHOLDERS
Under Texoil's Bylaws, meetings of the shareholders may be called by the
Chairman of the Board, the President, a majority of the Board of Directors or at
the written request of not less than 10 percent (10%) of the voting power of all
the outstanding shares of the corporation.
AMENDMENT OF ARTICLES AND BYLAWS
Generally, Texoil's Articles may be amended by a majority of the outstanding
votes entitled to be cast by each voting group entitled to vote on a given
matter or at the annual or any regular meeting of the Board of Directors without
prior notice, or at any special meeting if notice of the change is given in the
notice for the meeting.
INDEMNIFICATION
Texoil indemnifies Company officers and directors to the fullest extent
permitted under Nevada law against all liabilities incurred in connection with
their service to us. In addition, Texoil has purchased officer and director
insurance to provide liability protection for the directors.
LIMITATION OF LIABILITY
Texoil's Articles provide that Company directors will not be personally
liable for monetary damages to Texoil for breaches of their fiduciary duty as
directors, unless they violated their duty of loyalty to the Company or Texoil
stockholders, acted in bad faith, knowingly or intentionally violated the law,
authorized illegal dividends or redemptions or derived an improper personal
benefit from their action as directors. This provision applies only to claims
against directors arising out of their role as directors and not in any other
capacity (such as an officer or employee). Directors remain liable for
violations of the federal securities laws and Texoil retains the right to pursue
legal remedies other than monetary damages, such as an injunction or rescission
for breach of the director's duty of care.
PLAN OF DISTRIBUTION
The securities being registered under this prospectus are a secondary
offering by existing shareholders. The existing shareholders may offer their
securities in one or more transactions on the NASDAQ Small-Cap Market, on the
Boston Stock Exchange, or any other stock exchange on which the shares may be
admitted for trading, in accordance with applicable NASDAQ or exchange rules.
These shareholders may offer their securities in block transactions on the
exchange in accordance with its rules, in negotiated transactions (including
20
<PAGE>
the pledge of shares) or in a combination of any such methods. Prices may be at
market prices prevailing at the time of sale, at prices related to prevailing
market prices, or at negotiated prices through their brokers. No underwriters or
agents are involved. There is no underwriter or any other organized method for
offering the shares registered hereunder.
At present, no officer or director intends to sell any shares. In addition,
all shareholders who hold in excess of 300,000 shares (with the exception of
those discussed immediately below), have agreed to limit any sales to not more
than 15 percent (15%) of their individual holdings per calendar quarter,
commencing with the effective date of this registration statement. Certain
institutional shareholders are subject to contractual arrangements with Texoil.
These shareholders are listed below:
o Affiliates of EnCap Investments
Pursuant to a Registration Rights Agreement dated May 4, 1998, EnCap Equity 1996
Limited Partnership and Energy Capital Investment Company, PLC have the right to
have registered under a Form S-3 up to 100% of their shares and sell such
shares, in the following percentages and by the following dates:
06/30/98 20%
09/30/98 40%
12/31/98 60%
03/31/99 80%
06/30/99 100%
o LINCOLN NATIONAL LIFE INSURANCE
Under a Common Stock and Warrant Purchase
Agreement dated August 4, 1997, Lincoln
National Life Insurance Co. has the following
rights:
(i) One demand registration beginning on January 1, 1999, until August 4,
2002;
(ii) Piggyback registration rights until August 4, 2002 ; and
(iii) One put option until August 4, 2002.
o RIMCO
Under an Amended and Restated Stock Ownership and Registration Rights Agreement
dated December 31, 1997, RIMCO Partners, L.P. and three affiliated limited
partnerships have rights to two demand registration rights upon request of a
majority of the holders among the four partnerships and piggyback registration
rights for all limited partnerships.
o FIRST UNION CAPITAL MARKETS
Under a Common Stock and Warrant Purchase Agreement dated May 5, 1997, First
Union Capital Partners, Inc., has one demand registration beginning January 1,
1999, until May 31, 2005, piggyback registration rights until May 31, 2005, a
preemptive rights provision and a put option beginning on May 27, 2001.
Upon the effectiveness of this registration statement and provided this
statement remains effective, the Company believes that the registration
obligation to these four institutions will be satisfied. The total amount of
shares entitled to registration by each of these four institutions is listed
under "Selling Security Holders" above.
LEGAL OPINIONS
BOND & TAYLOR, LLP, WILL ISSUE AN OPINION ABOUT THE LEGALITY OF THE OFFERED
SECURITIES FOR US.
EXPERTS
The audited financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report.
21
<PAGE>
[LOGO GRAPHIC OMITTED]
40,903,462
SHARES
COMMON STOCK
PROSPECTUS
22
<PAGE>
PART II
(INFORMATION NOT REQUIRED IN PROSPECTUS)
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
ESTIMATED
---------
Securities and Exchange Commission Fee (ACTUAL) $11,693
Transfer Agent and Registrar Fees 150
Fees and Expenses of Trustees -
Rating Agency Fees -
Printing Expenses 975
Accountants' Fees 7,500
New York Stock Exchange Listing Fee -
Counsel Fees 5,000
Miscellaneous. -
-------
Total $25,318
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ten of Texoil, Inc., Articles of Incorporation mandates
indemnification of its directors and officers to the full extent permitted by
the Nevada General Corporation Law (the "Nevada" Act), and any other applicable
law. The Bylaws of the Company have been further amended to protect the officers
and directors to the full extent of the laws of the State of Nevada. The Nevada
Act permits a corporation to indemnify its directors and officers against
liability incurred in all proceedings, including derivative proceedings, arising
out of their service to the corporation or to other corporations or enterprises
that the officer or director was serving at the request of the corporation, to
the extent that the person seeking indemnification has acted in good faith and
in a manner which he or she reasonably believed to be in or not opposed to the
best interests of the corporation. In a criminal action or proceeding, the
person must also have had no reasonable cause to believe that his or her conduct
was unlawful. The Company is required to indemnify its directors and officers in
all such proceedings if they have not violated this standard.
In addition, Article Nine of Texoil, Inc., Articles of Incorporation
limits the liability of its directors and officers to the full extent permitted
by the Nevada Act as now and hereafter in effect. The effect of the Company's
Articles of Incorporation, together with the Nevada Act, is to eliminate
personal liability of directors and officers for damages for breach of fiduciary
duty, except for acts or omissions which involve intentional misconduct, fraud,
or a knowing violation of law; or the payment of dividends in violation of
Nevada law.
Texoil, Inc. has purchased directors' and officers' liability insurance
policies.
23
<PAGE>
ITEM 16. EXHIBITS.
2.2 Agreement and Plan of Merger, dated December 31, 1997, by and among
Texoil, Inc., Texoil Acquisition, Inc., and Cliffwood Oil & Gas Corp.
(incorporated by reference to Exhibit 2.1 to Item 7 of Form 8-K filed on
January 8, 1998).
3.1 Restated Articles of Incorporation of Texoil, Inc., as amended
(Incorporated by reference to Exhibit 3.1 of Form S-3 filed February 1,
1999).
3.2 Amended and Restated Bylaws of Texoil, Inc., as amended (Incorporated by
reference to Exhibit 3.2 of Form S-3 filed February 1, 1999)..
4.1 Form of Warrant Agreement between Texoil, Inc., as Issuer and First
Interstate Bank of Texas, N.A. as Warrant Agent, dated May 26, 1994
(incorporated by reference to Exhibit 4.1 filed with Form 10- KSB dated
December 31, 1997).
4.2 Specimen certificate for Class A Warrant (incorporated by reference to
Exhibit 4.2 filed with Form 10-KSB dated December 31, 1997).
4.3 Specimen certificate for Class B Warrant (incorporated by reference to
Exhibit 4.3 filed with Form 10-KSB dated December 31, 1997).
4.4 Specimen certificate for Underwriters Class A Warrant (incorporated by
reference to Exhibit 4.4 filed with Form 10-KSB dated December 31, 1997).
4.5 Specimen certificate for Underwriters Class B Warrant (incorporated by
reference to Exhibit 4.5 filed with Form 10-KSB dated December 31, 1997).
4.6 Specimen certificate for shares of Common Stock, par value $.01 per share
(incorporated by reference to Exhibit 4.6 filed with Form 10-KSB dated
December 31, 1997).
4.7 Note Purchase Agreement, dated December 31, 1997, by and among Texoil,
Inc., and Resource Investors Management Company (incorporated by reference
to Exhibit 5.1 to Form 8-K filed on January 8, 1998).
4.8 Form of the Texoil, Inc., 7.875% Convertible Subordinated General
Obligation Note (incorporated by reference to Exhibit 5.2 to Form 8-K
filed on January 8, 1998).
4.9 Amended and Restated Stock Ownership and Registration Rights Agreement
among Texoil, Inc., and RIMCO Partners, L.P., RIMCO Partners, L.P. II,
RIMCO Partners, L.P. III, and RIMCO Partners, L.P. IV, dated December 31,
1997 (incorporated by reference to Exhibit 5.5 to Form 8-K filed on
January 8, 1998).
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<PAGE>
4.10 Guaranty Agreement dated December 31, 1997, by and among Cliffwood Oil &
Gas Corp., and RIMCO Partners, L.P., RIMCO Partners, L.P. II, RIMCO
Partners, L.P. III, and RIMCO Partners, L.P. IV, (incorporated by
reference to Exhibit 5.3 to Form 8-K filed on January 8, 1998).
4.11 Guaranty Agreement dated December 31, 1997, by and among Texoil Company
and RIMCO Partners, L.P., RIMCO Partners, L.P. II, RIMCO Partners, L.P.
III, and RIMCO Partners, L.P. IV (incorporated by reference to Exhibit 5.4
to Form 8-K filed on January 8, 1998).
4.12 Acquisition and Distribution Agreement dated May 4, 1998, by and between
Texoil, Inc., Cliffwood Oil & Gas Corp., and Cliffwood Acquisition 1996
Limited Partnership (incorporated by reference to Exhibit 2.1 filed with
Form 8-K on May 12, 1998).
4.13 May 1998 Agreement in Respect of Agreement of Limited Partnership dated
May 4, 1998, by and among Cliffwood Oil & Gas Corp., EnCap Equity 1996
Limited Partnership and Energy Capital Investment Company PLC
(incorporated by reference to Exhibit 2.2 filed with Form 8-K on May 12,
1998).
4.14 Registration Rights Agreement dated May 4, 1998, by and among Texoil,
Inc., EnCap Equity 1996 Limited Partnership and Energy Capital Investment
Company PLC (incorporated by reference to Exhibit 2.3 filed with Form 8-K
on May 12, 1998).
4.15 First Amended and Restated Agreement of Limited Partnership dated May 4,
1998, by and among Cliffwood Oil & Gas Corp., EnCap Equity 1996 Limited
Partnership and Energy Capital Investment Company PLC (incorporated by
reference to Exhibit 2.5 filed with Form 8-K on May 12, 1998).
4.16 Co-Sale Agreement dated May 4, 1998, by and among Cliffwood Oil & Gas
Corp., Cliffwood Acquisition 1998 Limited Partnership, EnCap Equity 1996
Limited Partnership and Energy Capital Investment Company PLC
(incorporated by reference to Exhibit 2.6 with Form 8-K on May 12, 1998).
4.17 Common Stock and Warrant Purchase Agreement between Cliffwood Oil & Gas
Corp., and Belleview 1992 Income Fund L.P. dated as of August 4, 1997
(incorporated by reference to Exhibit 10.20 with Form 10-KSB filed on
April 8, 1998).
4.18 Common Stock and Warrant Purchase Agreement between Cliffwood Oil & Gas
Corp., and First Union Capital Partners, Inc., dated as of May 30, 1997
(incorporated by reference to Exhibit 10.30 with Form 10-KSB filed on
April 8, 1998).
5.1 Legal Opinion of Bond & Taylor, LLP (filed herewith).
16.1 Letter dated March 9, 1998, from BDO Seidman LLP to the Commission
(incorporated by reference to Exhibit 16.1 to Form 8-K filed on March 9,
1998).
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21.1 Following are the Company's subsidiaries:
NAME OF SUBSIDIARY OTHER NAME UNDER
INCORPORATION/ORGANIZATION SUBSIDIARY CONDUCTS BUSINESS JURISDICTION OF
- -------------------------- ---------------------------- ---------------
Cliffwood Oil & Gas Corp. None Texas
Cliffwood Production Co. None Texas
New Cliffwood Company None Texas
Cliffwood Exploration Company None Texas
Cliffwood Acquisition -
1996 Limited Partnership None Texas
Cliffwood-Blue Moon Joint
Venture, Inc. None Texas
Texoil Company None Tennessee
23.1 Consent of Arthur Andersen LLP (FILED HEREWITH).
23.2 Consent of Bond & Taylor LLP - Contained in Exhibit 5.1.
27.1 Financial Data Schedule (FILED HEREWITH).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes the following:
(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 of1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the SEC pursuant to Rule 424(b), if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective 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 paragraphs (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 with or furnished to the SEC by the registrant pursuant
26
<PAGE>
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment will be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
will be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement will
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time will be deemed to be the initial bona fide offering
thereof.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(6) The undersigned registrant hereby further undertakes:
(i) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form
of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act will be deemed to be part of
this registration statement as of the time it was declared
effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus will be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time will
be deemed to be the initial bonafide offering thereof.
27
<PAGE>
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, THE STATE OF TEXAS, ON THE DATE INDICATED.
TEXOIL, INC.
BY: /s/ FRANK A. LODZINSKI
FRANK A. LODZINSKI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
DATE SIGNED: MAY 24, 1999
PURSUANT TO REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES
INDICATED, ON THE DATE INDICATED.
SIGNATURE TITLE
--------- -----
/s/ FRANK A. LODZINSKI Director and President, Chief Executive Officer
Frank A. Lodzinski and Principal Accounting Officer
Date Signed: MAY 24, 1999
/s/ JERRY M. CREWS Director and Secretary
Jerry M. Crews
Date Signed: MAY 24, 1999
28
<PAGE>
/s/ T. W. HOEHN III Director
T. W. Hoehn III
Date Signed: MAY 24, 1999
/s/ ROBERT E. LAJOIE Director
Robert E. LaJoie
Date Signed: MAY 24, 1999
/s/ GARY J. MILAVEC Director
Gary J. Milavec
Date Signed: MAY 24, 1999
/s/ THOMAS A. REISER Director
Thomas A. Reiser
Date Signed: MAY 24, 1999
/s/ MICHAEL A. VLASIC Director
Michael A. Vlasic
Date Signed: MAY 24, 1999
29
EXHIBIT 5.1 - LEGAL OPINION
BOND & TAYLOR, L.L.P
1021 Main, Suite 1220
Houston, Texas 77002
May 18, 1999
Texoil, Inc.
110 Cypress Station Dr., Suite 220
Houston, Texas 77090
Ladies and Gentlemen:
We have acted as counsel for Texoil, Inc. (the "COMPANY") in connection
with the registration under the Securities Act of 1933, as amended, of
36,846,244 issued and outstanding shares of the Company's $.01 par value common
stock (the "COMMON STOCK"), as well as 4,057,218 shares of Common Stock issuable
upon the exercise of certain options and warrants, all on Form S-3, as amended.
We have examined the Company's Articles of Incorporation, as amended, its
Bylaws, as amended and the record of its corporate proceedings with respect to
the registration described above. In addition, we have examined such other
certificates, agreements, documents and papers, and we have made such other
inquiries and investigations of law as we have deemed appropriate and necessary
in order to express the opinion set forth in this letter. In our examinations,
we have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, photostatic, or conformed copies and the
authenticity of the originals of all such latter documents. In addition, as to
certain matters we have relied upon certificates and advice from various state
authorities and public officials, and we have assumed the accuracy of the
material and the factual matters contained therein.
Subject to the foregoing, it is our opinion that the shares of Common
Stock, transfer of which is being registered by the Company at the current time,
and will be, if and when issued, sold and delivered as described in the
Company's Registration Statement on Form S-3, as amended (the "REGISTRATION
STATEMENT"), legally issued, fully paid and non-assessable shares of the
Company's Common Stock.
We hereby consent (i) to be named in the Registration Statement, as
amended, and in the prospectus that constitutes a part thereof, as the attorneys
passing upon the validity of the issuance of the Common Stock on behalf of the
Company and, (ii) to the filing of this opinion as an Exhibit to the Company's
Registration Statement, as amended.
This opinion is to be used solely for the purpose of the registration of
the Common Stock and may not be used for any other purpose.
Sincerely yours, BOND & TAYLOR, L.L.P.
By: /s/ ADRIENNE RANDLE BOND
Adrienne Randle Bond
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated March 22, 1999,
included in Texoil, Inc.'s Annual Report on Form 10-KSB for the year ended
December 31, 1998, and to all references to our Firm included in this
Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Houston, Texas
May 18, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S QUARTERLY REPORT, CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTHS ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 564
<SECURITIES> 0
<RECEIVABLES> 3,003
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,742
<PP&E> 51,117
<DEPRECIATION> (6,318)
<TOTAL-ASSETS> 49,905
<CURRENT-LIABILITIES> 6,310
<BONDS> 0
0
0
<COMMON> 393
<OTHER-SE> 11,085
<TOTAL-LIABILITY-AND-EQUITY> 49,905
<SALES> 3,827
<TOTAL-REVENUES> 4,073
<CGS> 1,776
<TOTAL-COSTS> 447
<OTHER-EXPENSES> 1,025
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 547
<INCOME-PRETAX> 278
<INCOME-TAX> (105)
<INCOME-CONTINUING> 173
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 173
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
