AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 1, 1999
FILE NO. 33-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TEXOIL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>
<S> <C>
NEVADA 88-0177083
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
</TABLE>
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.
[-]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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CALCULATION OF REGISTRATION FEE(1)
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<CAPTION>
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED OFFERING PRICE PER AGGREGATE REGISTRATION FEE
SHARE (2) OFFERING PRICE (2)
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<S> <C> <C> <C> <C>
Common Stock, par $0.01 40,903,462 $.969 $39,635,455 $11,693
</TABLE>
(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 January 29, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL 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
Dated: February 1, 1999
[LOGO OF TEXOIL, INC., APPEARS HERE]
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 their stock. The Common Stock
will be sold into the market directly by the Selling Security Holders and there
is no underwriting arrangement. No proceeds of the sale will go to the Company.
The stock of certain officers, directors, and major shareholders is currently
subject to contractual agreements that restrict their ability to sell stock.
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 THE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The information in this prospectus is not complete and may be changed. A
registration statement related to these common stock has been filed with the
Securities and Exchange Commission. The common stock may not be sold until the
registration statement becomes effective. The prospectus is not an offer to sell
the securities and it is not soliciting an offer to buy the securities in any
state where offers or sales are not permitted.
This prospectus is dated February 1, 1999.
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TABLE OF CONTENTS
PAGE
ABOUT THIS PROSPECTUS................................................... 5
WHERE YOU CAN FIND MORE INFORMATION..................................... 5
THE COMPANY SUMMARY..................................................... 6
USE OF PROCEEDS......................................................... 6
RISK FACTORS............................................................ 7
DETERMINATION OF OFFERING PRICE......................................... 15
DILUTION................................................................ 16
DESCRIPTION OF CAPITAL STOCK............................................ 18
NEVADA BUSINESS CORPORATION ACT
AND THE ARTICLES AND BYLAWS............................................. 19
General......................................................... 19
Business Combinations........................................... 19
Directors Duties................................................ 20
Board of Directors.............................................. 20
Shareholder Proposals and Director Nominations.................. 20
Meetings of Shareholders........................................ 20
Amendment of Articles and Bylaws................................ 21
Indemnification................................................. 21
Limitation of Liability......................................... 21
PLAN OF DISTRIBUTION.................................................... 21
LEGAL OPINIONS.......................................................... 23
EXPERTS................................................................. 23
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the 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 number of
shares equal to 40,903,462, consisting of 36,846,244 currently issued and
4,057,218 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 the Company. As required, we will
provide a prospectus supplement that may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading WHERE YOU CAN FIND MORE INFORMATION.
We are participating in the SEC's plain English program. This is an
initiative launched by the SEC to make prospectuses and other information more
understandable to the general investor. We believe we have included all
information material to investors but certain details that may be important for
specific investment purposes have not been included. To see more detail, you
should read the exhibits filed with this registration statement.
WHERE YOU CAN FIND MORE 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. Please call the SEC at 1- 800-
SEC-0330 for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings 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.
o Annual Report on Form 10-K for the year ended December 31, 1997;
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998,
June 30, 1998, and September 30, 1998;
o Current Reports on Form 8-K/A-1, filed March 13, 1998, and Form 8-K,
filed May 4, 1998, the Report on Form 8-K filed November 13, 1998 and
Form 8-K/A-1 filed 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
(281) 537-9920
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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.
THE COMPANY SUMMARY
Texoil, Inc., (sometimes referred to as "Texoil" or the "Company") is a
Nevada corporation headquartered in Houston, Texas. Our operating subsidiaries
are: Cliffwood Oil & Gas Corp., a Texas corporation and Cliffwood Production
Co., a Texas corporation.
Texoil, Inc., is an independent energy company engaged in the
acquisition and development of oil and gas reserves through an active and
diversified program which includes purchases of reserves, re-engineering,
development, and exploration activities currently focused in Texas, South
Louisiana, and the Texas Gulf Coast. On December 31, 1997, the Company acquired
Cliffwood Oil & Gas Corp., in a merger which resulted in a comprehensive change
of control, the Board of Directors, and management and business strategy.
This prospectus is a secondary offering to provide liquidity for
existing shareholders through the ability to sell their common stock at market.
The Company will not receive any proceeds from this offering. Shareholders may
sell their shares directly into the market, at the current market price.
Officers, directors, and certain classes of shareholders are restricted or
limited to their ability to trade Company shares. In addition, various parties
holding Company shares are subject to agreements limiting the sale of shares.
You should refer to "Plan of Distribution" on page 21 for further information.
USE OF PROCEEDS
This registration statement is being filed to allow existing
shareholders the ability to trade shares they currently own. The Company will
receive no proceeds from the sale of securities being registered.
FORWARD-LOOKING INFORMATION
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. All statements other than
statements of historical facts included in this report including, without
limitation, statements regarding the Company's financial position, reserve
quantities and net present values, business strategy, plans, objectives,
expectations, intent, and beliefs of management of the Company for future
operations, capital expenditures, and covenant compliance are forward-looking
statements. Although the Company believes that the expectations reflected in the
forward-looking statements and the assumptions upon which such forward-looking
statements are based are reasonable, it can give no assurance that such
expectations and assumptions will prove to have been correct. Reserve estimates
are generally different from the quantities of oil and natural gas that are
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ultimately recovered. Important factors that could cause actual results to
differ materially from the Company's expectations are discussed under the
section RISK FACTORS below. Forward-looking statements are not guarantees of
future performance and actual results, developments and business decisions may
differ from those envisioned by such forward-looking statements.
RISK FACTORS
VOLATILITY OF OIL AND GAS PRICES
The Company's financial condition, operating results, future growth, and
the carrying value of its oil and gas properties depend on current prices of oil
and gas. The Company's ability to maintain or increase its borrowing capacity
and to obtain additional capital on attractive terms is also substantially
dependent upon oil and gas prices. Prices for oil and gas are subject to wide
fluctuations in response to relatively minor changes in the supply of and demand
for oil and gas, market uncertainty and a variety of additional factors beyond
the control of the Company. These factors include weather conditions in the
United States, the condition of the United States and/or world economy, the
actions of the Organization of Petroleum Exporting Countries ("OPEC"),
governmental regulation, political stability in the Middle East and elsewhere,
the foreign supply of oil and gas, the price of foreign imports and the
availability of alternate fuel sources. Any substantial and extended decline in
the price of oil or gas would have an adverse effect on the Company's quantities
of proved reserves, the carrying value of such proved reserves, borrowing
capacity, the Company's ability to obtain additional capital, and its revenues,
profitability, and cash flows from operations.
The SEC regulations which apply to companies that account for their
investments in oil and gas properties using the full-cost accounting rules
require companies, on a quarterly basis, 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 be performed using oil
and gas prices at the end of the applicable period, rather than historical
amounts or averages calculated over long periods. The Company took a writedown
earlier in 1998. With the deep decline in oil and gas prices as of the end of
1998, the Company could be required to take a further writedown of the value of
its oil and gas properties. While any such writedown would not affect cash flow
from operating activities, it would constitute a charge to earnings.
A reduction in the value of the Company's oil and gas properties could
result in a decrease of the Company's borrowing base. If the borrowing base is
reduced below the amount required in the Company's financing agreement, the
Company could be required to repay a portion of the outstanding debt. The
Company could be required to find alternative sources of capital to make this
debt repayment.
Fluctuations in oil and gas prices can also significantly impact the
Company'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 and often cause disruption in the market for oil and gas
producing properties, as buyers and sellers have difficulty agreeing on such
value. Price volatility also makes it difficult to project the estimated return
on investment for acquisitions, development and exploration projects.
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UNCERTAINTY OF ESTIMATES OF RESERVES AND FUTURE NET REVENUES; DECLINE IN OIL AND
GAS PRICES
The proved developed and undeveloped oil and gas reserve of the Company
are estimates based on reserve reports prepared by independent petroleum
engineers at a particular point in time and based on specific pricing
assumptions which may no longer be valid. Changes in pricing assumptions can
have a material effect on the estimated reserves. Since December 31, 1997, oil
and gas prices have generally declined. At December 31, 1998, the price of WTI
crude oil as quoted on the New York Mercantile Exchange was $12.05 per Bbl and
the comparable price at December 31, 1997, was $17.64 per Bbl. Quotations for
natural gas at such dates were $1.95 per MMBtu, and $2.25 per MMBtu
respectively. Estimating reserves requires substantial judgement on the part of
the petroleum engineers, resulting in imprecise determinations, particularly
with respect to new discoveries. Estimates of reserves and of 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. There can be no assurance that the pricing and product 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. Hedging contracts are also subject to the risks
that the other party may prove unable or unwilling to perform its obligations
under such contracts. Any significant non-performance could have a material
adverse financial effect on the Company. 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 undeveloped
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
In an attempt to reduce its sensitivity to natural gas price volatility,
the Company has entered into hedging transactions that result in a fixed price
over a fixed period for a portion of its gas production. If the Company'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 without the ability to hedge that risk through
sales of comparable quantities of its own production. Further, the terms under
which the Company enters into hedging contracts are based on assumptions and
estimates of numerous factors such as cost of production and pipeline and other
transportation costs to delivery points. Substantial variations between the
assumptions and estimates used by the Company and actual results experienced
could materially adversely affect the Company's anticipated profit margins and
its ability to manage the risk associated with fluctuations in natural gas
prices. Additionally, hedging contracts limit benefits the Company will realize
if actual prices rise above the contract prices. In 1998, the Company did not
hedge any of its oil or natural gas production. In November 1998, the Company
entered into a hedging contract whereby 3,333 MMBtu per day of natural gas is
purchased and sold subject to a fixed price swap agreement for monthly periods
from February 1999 through October 1999, and 3,000 MMBtu per day for the monthly
periods from February 2000 through October 2000. Pursuant to these arrangements,
the Company exchanges a floating market price for a fixed contract price. The
Company also entered into an interest rate swap in November 1998 covering
$12,000,000 of national principal for each month in the period from
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November 5, 1998, through November 6, 2000. The effect of this transaction is to
exchange the Company's floating interest rate for a fixed interest rate for the
period on a portion of the outstanding debt. This hedging transaction limits the
Company's risk to increasing interest rates, but also reduces the benefit to the
Company of any decrease in interest rates.
RESERVE REPLACEMENT AND GROWTH
The Company'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, the
Company's reserves and revenues will decline. Prior to the merger with
Cliffwood, the Company focused its activities almost exclusively on exploration
and had only limited success in replacing its production. New management plans,
however, to broadly diversify activities by placing greater emphasis on
acquisition, re-engineering and development activities. Beginning in January
1998, as a result of the merger, the Company's proved reserves increased
significantly to approximately 4,703,000 Bbls of oil and 11,622,000 Mcf of
natural gas. Estimated as of November 1, 1998, these figures further increased
to approximately 10,059,000 Bbls and 29,807,000 Mcf, primarily as a result of
1998 acquisitions and development of previously acquired properties, net of
production. Although the Company's management and business strategy, beginning
in 1998, has changed, no assurances can be given that the Company will be able
to continue to acquire, develop or discover additional reserves at an economical
cost.
ON-GOING CAPITAL REQUIREMENTS
The Company's business is capital intensive. Significant amounts of
capital must be reinvested in property acquisitions, development, and
exploration activities to maintain its asset base of oil and gas reserves.
Without investment, the Company's oil and gas reserves will deplete. The
successful implementation of the Company's plans for growth will require
significant cash resources. To the extent that cash flow from operations is
insufficient and external sources of capital are limited or unavailable, the
Company's ability to make the necessary capital investments to maintain or
expand its reserve base could be impaired.
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. Successful and profitable acquisition of properties is difficult
and the Company is competing for those properties against many better
capitalized competitors. Assessments of potential income and liabilities are
inexact and, therefore, the future financial performance of acquired properties
is inherently uncertain. In addition, the Company could be liable for some
existing liabilities, including possible environmental liabilities. There can be
no assurance that any properties acquired by the Company will be economically
produced or developed, and uneconomical properties could have a material adverse
effect on the Company.
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RE-ENGINEERING OF PRODUCING PROPERTIES
The Company intends to focus on re-engineering projects to enhance
current production, lower operating costs and increase the return on investment
of the field or well. Re-engineering activities may include well workovers,
recompletions of existing or untested horizons in existing well bores,
installation of artificial lift equipment, revamping production facilities,
drilling and installing salt water disposal facilities and the implementation or
improvement of water flood or other secondary recovery techniques.
Re-engineering usually involves less risk of failure than drilling operations,
but does have the risk that the Company will not achieve projected improvements,
or that the results are not sufficient to recover the investment.
DRILLING ACTIVITIES
The Company expects to engage in drilling operations. Whether
exploratory or developmental, drilling is high risk, including the risk of
losing the investment, or causing a serious accident. The cost of drilling,
completing and operating wells is often uncertain and substantial cost overruns
may occur.
The Company's drilling operations may be curtailed, delayed or canceled
as a result of numerous factors, many of which are beyond the Company's control,
including, but not limited to, title or mechanical problems, weather conditions,
compliance with governmental requirements and shortages or delays in the
delivery of equipment and services. Drilling always involves hazards of
blowouts, dangerous production and other physical hazards.
JOINT OPERATIONS WITH OTHERS; NON-OPERATOR STATUS
The Company 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 the operator.
At present, the Company is the "operator" of the majority of its oil and gas
properties. The Company is also a non-operating working interest owner in
numerous wells. For properties where the Company owns less than 50% of the
working interest, drilling and operating decisions may not be within the
Company's control. If the Company disagrees with the decision of a majority of
working interest owners, it may be required, among other things, to postpone the
proposed activity, relinquish or farm-out its interest, or decline to
participate. If the Company 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 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 is given 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
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the Company is a non-operating working interest owner, it may have a limited
ability to exercise control over operations and the associated costs of such
operations. The success of the Company's investment 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 due 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 which
would encumber the well and the interests of all joint owners.
COMPETITION
The Company encounters strong competition from major oil companies and
independent operators 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. Many of the Company's
competitors have financial resources, staffs and facilities substantially
greater than those of the Company.
MARKETING OF PRODUCTION
The Company's oil and gas production is marketed to third parties
consistent with industry practices. Typically, oil is sold at the wellhead at
field posted prices, plus or minus adjustments for quality, and transportation.
Natural gas is sold usually under a contract at a negotiated price based upon
factors normally considered in the industry, such as gas quality, distance from
the well to the pipeline, estimated reserves, liquid hydrocarbon content of
natural gas, and prevailing supply/demand conditions.
REGULATION
ENVIRONMENTAL REGULATION
Operations of the Company are subject to numerous federal, state, and
local laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. These laws and
regulations may require the acquisition of a permit before drilling commences;
restrict or prohibit the types, quantities and concentration of substances that
can be released into the environment in connection with drilling and production
activities; prohibit or limit drilling activities on certain lands lying within
wetlands or other protected areas; and impose substantial liabilities for
pollution resulting from past or present drilling and production operations.
Moreover, changes in federal and state environmental laws and regulations occur
frequently and may result in more stringent and costly requirements which could
have a significant impact on the operating costs of the Company. In general,
under various applicable environmental programs, the Company may be subject to
enforcement action in the form of injunctions, cease and desist orders and
administrative, civil and criminal penalties for violations of environmental
laws. The Company may also be subject to liability for natural resource damages
and other civil claims arising out of a pollution
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event. Laws and regulations protecting the environment may, in certain
circumstances, impose strict liability rendering a person liable for
environmental damage without regard to negligence or fault on the part of such
person. Such laws and regulations may expose the Company to liability for the
conduct of or conditions caused by others, or for acts of the Company which were
in compliance with all applicable laws at the time such acts were performed.
Management believes that the Company is in substantial compliance with current
applicable environmental laws and regulations and that continued compliance with
existing requirements will not have a material adverse impact on the Company.
Insofar as such laws and regulations are expanded, amended or reinterpreted, the
Company is unable to predict the future cost or impact of compliance.
The primary environmental statutory and regulatory programs that affect
the Company's operations include:
OIL POLLUTION ACT AND CLEAN WATER ACT. The Oil Pollution Act of 1990
("OPA") amends certain provisions of the Federal Water Pollution Control Act of
1972, commonly referred to as the Clean Water Act ("CWA"), 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. Responsible parties under OPA
include owners or operators of onshore or offshore drilling facilities. OPA
requires responsible parties to maintain proof of financial responsibility to
cover some portion of the cost of a potential spill and to prepare an oil spill
contingency plan. Failure to comply with these requirements or inadequate
cooperation in a spill event may subject a responsible party to civil or
criminal enforcement action. The CWA and similar state laws regulate the
discharge of pollutants, including dredged or fill materials, to waters of the
United States, including wetlands. A permit is required for such discharges, and
permit requirements may result either in operating limitations or treatment
requirements.
CLEAN AIR ACT. The operations of the Company may be subject to the Clean
Air Act ("CAA"), as amended, and comparable state statutes. 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 capital expenditures
by the Company.
SUPERFUND. The Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), commonly referred to as the "Superfund" law, imposes
strict joint and several liabilities on certain classes of persons with respect
to the release or threatened release of a hazardous substance to the
environment. These persons include: (i) the owner and operator of a facility
from which hazardous substances are released; (ii) owners and operators of a
facility at the time any hazardous substances were disposed; (iii) generators of
hazardous substances that were released at such facility; and (iv) parties who
arranged for the transportation of hazardous substances to such facility. The
Company may be responsible under CERCLA for all or part of the costs to clean up
sites at which hazardous substances have been released. Some states have similar
provisions. In certain circumstances, neighbors, and other third parties may
file claims based on common law tort liability
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theories for personal injury and property damage allegedly caused by the release
of hazardous substances at a CERCLA site.
RESOURCE CONSERVATION AND RECOVERY ACT. The Company's operations may
generate and result in the transportation, treatment and disposal of both
hazardous and nonhazardous solid wastes that are subject to the requirements of
the Federal Resource Conservation and Recovery Act ("RCRA"), and comparable
state and local requirements. Although many of the Company'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, which reclassification
would make such solid wastes subject to much more stringent handling,
transportation, storage, disposal and clean up requirements. State initiatives
to increase regulation of oil and gas wastes could have a similar impact.
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. The Company 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.
OSHA. The Occupational Safety and Health Act of 1970, as amended,
("OSHA") establishes employer responsibilities, including maintenance of a
workplace free of recognized hazards likely to cause death or serious injury,
compliance with standards promulgated by the Occupational Safety and Health
Administration, and various record keeping, disclosure and procedural
requirements. Various standards, including standards for notices of hazards,
safety in excavation and demolition work, and the handling of asbestos, may
apply to the Company's operations.
OIL AND GAS REGULATION
The federal government and various state and local governments have
adopted, and the Company's operations are continuously affected by, numerous and
complex laws and regulations respecting exploration and drilling for and
production, transportation and marketing of oil and natural gas. State and local
laws and regulations usually cover 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, underground injection of saltwater and oilfield wastes, gathering and
transportation of oil and gas, and other related matters. State laws and
regulations regarding spacing, unitization and pooling often dictate whether and
how much of the Company's leases will be entitled to participate in production
from oil and gas wells in which the Company has invested. Local governments are
becoming increasingly active in regulating oil and gas activities, especially
activities such as the location, drilling and operation of oil and gas wells and
the construction and operation of pipelines in or near populated areas.
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. In the past the
federal government has regulated prices at which gas could be sold. Currently,
producers may sell gas at uncontrolled market prices. In 1992, the Federal
Energy
13
<PAGE>
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. The
federal government and various state governments have adopted laws and
regulations regarding the methods of calculating lease royalties, the time by
which proceeds of production attributable to the interests of others must be
paid by producers and the rights of producers to suspend payments for the
proceeds of production attributable to others. 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. Such continuing increases in federal, state and local regulation
could affect the profitability of the Company.
OPERATIONAL HAZARDS AND INSURANCE
The Company's operations are subject to all of the risks normally
incident to the production of oil and gas, including blowouts, mechanical
failure, casing collapse, oil spills and fires, each of which 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 the Company to substantial
liability due to pollution and other environmental damage. The Company maintains
insurance coverage considered to be customary in the industry, either directly
or through third party operators who are contractually obligated to provide
insurance coverage. The Company may not, however, be fully insured against
certain of these risks, either because such insurance is not available or
because of high premium costs. The occurrence of a significant event that is not
fully insured against could have a material adverse effect on the Company's
financial position.
MARKETS FOR SHARES
Shares 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. In 1998, the Company received notification from NASDAQ that it
failed to maintain a minimum bid price of $1.00 and, pursuant to NASDAQ rules,
could be delisted should the minimum bid price not be raised to $1.00 or more
for a period of ten consecutive trading days over a ninety (90) day period.
Subsequently, the Company's bid price recovered. NASDAQ notified the Company as
of October 16, 1998, that it was in compliance. Considering the current
depressed product prices prevailing in the oil and gas industry, no assurance
can be given that the Company will be able to maintain the minimum listing
requirements. We believe, as of December 31, 1998, we may have failed to
maintain the minimum bid price. Shares may trade OTC (over-the-counter). If
delisted, no assurance can be given that the Company will be able to qualify for
trading on alternative markets or be relisted.
14
<PAGE>
DETERMINATION OF OFFERING PRICE
The following table lists high and low sales prices for the years 1996,
1997 and 1998 of the Common Stock, which trades publicly on the Boston Stock
Exchange and the NASDAQ Small-Cap Market under the symbol "TXLI."
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
As of October 31, 1998, the Company's Common Stock was held by
approximately 874 holders of record.
15
<PAGE>
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
<TABLE>
<CAPTION>
# TEXOIL OPTIONS OR
NAME STATE SHARES WARRANTS
- ---- ----- -------- -----------
<S> <C> <C> <C>
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., Custodian TX 47,180
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
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
16
<PAGE>
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
========== =========
</TABLE>
17
<PAGE>
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 for sale
approximately 93.7% of the total number of shares issued and outstanding. 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 consummated 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
Our 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. The Company 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 preemptive
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.
18
<PAGE>
TRANSFER AGENTS AND REGISTRARS
Chase Mellon Shareholder Services is the transfer agent and registrar.
You may contact us at the address listed on page 2 or Chase Mellon located at:
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
We are 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 an antitakeover effect.
We have not adopted any traditional antitakeover 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 the Company 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 applies
to the Company. 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 the Company, unless the
Company opts out of the statute and obtains shareholder approval by those
shareholders protected by the statute. The Company 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 the
Company is not staggered. There is no shareholders' rights plan in place.
19
<PAGE>
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 the Company, 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 our Board of Directors serve for one year or until their
successor is elected.
SHAREHOLDER PROPOSAL AND DIRECTOR NOMINATIONS
Our 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 our Bylaws.
To nominate directors, shareholders must submit a written notice to our
corporate secretary at least 60 days before a scheduled meeting. The notice must
include the name and address of the shareholder and of the nominee, a
description of any arrangements between the shareholder and the nominee,
information about the nominee required by the SEC, the written consent of the
nominee to serve as a director and other information.
Shareholder proposals must be submitted to our corporate secretary at
least 120 days before the first anniversary of the date of our last annual
meeting. The notice must include a description of the proposal, the reasons for
presenting the proposal at the annual meeting, the text of any resolutions to be
presented, the shareholder's name and address and number of shares held and 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, and if they do so, 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.
20
<PAGE>
MEETINGS OF SHAREHOLDERS
Under our 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 ten percent (10%) of the voting power of
all the outstanding shares of the corporation.
AMENDMENT OF ARTICLES AND BYLAWS
Generally, our 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
We indemnify our officers and directors to the fullest extent permitted
under Nevada law against all liabilities incurred in connection with their
service to us. In addition, the corporation has purchased officer and director
insurance to provide liability protection for the directors.
LIMITATION OF LIABILITY
Our Articles provide that our directors will not be personally liable
for monetary damages to us for breaches of their fiduciary duty as directors,
unless they violated their duty of loyalty to us or our 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 we retain 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, in
block transactions on the exchange in accordance with its rules or otherwise in
negotiated transactions (including 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, and pay customary transaction fees. No underwriters or agents are
involved. There is no underwriter or any other organized method for offering the
shares registered hereunder.
21
<PAGE>
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 fifteen 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
the Company, summarized below:
(1) 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 has 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:
20% 06/30/98
40% 09/30/98
60% 12/31/98
80% 03/31/99
100% 06/30/99
(2) LINCOLN NATIONAL LIFE INSURANCE
Under a Common Stock and Warrant Purchase Agreement dated August
4, 1997, Lincoln National Life Insurance Co. has rights to (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.
(3) 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.
(4) 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 Holders" above.
22
<PAGE>
LEGAL OPINIONS
BOND & TAYLOR, LLP, WILL ISSUE AN OPINION ABOUT THE LEGALITY OF THE
OFFERED SECURITIES FOR US.
EXPERTS
The audited financial statements and schedules 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.
23
<PAGE>
[LOGO OF TEXOIL, INC. APPEARS HERE]
40,903,462
SHARES
COMMON STOCK
PROSPECTUS
24
<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 while 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.
25
<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 (FILED
HEREWITH).
3.2 Amended and Restated Bylaws of Texoil, Inc., as amended (FILED
HEREWITH).
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).
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).
26
<PAGE>
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).
27
<PAGE>
21.1 Following are the Company's subsidiaries:
<TABLE>
<CAPTION>
NAME OF SUBSIDIARY OTHER NAME UNDER
INCORPORATION/ORGANIZATION SUBSIDIARY CONDUCTS BUSINESS JURISDICTION OF
- -------------------------- ---------------------------- ---------------
<S> <C> <C>
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
Texoil de Argentina, S. A. None Nevada
</TABLE>
23.1 Consent of Arthur Andersen LLP (FILED HEREWITH).
23.2 Consent of T. J. Smith & Company, Inc. (FILED HEREWITH).
23.3 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:
(1) To file, during any period in which offers or sales are being made,
a post effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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.
28
<PAGE>
(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 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 shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(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 shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(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 shall be deemed
to be part of this registration statement as of the time it was declared
effective.
29
<PAGE>
(ii)For the purpose of determining any liability under the Securities
Act of 1933, each post effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bonafide offering
thereof.
30
<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: FEBRUARY 1, 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
FRANK A. LODZINSKI PRESIDENT, CHIEF EXECUTIVE OFFICER
DATE SIGNED: FEBRUARY 1, 1999 AND PRINCIPAL ACCOUNTING OFFICER
/S/ JERRY M. CREWS DIRECTOR AND SECRETARY
JERRY M. CREWS
DATE SIGNED: FEBRUARY 1, 1999
31
<PAGE>
/S/ T. W. HOEHN III DIRECTOR
T. W. HOEHN III
DATE SIGNED: FEBRUARY 1, 1999
/S/ ROBERT E. LAJOIE DIRECTOR
ROBERT E. LAJOIE
DATE SIGNED: FEBRUARY 1, 1999
/S/ GARY J. MILAVEC DIRECTOR
GARY J. MILAVEC
DATE SIGNED: FEBRUARY 1, 1999
/S/ THOMAS A. REISER DIRECTOR
THOMAS A. REISER
DATE SIGNED: FEBRUARY 1, 1999
/S/ MICHAEL A. VLASIC DIRECTOR
MICHAEL A. VLASIC
DATE SIGNED: FEBRUARY 1, 1999
32
EXHIBIT 3.1 - RESTATED ARTICLES OF INCORPORATION (AMENDMENTS)
CERTIFICATE OF AMENDMENT OF THE
ARTICLES OF INCORPORATION OF
TEXOIL, INC.
1. The name of the corporation is Texoil, Inc. (the "CORPORATION".)
2. The Board of Directors of the Corporation has adopted resolutions (i)
proposing amendments to the Articles of Incorporation of the Corporation, (ii)
declaring the advisability of such proposed amendments, and (iii) submitting the
proposed amendments to the stockholders of the Corporation entitled to vote for
the consideration thereof.
3. The Articles of Incorporation of the Corporation, as amended, are
hereby amended by deleting the language contained in Article 4 in its entirety
and substituting the following therefore;
"ARTICLE 4"
The total number of shares that the Corporation shall have
authority to issue is 60,000,000 common shares with a par value of $.01 per
share and 10,000,000 preferred shares with a par value of $.01 per share.
The shares of preferred stock authorized hereby may, when
authorized for issuance by the Board of Directors of this Corporation, be issued
in a series having such designations, powers, preferences, rights and
limitations, and on such terms and conditions as the Board of Directors may from
time to time determine including the rights, if any, of the holders thereof with
respect to voting, dividends, redemption, liquidation and conversion.
Any and all shares of the stock of this Corporation of any class
shall be paid in as the Board of Directors may designate and as provided by law,
in cash, real or personal property, option to purchase, or any other valuable
right or thing, for the uses and purpose of the Corporation, and said shares of
stock when issued in exchange therefore shall thereupon and thereby become and
be fully paid, the same as though paid for in cash, and shall be nonassessable
forever; and the judgment of the Board of Directors of the corporation
concerning the value of the property, right or thing acquired in purchase or
exchange for stock shall be conclusive. No stockholder shall, whether common or
preferred, have any pre-emptive rights.
4. The Corporation currently has a total of 50,000,000 shares of Common
Stock authorized, of which 36,707,618 shares of Common Stock are outstanding and
entitled to vote on the amendment herein. A total of 24,090,976 shares voted for
this amendment, being a majority of the issued and outstanding shares. The
Corporation has 10,000,000 shares of Series A Preferred stock authorized, of
which none is issued and outstanding. The majority of the stockholders of the
Corporation have adopted the amendment herein set forth by written consent in
accordance with Section 78.320 of the Nevada Revised Statutes and Section 1.9 of
the bylaws of the Corporation, as amended.
33
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to the Articles of Incorporation of Texoil, Inc. to be executed by
Frank A. Lodzinski, its President and Jerry M. Crews, its Secretary, this 27th
day of May, 1998.
TEXOIL, INC.
/S/ FRANK A. LODZINSKI
Frank A. Lodzinski, President
ATTEST:
/S/ JERRY M. CREWS
Jerry M. Crews, Secretary
STATE OF TEXAS )
COUNTY OF HARRIS )
The foregoing instrument was acknowledged before me, on the 27th day of
May, 1998, by Frank A. Lodzinski, President, and Jerry M. Crews, Secretary, of
Texoil, Inc., a Nevada corporation, on behalf of the corporation.
/S/ SHIRLEY R. DUDERSTADT
Notary Public in and for
The State of Texas
34
EXHIBIT 3.2 - RESTATED BYLAWS (AMENDMENTS)
ARTICLE VII
INDEMNIFICATION, INSURANCE
AND OTHER FINANCIAL ARRANGEMENTS
SECTION 7.1 INDEMNIFICATION.
(a) The Corporation shall indemnify any officer, director, employee or
other agent of the Corporation who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, except an action by or
in the right of the Corporation, by reason of the fact that he or she is or was
a director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(whether or not for profit), against expenses, including attorneys' fees, fees
of consultants or experts, accounting fees, expert witness fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by that
person in connection with the action, suit or proceedings if he or she 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, and with respect to any
criminal action or proceeding, has no reasonable cause to believe that the
conduct was unlawful.
(b) The Corporation shall indemnify any officer, director, employee or
other agent who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he or
she is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (whether or not for profit), against expenses, including
amounts paid in settlement and attorneys' fees, fees of consultants or experts,
accounting fees, expert witness fees and other expenses actually and reasonably
incurred by that person in connection with the defense or settlement of the
action or suit if he or she 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. Indemnification may not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction
after exhaustion of all appeals therefrom, to be liable to the Corporation or
for amounts paid in settlement to the Corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines, upon application, that in view of all of the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
(c) The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the person did not
act 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, and that, with respect
to any criminal action or proceedings, he or she had reasonable cause to believe
that the conduct was unlawful.
35
<PAGE>
(d) Any indemnification under subsections (a) and (b) of this Section
7.1, unless ordered by a court or advanced pursuant to subsection (e) of this
Section 7.1, must be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances. In the event that such person
determines that a request for indemnification is appropriate, the person must
send written notice to the Corporation to request indemnification, and include
reasonable detail of the expenses incurred. The Corporation shall have thirty
(30) days to make the determination of the propriety of the indemnification. The
determination must be made:
(i) by the affirmative vote of a majority of disinterested
stockholders, whether or not the total number of disinterested stockholders is
sufficient for a quorum under state law or these bylaws;
(ii) By the Board of Directors by majority vote of a quorum
(which must be a minimum of two [2] directors) consisting of directors who were
not parties to the act, suit or proceeding;
(iii) If a majority vote of a quorum (which must be a minimum of
two [2] directors) consisting of directors who were not parties to the act, suit
or proceeding so orders, by independent legal counsel in a written opinion; or
(iv) If a minimum quorum of two (2) directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
(v) If the Corporation determines that indemnification is not
appropriate, or fails to make a determination within thirty (30) days, such
person shall have an immediate right to file a cause of action against the
Corporation, at law or in equity, to determine or enforce such person's right
under these Bylaw provisions.
(e) The Corporation shall advance the expenses of such person incurred
in defending a civil or criminal action, suit or proceeding as they are incurred
and in advance of a final disposition of the action, suit or proceeding, whether
or not such person is actually named a defendant or respondent in a proceeding,
within thirty (30) days after receipt by the Corporation, sent via receipted
delivery service to the attention of the President and Secretary of the
Corporation at the address set forth above, of notice of a request for
advancement of expenses pursuant to this Agreement and the Bylaws of the
Corporation, which must include an undertaking by or on behalf of such person to
repay amounts advanced if it is ultimately determined by a court of competent
jurisdiction that such person is not entitled to be indemnified by the
Corporation pursuant to the terms hereof. The undertaking to repay must be
accepted by the Corporation regardless of the creditworthiness of such person at
the time of the delivery of the undertaking.
(f) The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this Section 7.1:
(i) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the Articles of
Incorporation or any Bylaw, agreement, vote of stockholders or disinterested
directors, insurance policy or otherwise, for either an action in his
36
<PAGE>
or her official capacity or an action in another capacity while holding his or
her office, except that indemnification, unless ordered by a court pursuant to
subsection (b) of this Section 7.1 or for the advancement of expenses made
pursuant to subsection (e) of this Section 7.1.
(ii)Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
(g) Any change or amendment in these Bylaws that would adversely affect
the rights granted to the indemnified person shall be prospective only and shall
not be operative to adversely affect any rights of any person entitled to
indemnification hereunder.
SECTION 7.2 INSURANCE. The Corporation may purchase and maintain
insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise (whether or not for profit) for any liability asserted against him
and liability and expenses incurred by him in his capacity as a director,
officer, employee or agent, or arising out of his status as such, whether or not
the Corporation has the authority to indemnify him against such liability and
expenses.
SECTION 7.3 OTHER FINANCIAL ARRANGEMENTS.
(a) The other financial arrangements which may be made by the
Corporation pursuant to Section 7.2 may include, but are not limited to, the
following:
(i) The creation of a trust fund.
(ii) The establishment of a program of self-insurance.
(iii) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the Corporation.
(iv) The establishment of a letter of credit, guaranty or surety.
(b) No financial arrangement made pursuant to this Section 7.3 may
provide protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with respect to the
advancement of expenses or indemnification ordered by a court.
(c) Any insurance or other financial arrangement made on behalf of a
person pursuant to this Section may be provided by the Corporation or any other
person approved by the Board of Directors, even if all of the other person's
stock or other securities is owned by the Corporation.
SECTION 7.4 GENERAL. In the absence of intentional misconduct, fraud or
a knowing violation of law:
(a) The decision of the Board of Directors as to the propriety of the
terms and conditions of any insurance or other financial arrangement made
pursuant to Sections 7.2 or 7.3 and the choice of
37
<PAGE>
the person to provide the insurance or other financial arrangement is
conclusive; and
(b) The insurance or other financial arrangement:
(i) Is not void or voidable; and
(ii) Does not subject any director approving it to personal
liability for his action, even if a director approving the insurance or other
financial arrangement is a beneficiary of the insurance or other financial
arrangement.
38
EXHIBIT 5.1 - LEGAL OPINION
BOND & TAYLOR, L.L.P
1021 Main, Suite 1220
Houston, Texas 77002
February 1, 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
40,903,462 shares of the Company's $.01 par value common stock (the "COMMON
STOCK") on Form S-3.
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 sold and delivered as described in the Company's
Registration Statement on Form S-3 (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, 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.
39
<PAGE>
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
40
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated March 31, 1998,
included in Texoil, Inc.'s Annual Report on Form 10-KSB for the year-ended
December 31, 1997, and to all references to our Firm included in this
Registration Statement.
/S/ ARTHUR ANDERSEN LLP
Arthur Andersen LLP
Houston, Texas
January 28, 1999
41
EXHIBIT 23.2
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS
To the Stockholders and Board of Directors
of Texoil, Inc.
As independent petroleum engineers, we hereby consent to the incorporation by
reference of our report to Texoil, Inc., ("Company") dated March 10, 1998, and
used in the Company's 1997 Form 10-KSB, into this Form S-3.
T. J. Smith & Company, Inc.
/S/ TIMOTHY J. SMITH
Timothy J. Smith
February 1, 1999
42
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE COMPANY'S QUARTERLY REPORT, CONSOLIDATED FINANCIAL
STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998, 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-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 482
<SECURITIES> 0
<RECEIVABLES> 1,706
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,551
<PP&E> 30,494
<DEPRECIATION> (4,007)
<TOTAL-ASSETS> 30,628
<CURRENT-LIABILITIES> 3,378
<BONDS> 0
0
0
<COMMON> 11,175
<OTHER-SE> 25
<TOTAL-LIABILITY-AND-EQUITY> 30,628
<SALES> 6,164
<TOTAL-REVENUES> 6,974
<CGS> 3,839
<TOTAL-COSTS> 1,113
<OTHER-EXPENSES> 2,697
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 521
<INCOME-PRETAX> (1,196)
<INCOME-TAX> (215)
<INCOME-CONTINUING> (981)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (981)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.02)
</TABLE>
