As filed with the Securities and Exchange Commission on December 6, 2000.
REGISTRATION NO. 333-38606
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
to
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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BLUE DOLPHIN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 73-1268729
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
801 TRAVIS, SUITE 2100
HOUSTON, TEXAS 77002
(713) 227-7660
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
G. BRIAN LLOYD
VICE PRESIDENT, TREASURER AND SECRETARY
801 TRAVIS, SUITE 2100
HOUSTON, TEXAS 77002
(713) 227-7660
(Name, address and telephone number, including area code, of agent for service)
------------------------------------------------------------
WITH COPIES TO:
NICK D. NICHOLAS
PORTER & HEDGES, L.L.P.
700 LOUISIANA, 35TH FLOOR
HOUSTON, TEXAS 77002
PHONE: (713) 226-0600
FAX: (713) 226-0237
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please 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(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
PROPOSED MAXIMUM PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1) REGISTRATION FEE
-------------------------------------------------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE $.10 PER SHARE... 4,877,183 $5.25 $26,818,696 $7,080.14(2)
=============================================================================================================
</TABLE>
(1) PURSUANT TO RULE 457(C), THE REGISTRATION FEE FOR THE SHARES ORIGINALLY
REGISTERED AND THE ADDITIONAL SHARES REGISTERED BY THIS AMENDMENT TO THE
REGISTRATION STATEMENT IS CALCULATED BASED UPON THE AVERAGE OF THE HIGH
AND LOW SALE PRICES FOR THE COMMON STOCK REPORTED BY THE NASDAQ SMALL CAP
MARKET ON JUNE 2, AND NOVEMBER 30, 2000, RESPECTIVELY.
(2) INCLUDES $7,047.93 THAT WAS PAID WHEN THE REGISTRATION STATEMENT WAS
ORIGINALLY FILED AND $32.71 PAID CONCURRENTLY WITH THE FILING OF THIS
AMENDMENT TO THE REGISTRATION STATEMENT TO COVER THE REGISTRATION OF
23,241 ADDITIONAL SHARES OF COMMON STOCK.
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 6, 2000
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT OFFER 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 WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
--------------------------------------------------------------------------------
PROSPECTUS
BLUE DOLPHIN ENERGY COMPANY
4,877,183 Shares
COMMON STOCK
------------------------------------
The selling stockholders identified in this prospectus are offering
up to 4,877,183 shares of our common stock which are currently issued and
outstanding. The selling stockholders may sell shares of our common stock from
time to time in privately-negotiated transactions, in underwritten offerings, or
by a combination of such methods of sale. Sales of shares of common stock may be
made at fixed prices which may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices.
We are not offering any shares of our common stock for sale under
this prospectus and we will not receive any of the proceeds from the sale of
shares by selling stockholders under this prospectus.
Our common stock is traded on the Nasdaq Small Cap Market under the
symbol "BDCO." On DECEMBER 1, 2000, the last reported sale price of our common
stock was $4.6875 per share.
------------------------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 IN THIS PROSPECTUS.
------------------------------------
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
This prospectus is dated DECEMBER __, 2000.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
Blue Dolphin Energy Company............................................3
The Offering...........................................................3
Forward-Looking Statements.............................................4
Risk Factors...........................................................5
Use of Proceeds.......................................................15
Where You Can Find More Information...................................15
Selling Stockholders..................................................17
Plan of Distribution..................................................19
Legal Matters.........................................................20
Experts...............................................................20
2
<PAGE>
BLUE DOLPHIN ENERGY COMPANY
We conduct our business activities in TWO primary business segments:
o pipeline operations and activities, AND
o oil and gas exploration and production, INCLUDING OUR
DEVELOPMENTAL midstream projects.
We primarily concentrate on areas located along the western and
central coasts of the Gulf of Mexico.
We operate natural gas and condensate pipeline gathering facilities,
including a 50% undivided interest in the Blue Dolphin Pipeline System and a 50%
undivided interest in the Black Marlin Pipeline System. We also hold a 50%
undivided interest in the currently inactive Omega Pipeline.
Our midstream, development-stage projects include our investment in
and development of an offshore crude oil terminal through Petroport, Inc. and
acquisition of the Avoca gas storage assets through New Avoca Gas Storage LLC, a
25% owned and managed subsidiary. Petroport holds proprietary technology,
represented by certain patents issued and or pending, associated with the
development and operation of a deepwater crude oil and products port and
offshore storage facility. The Petroport deepwater terminal will receive crude
oil and refined products offshore with deliveries to shore by pipeline. Onshore
the Petroport pipeline will connect with an existing onshore storage and
distribution network, accessing Texas Gulf Coast and Mid-Continent refining
centers. New Avoca is currently conducting a feasibility study to determine the
technical and commercial viability of completing the construction of the Avoca
Natural Gas Storage facility.
Our oil and gas exploration and production activities include the
exploration, acquisition, development, operation and, when appropriate,
disposition of oil and gas properties. Our oil and gas assets are held by, and
we conduct our operations through Blue Dolphin Exploration Company, our
wholly-owned subsidiary, and American Resources Offshore, Inc., a publicly-held
company in which we own approximately 75% of the outstanding common stock. In
addition to conducting traditional oil and gas production operations for
ourselves, we operate and maintain oil and gas production facilities for third
party producers who also utilize our pipeline systems for gathering and
transportation of their production.
We are a holding company that conducts substantially all of our
operations through our subsidiaries. We were incorporated in 1986 as the result
of the corporate combination of ZIM Energy, a Texas corporation founded in 1983,
and Petra Resources, Inc., an Oklahoma corporation formed in 1980.
Our principal executive offices are located at 801 Travis, Suite
2100, Houston, Texas 77002 and our phone number is (713) 227-7660.
THE OFFERING
The selling shareholders primarily consist of persons who hold
securities that we issued in private placement transactions to obtain cash or
services for our business. The selling shareholders also include some of our
officers and directors and their family members. Accordingly, the common stock
held by the selling stockholders are restricted securities and are subject to
restrictions on resale arising under the Securities Act of 1933.
We are registering the resale of the selling stockholders' common
stock so that they may freely resell their common stock without the legal
restrictions and inconvenience associated with reselling restricted securities
under the Securities Act of 1933. An individual selling stockholder may choose
any of several methods for the resale of shares, as described in "Plan of
Distribution," below.
We will not receive any proceeds from the sale of common stock by
the selling stockholders.
3
<PAGE>
FORWARD-LOOKING STATEMENTS
The statements made in this prospectus or in the documents we have
incorporated by reference that are not statements of historical fact, are
"forward looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate" or "believe," or similar terminology.
The forward-looking statements include discussions about business
strategy and expectations concerning market position, future operations,
margins, profitability, liquidity and capital resources, and statements
concerning the integration into our business of the operations we have acquired.
Although we believe that the expectations in such statements are reasonable, we
can not give any assurance that those expectations will be correct.
We caution you not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus.
Our operations are subject to several uncertainties, risks and other
influences, many of which are outside our control and any of which could
materially affect our results of operations and ultimately prove the statements
we make to be inaccurate.
Important factors that could cause actual results to differ
materially from our expectations are discussed under the heading "Risk Factors,"
and elsewhere in this prospectus and in documents incorporated in this
prospectus by reference.
4
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND OTHER
INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO BUY ANY SHARES OF OUR COMMON
STOCK.
OIL AND GAS PRICES ARE VOLATILE AND A SUBSTANTIAL AND EXTENDED DECLINE IN THE
PRICE OF OIL AND GAS WOULD HAVE A MATERIAL ADVERSE EFFECT ON US.
Our revenues, profitability, operating cash flow, the carrying value
of our oil and gas properties and our potential for growth are largely dependent
on prevailing oil and gas prices. During the two year period ending June 30,
2000, the spot price for West Texas Intermediate ranged from a low of $10.82 to
a high of $34.76 per barrel. During this same period, the Henry Hub spot price
for natural gas ranged from a low of $.95 to a high of $4.61 per MMBtu. Prices
for oil and gas are subject to large fluctuations in response to relatively
minor changes in the supply and demand for oil and gas, uncertainties within the
market and a variety of other factors beyond our control. These factors include:
o weather conditions in the United States,
o the condition of the United States economy,
o the action of the Organization of Petroleum Exporting
Countries,
o governmental regulation,
o political stability in the Middle East and elsewhere,
o the foreign supply of oil and gas,
o the price of foreign imports, and
o the availability of alternate fuel sources.
In addition to decreasing our revenue and operating cash flow, low
or declining oil and gas prices could have collateral effects that could
adversely affect us, including the following:
o reducing the overall volumes of oil and gas that we can
produce from our oil and gas reserves economically,
o resulting in an impairment to the historical carrying value of
our oil and gas properties in our financial statements, which
could compel us, under generally accepted accounting
principles, to recognize an extraordinary write down of the
carrying value of our oil and gas assets and an associated
charge to our income,
o increasing our dependence on external sources of capital to
meet our cash needs, and
o impairing our ability to obtain needed equity or debt capital.
Volatile oil and gas prices also make it difficult to estimate the
value of producing properties we may acquire and also make it difficult for us
to budget for and project the return on acquisitions and development and
exploitation projects.
5
<PAGE>
FACTORS BEYOND OUR CONTROL AFFECT OUR ABILITY TO MARKET OIL AND GAS.
Our ability to market oil and gas from our wells depends upon
several factors beyond our control. These factors include:
o the level of domestic production and imports of oil and gas,
o the proximity of gas production to gas pipelines,
o the available pipeline capacity,
o the demand for oil and gas by utilities and other end users,
o the availability of alternate fuel sources,
o the effect of inclement weather,
o state and federal regulation of oil and gas marketing, and
o federal regulation of gas sold or transported in interstate
commerce.
If these factors were to change dramatically, our ability to market oil and gas
or obtain favorable prices for our oil and gas could be adversely affected.
WE WILL NEED EXTERNAL FINANCING TO SUPPORT OUR OIL AND GAS OPERATIONS AND THE
DEVELOPMENT OF OUR AVOCA AND PETROPORT PROJECTS.
All of the businesses we engage in are capital intensive. We will
need external financing to support our oil and gas business and to support the
development of our Avoca and Petroport projects. Our ability to expand our
reserve base, develop our oil and gas reserves and to fund the Avoca storage
project and Petroport facility, is dependent upon our ability to obtain the
necessary capital. We cannot assure you that we will be able to obtain necessary
financing, on acceptable terms, to expand our reserve base and invest in future
exploitation, acquisition and exploration opportunities. Under financing
arrangements which we may use for future purchases of oil and gas properties or
to fund any development projects, it is likely that such property's entire net,
after-tax cash flow will be dedicated to amortization of the financing and will
thus be unavailable to us until the financing is repaid. Any lender may also
condition its financing upon its receipt of some form of ownership interest in
the property which would reduce our interest in revenues from the property
acquired. Lack of adequate external financing could prevent us from acquiring
desirable oil and gas properties, may curtail development of our existing oil
and gas properties and could impact our ability to continue our Petroport
facility or Avoca project. Lack of adequate capital could force us to sell some
of our assets and on-going projects at less than advantageous prices.
WE WILL ABANDON THE BUCCANEER FIELD.
We currently have a lease interest in four lease blocks covering
more than 14,000 acres in the Gulf of Mexico, which we refer to as the Buccaneer
Field. As of December 31, 1999, the proved reserves attributable to this field
represented approximately 59% of the discounted value of our estimated future
net revenues for proved reserves. Production from this field also accounted for
approximately 9.8% of our total revenues for the year ended December 31, 1999.
In July 2000, production from our only producing well in this field ceased. We
have decided to abandon and not to re-establish production in the Buccaneer
field as a result of the occurrence of certain events in this field in the third
quarter of fiscal 2000. We will lose our lease on the Buccaneer Field at the end
of January 2001. There can be no assurance that we will be able to acquire
reserves to replace the reserves attributable to the Buccaneer Field or to
replace the revenue generated by the production from this field.
WE MAY BE SUBJECT TO CONTRACTUAL PENALTIES IF WE ARE UNABLE TO PAY OUR SHARE OF
DRILLING COSTS.
If we lack and are unable to obtain cash sufficient to pay our
proportionate share of the estimated costs to drill any well in which we own
less than 100% of the working interest, we may be subject to contractual
"non-consent" and other
6
<PAGE>
penalties. These penalties may include, for example, full or partial forfeiture
of our interest in the property, the well or a relinquishment of our interest in
production from a well in favor of the participating working interest owners
until the participating working interest owners have recovered a multiple of the
costs which would have been borne by us had we elected to participate, often
from 300% to 400% of such costs.
OUR AVOCA AND PETROPORT PROJECTS ARE IN THE DEVELOPMENT STAGE AND WE MAY NOT BE
ABLE TO SUCCESSFULLY COMPLETE THEM.
The cost of the Petroport terminal complex, main oil pipeline to
shore, and its onshore support facilities and facility licensing is estimated to
be $200.0 million. Deepwater ports, such as the Petroport facility, must comply
with extensive federal and state regulations. The licensing process is expected
to require at least one year. Given the nature and complexity of obtaining the
necessary license and permits, there can be no assurance that we will be issued
a deepwater port license and the other necessary permits for the Petroport
facility. Further, the fabrication, construction and installation of the
deepwater port is expected to require a minimum of two years. There can be no
assurances that upon completion of the facility that further competition and
regulations will not impede the operation of the deepwater port facility nor can
there be any assurances as to when we may expect to receive a return on our
capital investment, if any.
Avoca is currently conducting a feasibility study to determine the
technical and commercial viability of completing the construction of the Avoca
gas storage facility. We will either terminate the project or go forward with
its completion based on the results of the study. Further, given the highly
regulated and competitive industry, we can make no assurances that if we go
forward with the project that we will obtain the necessary regulatory approval.
Neither Petroport nor Avoca will earn any revenues until their
completion. We cannot assure you that either project will ever earn any
revenues.
WE FACE STRONG COMPETITION FROM LARGER OIL AND GAS COMPANIES THAT MAY NEGATIVELY
AFFECT OUR ABILITY TO CARRY ON OPERATIONS.
We operate in a highly competitive industry. We face intense
competition from other independent energy companies and operate at a competitive
disadvantage to larger, better capitalized companies. Our ability to
successfully compete in the marketplace is affected by many factors.
o Most of our competitors have greater financial resources than
we do which gives them access to more sources of capital to
acquire and develop a property.
o Most of our competitors have longer operating histories and
have more data generally available to them including
information relating to a property.
o We believe that we often establish a higher standard for the
minimum projected return on an investment than some of our
competitors since we cannot afford to absorb certain risks.
This, we believe, puts us at a competitive disadvantage in
acquiring oil and gas properties.
Our competitors include major integrated oil companies, substantial independent
energy companies, affiliates of major interstate and intrastate pipelines and
national and local gas gatherers, many of which possess greater financial and
other resources than we do.
BECAUSE OF THE HIGHLY COMPETITIVE NATURE OF THE PIPELINE BUSINESS, WE MAY NOT BE
ABLE TO RETAIN EXISTING CUSTOMERS OR ACQUIRE NEW CUSTOMERS.
Competition is intense in the markets where we operate pipeline
gathering facilities. Some of our competitors have greater financial resources
and access to customers who have larger supplies of natural gas than our
customers. This could allow those competitors to price their services more
aggressively than we do, which could hurt our profitability.
7
<PAGE>
We cannot give any assurances that we will be able to renew or
replace our current contracts as they expire. The renewal or replacement of
existing long-term contracts with our customers at rates sufficient to maintain
current revenues and cash flows depends on a number of factors beyond our
control, including:
o competition from other pipelines, and
o the price of, and demand for, natural gas in markets served,
and
o the successful drilling of new wells by other companies in the
market area around our pipeline systems; and
o the production rates that wells connected to our pipeline
produce.
THE AMOUNT OF OIL AND GAS WE PRODUCE MAY NOT BE SUFFICIENT TO OFFSET HEDGES.
FURTHERMORE, BY HEDGING, WE MAY NOT BENEFIT FROM INCREASES IN COMMODITY PRICES.
Part of our business strategy is to reduce our exposure to the
fluctuations in oil and gas prices by hedging a portion of our production. We
have in the past and may in the future enter into hedging arrangements. Our
hedges have in the past typically involved fixed price arrangements. At the
outset of a typical fixed price hedging arrangement, we contractually specify
the monthly volume of oil or gas and the fixed market price per unit of
production upon which the hedge will be based. Thereafter, typically on a
monthly basis, we either receive payments from, or make payments to, our hedging
counterparty depending on the unit market price during the preceding month. If
the unit market price exceeds the fixed price per unit of the hedge, we are
typically required to pay the other party an amount equal to the positive
difference between the hypothetical gross proceeds we would have received if we
had sold the hedged volume of production at the unit market price during the
preceding month, less the hypothetical gross proceeds from the same volume of
production sold at the unit hedge price. Conversely, if the per unit market
price of the commodity during the preceding month was below the unit hedge
price, we would receive a cash payment equal to the negative difference
resulting from the same computation. To limit the financial exposure associated
with fixed price hedges, we sometimes agree with our counterparty that no
payments will be due from us to the extent that the unit market price exceeds a
maximum "cap" price, and that no payment will be due to us to the extent that
the unit market price falls below a minimum "floor" price. We may also enter
into option contracts under which we sell our counterparty the right to purchase
from us an agreed volume of production at an agreed price. We typically receive
a cash option premium for granting options on our production. Additionally, we
may enter into forward sale contracts under which we agree to sell in the
future, and our counterparty agrees to purchase, stated quantities of production
at fixed prices.
Our hedging activities are subject to a number of risks including
instances in which:
o our production is less than we expected and our revenue is not
sufficient to meet our hedging payment obligations and other
financial obligations;
o there is a widening of price differentials between delivery
points required by fixed price delivery contracts to the
extent they differ from those points to which we typically
deliver our production; or
o our customers or the counterparties to our option contracts
fail to purchase the contracted quantities of oil or natural
gas.
Additionally, our fixed price sales and hedging contracts limit the benefits we
will realize if actual prices rise above the contract prices. We may in the
future increase the percentage of our production covered by hedging
arrangements.
OUR FUTURE SUCCESS DEPENDS UPON OUR ABILITY TO FIND, DEVELOP AND ACQUIRE
ADDITIONAL OIL AND GAS RESERVES THAT ARE ECONOMICALLY RECOVERABLE.
8
<PAGE>
Our future success depends upon our ability to find or acquire
additional oil and gas reserves that are economically recoverable. Our proved
reserves will decline as they are produced unless we conduct successful
exploration or development activities or acquire properties containing proved
reserves. We must attempt to increase our proved reserves even during periods of
low oil and gas prices when it is difficult to raise the capital necessary to
finance these activities. We cannot assure you that our planned development
projects and acquisition activities will result in significant increases in our
reserves or that we will drill productive wells at economic returns. The
drilling of oil and gas wells involves a high degree of risk, especially the
risk of dry holes or of wells that are not sufficiently productive to provide an
economic return on the capital expended to drill the wells. The cost of
drilling, completing and operating a well is uncertain, and our drilling or
production may be curtailed or delayed as a result of many factors. Some of the
many factors that could curtail or delay production are discussed on page 10
under the caption "Operating hazards including those peculiar to the marine
environment may adversely effect our ability to conduct business."
YOU SHOULD NOT PLACE UNDUE RELIANCE ON RESERVE INFORMATION BECAUSE RESERVE
INFORMATION REPRESENTS ESTIMATES.
This prospectus incorporates from our Annual Report on Form 10-K,
estimates of our oil and gas reserves and the future net revenues from those
reserves which we and our independent petroleum consultants have prepared.
Reserve engineering is a subjective process of estimating our recovery from
underground accumulations of oil and gas that cannot be measured in an exact
manner. The accuracy of our reserve estimates is a function of the quality of
available data and of engineering and geological interpretation and judgment.
Estimates of our economically recoverable oil and gas reserves and of future net
cash flows necessarily depend upon a number of variable factors and assumptions,
such as:
o historical production from the area compared with production
from other producing areas,
o the assumed effects of regulations by governmental agencies,
and
o assumptions concerning future oil and gas prices, future
operating costs, severance and excise taxes, development costs
and costs to restore or increase production on a producing
well.
In addition, different reserve engineers may make different
estimates of reserve quantities and cash flows based upon the same available
data. Our reserve estimates are to some degree speculative. As a result there
may be material variances between our actual results and costs, and our
estimates of:
o the quantities of oil and gas that we ultimately recover,
o our production and operating cost,
o the amount and of timing of our future development
expenditures, and
o our future oil and gas sales prices.
Any significant variance in these assumptions could materially affect the
estimated quantity and value of our reserves reported in this prospectus.
WE CANNOT ACCURATELY PREDICT THE SIZE OR FORESEE ALL RELATED RISKS OF AN
EXPLORATION TARGET.
Our decision to participate in the drilling of exploratory wells on
exploratory prospects and, ultimately, the success of our participation depends
largely on the results of 3-D seismic surveys being conducted or planned on such
prospects. Seismic surveys are digital recordings of shock waves reflected off
of underground formations. Three-dimensional seismic is the application of
powerful computer workstations and sophisticated software to seismic data
acquired from a dense pattern of shot points to create computer-generated,
three-dimensional displays of subsurface formations. The acquisition and
interpretation of 3-D and conventional seismic survey data and other geological
and geophysical data involves subjective professional judgment. Reliance on such
data and interpretations poses the risk that a decision to participate in
9
<PAGE>
the drilling of a well may be founded on incorrect data, erroneous
interpretations of data, or both. Although we believe our use of 3-D seismic
surveys will increase the probability of success of such exploratory wells and
will reduce average finding costs through the elimination of prospects that
might otherwise be drilled solely on the basis of 2-D seismic surveys, which
provides two-dimensional displays, and other traditional methods. There can be
no assurance as to the success of our participation in any drilling program.
10
<PAGE>
WE CANNOT CONTROL THE ACTIVITIES ON PROPERTIES WE DO NOT OPERATE.
Other companies operate many of the properties in which we have an
interest. As a result, we will depend on the operator of the wells to properly
conduct lease acquisition, drilling, completion and production operations. The
failure of an operator, or the drilling contractors and other service providers
selected by the operator to properly perform services, could adversely affect
us.
We have and generally anticipate that we will typically own
substantially less than a 50% working interest in our prospects and will
therefore engage in joint operations with other working interest owners. In
instances in which we own or control less than 50% of the working interest in a
prospect, decisions affecting the prospect could be made by the owners of more
than 50% of the working interest with which we disagree. For instance, if we are
unwilling or unable to participate in the costs of operations approved by a
majority of the working interests in a well, our working interest in the well
(and possibly other wells on the prospect) will likely be subject to contractual
"non-consent penalties" such as those described under the caption "We may be
subject to contractual penalties if we are unable to pay our share of drilling
costs."
WE DO NOT HAVE A VESTED INTEREST IN ALL OF OUR PROSPECTS.
Until an oil and gas exploration company acquires leases covering
its "prospects," its prospects are geological ideas rather than recordable title
interests in real property and are subject to prior lease in whole or in part by
others. It is possible that certain of the prospects in our inventory will be
unleased. Until such time as all of the lands within these prospects are leased
by us, it is possible that all or a portion of such prospects could be leased by
others.
WE HAVE PURSUED, AND INTEND TO CONTINUE TO PURSUE, ACQUISITIONS. OUR BUSINESS
MAY BE ADVERSELY AFFECTED IF WE CANNOT EFFECTIVELY INTEGRATE ACQUIRED
OPERATIONS.
One of our business strategies has been to acquire operations and
assets that are complementary to our existing businesses. Acquiring operations
and assets involves financial, operational and legal risks. These risks include:
o inadvertently becoming subject to liabilities of the acquired
company that were unknown to us when it was acquired by us,
such as later asserted litigation matters or tax liabilities;
o the difficulty of assimilating operations, systems and
personnel of the acquired businesses; and
o maintaining uniform standards, controls, procedures and
policies.
Any future acquisitions would likely result in an increase in expenses. In
addition, competition from other potential buyers could cause us to pay a higher
price than we otherwise might have to pay and reduce our acquisition
opportunities. Acquisitions we pursue are often out-bid by larger, better
capitalized companies. Moreover, our past success in making acquisitions and in
integrating acquired businesses does not necessarily mean we will be successful
in making acquisitions and integrating businesses in the future.
OPERATING HAZZARDS INCLUDING THOSE PECULIAR TO THE MARINE ENVIRONMENT MAY
ADVERSELY AFFECT OUR ABILITY TO CONDUCT BUSINESS.
Our operations are subject to risks inherent in the oil and gas
industry, such as:
o sudden violent expulsions of oil, gas and mud while drilling a
well, commonly referred to as a blowout,
o a cave in and collapse of the earth's structure surrounding a
well, commonly referred to as cratering,
o explosions,
11
<PAGE>
o fires,
o pollution, and
o other environmental risks.
These risks could result in substantial losses to us from injury and loss of
life, damage to and destruction of property and equipment, pollution and other
environmental damage and suspension of operations. Our offshore operations are
also subject to a variety of operating risks peculiar to the marine environment,
such as hurricanes or other adverse weather conditions and more extensive
governmental regulation. These regulations may, in certain circumstances, impose
strict liability for pollution damage or result in the interruption or
termination of operations.
LOSSES AND LIABILITIES FROM UNINSURED OR UNDERINSURED DRILLING AND OPERATING
ACTIVITIES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FINANCIAL CONDITION AND
OPERATIONS.
We maintain several types of insurance to cover our operations,
including maritime employer's liability and comprehensive general liability.
Amounts over base coverages are provided by primary and excess umbrella
liability policies with maximum limits of $40.0 million. We also maintain
operator's extra expense coverage, which covers the control of drilled or
producing wells as well as redrilling expenses and pollution coverage for wells
out of control.
We may not be able to maintain adequate insurance in the future at
rates we consider reasonable or losses may exceed the maximum limits under our
insurance policies. If a significant event that is not fully insured or
indemnified occurs, it could materially and adversely affect our financial
condition and results of operations.
COMPLIANCE WITH ENVIRONMENTAL AND OTHER GOVERNMENT REGULATIONS COULD BE COSTLY
AND COULD NEGATIVELY IMPACT PRODUCTION AND PIPELINE OPERATIONS.
Our operations are subject to numerous laws and regulations
governing the discharge of materials into the environment or otherwise relating
to environmental protection. These laws and regulations may:
o require the acquisition of a permit before drilling commences,
o restrict the types, quantities and concentration of various
substances that can be released into the environment from
drilling and production activities,
o limit or prohibit drilling and pipeline activities on certain
lands lying within wilderness, wetlands and other protected
areas,
o require remedial measures to mitigate pollution from former
operations, such as plugging abandoned wells and abandoning
pipelines, and
o impose substantial liabilities for pollution resulting from
our operations.
The recent trend toward stricter standards in environmental
legislation and regulation is likely to continue. The enactment of stricter
legislation or the adoption of stricter regulation could have a significant
impact on our operating costs, as well as on the oil and gas industry in
general.
Our operations could result in liability for personal injuries,
property damage, oil spills, discharge of hazardous materials, remediation and
clean-up costs and other environmental damages. We could also be liable for
environmental damages caused by previous property owners. As a result,
substantial liabilities to third parties or governmental entities may be
incurred which could have a material adverse effect on our financial condition
and results of operations. We maintain insurance coverage for our operations,
including limited coverage for sudden and accidental environmental
12
<PAGE>
damages, but we do not believe that insurance coverage for environmental damages
that occur over time or complete coverage for sudden and accidental
environmental damages is available at a reasonable cost. Accordingly, we may be
subject to liability or may lose the privilege to continue exploration or
production activities upon substantial portions of our properties if certain
environmental damages occur.
The Oil Pollution Act of 1990 imposes a variety of regulations on
"responsible parties" related to the prevention of oil spills. The
implementation of new, or the modification of existing, environmental laws or
regulations, including regulations promulgated pursuant to the Oil Pollution Act
of 1990, could have a material adverse impact on us.
EXISTING AND FUTURE UNITED STATES GOVERNMENTAL REGULATION, TAXATION AND PRICE
CONTROLS COULD SERIOUSLY HINDER US.
Our oil and gas leases in the Gulf of Mexico are administered
principally by the Minerals Management Service, an agency of the U.S. Department
of Interior. This agency strictly regulates the exploration, development and
production of oil and gas reserves in the Gulf of Mexico. Such regulations could
seriously impact our operations in the Gulf of Mexico. The federal government
regulates the interstate transportation of oil and natural gas, through the
Federal Energy Regulatory Commission. Federal reenactment of price controls or
increased regulation of the transport of oil and natural gas could seriously
hinder us. Of the natural gas pipelines owned by the Company, only Black Marlin
is subject to Natural Gas Act regulation. As a result, its gas transportation
service and pricing are regulated by FERC. The trend toward greater competition
among gas pipelines subject to Natural Gas Act regulation is continuing, making
it infeasible for regulated pipelines to rely upon exclusive monopoly status.
WE MAY ISSUE SHARES OF PREFERRED STOCK WITH GREATER RIGHTS THAN OUR COMMON
STOCK.
Our certificate of incorporation authorizes our board of directors
to issue one or more series of preferred stock and set the terms of the
preferred stock without seeking any further approval from our common
stockholders. Any preferred stock that is issued may rank ahead of our common
stock in terms of dividends, priority and liquidation premiums and may have
greater voting rights than our common stock.
PROVISIONS IN OUR CORPORATE DOCUMENTS AND DELAWARE LAW COULD DELAY OR PREVENT A
CHANGE IN CONTROL OF OUR COMPANY, EVEN IF THAT CHANGE WOULD BE BENEFICIAL TO OUR
STOCKHOLDERS.
Certain provisions of our certificate of incorporation and the
provisions of Section 203 of the Delaware General Corporation Law may delay,
discourage, prevent or render more difficult an attempt to obtain control of our
company, whether through a tender offer, business combination, proxy contest or
otherwise. These provisions include:
o the charter authorization of "blank check" preferred stock,
o a limitation on the removal of directors only for cause, and
o a restriction on the ability of stockholders to take actions
by written consent.
Each of these provisions could act as a "repellent" to an
unsolicited offer from a buyer. For example, our board of directors may create a
series of preferred stock that contains certain rights that would be
disadvantageous or undesirable to a possible buyer. Removing directors only for
cause allows the directors to maintain control of the board at least until the
next annual meeting of the shareholders. Also, the lack of ability to act by
written consent forces a meeting of the shareholders for the taking of corporate
action and thus limits the right of a controlling stockholder to take corporate
action quickly.
THERE IS A LIMITED TRADING MARKET FOR OUR COMMON STOCK.
Our common stock is traded on the Nasdaq Small Cap Market. Average
daily trading volume for our common stock, as reported by the Nasdaq Small Cap
Market for the third quarter of 2000, was approximately 2,887 shares. Despite
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<PAGE>
the increase in the number of shares of common stock to be publicly held as a
result of this offering, or should additional equity be issued, we cannot assure
you that a more active trading market will develop. Because there is a small
public float in our common stock and it is thinly traded, sales of small amounts
of common stock in the public market could materially adversely affect the
market price for our common stock. If a more active market does not develop, we
may not be able to sell shares in the future promptly, for prices that we deem
appropriate, or perhaps at all.
WE HAVE NOT PAID DIVIDENDS ON OUR COMMON STOCK AND DO NOT EXPECT TO IN THE
FORESEEABLE FUTURE.
Our credit agreement with Bank One, N.A., bars us from issuing any
dividends if any indebtedness is outstanding under the credit agreement. While
no indebtedness is currently outstanding under the credit agreement, we have not
paid dividends on our common stock since our inception and do not expect to in
the foreseeable future, so our shareholders will not be able to receive a return
on their investments without selling their shares. We presently anticipate that
all earnings, if any, will be retained for development of our business. Any
future dividends will be subject to the discretion of our board of directors and
will depend on, among other things, future earnings, our operating and financial
condition, our capital requirements and general business conditions.
THE MARKET PRICE OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED BY SALES OF
SUBSTANTIAL AMOUNTS OF COMMON STOCK IN THE PUBLIC MARKET OR THE PERCEPTION THAT
SUCH SALES COULD OCCUR.
As of September 30, 2000, we had 6,034,436 shares of common stock
outstanding. Approximately 173,797 additional shares of common stock were
issuable upon the exercise of outstanding options, warrants and convertible
securities. The market price of our common stock could be adversely affected by
sales of substantial amounts of common stock in the public market or the
perception that such sales could occur.
14
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of our common stock
by the selling stockholders pursuant to this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration statement on
Form S-3 that we filed with the SEC under the Securities Act. This prospectus,
which forms a part of the registration statement, does not contain all the
information set forth in the registration statement. You should refer to the
registration statement and its related exhibits and schedules for further
information with respect to our company and the shares offered in this
prospectus. Statements contained in this prospectus concerning the provisions of
any document are not necessarily complete and, in each instance, reference is
made to the copy of that document filed as an exhibit to the registration
statement or otherwise filed with the SEC and each such statement is qualified
by this reference. The registration statement and its exhibits and schedules are
on file at the offices of the SEC and may be inspected without charge.
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file,
including the registration statement, at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
l-800-SEC-0330 for further information on the operation of the Public Reference
Room. Our public filings are also available from commercial document retrieval
services and at the Internet World Wide Web site maintained by the SEC at
"http://www.sec.gov."
SEC rules allow us to include some of the information required to be
in the registration statement by incorporating that information by reference to
other documents we file with them. That means 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 Exchange Act of 1934 until all of the securities covered by this
prospectus are sold:
o Annual Report on Form 10-K/A- 2 for the year ended December
31, 1999, filed with the SEC on December 5, 2000;
o Quarterly Report on Form 10-Q/A-1 for the period ended March
31, 2000, filed with the SEC on September 7, 2000;
o Quarterly Report on Form 10- Q/A-1 for the period ended June
30, 2000, filed with the SEC on September 7, 2000;
o Quarterly Report on Form 10-Q/A-1 for the period ended
September 30, 2000, filed with the SEC on December 5, 2000;
o Current Report on Form 8-K filed with the SEC on December 17,
1999; as amended by Form 8-K/A filed on February 15, 2000,
Form 8-K/A-2 filed on February 16, 2000, Form 8-K/A-3 file on
June 5, 2000 , Form 8-K/A-4 filed on September 7, 2000 AND
Form 8-K/A-5 filed on December 5, 2000;
o Current Report on Form 8-K filed on June 5, 2000;
o Definitive Proxy Statement on Schedule 14A dated April 20,
2000; and
o The description of our common stock contained in the Form 8-K,
filed June 5, 2000.
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<PAGE>
You may request a copy of these filings, which we will provide to
you at no cost, by writing or telephoning us at the following address:
Blue Dolphin Energy Company
801 Travis, Suite 2100
Houston, Texas 77002
(713) 227-7660
Attention: G. Brian Lloyd, Secretary
You should rely only on the information incorporated by reference or
contained in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. The selling stockholders
are not making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information appearing
in this prospectus is accurate as of the date on the front cover of this
prospectus only. Our business, financial condition, results of operations and
prospects may have changed since that date.
16
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information concerning each
of the selling stockholders as of September 30, 2000. The shares are being
registered to permit the selling stockholders and certain of their respective
pledgees, donees, transferors or other successors in interest to offer the
shares from time to time. See "Plan of Distribution."
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF
OWNED AND TO BE NUMBER OF SHARES PERCENTAGE OF SHARE
OWNED PRIOR TO SHARES BEING OWNED AFTER OWNED AFTER
SELLING STOCKHOLDERS OFFERING (1) OFFERED (1) OFFERING (2) OFFERING (2)
----------------------------------------------------- ---------------- ------------ ------------ -------------------
<S> <C> <C> <C> <C>
John Atwood (3)...................................... 12,720 12,720 0 *
Ragnhild Bendigsten.................................. 1,400 1,400 0 *
Bjorn Bendigsten..................................... 26,833 26,833 0 *
Blue Dolphin Services Co. 401(k) Plan (4)............ 20,000 20,000 0 *
Blystad Shipping & Transport Inc. ................... 200,000 200,000 0 *
Michael S. Chadwick (5).............................. 6,890 6,890 0 *
Alvin Childs (6)..................................... 890 890 0 *
Colombus Petroleum Limited Inc. (7).................. 911,712 911,712 0 *
Christian Hysing-Dahl (8)............................ 1,335 1,335 0 *
William Driscoll (9)................................. 3,111 3,111 0 *
Foilpropeller AS..................................... 65,000 65,000 0 *
Fohla LTD............................................ 166,666 166,666 0 *
Bjorn Gilbo.......................................... 147,850 147,850 0 *
Greenway Energy Investors............................ 20,000 20,000 0 *
Debra Young Hatch & Richard J. Hatch Jr. TTEE ...... 6,666 6,666 0 *
Michael J. Jacobson (10)............................. 112,272 112,272 0 *
Harris A. Kaffie (11)................................ 590,864 590,864 0 *
Harris A. Kaffie TTEE, Morgan Sims Kaffie (12)....... 1,133 1,133 0 *
Lynda Young Kaffie TTEE, Morgan Sims Kaffie (13)..... 106,666 106,666 0 *
Kalin AS............................................. 89,212 89,212 0 *
Roland B. Keller (14)................................ 28,401 28,401 0 *
Gordon Brian Lloyd (15).............................. 7,441 7,441 0 *
Vernon Luning (16)................................... 7,778 7,778 0 *
Lysa Development SA.................................. 63,000 63,000 0 *
Birger Nergaard...................................... 108 108 0 *
Nordic Technology Corp. ............................. 66,001 66,001 0 *
Osler Holdings LTD................................... 263,900 263,900 0 *
Petrel Limited....................................... 30,000 30,000 0 *
Daniel B. Porter (17)................................ 175,823 175,823 0 *
Rithmanian LTD ...................................... 166,666 166,666 0 *
Kenneth Sandvold..................................... 196,667 196,667 0 *
Kristian Siem (18)................................... 216,666 216,666 0 *
Elisabeth Siem (19).................................. 8,333 8,333 0 *
Ivar Siem (20)....................................... 396,476 396,476 0 *
Kristine Siem (21)................................... 108,333 108,333 0 *
Spencer Invest Inc................................... 74,000 74,000 0 *
S.A. Storsveen....................................... 20,000 20,000 0 *
TI As (22)........................................... 4,700 4,700 0 *
Troulinell Limited................................... 273,700 273,700 0 *
Ware Snow Fogel Jackson & Green P.C. SHP............. 29,875 29,875 0 *
Jan-Olaf Williams.................................... 81,429 81,429 0 *
Woodland Company LTD................................. 166,666 166,666 0 *
</TABLE>
--------------------------------
* Indicates less than 1%.
17
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(1) Ownership is determined in accordance with Rule 13d-3 under the Exchange
Act. The actual number of shares beneficially owned and offered for sale
is subject to adjustment and could be materially less or more than the
estimated amount indicated depending upon factors which we cannot predict
at this time.
(2) Assumes the sale of all of the shares offered hereby to persons who are
not affiliates of the selling stockholders.
(3) Mr. Atwood has served as our Vice President-Finance and Corporate
Development since October 1998. He previously served as our Vice President
of Land.
(4) The Blue Dolphin Services Co. 401(k) Plan is the savings plan for Blue
Dolphin Energy and all of our subsidiaries. The shares being registered
were issued in February 1999 for the benefit of employees eligible to
participate in the 401(k) Plan.
(5) Mr. Chadwick has been one of our directors since May 1992.
(6) Mr. Childs has served as plant supervisor for our subsidiary, Mission
Energy, Inc., since April 1992
(7) Colombus Petroleum Limited Inc. is and has been a greater than 10%
stockholder since May 1994.
(8) Mr. Hysing-Dahl served as our director from May 1992 until October 1998.
(9) Mr. Driscoll has served as our Manager of Geology since January 1991.
(10) Mr. Jacobson has served as our President since January 1990.
(11) Mr. Kaffie has served as our Director and has been a greater than 10%
stockholder since December 1989.
(12) Morgan Sims Kaffie is the son of Harris A. Kaffie.
(13) Morgan Sims Kaffie is the son of Lynda Young Kaffie, and Lynda Young
Kaffie is the wife of Harris A. Kaffie.
(14) Mr. Keller has served as our Executive Vice President-Exploration and
Development since September 1990.
(15) Mr. Lloyd is our Vice President, Secretary and Treasurer. He has held the
position of Secretary since May 1989, Treasurer since September 1989 and
Vice President since March 1998.
(16) Mr. Luning has served as our Vice President-Drilling and Production since
June 1995.
(17) Mr. Porter served as our Director from December 1989 to May 2000.
(18) Kristian Siem is the brother of Ivar Siem, Chairman of Blue Dolphin
Energy.
(19) Elisabeth Siem is the adult daughter of Ivar Siem, Chairman of Blue
Dolphin Energy.
(20) Mr. Siem has served as our Chairman of the Board since December 1989.
(21) Kristine Siem is the adult daughter of Ivar Siem, Chairman of the Company.
(22) Ivar Siem, Chairman of Blue Dolphin Energy is the beneficial owner of
these shares.
18
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may sell shares of our common stock in
transactions on exchanges or markets as our common stock may be then listed for
trading. Shares may be sold in privately-negotiated transactions, in
underwritten offerings, or by a combination of such methods of sale. Sales of
shares of common stock may be made at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. As used in this prospectus,
"selling stockholders" includes pledgees, donees, transferees and other
successors in interest to the selling stockholders selling shares received from
a selling stockholder after the date of this prospectus. The selling
stockholders may effect such transactions by selling the shares of common stock
to or through broker-dealers, and such broker-dealers may receive compensation
in the form of discounts, concessions or commissions from the selling
stockholders or the purchasers of the shares for whom such broker-dealers may
act as agent or to whom they sell as principal, or both (which compensation to a
particular broker-dealer might be in excess of customary commissions).
In connection with an underwritten offering, if any, the
underwriters may make short sales of shares of our common stock and may purchase
shares of our common stock on the open market to cover positions created by
short sales. Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in any such offering. Short
sales may be "covered" or "naked" short sales.
o "Covered" short sales are sales made in an amount not greater
than the underwriters' overallotment option to purchase
additional shares in an offering. The underwriters may close
out any covered short position by either exercising their
overallotment option or purchasing shares in the open market.
In determining the source of shares to close out the covered
short position, the underwriters will consider, among other
things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase
shares through the overallotment option.
o "Naked" short sales are sales in excess of the overallotment
option. The underwriters must close out any naked short
position by purchasing shares in the open market. A naked
short position is more likely to be created if the
underwriters are concerned that there may be downward pressure
on the price of the shares in the open market after pricing
that could adversely affect investors who purchase in the
offering.
Similar to other purchase transactions, the underwriters' purchases
to cover the syndicate short sales may have the effect of raising or maintaining
the market price of our common stock or preventing or retarding a decline in the
market price of our common stock. As a result, the price of our common stock may
be higher than the price that might otherwise exist in the open market.
Other methods by which selling stockholders may sell shares of our
common stock include, without limitation:
o "at the market" to or through market makers or into an
existing market for our common stock,
o in other ways not involving market makers or established
trading markets, including direct sales to purchasers or sales
effected through agents,
o through transactions in options or swaps or other derivatives,
whether exchange-listed or otherwise,
o through block trades,
o through short sales, or
o any combination of any such methods of sale.
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<PAGE>
The selling stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to those broker dealers of the common
stock offered by this prospectus, which common stock such broker-dealers may
resell under this prospectus. The selling stockholders may also make sales under
Rule 144 of the Securities Act if an exemption from registration is available.
The selling stockholders and any broker-dealers who act in
connection with the sale of shares of our common stock under this prospectus may
be deemed to be "underwriters" as that term is defined in the Securities Act,
and any commissions received by them and profit on any resale of the shares of
our common stock as principal might be deemed to be underwriting discounts and
commissions under the Securities Act.
Under certain registration rights agreements with certain of the
selling stockholders, we have agreed to indemnify certain of the selling
stockholders and each underwriter, if any, against certain liabilities,
including certain liabilities under the Securities Act as amended, or will
contribute to payments such selling stockholders or underwriters may be required
to make in respect of certain losses, claims, damages or liabilities.
After we are notified by a selling stockholder that any material
arrangement has been entered into with a broker- dealer for the sale of common
stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
o the name of each such selling stockholder and of the
participating broker-dealer(s),
o the type and number of securities involved,
o the price at which such securities were sold,
o the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable,
o that such broker-dealer(s) did not conduct any investigations
to verify the information set out or incorporated by reference
in this prospectus, and
o other facts material to the transaction.
LEGAL MATTERS
Certain legal matters relating to the validity of the common stock
will be passed upon by Porter & Hedges, L.L.P., Houston, Texas.
EXPERTS
The consolidated financial statements of Blue Dolphin Energy Company
at December 31, 1999 and 1998, and for each of the three years in the period
ended December 31, 1999, appearing in this Prospectus and Registration Statement
have been audited by KPMG LLP, independent auditors, as set forth in their
report thereon incorporated by reference elsewhere herein which, as to the year
1999, are based in part on the report of Ernst & Young LLP, independent
auditors. The financial statements referred to above are included in reliance
upon such reports given on the authority of such firms as experts in accounting
and auditing.
Ernst & Young LLP, independent auditors, have audited the
consolidated financial statements of American Resources Offshore, Inc. as of
December 31, 1998 and for the year then ended included in our Current Report on
Form 8-K filed December 17, 1999, as set forth in their report (which contains
an explanatory paragraph describing conditions that raise substantial doubt
about American Resource Offshore Inc.'s ability to continue as a going concern
as described in
20
<PAGE>
Note 20 to the consolidated financial statements), which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. The consolidated financial statements of American Resources Offshore,
Inc. are incorporated by reference in reliance on Ernst & Young LLP's report,
given on their authority as experts in accounting and auditing.
21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the amount of fees and expenses to
be incurred in connection with the issuance and distribution of the securities
registered hereby, other than underwriting discounts and commissions.
Registration Fee Under Securities Act.... $ 7,048
Legal Fees............................... 25,000
Accounting Fees.......................... 35,000
Printing and Engraving................... 10,000
Miscellaneous Fees....................... 2,000
------------------
Total........................ $ 79,048
==================
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporate Law ("DGCL") permits a
corporation to indemnify any person 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, by reason of the fact
that he 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 against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action.
In a suit brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees, actually
and reasonably incurred in connection with the defense or settlement of the
case, and the corporation may not indemnify for amounts paid in satisfaction of
a judgment or in settlement of the claim. In any such action, no indemnification
may be paid in respect of any claim, issue or matter as to which such persons
shall have been adjudged liable to the corporation except as otherwise provided
by the Delaware Court of Chancery or the court in which the claim was brought.
In any other type of proceeding, the indemnification may extend to judgments,
fines and amounts paid in settlement, actually and reasonably incurred in
connection with such other proceeding, as well as to expenses (including
attorneys' fees).
The statute does not permit indemnification unless the person
seeking indemnification has acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interest of the corporation and,
in the case of criminal actions or proceedings, the person had no reasonable
cause to believe his conduct was unlawful. There are additional limitations
applicable to criminal actions and to actions brought by or in the name of the
corporation. The determination as to whether a person seeking indemnification
has met the required standard of conduct is to be made (i) by a majority vote of
a quorum of disinterested members of the board of directors, or (ii) by
independent counsel in a written opinion, if such a quorum does not exist or if
the disinterested directors so direct, or (iii) by the stockholders.
Our certificate of incorporation and bylaws require us to indemnify
our directors and officers to the fullest extent permitted under Delaware law.
Our certificate of incorporation limits the personal liability of a director to
us or our stockholders to damages for breach of the director's fiduciary duty.
We maintain officers' and directors' indemnity insurance against
expenses of defending claims or payment of amounts arising out of good-faith
conduct believed by the officer or director to be in or not opposed to our best
interest.
22
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
Exhibits
EXHIBIT NO. DESCRIPTION
*5.1 -- Opinion of Porter & Hedges, L.L.P.
*23.1 -- Consent of Porter & Hedges, L.L.P. (included in
Exhibit 5.1)
**23.2 -- Consent of KPMG LLP
**23.3 -- Consent of Ernst & Young LLP
*23.4 -- Consent of Netherland, Sewell & Associates, Inc.,
independent petroleum engineers and geologists
*23.5 -- Consent of Ryder Scott Company, independent petroleum
engineers
*24.1 -- Power of Attorney (included on signature page)
-----------------------------------
* Previously filed.
** Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
o To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
- To include any prospectus required by section 10(a)(3)
of the Securities Act of 1933;
- 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 this
registration statement;
- To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement; provided,
however, that subparagraphs (i) and (ii) do not apply if
the information required to be included in a
post-effective amendment by those paragraphs is
contained in the periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of
the Securities and Exchange Act of 1934 that are
incorporated by reference in this registration
statement.
o 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 herein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
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o 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.
o The undersigned Registrant hereby further undertakes that, for
the 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 Section 15(d) of the Securities
Exchange of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new
registration statement relating to the securities offered
herein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
o 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 SEC such
indemnification is against public policy as expressed in the
Securities Act of 1933 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 Securities Act
and will be governed by the final adjudication of such issue.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, Blue Dolphin Energy Company 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 Amendment No. 2 Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas on December 5, 2000.
BLUE DOLPHIN ENERGY COMPANY
By: /s/ MICHAEL J. JACOBSON
--------------------------------------
MICHAEL J. JACOBSON, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement on Form S-3 has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ MICHAEL J. JACOBSON President and Chief Executive Officer, December 5, 2000
------------------------------ (Principal Executive Officer)
Michael J. Jacobson
/s/ G. BRIAN LLOYD Vice President, Treasurer and Secretary December 5, 2000
------------------------------ (Principal Financial and Accounting Officer)
G. Brian Lloyd
/s/ IVAR SIEM Director December 5, 2000
------------------------------
Ivar Siem
/s/ * Director December 5, 2000
------------------------------
Harris A. Kaffie
/s/ * Director December 5, 2000
------------------------------
Michael S. Chadwick
*By: /s/ G. BRIAN LLOYD
------------------------
G. Brian Lloyd
Attorney-in-fact
</TABLE>
<PAGE>
EXHIBITS
EXHIBIT NO. DESCRIPTION
*5.1 -- Opinion of Porter & Hedges, L.L.P.
*23.1 -- Consent of Porter & Hedges, L.L.P. (included in
Exhibit 5.1)
**23.2 -- Consent of KPMG LLP
**23.3 -- Consent of Ernst & Young LLP
*23.4 -- Consent of Netherland, Sewell & Associates, Inc.,
independent petroleum engineers and geologists
*23.5 -- Consent of Ryder Scott Company, independent petroleum
engineers
*24.1 -- Power of Attorney (included on signature page)
-----------------------------------
* Previously filed.
** Filed herewith.
