Notice of Annual Meeting of Shareholders
Notice is hereby given that the Annual Meeting of
Shareholders (the "Meeting") of Mallon Resources Corporation
(the "Company") will be held at the Hotel Monaco, 1717 Champa
Street, Denver, Colorado, at 9:00 a.m. local time, on Tuesday,
June 8, 1999, for the following purposes:
(I) To elect Directors of the Company; and
(II) To transact such other business as may properly come
before the Meeting.
Only holders of common stock of record at the close of
business on April 26, 1999 are entitled to notice of and to vote
at the Meeting.
By Order of the Board of Directors,
Roy K. Ross
Corporate Secretary
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING.
ALL SHAREHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE
MEETING IN PERSON, ARE REQUESTED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED ENVELOPE. SHOULD
YOU ATTEND THE MEETING, YOU MAY, IF YOU CHOOSE TO, VOTE IN
PERSON, EVEN THOUGH YOU MAY HAVE PREVIOUSLY SUBMITTED A PROXY
CARD.
Mallon Resources Corporation
999 18th Street, Suite 1700
Denver, Colorado 80202
_______________
Proxy Statement
for
Annual Meeting of Shareholders
To Be Held
Tuesday, June 8, 1999
General Information
This statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Mallon
Resources Corporation (the "Company") to be used at the
Company's Annual Meeting of Shareholders (the "Meeting") to be
held at the Hotel Monaco, 1717 Champa Street, Denver, Colorado,
on Tuesday, June 8, 1999, at 9:00 a.m., for the purposes set
forth in the accompanying Notice of Annual Meeting of
Shareholders. This statement was sent to shareholders on or
about April 29, 1999.
The shares covered by the enclosed Proxy, if such is properly
executed and received by the Board of Directors prior to the
Meeting, will be voted in favor of the proposals to be considered
at the Meeting, unless such Proxy specifies otherwise or the
authority to vote on the election of directors has been withheld.
A Proxy may be revoked at any time before it is exercised by
giving written notice to the Secretary of the Company or by
executing a Proxy bearing a later date. Shareholders may vote
their shares in person if they attend the meeting, even if they
have previously executed and returned a Proxy.
The only matter planned to be brought before the Meeting is
the election of directors to serve for the ensuing year.
Only shareholders of record at the close of business on
April 26, 1999, will be entitled to vote at the Meeting. On that
date, there were issued and outstanding 7,023,940 shares of the
Company's $0.01 par value common stock ("Common Stock"), entitled
to one vote per share. Cumulative voting is not allowed in the
election of directors or for any other purpose. One-third of the
outstanding Common Stock will constitute a quorum for the
transaction of business at the Meeting. The vote of a majority
of a quorum is needed to pass a proposal.
At the Meeting, members of senior management will speak and
there will be a general discussion period during which
shareholders will have an opportunity to ask questions about the
business of the Company. Management knows of no other matters to
be brought before the Meeting. If other matters properly come
before the Meeting, it is the intention of the persons named in
the solicited Proxy to vote such Proxy in accordance with their
judgment. No compensation will be paid to any person in
connection with solicitation of Proxies. Brokers and others will
be reimbursed for out-of-pocket and reasonable clerical expenses
incurred in forwarding solicitation materials to beneficial
owners of the Common Stock. Special solicitation of Proxies may
in certain instances be made personally or by telephone by
officers and employees of the Company and by regular employees of
certain banking and brokerage houses. All expenses in connection
with this solicitation will be borne by the Company.
Proposal I: Election of Directors
General
The Company's Bylaws provide that the size of the Board of
Directors can be as few as three or as many as fifteen. The
number of directors may be changed from time to time by
resolution of the Board of Directors or the shareholders. The
size of the Board of Directors is presently seven members.
Accordingly, management will nominate seven persons for election
to the Board. Directors are elected annually for one-year terms.
It is the recommendation of management that the seven
nominees named below be elected to the Board of Directors for the
coming year, and until their successors have been duly elected
and qualified. Unless authority is withheld, the shares
represented by your Proxy will be voted for their election. No
Proxy will be voted for more than seven nominees. Unless your
Proxy withholds authority to do so, if any nominee elects not to
serve or is unable to serve for any reason, your Proxy will be
voted for an alternative nominee to be designated by management
to replace such nominee. The Board of Directors has no reason to
expect that any nominee will be unable to serve. There is no
arrangement between any of the nominees or officers and any other
person or persons pursuant to which he was or is to be selected
as a director, nominee or officer, nor is there any family
relationship between or among any nominees or officers. To the
best knowledge of the Company, none of the nominees have been
involved in any material legal proceedings during the past five
years.
Nominees
Nominees for the Board of Directors are:
<TABLE>
<CAPTION>
Period of Service
Name Age Title(s) as Director
<S> <C> <C> <C>
George O. Mallon, Jr. 54 Director, Chairman of the Board, Since 1988
President and Chief Executive Officer
Kevin M. Fitzgerald 44 Director, Executive Vice President and Since 1988
Chief Operating Officer
Roy K. Ross 48 Director, Executive Vice President, Since 1992
General Counsel, and Secretary
Frank Douglass 65 Director Since 1988
Roger R. Mitchell 66 Director Since 1990
Francis J. Reinhardt, Jr. 69 Director Since 1994
Peter H. Blum 41 Director Since 1998
</TABLE>
Principal Occupations
A brief description of the business experience of each
nominee for re-election as a director is set forth below:
George O. Mallon, Jr., has served as President, Chairman, and
Chief Executive Officer of the Company since its formation in
December 1988. Mr. Mallon is also Chairman of Mallon Oil Company
("Mallon Oil"), the Company's wholly-owned subsidiary, and a
director of Laguna Gold Company ("Laguna"), a gold mining
company in which the Company owns a minority interest. He earned
a B.S. degree in Business from the University of Alabama in 1965,
and a M.B.A. degree from the University of Colorado in 1977.
Kevin M. Fitzgerald has served as Executive Vice President
and Chief Operating Officer of the Company since its formation in
December 1988. Mr. Fitzgerald, who is also President of Mallon
Oil, earned a B.S. degree in Petroleum Engineering from the
University of Oklahoma in 1978.
Roy K. Ross joined the Company as Executive Vice President
and General Counsel in October 1992. From June 1976 through
September 1992, Mr. Ross was an attorney in private practice with
the Denver-based law firm of Holme Roberts & Owen. Mr. Ross, who
is also Executive Vice President and General Counsel to Mallon
Oil and a director and Vice President of Laguna, earned his B.A.
degree in Economics from Michigan State University in 1973, and
his J.D. degree from Brigham Young University in 1976.
Frank Douglass, an attorney, is retired from the Texas law
firm of Scott, Douglass & McConnico, LLP, where he was a partner
from 1976 to 1998. Mr. Douglass earned a B.B.A. degree from
Southwestern University in 1953 and a L.L.B. degree from the
University of Texas School of Law in 1958.
Roger R. Mitchell lives in North Carolina, where he is
retired and attends to his personal investments. He earned a
B.S. degree in Business from Indiana University in 1954 and an
M.B.A. degree from Indiana University in 1956.
Francis J. Reinhardt, Jr. is with the New York investment
banking firm of Carl H. Pforzheimer & Co., where he has been a
partner since 1966. He is a member and past president of the
National Association of Petroleum Investment Analysts. Since
December 1992, Mr. Reinhardt has also been a director of XCL,
Ltd., a public company engaged in the oil and gas business. Mr.
Reinhardt holds a B.S. degree from Seton Hall University and an
M.B.A. from New York University.
Peter H. Blum has been president of McLean Equities Ltd,
Inc., a private investment bank, since October 1998. From April
1997 to October 1998, he was Senior Managing Director with the
New York investment banking firm of Gaines, Berland Inc. From
1995 to 1997, Mr. Blum held the position of Managing Director
with the investment banking firm Rodman & Renshaw, Inc. From
1992 to 1995, Mr. Blum held various positions with the investment
banking firm Mabon Securities, Inc. Mr. Blum earned a B.B.A.
degree in accounting from the University of Wisconsin in 1979.
Meetings and Committees of the Board; Board Compensation
The business and affairs of the Company are under the
direction of the Board of Directors. For the period April 1998
through March 1999, the Board of Directors held four formal
meetings and acted by written consent on numerous occasions.
Each director who is standing for re-election attended all of the
meetings, either in person or by means of a telephone conference
connection, and all directors participated in all of the written
consents. Directors who are not also members of management are
paid $2,000 for each meeting they attend. Board members are also
reimbursed for reasonable out-of-pocket expenses incurred in
connection with attending meetings of the Board. In November
1998, the current non-management members of the Board were each
granted options to purchase 2,735 shares of Common Stock at an
adjusted exercise price of $6.875 per share. These options vest
in increments in 1998, 1999 and 2000.
The Company's Board of Directors has three committees, the
Audit Committee, the Compensation Committee, and the Nominating
Committee. The Board has assigned certain advisory authority to
each committee, but the decision-making and management
responsibilities of the Company remain with the full Board. The
Audit Committee of the Board, which held one meeting during the
last year, is comprised of Messrs. Douglass, Mitchell, Reinhardt
and Blum. The Audit Committee's purpose is to oversee the
Company's accounting and financial reporting policies and
practices and to assist the Board of Directors in fulfilling its
fiduciary and corporate accountability responsibilities. The
Company's independent auditors have unrestricted direct access to
the Audit Committee members. The Compensation Committee of the
Board, which held one formal meeting and acted by unanimous
written consent on several occasions during the last year, is
currently comprised of Messrs. Douglass, Reinhardt and Blum. The
Compensation Committee has submitted the report that appears
below. The Nominating Committee, which considers nominees for
election to the Board, is comprised of Messrs. Mallon and
Reinhardt.
Compensation Committee Report
The Company's Board of Directors established the Compensation
Committee (the "Committee") to propose, subject to Board
ratification, equity and cash compensation of executive officers
and equity compensation for all employees. The Committee's
philosophy is that, in light of the Company's relatively small
size, employee compensation (including salary, bonus and equity-
based compensation) should be somewhat below the mid-point of
industry standards. The Committee believes that equity
compensation -- in the form of stock options -can be an
appropriate incentive for selected employees, including executive
officers, and can serve to align the interests of the employees,
executive officers and shareholders. In 1997, the Company
engaged the services of an expert in compensation matters to
conduct a survey of compensation practices in the oil and gas
industry and to advise the Company with respect thereto.
Cash Compensation. The Committee's cash compensation
objective is to establish an acceptable pay scale for employees.
The executive officers of the Company are considered in this
planning in the same manner as all other employees. Each year,
all employees, including the executive officers, are evaluated by
their managers (or in the case of the Chief Executive Officer, by
the Committee) and may receive salary adjustments based upon
their performance.
Equity Compensation. Historically, the Company has not used
equity compensation as a component of employee compensation
packages as widely as is common in the industry. After the
Company's 1997 Equity Participation Plan (the "Plan") was
ratified by the shareholders at 1997's annual meeting, the
Committee made limited equity compensation awards as part of its
compensation decisions. All employees are eligible for awards
under the Plan. The Plan was designed to provide: (a) a method
to both attract and retain high caliber talent over the long
term, (b) an opportunity for selected employees to share in the
long term success of the Company, (c) an ownership interest in
the Company's success, and (d) recognition of individual
contributions.
Bonus Compensation. The Company maintains a "Bonus Pool"
comprised of an amount of cash equal to 1.3% of the Company's
gross revenue, as adjusted. Quarterly, the money accumulated in
the pool is paid out as cash bonuses to the employees of the
Company. The Chief Executive Officer proposes the amounts to be
paid to each employee, including himself, based upon his judgment
of their relative contributions to the success of the Company
over the quarter for which the bonus is being paid. His
determinations are subject to review by the Committee.
Chief Executive Officer. Mr. Mallon's compensation
arrangements with the Company are contained in an employment
contract entered into in April 1997. That contract is for a
three year period, which, until 2000, will be automatically
extended each year for an additional year, unless the Company
earlier elects not to extend the contract. The contract
establishes Mr. Mallon's annual base salary at $175,000. In
connection with the signing of the contract, Mr. Mallon was
awarded 10,000 shares of Common Stock, which vest in increments
over three years. Mr. Mallon has also been granted options under
the Plan to purchase shares of Common Stock. Mr. Mallon's
performance as Chief Executive Officer and President is subject
to review by the Committee annually, which review may result in
adjustments to his compensation package.
* The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the
Securities Act of 1933 or under the Securities Act of 1934,
except to the extent that the Company specifically incorporates
this report by reference.
Executive Compensation
The following table summarizes certain information regarding
compensation awarded to, earned by or paid by the Company for
services rendered for the year ended December 31, 1998 to the
Company's chief executive officer and the four other most highly
compensated individuals whose total compensation, exceeded
$100,000 for such year.
Year ended December 31, 1998
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Awards
Name and Other Annual Restricted Securities All Other
Principal Compensation Stock Awards Underlying Compensation
Position Year Salary($) Bonus($) ($) ($) Options (#) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
G.O. Mallon, Jr.
CEO 1998 174,000 48,107 98,094 2,500
1997 175,000 29,700 73,750 (1) 142,000 2,375
1996 141,000 12,000 34,000
K.M. Fitzgerald
E.V.P. 1998 144,000 31,062 55,533 2,500
1997 145,000 24,000 73,750 (2) 127,500 1,500
1996 111,000 10,400 34,000
R.K. Ross
E.V.P. 1998 140,000 18,672 39,915 2,500
1997 140,000 22,400 36,875 (3) 78,000 2,375
1996 106,000 9,400 34,000
W.A. Bond
VP Exploration of Mallon Oil
1998 90,000 11,618 7,000
1997 90,000 13,725 15,000
D.M. Erickson
VP Operations
of Mallon Oil 1998 100,000 11,802 2,236
1997 91,667 9,500 20,000 1,676
</TABLE>
1. In April 1997, Mr. Mallon was granted 10,000 Restricted Stock
Bonus Shares. The shares vest 1,000 shares in April 1998, 4,000
shares in April 1999, and 5,000 shares in April 2000.
2. In April 1997, Mr. Fitzgerald was granted 10,000 Restricted
Stock Bonus Shares. The shares vest 1,000 shares in April 1998,
4,000 shares in April 1999, and 5,000 shares in April 2000.
3. In April 1997, Mr. Ross was granted 5,000 Restricted Stock
Bonus Shares. The shares vest 1,000 shares in April 1998, 1,500
shares in April 1999, and 2,500 shares in April 2000.
<TABLE>
<CAPTION>
Individual Grants
Number of Percent
Securities of Total Grant Date
Underlying Options Exercise or Market Price Present
Options Granted Base Price on Date of Expiration Value(1)
Name Granted(#) in 1998 ($/Sh) Grant ($/Sh) Date ($)
<S> <C> <C> <C> <C> <C> <C>
G.O. Mallon, Jr. 68,548 29.1 6.875 (2) 7.50 28-Jan-08 251,804
9,546 4.0 0.01 7.50 28-Jan-08 65,550
20,000 8.5 6.875 (2) 9.125 25-Nov-08 73,468
142,000 n.a. 6.875 (2) 8.375 10-Jun-07 n.a.
K.M. Fitzgerald 48,745 20.7 6.875 (2) 7.50 28-Jan-08 179,059
6,788 2.9 0.01 7.50 28-Jan-08 46,612
127,500 n.a. 6.875 (2) 8.375 10-Jun-07 n.a.
R.K. Ross 35,036 14.9 6.875 (2) 7.50 28-Jan-08 128,701
4,879 2.1 0.01 7.50 28-Jan-08 33,503
78,000 n.a. 6.875 (2) 8.375 10-Jun-07 n.a.
W.A. Bond 7,000 3.0 6.875 (2) 7.50 28-Jan-08 25,714
15,000 n.a. 6.875 (2) 8.375 10-Jun-07 n.a.
D.M. Erickson 20,000 n.a. 6.875 (2) 8.375 10-Jun-07 n.a.
</TABLE>
1. The Grant Date Present Value of the options was determined
using the Black-Scholes option-pricing model, using the following
assumptions: risk-free interest rate - 4.75%; expected life in
years - 4; expected volatility - 64.6%; expected dividends - 0.0%.
2. The exercise price of these options was originally the market
price for a share of Common Stock on the date of grant. On
December 11, 1998, the Board reduced the exercise price of these
options to $6.875, the then current market price for a share of
Common Stock. See below.
<TABLE>
<CAPTION>
Value Number of Securities Underlying Value of Unexercised
Shares Acquired Realized Unexercised Options In-The-Money Options
Name On Exercise (#) ($) At December 31, 1998 (#) At December 31, 1998(#)
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
G.O. Mallon, Jr. 247,373 0 115,285 0
K.M. Fitzgerald 84,835 115,227 125,769 37,284
R.K. Ross 40,819 78,733 17,882 26,801
W.A. Bond 4,400 17,600 0 0
D.M. Erickson 8,000 12,000 54,920 82,380
</TABLE>
Option Re-Pricing. On December 11, 1998, the Board of
Directors and the Compensation Committee reduced the exercise
price of substantially all outstanding options and warrants to
purchase shares of the Company's common stock to $6.875 per
share, the closing price for the stock on December 11, as
reported by Nasdaq. The re-pricings were implemented because
depressed oil and gas prices and general turmoil in the financial
markets had combined to drive down the market price for the
Company's common stock, despite the Company's continued operating
success. The Board and Committee believed the re-pricings will
provide renewed incentives to the holders of the effected
securities to work toward the Company's success.
<TABLE>
<CAPTION>
Number Of Market Price Length of
Securities Of Stock At Exercise Price Original Term
Underlying Time of At Time of New Remaining
Options Repricing or Repricing or Exercise At Date of
Repriced Amendment Amendment Price Repricing or
Name Date or Amended ($/Sh) ($/Sh) ($/Sh) Amendment
<S> <C> <C> <C> <C> <C> <C>
G.O. Mallon, Jr. 11-Dec-98 142,000 6.875 8.375 6.875 103 months
11-Dec-98 68,548 6.875 7.50 6.875 110 months
11-Dec-98 20,000 6.875 9.125 6.875 120 months
K.M. Fitzgerald 11-Dec-98 127,500 6.875 8.375 6.875 103 months
11-Dec-98 48,745 6.875 7.50 6.875 110 months
R.K. Ross 11-Dec-98 78,000 6.875 8.375 6.875 103 months
11-Dec-98 35,036 6.875 7.50 6.875 110 months
W.A. Bond 11-Dec-98 15,000 6.875 8.375 6.875 103 months
11-Dec-98 7,000 6.875 7.50 6.875 110 months
</TABLE>
Equity Participation Plans. Under the Mallon Resources
Corporation 1988 Equity Participation Plan and the Mallon
Resources Corporation 1997 Equity Participation Plan, shares of
Common Stock have been reserved for issuance for various
compensation purposes. The Plans are administered by the
Compensation Committee, currently comprised of Messrs. Reinhardt,
Douglass and Blum, none of whom is eligible to participate in the
Plans. The terms of any awards made under the Plans are within
the broad discretion of the Committee. At December 31, 1998, the
following options to purchase shares of the Company's Common
Stock were issued and outstanding under the Plans:
Number of Weighted Average
Shares Exercise Price
817,403 $6.25
Employee Profit Sharing and Thrift Plan. The Company
established the Mallon Resources Corporation 401(k) Profit
Sharing Plan (the "401(k) Plan") effective January 1, 1989. The
Company will match an employee's contribution to the 401(k) Plan
in an amount up to 25% of his or her eligible monthly
contributions. The Company may also contribute additional
amounts at the discretion of the Compensation Committee of the
Board of Directors, contingent upon realization of earnings by
the Company, which, in the sole discretion of the Board of
Directors, are adequate to justify a corporate contribution. The
401(k) Plan is open to all full time employees of the Company.
Certain Relationships and Related Transactions
The Company serves as operator of certain oil and gas
properties in which some of the officers and directors of the
Company have working interests. Such individuals pay their pro-
rata share of all costs relating to the properties, on the same
basis as other unaffiliated interest owners. Mr. Fitzgerald, one
of the Company's directors and executive officers, owns royalty
interests that burden certain of the Company's properties.
Stock Ownership
The following table sets forth information concerning the
beneficial ownership of the Company's Common Stock as of
April 15, 1999, by (i) each shareholder known by the Company to
own of record or beneficially more than 5% of the Company's
outstanding Common Stock; (ii) the Company's chief executive
officer (Mr. Mallon); (iii) each of the Company's Directors and
nominees, and (iv) all Directors and Officers as a group.
<TABLE>
<CAPTION>
Number of Percent
Name and Address (1) Shares Owned
<S> <C> <C>
George O. Mallon, Jr. 517,990 (2) 7.1%
Kevin M. Fitzgerald 122,607 (3) 1.7%
Roy K. Ross 62,217 (4) 0.9%
Frank Douglass 44,010 (5) 0.6%
Roger R. Mitchell 55,826 (6) 0.8%
Francis J. Reinhardt, Jr. 58,086 (7) 0.8%
Peter H. Blum 95,401 (8) 1.3%
Wellington Management Company, LLP 662,000 (9) 9.4%
State Street Research and Management 491,000 (10) 7.0%
Robert Fleming Inc. 541,975 (11) 7.7%
Centennial Energy Partners 356,000 (12) 5.1%
All Officers and Directors as a Group
(8 persons) 964,937 (13) 12.7%
</TABLE>
1. The address of Messrs. Mallon, Fitzgerald and Ross is 999 18th
Street, Suite 1700, Denver, CO 80202. The address of Mr.
Douglass is 4350 Beltway Drive, Dallas, TX 75244-8266. The
address of Mr. Mitchell is 5436 Lake Edge Drive, Holly Springs,
NC 27540. The address of Mr. Reinhardt is 650 Madison Ave., 23rd
Floor, New York, NY 10022. The address of Mr. Blum is 4 Trapping
Way, Pleasantville, NY 10570. The address of Wellington
Management Company, LLP is 75 State Street, Boston, MA 02109.
The address of State Street Research and Management is One
Financial Center, 30th Floor, Boston, MA 02111-2690. The
address of Robert Fleming Inc. is 320 Park Avenue, 11th Floor,
New York, NY 10022. The address of Centennial Energy Partners is
900 Third Avenue, Suite 1801, New York, NY 10022.
2. Includes 2,166 shares owned by Mr. Mallon's wife, 254,039
shares that could be acquired by Mr. Mallon upon the exercise of
immediately exercisable stock options and warrants that he holds,
and 5,000 restricted stock award shares that have not yet vested.
A trust created for the benefit of Mr. Mallon's children owns
shares that are not included, as Mr. Mallon has no voting or
other control over the shares in the trust.
3. Includes 102,607 shares that could be acquired by Mr.
Fitzgerald upon the exercise of immediately exercisable stock
options and warrants that he holds, and 5,000 restricted stock
award shares that have not yet vested. Does not include 104,121
shares covered by stock options that have not yet vested.
4. Includes 55,467 shares that could be acquired by Mr. Ross upon
the exercise of immediately exercisable stock options and
warrants that he holds, and 2,500 restricted stock award shares
that have not yet vested. Does not include 70,751 shares covered
by stock options that have not yet vested.
5. Includes 25,406 shares that could be acquired by Mr. Douglass
upon the exercise of immediately exercisable stock options and
warrants that he holds. Does not include 3,000 shares covered by
stock options that have not yet vested.
6. Includes 20,736 shares that could be acquired by Mr. Mitchell
upon the exercise of immediately exercisable stock options that
he holds. Does not include 3,000 shares covered by stock options
that have not yet vested.
7. Includes 23,401 shares that could be acquired by Mr. Reinhardt
upon the exercise of immediately exercisable stock options and
warrants that he holds. Does not include 3,000 shares covered by
stock options that have not yet vested.
8. Includes 93,401 shares that could be acquired by Mr. Blum upon
the exercise of immediately exercisable stock options and
warrants that he holds. Does not include 3,000 shares covered by
stock options that have not yet vested.
9. According to information provided in a Schedule 13G dated
December 31, 1998.
10. According to information provided in a Schedule 13G dated
February 11, 1999.
11. According to information provided in a Schedule 13G dated
February 5, 1999.
12. According to information provided in a Schedule 13G dated
April 5, 1999.
13. Includes 583,857 shares that could be acquired upon the
exercise of immediately exercisable stock options and warrants
and 12,500 restricted stock award shares that have not yet
vested. Does not include 200,072 shares covered by stock options
that have not yet vested.
Annual Report and Financial Statements
You are referred to the Company's Annual Report to
Shareholders for the year ended December 31, 1998, enclosed
herewith. The Annual Report is not incorporated in the Proxy
Statement and is not to be considered part of the soliciting
material.
Comparative Performance Graph
The following line graph reflects the performance of (i) the
Company's Common Stock, (ii) the Nasdaq Market Index, and (iii)
the Standard Industrial Classification ("SIC") Index for SIC Code
131 (which includes crude petroleum and natural gas companies).
The graph assumes $100 was invested on December 31, 1993 in the
Company's Common Stock and in each of the other indices. The
graph also assumes the reinvestment of all dividends. Stock
price performance shown on the graph is not necessarily
indicative of future price performance.
<TABLE>
<CAPTION>
Mallon Resources Corporation
Comparison of Cumulative Total Return
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Mallon Resources Corporation 100 50.00 37.50 56.25 51.56 42.97
SIC Code Index 100 104.80 115.26 153.26 155.34 124.43
Nasdaq Market Index 100 104.99 136.18 169.23 207.00 291.96
</TABLE>
Submission of Shareholder Proposals
Proposals intended for inclusion in next year's Proxy
Statement should be sent to the Secretary of the Company at 999
18th Street, Suite 1700, Denver, Colorado 80202, and must be
received by March 1, 2000.
Compliance with Securities Transaction Reporting Requirements
Pursuant to Section 16(a) of the Securities Exchange Act
1934, certain individuals and entities are required to
periodically file reports with the Securities and Exchange
Commission in which they disclose information concerning their
transactions involving the Company's securities. To the
Company's knowledge, based solely on review of copies of such
reports submitted to the Company, during the year ended
December 31, 1998, no individual or entity known to the Company
to be subject to the reporting requirements of Section 16(a)
failed to satisfy those requirements in a timely fashion.
By Order of the Board of Directors,
Roy K. Ross
Corporate Secretary
Dated: April 29, 1999
PROXY CARD
Annual Meeting of Shareholders - June 8, 1999
The undersigned shareholder of Mallon Resources Corporation (the
"Company") acknowledges receipt of notice of the Company's
Annual Meeting of Shareholders to be held in Denver, Colorado,
on Tuesday, June 8, 1999, and hereby appoints Alfonso R. Lopez
and Carol Naranjo, or either of them, with the power of
substitution, as attorneys and proxies to represent and vote, as
designated below, all the shares of the Company's Common Stock
held of record by the undersigned on April 26, 1999, at the
Annual Meeting, or any adjournment thereof, as follows:
I. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES LISTED BELOW
(Except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees below
George O. Mallon, Jr. Kevin M. Fitzgerald
Roy K. Ross Roger R. Mitchell
Frank Douglass Frances J. Reinhardt, Jr.
Peter H. Blum
(INSTRUCTIONS: To withhold authority to vote for any individual
nominee, draw a line through that nominee's name).
II. In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
meeting.
This Proxy when properly executed and delivered will be voted in
the manner directed herein by the undersigned shareholder. If
no direction is given, this proxy will be voted FOR all
proposals.
Dated __________________, 1999
Please sign exactly as your name appears on the stock
certificate(s). When shares are held as joint tenants, both
should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
_________________________________
Signature
_________________________________
Signature (if held jointly)
_________________________________
Printed name, as it appears on stock certificate(s)
_________________________________
Printed name of joint tenant, as it appears on stock
certificate(s)
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE
