As filed with the Securities and Exchange Commission on November 26, 1997
Registration No. __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-3
Registration Statement
Under
The Securities Act of 1933, as Amended
----------------------
UNITED STATES EXPLORATION, INC.
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(Exact name of registrant as specified in charter)
Colorado 1380 84-1120323
-------- ---- ----------
(State or other jurisdiction (Primary Standard I.R.S. Employer
of incorporation Industrial Identification No.)
or organization) Classification Code)
1560 Broadway, Suite 1900
Denver, Colorado 80202
(303) 863-3550
--------------------------------------------
(Address and telephone number of registrant's
principal executive offices)
Bruce D. Benson, President, Chief Executive Officer and Chairman of the Board
1560 Broadway, Suite 1900
Denver, Colorado 80202
(303) 863-3550
-------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies of all communications, including all communications sent to the
agent for service, should be sent to:
David J. Babiarz, Esq.
Overton, Babiarz & Sykes, P.C.
7720 E. Belleview Avenue
Building 46-B, Suite 200
Englewood, CO 80111
(303)779-5900
----------------------------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable 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 of the Securities Act of 1933
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(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. [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------
Proposed
Title of each class Proposed maximum
of securities to be Amount to be maximum offering aggregate offering Amount of
registered registered price per unit price registration fee
- -------------------------------------------------------------------------------------------------------------------
Common Stock, $.0001
par value per share,
issuable on conversion
<S> <C> <C> <C> <C>
of Preferred Stock 7,700,000 $3.84 * $29,568,000 $8,960.00
</TABLE>
* Based upon the conversion rate of the Common Stock underlying the Preferred
Stock and the market price of the Common Stock on November 25, 1997.
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, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
<PAGE>
[RED HERRING]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there by any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION DATED NOVEMBER 26, 1997
P R O S P E C T U S
UNITED STATES EXPLORATION, INC.
7,700,000 Common Shares,
$.0001 par value per share
The shares of Common Stock offered hereby are issuable by the Company upon
conversion of the Company's outstanding 1996 Series "C" Preferred Stock (the
"Series "C" Preferred Stock"). The Company will not receive any additional
consideration upon conversion of Series "C" Preferred Stock.
The Company's Common Stock is listed on the American Stock Exchange under
the symbol "UXP". On November 25, 1997, the last reported sale price for the
Common Stock was $3.875 per share.
The Company will pay all costs and expenses incurred in connection with the
registration of the Common Shares.
Investors should consider the information set forth under "Risk Factors" in
evaluating an investment in the Common Shares.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is November .. , 1997
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, with all amendments, the "Registration Statement") filed by the Company
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "1933 Act"). The Prospectus does not
contain all the information set forth in the Registration Statement and
exhibits, and statements included in this Prospectus as to the contents of any
contract or other document are not necessarily complete. For further
information, reference is made to the Registration Statement and all exhibits
filed therewith. Statements contained in this Prospectus are qualified in all
respects by reference to the copy of the contracts or documents filed as an
exhibit to the Registration Statement. The Company is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and in accordance therewith, files reports, proxy statements,
and other information with the Commission. Information concerning the Company
can be inspected and copied at the offices of the Commission, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549; 500 Madison Street, Suite 1400,
Chicago, Illinois 60661; and 7 World Trade Center, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants, such as the Company, that file
electronically with the Commission. Information concerning the Company is also
available for inspection at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York 10006-1881.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for the year ended March 31,
1997 (herein, the "10-KSB"), its Quarterly Reports on Form 10-QSB for the
quarters ended June 30 and September 30, 1997 and the description of the
Company's Common Shares contained in its Registration Statement on Form 8-A as
filed with the Commission on October 17, 1997, are hereby incorporated in this
Prospectus by reference. In addition, all documents filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the
date of this Prospectus and prior to the termination of the offering are hereby
incorporated by reference.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that such statement is modified or replaced by a statement contained
in this Prospectus or in any other subsequently filed document that also is or
is deemed to be incorporated by reference into this Prospectus. Any such
statement so modified or superseded shall not be deemed, except as so modified
or replaced, to constitute a part of this Prospectus. The Company will provide
without charge to each person to whom a copy of this Prospectus has been
delivered, upon written or oral request, a copy of any of the documents referred
to above that have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents. Written or oral requests for such copies
should be directed to F. Michael Murphy, Vice President and Secretary, United
States Exploration, Inc., 1560 Broadway, Suite 1900, Denver, Colorado 80202;
(303) 863-3550.
ii
<PAGE>
Special Note Regarding Forward Looking Statements
Certain statements contained or incorporated by reference herein constitute
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward looking statements include, without
limitation, statements regarding the Company's need for working capital, future
revenues and results of operations. Factors that could cause actual results to
differ materially include, among others, the following: Market prices in the oil
and gas industry, results of drilling, recompletions and work-overs undertaken
by the Company, the Company's ability to identify, document and finance future
acquisitions of producing or undeveloped oil and gas properties, competition
with other regional suppliers of oil and gas products, relationships with third
parties regarding utilization of Company owned gas gathering systems and the
overall economic climate as well as the other factors discussed under "Risk
Factors". Most of these factors are outside the control of the Company.
Investors are cautioned not to put undue reliance on forward looking statements.
The Company disclaims any intent or obligation to update publicly these forward
looking statements, whether as a result of new information, future events or
otherwise.
iii
<PAGE>
TABLE OF CONTENTS
Page
----
The Company ............................................................. 1
Risk Factors ............................................................ 1
Plan of Distribution .................................................... 5
Opinion of Counsel ...................................................... 5
Experts ................................................................. 6
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
COMMON SHARES OFFERED BY THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY COMMON SHARES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
iv
<PAGE>
THE COMPANY
United States Exploration, Inc. (the "Company") was incorporated under the
laws of the State of Colorado on January 9, 1989. The Company is an independent
producer of oil and natural gas and an operator of natural gas gathering
systems. The Company's executive offices are located at 1560 Broadway, Suite
1900, Denver, Colorado 80202. Its telephone number is (303) 863-3550.
The Company owns high percentage working interests and net revenue
interests in both oil and gas properties, and interests in gas gathering
systems. The Company acts as operator for substantially all properties and
systems in which it currently owns an interest. Historically, the Company's
operations have been primarily in Kansas and Oklahoma, but the Company has
adopted an expansion strategy that includes the acquisition of oil and gas
properties in other areas of the United States.
RISK FACTORS
Prospective investors should carefully consider the following factors,
among others set forth in this Prospectus, before making a decision to acquire
the Common Shares offered hereby.
Risk Factors Relating to the Company
Limited Operating History. The activities of the Company to date have been
limited. The success of the Company will depend on the efforts of management to
evaluate and pursue opportunities to acquire and develop new or existing oil and
gas properties and to raise the capital necessary for such activities. There is
no assurance that the Company will be successful in those pursuits or that its
existing or future properties will generate a profit to the Company.
Sustained Operating Losses. The Company has sustained substantial operating
losses since its inception in 1989 and has required capital from outside sources
(primarily private equity investors) to finance operations and continue as a
going concern. There can be no assurance that the Company's future operations
will prove profitable or that the Company will be able to attract additional
capital from outside sources to finance continuing operations and its planned
growth strategy.
Risks Relating to Growth Strategy. The principal component of the Company's
growth strategy is to continue to expand through additional acquisitions which
compliment the Company's business in new or existing geographic areas. Since its
formation in 1989, the Company has pursued a growth strategy through acquisition
of other business entities or assets, and may continue this strategy in the
future. The Company's future growth will depend upon a number of factors,
including, among others, the Company's ability to (i) identify and negotiate
satisfactory agreements with acceptable acquisition candidates; (ii) generate
sufficient funds from existing operations or third party financing to support
such acquisitions; (iii) staff, train and retain skilled personnel; and (iv)
successfully integrate acquired businesses or assets with the Company's existing
operations and systems. Certain of these factors are beyond the Company's
control and may be affected by the economy or actions taken by competing
companies. There can be no assurance that the Company will successfully expand
or that any expansion will result in profitability. The failure to effectively
identify, evaluate, acquire and integrate acquired businesses or assets would
adversely affect the Company's business, financial condition and results of
operations, possibly causing negative effects on the market price of the
Company's Common Stock. In addition, acquisitions involve a number of special
risks, such as diversion of management's attention, difficulties in the
integration of acquired operations and retention of key personnel and
1
<PAGE>
unanticipated legal liabilities, some or all of which could have a material
adverse effect on the Company's business, financial condition and results of
operations. The results achieved to date by the Company may not be indicative of
its prospects or ability to operate successfully in new geographic areas, many
of which may have different conditions and characteristics than those of the
Company's current operations.
In connection with prospective acquisitions, the Company anticipates
experiencing growth in the number of its employees and the geographic area of
its operations. The Company believes this growth will increase the operating
complexity of the Company, the demands on its operating and financial systems
and the level of responsibility for both existing and new management personnel.
Implementation of the Company's growth strategy may therefore impose significant
strain on the Company's management and systems. To manage this expected growth,
the Company intends to continue to expand, train and manage its employee base
and update its systems as appropriate. There can be no assurance that the
Company will be able to attract and retain qualified management and employees or
maintain adequate operating and financial systems and controls to support its
growth. The inability of the Company to successfully manage expected growth
would have a material adverse effect on the Company's business, financial
condition and results of operations.
Future Drilling Commitments. Oil and gas leases in which the Company holds
an interest or which it may acquire in the future may include commitments for
the drilling of oil and gas wells to retain the Company's interest in the lease.
The provisions of these leases typically require the drilling of a new well or
recompletion of an existing well at specified intervals in order to retain the
Company's interest in the lease. Portions of the acreage covered by the lease
which are unproductive as a result of this drilling may be forfeited by the
Company. The Company intends to fulfill its drilling commitments on those leases
and in such geographic areas as mangement deems in the best interest of the
Company and its shareholders. However, all of this activity requires working
capital, the source of which cannot be assured. Failure of the Company to
develop all or portions of existing or future leases may result in forfeiture of
those leases.
Dependence on Key Personnel. The success of the Company is currently
dependent upon the efforts and expertise of Bruce D. Benson, Chairman of the
Board, President and Chief Executive Officer of the Company, F. Michael Murphy,
Chief Financial Officer, Vice President and Secretary, Murray N. Brooks, Vice
President of Operations and certain other employees of Benson Mineral Group,
Inc. ("BMG"). Other than an employment agreement with Mr. Benson, the Company
does not have employment agreements with any of its officers. In addition, Mr.
Benson does not devote his full time to the affairs of the Company. The loss of
the services of any of these individuals could adversely effect the conduct of
the Company's business.
Risks Associated with Gathering Systems. Obtaining dedicated gas reserves
to maintain the throughput of the gathering systems currently owned by the
Company will require the drilling of additional wells by the Company or third
parties in the vicinity of the gathering systems, as well as continual
negotiation of new agreements to transport gas. Future drilling may depend on
increased prices for gas, which are not within the Company's control. As a
result, successful operation of the gathering systems in the long term will
depend on the Company's or third parties' ability to develop or acquire
additional reserves to be dedicated to the gathering systems. Due to the
competitive nature of the industry, there can be no assurance that the Company
will be successful in these efforts.
2
<PAGE>
Limitations on Estimates of Company's Existing Reserves. The Company has
obtained oil and gas reserve reports from outside consultants in connection with
the estimate of oil and gas reserves contained in certain of its filings with
the Securities and Exchange Commission. However, reserve engineering is not an
exact science and involves estimates based on numerous assumptions, many of
which are variable and uncertain. Because estimates of reserves and future net
revenues involve projecting future results by estimating future events, such
estimates may vary substantially from actual results. Estimates of reserve
amounts may be significantly affected by various factors including, but not
limited to, fluctuations in the prices for oil and gas products and costs of
production, which prices and costs may be volatile. Actual production, revenues,
taxes, development expenses and operating expenses can be expected to vary from
the estimates. In addition, assumptions made about future production and
marketing may differ from actual production and marketing. Estimates of
undeveloped reserves are not based upon information such as actual production
history, and thus are generally not as reliable. There can be no assurance that
the Company will be able to make the expenditures which the reserve estimates
and economic projections assume will be made.
While the respective reserve estimates, evaluations and associated future
net revenues reported by the Company represent its best estimate with respect to
the existence of oil and gas reserves and the future net revenues associated
with the production of oil and gas and the operation of the gathering systems,
such estimates should not be taken as a representation or guarantee of future
results.
Governmental Regulation. The Company is subject to Federal, state and local
laws, regulations and administrative practices affecting its business. Domestic
exploration for, and production and sale of, oil and gas are extensively
regulated both at the Federal and state levels. A heavy regulatory burden on the
oil and gas industry increases the Company's cost of doing business and
consequently affects its profitability. The activities of the Company will also
be subject to various Federal, state and local laws and regulations designed to
protect the environment. Under these laws, the Company could be liable for
substantial cleanup and response costs plus penalties in the event of a spill of
oil or hazardous substances. For instance, legislation has been proposed in
Congress from time to time that would amend the Federal Resource Conservation
and Recovery Act of 1976 ("RCRA") to reclassify oil and gas production wastes as
"hazardous waste." If such legislation were enacted, it could have a significant
impact on operating costs of the Company, as well as the oil and gas industry in
general. It is not anticipated that the Company will be required in the near
future to expend amounts that are material in relation to its capital
expenditure program by reason of environmental laws and regulations, but
inasmuch as such laws and regulations are frequently changed, the Company is
unable to predict the ultimate cost of compliance.
Potential Liability for Environmental Cleanup. In connection with the
ownership or operation of its oil and gas properties, the Company may be subject
to potential liabilities for environmental cleanup or damages in connection with
any contamination associated with the site. The Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA" or "Superfund") and
certain state laws and regulations impose liability for cleanup of waste sites,
and in some circumstances, attorney's fees, damages and/or trebling of damages.
Any violations, even though not directly caused by the Company, could
potentially subject the Company to fines and penalties, as well as other
administrative sanctions. While management is not aware of any existing adverse
conditions, such violations could have a material adverse effect on the
Company's future profitability.
3
<PAGE>
Competition. There are many established companies engaged in the
exploration, development and production of oil and gas reserves, both in the
United States and in foreign countries, which have substantially greater
experience and financial and personnel resources than the Company. Accordingly,
the Company will be competing with numerous national and international firms
engaged in the oil and gas industry.
Risk Factors Related to the Offering
Recent Exchange Listing; Limited Trading Market. The Company's Common Stock
was admitted for listing on the American Stock Exchange effective October 23,
1997. Prior to that date, the Common Stock was quoted in the Nasdaq Small Cap
market. It is impossible to predict what effect, if any, such new listing will
have on the trading market for the Common Stock. Trading in the Common Stock
historically has been limited, averaging approximately 25,500 shares per day for
the twelve months preceding the date of this Prospectus. Accordingly, investors
may have difficulty selling their Common Stock, should they desire to do so.
(See "Market for Common Stock").
Market Overhang. An aggregate of 7,700,000 shares of Common Stock are
issuable upon conversion of the Series "C" Preferred Stock, while 8,765,058
shares are outstanding on the date of this Prospectus. In addition,
approximately 4,600,000 additional shares are issuable upon exercise of options
currently outstanding. The Company is unable to predict what effect, if any,
sales of these Common Shares may have on the prevailing market price thereof. A
possibility exists that a sale of a significant volume of these shares may have
a depressive effect on the market price of the Common Stock.
Lack of Dividends. No dividend has been paid on the Common Shares since
inception, and none is contemplated at any time in the foreseeable future.
Management contemplates that any cash available from operations will be
reinvested in the business for the foreseeable future. In addition, terms of the
Series "C" Preferred Stock prevent payment of dividends on the Common Stock
while the Series "C" Preferred Stock is outstanding.
Preferred Stock Outstanding. The Company currently has outstanding Series
"C" Preferred Stock containing preferences on dividends and liquidation.
Pursuant to the terms of the Series "C" Preferred Stock, holders are entitled to
receive, when, as and if declared by the Board of Directors, out of funds at the
time legally available, cash dividends at the rate of 8% per annum. Such
dividends have priority as to dividends on the Common Shares and any other class
or series of capital stock issued hereafter. In the event of liquidation,
dissolution or winding up of the Company, holders of the Series "C" Preferred
Stock are entitled to receive, out of the assets of the Company available for
distribution to shareholders, a liquidation preference of $6.00 per share of
Series "C" Preferred Stock, plus an amount equal to any accrued or unpaid
dividends up to the payment date. The rights in liquidation of the Series "C"
Preferred Stock are prior and superior to any payment or distribution to holders
of Common Shares, or any series or class of Company stock issued hereafter.
Finally, the Company has authorized a total of 100,000,000 shares of Preferred
Stock, which shares may be divided into series as designated by the Board of
Directors and issued in the future. The outstanding Series "C" Preferred Stock,
and any series of Preferred Shares issued in the future, will operate to the
disadvantage of existing shareholders and purchasers in this offering.
4
<PAGE>
Risk Factors Relating to the Oil and Gas Industry
Volatility in Oil and Gas Prices. The Company's revenues and future rate of
growth are substantially dependent on prevailing prices for natural gas and oil.
These prices can be extremely volatile. Prices are effected by actions of state
and local agencies, the United States and foreign governments, and international
cartels. These external factors and the volatile factors of the energy markets
make it difficult to estimate future prices of natural gas and oil. Any
substantial or extended decline in the price of natural gas or oil would have a
material adverse effect on the Company's financial condition and the results of
operations, including reduced cash flow. All of these factors are beyond the
control of the Company. Sales and prices of the natural gas and oil are often
seasonal in nature, leading to substantial differences in cash flow at various
times throughout the year. Federal and state regulation of oil and gas
production and transportation, general economic conditions, changes in supply
and changes in demand all could adversely effect the Company's ability to
produce and market its natural gas and oil. If market factors were to change
dramatically, the financial impact on the Company could be substantial. The
availability of markets and the volatility of market prices are beyond the
control of the Company and thus represent a significant risk.
Market and Other Risk Factors. The acquisition, exploration, development,
production and sale of oil and gas are subject to many factors which are outside
the Company's control. These factors include worldwide and domestic economic and
political conditions, and the supply and price of other fuels.
Operating Hazards and Uninsured Risks. The Company's operations will be
subject to all the risks normally incident to exploration for, development and
production of oil and gas, including blowouts, explosions and fires, any of
which could result in damage to or destruction of oil and gas wells or producing
facilities, damage to life, property and possibly, the environment. While the
Company has acquired liability insurance insuring against injury or damage to
person or property, and will require insurance from any contractor or industry
partner with which the Company may contract for drilling on the properties in
which it currently holds an interest, there is no assurance that the proceeds of
such insurance will protect the Company against all risks, or that the proceeds
of such insurance will be adequate in each case.
PLAN OF DISTRIBUTION
The shares of Common Stock are issuable upon conversion of outstanding
Series "C" Preferred Stock. The Preferred Stock is convertible at any time and
until the Preferred Stock is redeemed by the Company. Any solicitation for the
conversion of the Preferred Stock will be done by the Company, through its
officers and directors. No commission or other form of renumeration will be paid
in connection with such efforts. The Company will not receive any additional
consideration upon conversion of the Series "C" Preferred Stock.
OPINION OF COUNSEL
The validity of the Common Shares offered hereby has been passed upon for
the Company by Overton, Babiarz & Sykes, P.C., Englewood, Colorado. Overton,
Babiarz & Sykes, P.C. owns options to acquire 70,000 Common Shares of the
Company.
5
<PAGE>
EXPERTS
The financial statements of United States Exploration, Inc. as of March 31,
1997 and for the year then ended, incorporated in this Prospectus by reference
to the Annual Report on Form 10-KSB for the year ended March 31, 1997 have been
so incorporated in reliance on the report of Grant Thornton, LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting. The audited financial statements in all future reports and filings
incorporated herein by reference will be so incorporated in reliance upon the
reports of the auditors named therein given on the authority of such auditors as
experts in auditing and accounting.
The Company's estimated reserve evaluations incorporated in the Prospectus
by reference to the Annual Report on Form 10-KSB for the year ended March 31,
1997 have been so incorporated in reliance on the consent of Petroleum
Consultants, Inc. upon the authority of such firm as experts in petroleum
engineering. The reserve reports in all future reports and filings incorporated
herein by reference will be so incorporated in reliance upon the reports of the
engineers named therein given on the authority of such consultants as experts in
petroleum reserves.
6
<PAGE>
PART II
Information Not Required in the Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The expenses of the offering, to be borne by the Company, are as
follows:
SEC Filing Fee $ 8,960
Printing Expenses $ 500 *
Accounting Fees and Expenses $ 2,500 *
Legal Fees and Expenses $ 5,000 *
Miscellaneous $ 1,040 *
---------
Total $18,000
=========
* Indicates estimates for purposes of this filing.
Item 15. Indemnification of Directors and Officers.
Under Section 7-109-102 of the Colorado Business Corporation Act, Article
IX of the Registrant's Articles of Incorporation, as amended, and agreements
executed with the Registrant, its directors and officers are entitled to be
indemnified against certain liabilities which they may incur in their capacities
as such. Further, the Board of Directors is required to advance expenses
(including attorneys fees) incurred in defending a civil or criminal action,
suit or proceeding in advance of the final disposition of the such action, suit
or proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it is ultimately
determined that he is entitled to be indemnified by the Company as authorized in
the foregoing provisions.
Item 16. Exhibits.
The following is a complete list of exhibits filed as a part of this
Registration Statement and which are incorporated herein.
Exhibit No. Description
- ----------- -----------
5 Opinion of Overton, Babiarz & Sykes, P.C. regarding the legality
of the securities registered hereunder
23.1 Consent of Grant Thornton, LLP
II-1
<PAGE>
23.2 Consent of Petroleum Consultants, Inc.
23.3 Consent of Overton, Babiarz & Sykes, P.C.
24 Power of Attorney (included in the signature page to this
Registration Statement)
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales of the Common
Shares are being made, a post-effective amendment to this Registration Statement
to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which, individually
or in the aggregate, represent a fundamental change in the
information in the registration statement;
(iii)Include any additional or revised material information on the
plan of distribution.
Provided, however, that the undertakings set forth in paragraphs (a)(1)(i)
and (a)(1)(ii) above do not apply if the information required to be included in
a post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized in Denver, Colorado on the 26, day of November, 1997.
UNITED STATES EXPLORATION, INC.
By: /S/ BRUCE D. BENSON
---------------------------------------------------
Bruce D. Benson, President, Chief Executive Officer
and Chairman of the Board
POWER OF ATTORNEY
We, the undersigned officers and directors of United States Exploration,
Inc., do hereby constitute and appoint Bruce D. Benson and F. Michael Murphy, or
either of them, to be our true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for each of us and in our name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith
and about the premises, as fully to all intents and purposes as each of us might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement or Amendment thereto has been signed by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/S/ BRUCE D. BENSON President, Chief Executive November 26, 1997
- ---------------------------- Officer, and Chairman of
Bruce D. Benson the Board of Directors
/S/ F. MICHAEL MURPHY Vice President, Chief November 26, 1997
- ---------------------------- Financial Officer and Secretary
F. Michael Murphy
/S/ RANDALL L. ROGERS Chief Accounting Officer November 26, 1997
- ----------------------------
Randall L. Rogers
/S/ THOMAS W. GAMEL Director November 26, 1997
- ----------------------------
Thomas W. Gamel
/S/ ROBERT J. MALONE Director November 26, 1997
- ----------------------------
Robert J. Malone
/S/ RICHARD L. ROBINSON Director November 26, 1997
- ----------------------------
Richard L. Robinson
II-3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated May 30, 1997 accompanying the consolidated
financial statements of United States Exploration, Inc. and Subsidiaries
included in the Annual Report on Form 10-KSB for the year ended March 31, 1997
which is incorporated by reference in this Registration statement and
Prospectus. We consent to the incorporation by reference in the Registration
Statement and Prospectus of the aforementioned report and to the use of our name
as it appears under the caption "Experts."
GRANT THORNTON, LLP
/S/ GRANT THORNTON LLP
- ------------------------------------
Wichita, Kansas
November 24, 1997
CONSENT OF INDEPENDENT PETROLEUM CONSULTANT
As independent petroleum consultants, Petroleum Consultants, Inc.
("Petroleum Consultants") has rendered its Reserve Report, dated May 20, 1997,
concerning the properties operated at that time by the United States
Exploration, Inc. Petroleum Consultants hereby consents to all references to
Petroleum Consultants in the Prospectus and Registration Statement of which they
are a part, and the reference to Petroleum Consultants under the heading
"Experts" in the Registration Statement on Form S-3 of United States
Exploration, Inc.
PETROLEUM CONSULTANTS, INC.
/s/ RONALD L. COOK
-----------------------------------------
Ronald L. Cook, P.E.
OVERTON, BABIARZ & SYKES, P.C.
ATTORNEYS AT LAW
DENVER TECH CENTER
7720 EAST BELLEVIEW AVENUE, SUITE 200
ENGLEWOOD, COLORADO 80111
(303) 779-5900
Facsimile (303) 779-6006
DAVID J. BABIARZ
November 24, 1997
United States Exploration, Inc.
1560 Broadway, Ste. 1900
Denver, CO 80202
Re: Registration Statement on Form S-3
(S.E.C. File No. ____________) Covering
Public Offering of 7,700,000 Common Shares
Gentlemen:
We have acted as counsel to United States Exploration, Inc., a Colorado
corporation (the "Company"), in connection with the registration by the Company
of an aggregate of 7,700,000 Common Shares, par value $.0001 per share (the
"Common Shares"), to be issued by the Company upon conversion of Series "C"
Preferred Stock previously issued by the Company (the "Preferred Stock"), all as
more fully set forth in the Registration Statement on Form S-3 to be filed by
the Company on or about November 25, 1997.
In such capacity, we have examined, among other documents, the Articles of
Incorporation, as amended, Bylaws and minutes of meetings of its Board of
Directors.
Based on the foregoing, and subject to such further examinations as we have
deemed relevant and necessary, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Colorado.
2. The Common Shares, when issued upon conversion of the Preferred Stock
and the Articles of Incorporation, will be legally and validly issued, fully
paid and non-assessable.
3. The Preferred Stock and underlying Common Shares have been legally and
validly authorized under the Articles of Incorporation, as amended, of the
Company.
<PAGE>
United States Exploration, Inc.
November 24, 1997
Page 2
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part thereof,
and any amendments thereto.
Sincerely,
OVERTON, BABIARZ & SYKES, P.C.
/s/ OVERTON, BABIARZ & SYKES, P.C.
