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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 2000
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NUEVO ENERGY COMPANY
(Exact name of registrant as specified in its charter)
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DELAWARE 1311 76-0304436
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
1021 MAIN, SUITE 2100, HOUSTON, TEXAS 77002
(713) 652-0706
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
BRUCE K. MURCHISON
1021 MAIN, SUITE 2100, HOUSTON, TEXAS 77002
(713) 652-0706
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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Copies to:
GEORGE G. YOUNG III
HAYNES AND BOONE, L.L.P.
1000 LOUISIANA ST., SUITE 4300
HOUSTON, TEXAS 77002
TELEPHONE: (713) 547-2081
TELECOPY: (713) 547-2600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after the Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
---------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER UNIT PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
9 3/8% Senior Subordinated Notes due
2010................................... $150,000,000 100% $150,000,000 $39,600(1)
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(1) Calculated in accordance with Rule 457(f)(2).
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.
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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 BE 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.
[NUEVO ENERGY COMPANY LOGO]
NUEVO ENERGY COMPANY
OFFER TO EXCHANGE
9 3/8% SENIOR SUBORDINATED NOTES DUE 2010, SERIES B
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR
ANY AND ALL OUTSTANDING
9 3/8% SENIOR SUBORDINATED NOTES DUE 2010, SERIES A
($150,000,000 IN PRINCIPAL AMOUNT OUTSTANDING)
THE EXCHANGE OFFER
- The exchange offer expires at 5:00 p.m., New York City time, on
, unless extended.
- The exchange offer is not conditioned upon a minimum aggregate principal
amount of existing notes being tendered.
- All existing notes tendered according to the procedures in this
prospectus and not withdrawn will be exchanged for an equal principal
amount of exchange notes.
- The exchange offer is not subject to any condition other than that it not
violate applicable laws or any applicable interpretation of the staff of
the Securities and Exchange Commission.
THE EXCHANGE NOTES
- The terms of the exchange notes to be issued in the exchange offer are
substantially identical to the existing notes, except that we have
registered the exchange notes with the Securities and Exchange
Commission. In addition, the exchange notes will not be subject to the
transfer restrictions the existing notes are subject to, and provisions
relating to an increase in the stated interest rate on the existing notes
will be eliminated. We do not intend to apply for listing any of the
exchange notes on any securities exchange or to arrange for them to be
quoted on any quotation system.
- The exchange notes will be senior subordinated obligations of Nuevo
Energy Company. They are subordinate to our senior debt. As of June 30,
2000, we had senior debt outstanding of approximately $103.5 million.
- Interest on the exchange notes will accrue from September 26, 2000 or, if
later, from the most recent date of payment of interest on the existing
notes, at the rate of 9 3/8% per year, payable semi-annually in arrears
on each October 1 and April 1.
---------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 10 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
---------------------
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.
---------------------
The date of this Prospectus is , 2000.
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TABLE OF CONTENTS
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PAGE
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Where You Can Find More Information......................... 1
Forward-Looking Statements.................................. 2
Summary..................................................... 3
Risk Factors................................................ 10
Use of Proceeds............................................. 15
Selected Consolidated Financial Data........................ 16
The Exchange Offer.......................................... 19
Description of the Exchange Notes........................... 28
Registration Rights......................................... 67
Certain Federal Income Tax Consequences..................... 67
Plan of Distribution........................................ 70
Legal Matters............................................... 71
Experts..................................................... 71
Glossary of Oil and Gas Terms............................... 72
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement that we have filed with
the SEC. You should read this prospectus and the information incorporated by
reference, including the exhibits to the registration statement.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the SEC located at
7 World Trade Center, Suite 1300, New York, New York 10048 and at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. You may obtain information
on the operation of the SEC's public reference room in Washington, D.C. by
calling the SEC at 1-800-SEC-0330. We also file information with the New York
Stock Exchange. Such reports, proxy statements and other information may be read
and copied at 30 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" information from the
documents we file with them, which means that we can disclose important
information to you by referring you to these documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we later file with the SEC will automatically update and
supersede this information. Specifically, we incorporate by reference the
documents listed below and any future filings we make with the SEC (including
any filings we make prior to the effectiveness of the registration statement
under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the offering is terminated:
- Our Annual Report on Form 10-K for the year ended December 31, 1999;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000; and
- Our Current Reports on Form 8-K filed on February 23, 2000 and March 6,
2000.
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This prospectus incorporates important business and financial information
about us that is not included in or delivered with this document. You may
request a copy of this information at no cost, by writing or telephoning us at
the following address:
Nuevo Energy Company
1021 Main, Suite 2100
Houston, Texas 77002
Attn: Corporate Secretary
Phone: (800) 364-0206
THE EXCHANGE OFFER IS EXPECTED TO EXPIRE ON , AND YOU
MUST MAKE YOUR EXCHANGE DECISIONS BY THIS EXPIRATION DATE. TO OBTAIN TIMELY
DELIVERY OF THE REQUESTED INFORMATION, YOU MUST REQUEST THIS INFORMATION BY
, OR THE DATE THAT IS NO LATER THAN FIVE BUSINESS DAYS
BEFORE THE EXPIRATION DATE.
You should rely only on the information provided or incorporated by
reference in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information included or incorporated by reference in this
prospectus or any documents incorporated by reference herein is accurate as of
any date other than the date on the front of such documents.
FORWARD-LOOKING STATEMENTS
In this prospectus, we make forward-looking statements. We cannot assure
you that the plans, intentions or expectations upon which our forward-looking
statements are based will occur. Our forward-looking statements are subject to
risks, uncertainties and assumptions, including those discussed elsewhere in
this prospectus and the documents that are incorporated by reference into this
prospectus. Some of the risks which could affect our future results and could
cause results to differ materially from those expressed in our forward-looking
statements include:
- the volatility of oil and natural gas prices;
- the uncertainty of estimates of oil and natural gas reserves;
- the impact of competition;
- difficulties encountered during the exploration for and production of oil
and natural gas;
- the difficulties encountered in delivering oil and natural gas to
commercial markets;
- changes in customer demand;
- the uncertainty of our ability to attract capital;
- changes in the extensive government regulations regarding the oil and
natural gas business; and
- compliance with environmental regulations.
The information contained in this prospectus, including the information set
forth under the heading "Risk Factors," identifies additional factors that could
affect our operating results and performance. We urge you to carefully consider
those factors.
Our forward-looking statements are expressly qualified in their entirety by
this cautionary statement.
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SUMMARY
This summary highlights information from this prospectus, but does not
contain all material features of the exchange offer. For a complete description
of information which may be important to you, you should read this entire
document and the materials we have referred you to and consult with your own
legal and tax advisors. If you are not familiar with the terms used to describe
the quantities, present value and other information about oil and gas reserves,
please see "Glossary of Oil and Gas Terms."
This prospectus contains forward-looking statements that involve risks and
uncertainties. See "Forward-Looking Statements." See "Risk Factors" for certain
factors, including factors affecting forward-looking statements, that you should
consider before exchanging your notes.
In this prospectus, the words "we," "our," "ours," "us" and "Nuevo" refer
to Nuevo Energy Company and, except as otherwise specified in this prospectus,
to our subsidiaries.
ABOUT NUEVO
We are an independent oil and gas company. Our properties are concentrated
in California, where we are the largest independent producer, with properties
located both onshore and offshore. Our onshore California properties are located
primarily in the San Joaquin and Los Angeles Basins and in Santa Barbara county.
Our offshore California properties are located in the Santa Barbara Channel and
offshore Long Beach. We also own properties in the onshore Gulf Coast region and
internationally offshore the Republics of Congo and Ghana in West Africa, in
Canada and in Tunisia in North Africa. Since our inception in 1990, we have
expanded our operations through a series of disciplined, low-cost acquisitions
of oil and gas properties and the subsequent exploitation and development of
these properties. We have complemented these efforts with strategic divestitures
and an opportunistic exploration program which provides exposure to prospects
with the potential to add substantially to the growth of our shareholder value.
BUSINESS STRATEGY
Our business strategy consists of the following:
- dedication to a management philosophy that frames important decisions in
terms of anticipated impact on per share, rather than absolute, growth in
reserves, production, cash flows and net asset value;
- maintenance of a sound capital structure that allows us to implement a
contrarian investment orientation;
- the outsourcing of non-strategic functions;
- the alignment of employee compensation with shareholder objectives; and
- a commitment to an exemplary corporate governance structure which
reinforces the view of Nuevo as a conduit for stockholders to achieve
superior long term capital gains.
BUSINESS STRENGTHS
We believe that the following strengths provide us with significant
competitive advantages.
Timely Acquisitions and Divestitures of Properties. We have demonstrated
an ability to make acquisitions of producing properties with significant
exploitation or exploration opportunities at favorable prices and have shown
discipline in avoiding acquisitions in high-priced markets. We also seek to
divest properties in order to take advantage of strong markets and to redeploy
capital into higher return alternatives.
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Record of Reserve Growth at Low Finding Costs. Between December 31, 1997
and December 31, 1999, on a pro forma basis assuming the sale of our East Texas
natural gas properties before 1997, our estimated net proved reserves increased
17% from 246.3 MMBOE to 289.4 MMBOE. Over this period, our total finding costs
were $2.81 per BOE, which included finding costs from exploration and
exploitation of $2.57 per BOE domestically and $6.48 per BOE internationally,
and average finding costs from acquisitions of $1.91 per BOE.
Exploitation Projects. We have an inventory of over five years of low risk
exploitation projects which have the potential to significantly increase
reserves. Despite a significantly reduced capital budget in response to low oil
prices, between December 31, 1997 and December 31, 1999, we replaced 180% of our
production through exploitation and exploration.
Long-Lived Production Profile. Our properties are long-lived with a
reserve life index of 14.0 years as of December 31, 1999. This reduces
re-investment risk and adds stability to long term cash flows.
Low Cost Structure. We believe that we have the ability to significantly
reduce operating costs on acquired properties from levels experienced by prior
operators. For example, the lease operating expense per BOE for the properties
acquired in April 1996 from Union Oil Company of California was reduced from
$6.40 in the first quarter of 1996 to $5.82 for the year ended December 31,
1999. Additionally, we outsource many of our non-core day to day functions to
third party service providers, allowing us to maintain a low cost structure and
permitting our executive management team to focus on strategic decisions.
Preservation of a Sound Capital Structure. We believe that our contrarian
acquisition strategy requires that we maintain a strong capital structure.
Accordingly, as of December 31, 1999 our long term debt was $1.18 per BOE, which
is among the lowest in the industry. During the recent period of depressed oil
prices, our strong capital structure allowed us to maintain significant
liquidity in the form of unused commitments under our bank credit facility.
Reduction of Commodity Price Risk Exposure. We have implemented a hedging
policy designed to reduce our near term exposure to fluctuating oil prices. This
hedging policy is designed to enhance the stability of our cash flows, assure us
of internal funding for capital projects, improve our debt capacity and reduce
the volatility of our interest coverage ratios.
PRINCIPAL OFFICE
Our principal executive offices are located at 1021 Main, Suite 2100,
Houston, Texas 77002 and our telephone number is (713) 652-0706.
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THE EXCHANGE OFFER
On September 19, 2000, we issued $150,000,000 of our 9 3/8% Senior
Subordinated Notes due 2010, Series A. The existing notes were issued to
qualified institutional buyers in reliance upon the exemption from registration
provided by Rule 144A under the Securities Act and outside the United States in
compliance with Regulation S of the Securities Act. In connection with the
issuance of the existing notes, we entered into a registration agreement in
which we agreed to deliver to you this prospectus and to use our best efforts to
complete the exchange offer or to file and cause to become effective a
registration statement covering the resale of the existing notes. If the
exchange offer is not completed by March 18, 2001 and if we have not caused a
registration statement covering the resale of the existing notes to become
effective by that date, the interest rate on the notes will be increased by 0.5%
per year for the 90 days subsequent to March 18, 2001. The interest rate on the
notes will be increased by an additional 0.25% per year for each 90-day period
during which the exchange offer is not completed and the resale registration
statement is not effective. The maximum amount by which the interest rate will
be increased is 1% in total. After the exchange offer is complete, you will no
longer be entitled to any exchange or registration rights for your notes. You
should read the discussion under the heading "The Exchange Offer" beginning on
page 21 and "Description of the Exchange Notes" beginning on page 32 for further
information about the exchange notes.
The Exchange Offer......... We are offering to exchange up to $150,000,000
principal amount of exchange notes for an identical
principal amount of existing notes. Existing notes
may be exchanged only in $1,000 increments.
The terms of the exchange notes are identical in
all material respects to the existing notes except
that the exchange notes have been registered under
the Securities Act. Because we have registered the
exchange notes, the exchange notes will not be
subject to transfer restrictions and holders of
exchange notes will have no registration rights.
Also, the exchange notes will not contain
provisions for an increase in their stated interest
rate.
Resale..................... We believe the notes issued in the exchange offer
may be offered for resale, resold and otherwise
transferred by you without compliance with the
registration and prospectus delivery provisions of
the Securities Act provided that:
- the exchange notes received in the exchange offer
are acquired in the ordinary course of your
business;
- you are not participating and have no
understanding with any person to participate in
the distribution of the exchange notes issued to
you in the exchange offer; and
- you are not an affiliate of ours.
Each broker-dealer issued exchange notes in the
exchange offer for its own account in exchange for
existing notes acquired by the broker-dealer as a
result of market-making or other trading activities
must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resale of the exchange notes
issued in the exchange offer. A broker-dealer may
use this prospectus for an offer to resell, resale
or other retransfer of the exchange notes issued to
it in the exchange offer.
Expiration Date............ 5:00 p.m., New York City time, on ,
unless we extend the exchange offer. It is possible
that we will extend the exchange offer until all
existing notes are tendered. You may withdraw
existing notes
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you tendered at any time before 5:00 p.m., New York
City time, on the expiration date. See "The
Exchange Offer -- Expiration Date; Extensions;
Amendments."
Accrued Interest on the
Exchange Notes and the
Existing Notes........... The exchange notes will bear interest from
September 26, 2000 or, if later, from the most
recent date of payment of interest on the existing
notes, at a rate of 9 3/8% per year, payable
semi-annually on October 1 and April 1. September
15 and March 15 are the record dates for
determining holders entitled to interest payments.
Conditions to the Exchange
Offer.................... The exchange offer is subject only to the following
conditions:
- the compliance of the exchange offer with
securities laws;
- the proper tender of the existing notes;
- the representation by the holders of the existing
notes that they are not our affiliate, that the
exchange notes they will receive are being
acquired by them in the ordinary course of their
business and that at the time the exchange offer
is completed the holder had no plan to
participate in the distribution of the exchange
notes; and
- no judicial or administrative proceeding shall
have been threatened that would limit us from
proceeding with the exchange offer.
Procedures for Tendering
Existing Notes Held in
the Form of Book-Entry
Interests................ The existing notes were issued as global securities
and were deposited with State Street Bank and Trust
Company when they were issued. State Street Bank
and Trust Company issued a certificateless
depositary interest in each note, which represents
a 100% interest in the note, to The Depository
Trust Company. Beneficial interests in the notes
held by participants in DTC, which we will refer to
as notes held in book-entry form, are shown on, and
transfers of the notes can be made only through,
records maintained in book-entry form by DTC and
its participants.
If you are a holder of an existing note held in the
form of a book-entry interest and you wish to
tender your book-entry interest for exchange in the
exchange offer, you must transmit to State Street
Bank and Trust Company, as exchange agent, at the
address on the cover page of the letter of
transmittal, before the expiration date of the
exchange offer, the following:
either
- a properly completed and executed letter of
transmittal, which accompanies this prospectus,
or a facsimile of the letter of transmittal,
including all other documents required by the
letter of transmittal; or
- a computer-generated message transmitted by means
of DTC's Automated Tender Offer Program (ATOP)
system that, when received by the exchange agent
will form a part of a confirmation of
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book-entry transfer in which you acknowledge and
agree to be bound by the terms of the letter of
transmittal;
and either
- a timely confirmation of book-entry transfer of
your existing notes into the exchange agent's
account at DTC, according to the procedure for
book-entry transfers described in this prospectus
under the heading "The Exchange
Offer -- Procedures for Tendering -- Existing
Notes Held in Book-Entry Form," must be received
by the exchange agent on or prior to the
expiration date; or
- the documents necessary for compliance with the
guaranteed delivery procedures described below.
Procedures for Tendering
Existing Notes Held in
Certificated Form........ If you hold your existing notes in certificated
form and wish to accept the exchange offer, sign
and date the letter of transmittal, and deliver the
letter of transmittal, along with certificates for
the existing notes and any other required
documentation, to the exchange agent on or before
the expiration date.
Representations and
Warranties................. By executing the letter of transmittal or by being
deemed to have executed the letter of transmittal
by tendering through ATOP, you represent to us
that, among other things:
- the exchange notes you receive will be acquired
in the ordinary course of your business;
- you have no arrangement with any person to
participate in the distribution of the exchange
notes; and
- you are not an affiliate of ours or, if you are
an affiliate, you will comply with the
registration and prospectus delivery requirements
of the Securities Act to the extent applicable.
Special Procedures for
Beneficial Owners.......... If you are a beneficial owner whose existing notes
are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and
wish to tender those existing notes in the exchange
offer, please contact the registered holder as soon
as possible and instruct them to tender on your
behalf and comply with the instructions in this
prospectus.
Guaranteed Delivery
Procedures................. If you are unable to deliver the existing notes,
the letter of transmittal or any other required
documents to the exchange agent prior to the
expiration date, you may tender your existing notes
according to the guaranteed delivery procedures
described in this prospectus under the heading "The
Exchange Offer -- Guaranteed Delivery Procedures."
Withdrawal Rights.......... You may withdraw existing notes you tendered by
furnishing a notice of withdrawal to the exchange
agent or by complying with applicable ATOP
procedures at any time before 5:00 p.m. New York
City time on the expiration date. See "The Exchange
Offer -- Withdrawal of Tenders."
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Acceptance of Existing
Notes and Delivery of
Exchange Notes........... If the conditions described under "The Exchange
Offer -- Conditions" are satisfied, we will accept
for exchange any and all existing notes that are
properly tendered before the expiration date. See
"The Exchange Offer -- Procedures for Tendering."
If we close the exchange offer, the exchange notes
will be delivered promptly following the expiration
date. Otherwise, we will promptly return any
existing notes tendered.
Certain Federal Income Tax
Considerations........... See "Certain Federal Income Tax Considerations" for
a discussion of U.S. federal income tax
considerations you should consider before tendering
existing notes in the exchange offer.
Exchange Agent............. State Street Bank and Trust Company is serving as
exchange agent for the exchange offer. The address
for the exchange agent is listed under "The
Exchange Offer -- Exchange Agent." If you would
like more information about the exchange offer, you
should call the exchange agent at (617) 662-1525.
The facsimile number for the exchange agent is
(617) 662-1452.
See "The Exchange Offer" for more detailed information concerning the terms
of the exchange offer.
TERMS OF THE EXCHANGE NOTES
The form and terms of the exchange notes to be issued in the exchange offer
are the same as the form and terms of the existing notes except that the
exchange notes will be registered under the Securities Act and, accordingly,
will not bear legends restricting their transfer. The notes issued in the
exchange offer will evidence the same debt as the existing notes, and both the
existing notes and the exchange notes are governed by the same indenture.
Title...................... 9 3/8% Senior Subordinated Notes due 2010, Series
B.
Maturity Date.............. October 1, 2010.
Interest Payment Dates..... October 1 and April 1 of each year, commencing on
April 1, 2001.
Optional Redemption........ We may redeem up to one-third of the exchange notes
prior to October 1, 2003 from the proceeds of one
or more bona fide underwritten sales to the public
of our common stock at a redemption price of
109.375% of the principal amount. Otherwise, we
will not have the right to redeem the exchange
notes until October 1, 2005, after which we may
redeem the exchange notes if we pay the redemption
premium described under "Description of the
Exchange Notes -- Redemption at Our Option."
Subordination.............. The exchange notes will be unsecured senior
subordinated obligations of ours. The payment of
the principal of, and premium and interest on, the
exchange notes will be subordinated in right of
payment to the payment of all of our current and
future senior indebtedness to the same extent as
the existing notes are subordinated to senior
indebtedness. In addition, the exchange notes will
be structurally subordinated to the liabilities of
our subsidiaries. For a description of the terms
and possible effects of subordination, see "Risk
Factors" and "Description of the Exchange
Notes -- Subordination." At June 30,
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2000, we had $103.5 million of outstanding senior
indebtedness and our subsidiaries had liabilities
on their balance sheets of $84.6 million. The
exchange notes will rank equally with:
- any of the existing notes not acquired by us in
the exchange offer;
- our 9 1/2% Senior Subordinated Notes due 2008;
and
- our 9 1/2% Senior Subordinated Notes due 2006.
As of September 1, 2000, there was outstanding
$257.3 million and $2.4 million principal amount of
our 9 1/2% senior subordinated notes due 2008 and
our 9 1/2% senior subordinated notes due 2006,
respectively. The indenture for the exchange notes
will permit us to incur additional indebtedness,
including indebtedness that ranks senior in right
of payment to the exchange notes.
Change of Control.......... If a change of control occurs, we will be required
to offer to repurchase the exchange notes for cash
in the amount of 101% of the principal amount of
the exchange notes plus accrued and unpaid
interest. For a description of a change of control,
see "Description of the Exchange
Notes -- Repurchase at the Option of the
Holders -- Change of Control." Our bank credit
facility currently prohibits us from purchasing any
of the exchange notes, which would include any
purchase we may be required to make pursuant to a
change of control offer. We cannot assure you that
we will be able to amend the bank credit facility
to permit the purchase of exchange notes or
refinance the bank credit facility with lenders who
will allow us to make the required purchases. Also,
if a change of control were to occur, there can be
no assurance that we will have sufficient funds to
purchase any of the exchange notes or be permitted
under the terms of other agreements to purchase the
exchange notes. See "Risk Factors" for a
description of the possible effects if we are
unable to purchase the exchange notes upon a change
of control.
Exchange Notes Covenants... The indenture governing the exchange notes contains
covenants that limit our ability to, among other
things:
- incur additional indebtedness;
- pay dividends and repurchase our capital stock;
- enter into transactions with our affiliates;
- dispose of assets; and
- engage in mergers and consolidations.
These covenants are subject to important exceptions
and qualifications which are described under
"Description of the Exchange Notes -- Material
Covenants."
Risk Factors............... See "Risk Factors" for a discussion of factors you
should carefully consider before deciding to invest
in the exchange notes.
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RISK FACTORS
You should carefully consider all of the information we have included in
this prospectus and the documents we have incorporated by reference before
tendering your existing notes.
OUR SIGNIFICANT DEBT LEVELS AND OUR DEBT COVENANTS MAY LIMIT OUR FUTURE
FLEXIBILITY IN OBTAINING ADDITIONAL FINANCING AND IN PURSUING BUSINESS
OPPORTUNITIES.
As of June 30, 2000, we had approximately $363 million in long-term debt,
excluding current maturities. The level of our indebtedness will have important
effects on our future operations, including:
- A portion of our cash flow will be used to pay interest and principal on
our debt and will not be available for other purposes.
- Our bank credit facility contains financial tests which we must satisfy
in order to avoid a default under our bank credit facility.
- Covenants in the new notes, our existing senior subordinated notes and
our bank credit facility require us to meet financial tests in order to
borrow additional money, which may have the effect of limiting our
flexibility in reacting to changes in our business and our ability to
fund future operations and acquisitions.
- Our ability to obtain additional financing for capital expenditures and
other purposes may be limited.
SINCE THE EXCHANGE NOTES ARE SUBORDINATED TO SENIOR DEBT, THERE MAY NOT BE
SUFFICIENT ASSETS TO PAY AMOUNTS OWED ON THE NOTES IF A DEFAULT OCCURS.
The exchange notes will be subordinated to our current and future senior
debt. In addition, the exchange notes will rank equally with our existing and
future senior subordinated indebtedness and will be effectively subordinated to
the obligations of our subsidiaries. Upon a liquidation or in a bankruptcy or
other similar proceeding, the holders of our senior debt will be entitled to be
paid in full before any payment may be made to the holders of the exchange
notes. In addition, creditors of our subsidiaries will be paid prior to any use
of our subsidiaries' assets to make payments on the notes. As a result, the
holders of exchange notes may receive less, proportionately, than the holders of
senior debt. We cannot assure you that we will have sufficient assets to pay
amounts due on the exchange notes. Our indenture for the exchange notes will
permit us to incur additional debt in the future, including the entire amount
that will be available for borrowing under our bank credit facility.
YOU MAY SUFFER ADVERSE CONSEQUENCES IF YOU DO NOT EXCHANGE EXISTING NOTES.
The existing notes that are not exchanged for exchange notes have not been
registered with the SEC or in any state. Unless the existing notes are
registered, they may only be offered and sold pursuant to an exemption from, or
in a transaction that is not subject to, the registration requirements of the
Securities Act. Depending upon the percentage of existing notes exchanged for
exchange notes, the liquidity of the existing notes may be adversely affected.
WE MAY NOT BE ABLE TO REPURCHASE NOTES UPON A CHANGE OF CONTROL.
If a change of control occurs, each holder of exchange notes will have the
right to require us to repurchase all or any part of that holder's exchange
notes as described under "Description of the Exchange Notes -- Repurchase at the
Option of Holders -- Change of Control." Our bank credit facility prohibits the
repurchase of exchange notes. In order to repurchase the exchange notes, we
would be required to repay our debt under our bank credit facility or obtain
consents from our bank lenders. If we cannot repay the bank credit facility or
obtain the consents, we would not be able to repurchase the exchange notes.
Also, we may not have sufficient funds available or be able to obtain the
financing necessary to repurchase the exchange notes.
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<PAGE> 13
If a change of control occurs and we do not offer to repurchase the
exchange notes or if we do not repurchase the exchange notes when we are
required to, an event of default will occur under the indenture governing the
exchange notes, which would also be a default under our bank credit facility.
Each of these defaults could have a material adverse effect on us and the
holders of the exchange notes.
OIL AND GAS PRICES ARE VOLATILE AND WERE DEPRESSED UNTIL RECENTLY.
Our success is highly dependent on prices for oil and gas, which are
extremely volatile. Beginning in 1997 and continuing through early 1999, the
prices we received for our production declined, especially for oil. Any
substantial or extended decline in the price of oil would have a material
adverse effect on us. Oil and gas markets are both seasonal and cyclical. The
prices of oil and gas depend on factors we cannot control such as weather,
economic conditions and government actions. Prices of oil and gas will affect
the following aspects of our business:
- our revenues, cash flows and earnings;
- our ability to attract capital to finance our operations and the cost of
the capital;
- the amount we are allowed to borrow under our bank credit facility;
- the value of our oil and gas properties; and
- the profit or loss we incur in exploring for and developing our reserves.
OUR CALIFORNIA HEAVY OIL PRODUCTION MAY INCREASE OUR SUSCEPTIBILITY TO OIL PRICE
VOLATILITY.
The price we receive for heavy oil is lower than for lighter oil. In
addition, the difference between the prices we receive for California heavy oil
and our production costs are less than for lighter grades. As a result, the
effect of a decrease in the price of oil will more adversely affect the
profitability of heavy oil compared with lighter oil.
WE MAY BE UNABLE TO REPLACE RESERVES WHICH WE HAVE PRODUCED.
Our future success depends upon our ability to find, develop and acquire
additional oil and gas reserves that are economically recoverable. Without
successful exploration, exploitation or acquisition activities, our reserves and
revenues will decline. We cannot assure you that we will be able to find and
develop or acquire additional reserves at an acceptable cost.
WE MAY NOT BE SUCCESSFUL IN ACQUIRING AND DEVELOPING OIL AND GAS PROPERTIES.
The successful acquisition and development of oil and gas properties
requires an assessment of recoverable reserves, future oil and gas prices and
operating costs, potential environmental and other liabilities and other
factors. Such assessments are necessarily inexact. As a result, we may not
recover the purchase price of a property from the sale of production from the
property, or may not recognize an acceptable return from properties we acquired.
In addition, we cannot assure you that our exploitation and development
activities will result in any increases in reserves. Our operations may be
curtailed, delayed or canceled as a result of lack of adequate capital and other
factors, such as title problems, weather, compliance with governmental
regulations or price controls, mechanical difficulties or shortages or delays in
the delivery of equipment. In addition, the costs of exploitation and
development may materially exceed initial estimates.
WE MAY NOT BE ABLE TO MAKE ACQUISITIONS OR GENERATE CASH FLOWS IF WE ARE UNABLE
TO RAISE CAPITAL.
We will be required to make substantial capital expenditures to develop our
existing reserves and to discover new oil and gas reserves. Historically, we
have financed these expenditures primarily with cash from operations, proceeds
from bank borrowings and proceeds from the sale of debt and equity securities.
We cannot assure you that we will be able to raise capital in the future. We
also make offers to acquire oil
11
<PAGE> 14
and gas properties in the ordinary course of our business. If these offers are
accepted, our capital needs may increase substantially.
INFORMATION IN THIS PROSPECTUS REGARDING OUR FUTURE EXPLOITATION AND EXPLORATION
PROJECTS REFLECTS OUR CURRENT INTENT AND IS SUBJECT TO CHANGE.
We describe our current exploitation and exploration plans in this
prospectus and the materials incorporated by reference in this prospectus.
Whether we ultimately undertake an exploitation or exploration project will
depend on the following factors:
- availability and cost of capital;
- receipt of additional seismic data or the reprocessing of existing data;
- current and forecasted oil or gas prices;
- the costs and availability of drilling rigs and other equipment, supplies
and personnel necessary to conduct these operations;
- success or failure of activities in similar areas;
- changes in the estimates of the costs to complete the projects;
- our ability to attract other industry partners to acquire a portion of
the working interest to reduce exposure to costs and risks; and
- decisions of our joint working interest owners.
We will continue to gather data about our projects, and it is possible that
additional information may cause us to alter our schedule or determine that a
project should not be pursued at all. You should understand that our plans
regarding our projects are subject to change.
YOU SHOULD NOT PLACE UNDUE RELIANCE ON RESERVE INFORMATION BECAUSE RESERVE
INFORMATION REPRESENTS ESTIMATES.
Estimating quantities of proved reserves is inherently imprecise and
involves uncertainties and factors beyond our control. The reserve data in this
prospectus represent only estimates. Such estimates are based upon assumptions
about future production levels, future oil and gas prices and future operating
costs. As a result, the quantity of proved reserves may be subject to downward
or upward adjustment. In addition, estimates of the economically recoverable oil
and gas reserves, classifications of such reserves, and estimates of future net
cash flows, prepared by different engineers or by the same engineers at
different times, may vary substantially. Information about reserves constitutes
forward-looking information. See "Forward-Looking Statements."
WEATHER, UNEXPECTED SURFACE CONDITIONS, AND OTHER UNFORESEEN OPERATING HAZARDS
MAY ADVERSELY IMPACT OUR OIL AND GAS ACTIVITIES.
There are many operating hazards in exploring for and producing oil and
gas, including:
- our drilling operations may encounter unexpected formations or pressures
which could cause damage to equipment or personal injury;
- we may experience equipment failure which curtails or stops production;
and
- we could experience blowouts or other damages to the productive
formations which may require a well to be re-drilled or other corrective
action to be taken.
In addition, any of the foregoing may result in environmental damages or
personal injury for which we will be liable. Moreover, our offshore operations
are subject to a variety of risks peculiar to the marine
12
<PAGE> 15
environment such as hurricanes and other adverse weather conditions. Offshore
operations are also subject to more extensive governmental regulations.
We cannot assure you that we will be able to maintain adequate insurance at
rates we consider reasonable to cover our possible losses from operating
hazards. The occurrence of a significant event not fully insured or indemnified
against could materially and adversely affect our financial condition and
results of operations.
TURMOIL IN FOREIGN COUNTRIES MAY AFFECT OUR FOREIGN INVESTMENTS.
Our foreign investments involve risks typically associated with investments
in emerging markets, including:
- we may experience political instability in the countries where we have
foreign investments;
- we may be forced to renegotiate our contracts with foreign governments;
- we may experience the nationalization of the oil and gas industry in the
countries where we have foreign investments;
- we may experience foreign government restrictions on their currency and
large fluctuations in the exchange rate; and
- we may have increased taxes or royalties imposed on our foreign
operations by foreign governments.
Political conditions in the geographic area around the Congo have been
unstable in recent years. During 1997, a new government took power in the Congo
following a civil war. Our Congo production is located approximately 30 miles
offshore and has experienced no material interruption as a result of the
political instability. We attempt to conduct our business in such a manner so
that political and economic events of this nature will continue to have minimal
effect on our operations, but we cannot assure you that we will be successful in
protecting against such risks. Previous Congo governments have requested that we
convert our Marine I Exploitation Permit to a production sharing agreement. We
cannot assure you that the new government will not make such a request or as to
the terms of the agreement if such a request is made.
WE HAVE LESS CONTROL OVER OUR FOREIGN THAN OUR DOMESTIC INVESTMENTS.
Foreign governments often retain ownership of the minerals. Our lack of
control over the minerals could result in the following:
- the foreign country may require exploration or development to progress on
a faster or slower pace than we prefer;
- the foreign country may require us to pay large royalties or taxes to
them; and
- the foreign country may require us to spend larger amounts on exploration
and development than we have funds for or than we deem appropriate, which
may mean that we forfeit all or a portion of acreage subject to this
requirement.
All of these events could reduce the value of our foreign investments.
WE COULD INCUR LIABILITY IN CONNECTION WITH OUR PROPERTIES IN THE CONGO.
In connection with our respective acquisitions of two subsidiaries owning
interests in the Yombo field offshore the Republic of Congo, we and a
wholly-owned subsidiary of CMS NOMECO Oil and Gas Co. ("CMS") agreed with the
seller of the subsidiaries not to claim tax losses, called "dual consolidated
losses," incurred by such subsidiaries prior to the acquisitions. Under the
agreement, we and the CMS
13
<PAGE> 16
subsidiary may be liable to the seller for the recapture of dual consolidated
losses utilized by the seller in years prior to the acquisitions if triggering
events occur. These triggering events include:
- the disposition by us or the CMS subsidiary of a respective Congo
subsidiary;
- either Congo subsidiary's sale of its interest in the Yombo field;
- the acquisition of us or CMS by another consolidated group; or
- the failure of a Congo subsidiary to continue as a member of its
respective consolidated group.
A triggering event will not occur, however, if a subsequent purchaser
enters into agreements specified in the U.S. Internal Revenue Service's
consolidated return regulations intended to ensure that such dual consolidated
losses will not be claimed. We have agreed with CMS that the party responsible
for the triggering event shall indemnify the other for any liability to the
seller as a result of such triggering event. Our potential direct liability
could be as much as $48.5 million, as of December 31, 1999, if a triggering
event with respect to us occurs. We believe that CMS's liability, for which we
would be jointly liable with an indemnification right against CMS, could be as
much as $64.1 million, as of December 31, 1999. We do not expect a triggering
event to occur with respect to us or CMS and do not believe that the agreement
will have a material adverse effect on us.
WE MAY NOT HAVE PRODUCTION TO OFFSET HEDGES; BY HEDGING, WE MAY NOT BENEFIT FROM
PRICE INCREASES.
Part of our business strategy is to reduce our exposure to the volatility
of oil and gas prices by hedging a portion of our production. In a typical hedge
transaction, we will have the right to receive from the other parties to the
hedge the excess of the fixed price specified in the hedge over a floating price
based on a market index, multiplied by the quantity hedged. If the floating
price exceeds the fixed price, we are required to pay the other parties this
difference multiplied by the quantity hedged. We are required to pay the
difference between the floating price and the fixed priced when the floating
price exceeds the fixed price regardless of whether we have sufficient
production to cover the quantities specified in the hedge. Significant
reductions in production at times when the floating price exceeds the fixed
price could require us to make payments under the hedge agreements even though
such payments are not offset by sales of production. Hedging will also prevent
us from receiving the full advantage of increases in oil or gas prices above the
fixed amount specified in the hedge.
COMPLIANCE WITH ENVIRONMENTAL AND OTHER GOVERNMENT REGULATIONS COULD BE COSTLY
AND COULD NEGATIVELY IMPACT PRODUCTION.
Our operations are subject to numerous laws and regulations governing the
operation and maintenance of our facilities and the discharge of materials into
the environment or otherwise relating to environmental protection. These laws
and regulations may:
- require that we acquire permits before commencing drilling;
- restrict the substances that can be released into the environment in
connection with drilling and production activities;
- limit or prohibit drilling activities on protected areas such as wetlands
or wilderness areas; and
- require remedial measure to mitigate pollution from former operations,
such as plugging abandoned wells.
Under these laws and regulations, we could be liable for personal injury
and clean-up costs and other environmental and property damages, as well as
administrative, civil and criminal penalties. We maintain limited insurance
coverage for sudden and accidental environmental damages as well as
environmental damage that occurs over time. However, we do not believe that
insurance coverage for the full potential liability of environmental damages is
available at a reasonable cost. Accordingly, we may be subject to liability or
we may be required to cease production from properties in the event of
environmental damages.
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<PAGE> 17
FACTORS BEYOND OUR CONTROL AFFECT OUR ABILITY TO MARKET PRODUCTION.
The ability to market oil and gas from our wells depends upon numerous
factors beyond our control. These factors include:
- the extent of domestic production and imports of oil and gas;
- the availability of capacity to refine heavy oil;
- the proximity of the gas production to gas pipelines;
- the availability of pipeline capacity;
- the demand for oil and gas by utilities and other end users;
- the availability of alternative fuel sources;
- the effects of inclement weather;
- state and federal regulation of oil and gas marketing; and
- federal regulation of gas sold or transported in interstate commerce.
Because of these factors, we may be unable to market all of the oil or gas
we produce. In addition, we may be unable to obtain favorable prices for the oil
and gas we produce.
THERE MAY NOT BE A LIQUID MARKET FOR RESALE OF THE EXCHANGE NOTES.
The exchange notes are new securities for which there currently is no
market. Although the initial purchasers have informed us that they intend to
make a market in the exchange notes, they are not obligated to do so and any
such market making may be discontinued at any time without notice. In addition,
the market making activity may be limited during the pendency of the exchange
offer. Accordingly, there can be no assurance as to the development or liquidity
of any market for the exchange notes. The exchange notes sold to QIBs are
expected to be eligible for trading by qualified institutional buyers in the
PORTAL market. We do not intend to apply for listing of the exchange notes on
any securities exchange or for quotation through the Nasdaq National Market.
The liquidity of, and trading market for the exchange notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of our financial performance and prospects.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the exchange
notes. In consideration for issuing the exchange notes as contemplated in this
prospectus, we will receive in exchange existing notes in like principal amount.
The existing notes surrendered in exchange for exchange notes will be retired
and canceled and cannot be reissued. Issuance of the exchange notes will not
result in a change in our amount of outstanding debt.
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<PAGE> 18
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth our selected financial data for the five
years ended December 31, 1999 and for the nine-month periods ended September 30,
1999 and 2000. The financial data for each of the five years in the period ended
December 31, 1999 has been derived from our audited consolidated financial
statements for these periods. The financial data for each of the nine-month
periods ended September 30, 1999 and 2000 has been derived from our unaudited
condensed consolidated financial statements for these periods. Such unaudited
financial statements have been prepared on the same basis as our audited
financial statements. We believe that such unaudited financial statements
contain all adjustments necessary for a fair presentation of the financial
information presented (consisting only of normal recurring adjustments). Interim
results are not necessarily indicative of results for the full year. The
selected financial data is not necessarily indicative of our future results.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- -------------------
1995(1) 1996(1) 1997(1) 1998 1999 1999 2000
-------- --------- --------- --------- --------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Oil and gas revenues...................... $102,455 $ 279,859 $ 331,973 $ 240,010 $ 239,306 $165,327 $230,656
Gas plant revenues........................ $ 27,183 $ 34,802 $ 14,826 $ 2,665 $ 2,968 -- --
Pipeline and other revenues............... $ 7,222 $ 6,774 $ 5,772 $ 2,700 $ 4 -- --
Gain on sale of assets, net............... -- $ 6,008 $ 1,372 $ 5,768 $ 85,294 $ 80,003 --
Interest and other income................. $ 1,106 $ 1,614 $ 3,335 $ 1,560 $ 4,663 $ 4,421 $ 3,085
-------- --------- --------- --------- --------- -------- --------
Total revenues...................... $137,966 $ 329,057 $ 357,278 $ 252,703 $ 332,235 $249,751 $233,741
-------- --------- --------- --------- --------- -------- --------
Costs and expenses:
Lease operating expenses.................. $ 28,873 $ 93,062 $ 120,042 $ 134,704 $ 127,164 $ 95,841 $103,610
Gas plant operating expenses.............. $ 22,667 $ 29,311 $ 13,356 $ 3,202 $ 3,385 -- --
Pipeline and other operating costs........ $ 4,726 $ 6,105 $ 5,243 $ 2,028 $ 286 -- --
Provision for impairment of oil and gas
properties(2)........................... -- -- $ 30,000 $ 68,904 -- -- --
Provision for (revision of) impairment of
assets held for sale(3)................. -- -- $ 23,942 $ (3,740) -- -- --
Exploration costs......................... $ 2,357 $ 4,571 $ 11,082 $ 16,562 $ 14,017 $ 10,619 $ 5,533
Depreciation, depletion and
amortization............................ $ 45,233 $ 75,664 $ 102,158 $ 85,036 $ 80,652 $ 63,556 $ 49,885
General and administrative expenses....... $ 5,444 $ 13,155 $ 17,396 $ 13,636 $ 18,137 $ 11,835 $ 13,391
Outsourcing fees.......................... $ 5,857 $ 11,974 $ 14,410 $ 14,458 $ 14,129 $ 10,449 $ 10,199
Interest expense.......................... $ 15,389 $ 36,009 $ 27,357 $ 32,471 $ 33,110 $ 24,348 $ 26,596
Dividends on TECONS(4).................... -- $ 165 $ 6,613 $ 6,613 $ 6,613 $ 4,959 $ 4,959
Loss on sales of assets, net.............. $ 645 -- -- -- -- -- $ 14
Other expense............................. $ 45 $ 1,069 $ 3,019 $ 5,726 $ 8,659 $ 6,433 $ 4,419
-------- --------- --------- --------- --------- -------- --------
Total costs and expenses............ $131,236 $ 271,085 $ 374,618 $ 379,600 $ 306,152 $228,040 $218,606
-------- --------- --------- --------- --------- -------- --------
Income (loss) before income taxes, minority
interest, and extraordinary item.......... $ 6,730 $ 57,972 $ (17,340) $(126,897) $ 26,083 $ 21,711 $ 15,135
Income tax expense (benefit)................ $ 2,582 $ 23,965 $ (6,656) $ (32,625) $ (5,359) $ 8,683 $ 6,100
Minority interest in earnings (loss) of
subsidiary................................ $ 16 $ (271) $ (8) -- -- -- --
-------- --------- --------- --------- --------- -------- --------
Income (loss) before extraordinary item..... $ 4,132 $ 34,278 $ (10,676) $ (94,272) $ 31,442 $ 13,028 $ 9,035
Extraordinary loss on early extinguishment
of debt net of income tax benefit of
$2,037(5)................................. -- -- $ 3,024 -- -- -- --
-------- --------- --------- --------- --------- -------- --------
Net income (loss)........................... $ 4,132 $ 34,278 $ (13,700) $ (94,272) $ 31,442 $ 13,028 $ 9,035
Dividends on preferred stock................ $ 1,472 $ 939 -- -- -- -- --
-------- --------- --------- --------- --------- -------- --------
Income (loss) attributable to common
stockholders.............................. $ 2,660 $ 33,339 $ (13,700) $ (94,272) $ 31,442 $ 13,028 $ 9,035
======== ========= ========= ========= ========= ======== ========
</TABLE>
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<PAGE> 19
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------- -------------------
1995(1) 1996(1) 1997(1) 1998 1999 1999 2000
-------- --------- --------- --------- --------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS DATA:
Net cash flows provided by (used in)
operating activities...................... $ 37,194 $ 126,921 $ 165,462 $ 35,833 $ 24,024 $ (2,359) $ 63,944
Net cash flows (used in) provided by
investing activities...................... $(32,582) $(546,002) $(169,478) $(148,335) $ 98,146 $ 84,040 $(76,142)
Net cash flows (used in) provided by
financing activities...................... $ (2,294) $ 426,952 $ (412) $ 110,697 $(119,285) $(86,897) $ 53,185
OTHER FINANCIAL DATA:
Capital expenditures........................ $ 41,445 $ 582,346 $ 195,895 $ 163,274 $ 130,641 $ 47,770 $ 83,262
EBITDAX(6).................................. $ 70,354 $ 168,373 $ 182,440 $ 73,181 $ 75,181 $ 45,190 $102,122
Ratio of earnings to fixed charges(7)....... 1.4x 2.6x -- -- 1.7x 1.7x 1.5x
Ratio of EBITDAX to interest expense(8)..... 4.6x 4.7x 6.7x 2.3x 2.3x 1.9x 3.8x
Ratio of long-term debt to EBITDAX(9)....... 1.7x 1.7x 1.7x 5.7x 4.5x N/A N/A
BALANCE SHEET DATA:
Working capital............................. $ 15,757 $ 22,338 $ 9,257 $ 111,629 $ 4,941 $ 33,650 $ 46,552
Total assets................................ $262,359 $ 817,643 $ 804,286 $ 817,685 $ 760,030 $747,477 $830,920
Total debt(9)............................... $116,709 $ 292,446 $ 309,656 $ 422,302 $ 341,500 $361,625 $409,727
Stockholders' equity........................ $123,349 $ 345,439 $ 324,739 $ 231,878 $ 233,638 $227,077 $233,051
</TABLE>
---------------
(1) Effective January 1, 1998, we changed our method of accounting for our
investments in oil and gas properties from the full cost to the successful
efforts method. All prior years' financial statements presented in this
prospectus have been restated to reflect this change.
(2) We incurred an impairment of $68.9 million at December 31, 1998 and $30.0
million at December 31, 1997 on certain fields due to decreased crude oil
prices.
(3) The provision for impairment of assets held for sale reflects a charge we
took to write down our midstream assets to their fair value in 1997. These
assets are primarily gas pipelines and processing plants. The impairment
represented our estimate of the difference between the book value of these
assets and the amount we expected to receive when we sold the assets.
(4) TECONS are the Company-Obligated Mandatorily Redeemable Convertible
Preferred Securities of our financing subsidiary Nuevo Financing I. The
principal assets of Nuevo Financing I are $115.0 million of our 5 3/4%
convertible subordinated debentures due December 15, 2026. Interest we pay
on the 5 3/4% debentures to Nuevo Financing I are paid by Nuevo Financing I
as dividends on the TECONS.
(5) During 1997, we redeemed our 12 1/2% senior subordinated notes prior to
maturity and recorded $3.0 million as our extraordinary loss on early
extinguishment of debt, net of income tax benefit.
(6) The term "EBITDAX" means earnings before interest, dividends on TECONS,
taxes, depreciation, depletion and amortization, property impairment,
gain/loss on sale of assets and exploration costs. EBITDAX is included
because it is commonly used as a measure of a company's ability to incur
indebtedness. EBITDAX should not be used as a substitute for cash flow from
operating activities or other income or cash flow information prepared in
accordance with generally accepted accounting principals as an indication of
profitability or liquidity. EBITDAX may not be comparable to similarly
titled items of other companies.
(7) When we calculate our ratio of earnings to fixed charges, earnings means
income or loss before income taxes and fixed charges. Fixed charges means
the sum of the following:
- interest expense;
- dividends on the TECONS;
- amortization of debt issuance costs; and
17
<PAGE> 20
- the portion of operating leases deemed to be representative of interest.
Earnings were not sufficient to cover fixed charges for 1997 and 1998 by $19.5
million and $127.5 million, respectively.
(8) For purposes of this calculation, interest expense does not include
dividends or interest payments on the TECONS.
(9) Total debt does not include the TECONS.
18
<PAGE> 21
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
We issued $150,000,000 in principal amount of existing notes on September
19, 2000. The existing notes were issued to qualified institutional buyers in
reliance upon the exemption from registration provided by Rule 144A under the
Securities Act and outside the United States in compliance with Regulation S of
the Securities Act. In connection with the issuance of the existing notes, we
agreed with Banc of America Securities LLC, Banc One Capital Markets, Inc. and
J. P. Morgan & Co., who acted as the initial purchasers for the issuance of the
existing notes, that promptly following the issuance of the existing notes, we
would:
- file with the SEC a registration statement related to the exchange notes;
- use our reasonable best efforts to cause the registration statement to
become effective under the Securities Act; and
- offer to the holders of the existing notes the opportunity to exchange
their existing notes for a like principal amount of exchange notes upon
the effectiveness of the registration statement.
A copy of the agreements with Banc of America Securities, Banc One Capital
Markets, Inc. and J. P. Morgan & Co. have been filed as exhibits to the
registration statement of which this prospectus is a part.
Based on existing interpretations of the Securities Act by the staff of the
SEC described in several no-action letters, and subject to the following
sentence, we believe that the exchange notes issued in the exchange offer may be
offered for resale, resold and otherwise transferred by their holders, other
than broker-dealers or our "affiliates," without further compliance with the
registration and prospectus delivery provisions of the Securities Act. However,
any holder of existing notes who is an affiliate of ours, who is not acquiring
the exchange notes in the ordinary course of such holder's business or who
intends to participate in the exchange offer for the purpose of distributing the
exchange notes:
- will not be able to rely on the interpretations by the staff of the SEC
described in the above-mentioned no-action letters;
- will not be able to tender existing notes in the exchange offer; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the
existing notes unless the sale or transfer is made under an exemption
from these requirements.
We do not intend to seek our own no-action letter, and there is no
assurance that the staff of the SEC would make a similar determination regarding
the exchange notes as it has in these no-action letters to third parties. See
"Plan of Distribution."
As a result of the filing and effectiveness of the registration statement
of which this prospectus is a part, we will not be required to pay an increased
interest rate on the existing notes. Following the closing of the exchange
offer, holders of existing notes not tendered will not have any further
registration rights except in limited circumstances requiring the filing of a
shelf registration statement, and the existing notes will continue to be subject
to restrictions on transfer. Accordingly, the liquidity of the market for the
existing notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions stated in this prospectus and
in the letter of transmittal, we will accept all existing notes properly
tendered and not withdrawn prior to 5:00 p.m. New York City time, on the
expiration date. After authentication of the exchange notes by the trustee or an
authenticating agent, we will issue $1,000 principal amount of exchange notes in
exchange for each $1,000 principal
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<PAGE> 22
amount of outstanding existing notes accepted in the exchange offer. Holders may
tender some or all of their existing notes in denominations of $1,000 or any
integral multiple of $1,000.
If you wish to exchange your existing notes for exchange notes in the
exchange offer, you will be required to represent that:
- you are not our affiliate, as defined in Rule 405 of the Securities Act;
- any exchange notes will be acquired in the ordinary course of your
business;
- you have no arrangement with any person to participate in the
distribution of the exchange notes;
- if you are not a broker-dealer, that you are not engaged in and do not
intend to engage in the distribution of the exchange notes; and
- if you are a broker-dealer that will receive exchange notes for your own
account in exchange for existing notes that were acquired as a result of
market-making or other trading activities, that you will deliver a
prospectus, as required by law, in connection with any resale of those
exchange notes.
You will make these representations to us by signing or agreeing to be bound by
the letter of transmittal.
Broker-dealers that are receiving exchange notes for their own account must
have acquired the existing notes as a result of market-making or other trading
activities in order to participate in the exchange offer. Each broker-dealer
that receives exchange notes for its own account under the exchange offer must
acknowledge that it will deliver a prospectus in connection with any resale of
the exchange notes. The letter of transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be admitting that it is
an "underwriter" within the meaning of the Securities Act. We will be required
to allow broker-dealers to use this prospectus following the exchange offer in
connection with the resale of exchange notes received in exchange for existing
notes acquired by broker-dealers for their own account as a result of
market-making or other trading activities. If required by applicable securities
laws, we will, upon written request, make this prospectus available to any
broker-dealer for use in connection with a resale of exchange notes for a period
of 90 days after the consummation of the exchange offer. See "Plan of
Distribution."
The exchange notes will evidence the same debt as the existing notes and
will be issued under and entitled to the benefits of the same indenture. The
form and terms of the exchange notes are identical in all material respects to
the form and terms of the existing notes except that:
- the exchange notes will be issued in a transaction registered under the
Securities Act;
- the exchange notes will not be subject to transfer restrictions; and
- provisions providing for an increase in the stated interest rate on the
existing notes will be eliminated.
As of the date of this prospectus, $150,000,000 aggregate principal amount
of the existing notes was outstanding. In connection with the issuance of the
existing notes, we arranged for the existing notes to be issued and transferable
in book-entry form through the facilities of DTC, acting as depositary. The
exchange notes will also be issuable and transferable in book-entry form through
DTC.
This prospectus, together with the accompanying letter of transmittal, is
initially being sent to all registered holders as of the close of business on
, 2000. We intend to conduct the exchange offer as required by the
Exchange Act, and the rules and regulations of the SEC under the Exchange Act,
including Rule 14e-1, to the extent applicable.
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<PAGE> 23
Rule 14e-1 describes unlawful tender practices under the Exchange Act. This
section requires us, among other things:
- to hold our exchange offer open for twenty business days;
- to give ten days notice of any change in the terms of this offer; and
- to issue a press release in the event of an extension of the exchange
offer.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of existing notes being tendered, and holders of the existing notes do
not have any appraisal or dissenters' rights under the General Corporation Law
of the State of Delaware or under the indenture in connection with the exchange
offer. We shall be considered to have accepted existing notes tendered according
to the procedures in this prospectus when, as and if we have given oral or
written notice of acceptance to the exchange agent. See "-- Exchange Agent." The
exchange agent will act as agent for the tendering holders for the purpose of
receiving exchange notes from us and delivering exchange notes to those holders.
If any tendered existing notes are not accepted for exchange because of an
invalid tender or the occurrence of other events described in this prospectus,
certificates for these unaccepted existing notes will be returned, at our cost,
to the tendering holder of the existing notes or, in the case of existing notes
tendered by book-entry transfer, into the holder's account at DTC according to
the procedures described below, as promptly as practicable after the expiration
date.
Holders who tender existing notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes related to the exchange of existing
notes in the exchange offer. We will pay all charges and expenses, other than
applicable taxes, in connection with the exchange offer. See "-- Solicitation of
Tenders; Fees and Expenses."
NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO HOLDERS
OF EXISTING NOTES AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING ALL OR ANY
PORTION OF THEIR EXISTING NOTES TO THE EXCHANGE OFFER. MOREOVER, NO ONE HAS BEEN
AUTHORIZED TO MAKE ANY RECOMMENDATION. HOLDERS OF EXISTING NOTES MUST MAKE THEIR
OWN DECISION WHETHER TO TENDER IN THE EXCHANGE OFFER AND, IF SO, THE AMOUNT OF
EXISTING NOTES TO TENDER AFTER READING THIS PROSPECTUS AND THE LETTER OF
TRANSMITTAL AND CONSULTING WITH THEIR ADVISORS, IF ANY, BASED ON THEIR OWN
FINANCIAL POSITION AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" shall mean 5:00 p.m., New York City time, on
, unless we, in our sole discretion, extend the exchange
offer, in which case the term "expiration date" shall mean the latest date to
which the exchange offer is extended.
We expressly reserve the right, in our sole discretion:
- to delay acceptance of any existing notes or to terminate the exchange
offer and to refuse to accept existing notes not previously accepted, if
any of the conditions described under "-- Conditions" shall have occurred
and shall not have been waived by us;
- to extend the expiration date of the exchange offer;
- to amend the terms of the exchange offer in any manner;
- to purchase or make offers for any existing notes that remain outstanding
subsequent to the expiration date;
- to the extent permitted by applicable law, to purchase existing notes in
the open market, in privately negotiated transactions or otherwise.
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<PAGE> 24
The terms of the purchases or offers described in the fourth and fifth clauses
above may differ from the terms of the exchange offer.
Any delay in acceptance, termination, extension, or amendment will be
followed as promptly as practicable by oral or written notice to the exchange
agent and by making a public announcement. If the exchange offer is amended in a
manner determined by us to constitute a material change, we will promptly
disclose the amendment in a manner reasonably calculated to inform the holders
of the amendment.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, termination, extension, or amendment
of the exchange offer, we shall have no obligation to publish, advise, or
otherwise communicate any public announcement, other than by making a timely
release to the Dow Jones News Service.
You are advised that we may extend the exchange offer because some of the
holders of the existing notes do not tender on a timely basis. In order to give
these noteholders the ability to participate in the exchange and to avoid the
significant reduction in liquidity associated with holding an unexchanged note,
we may elect to extend the exchange offer.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from the date of issuance of the
existing notes that are tendered in exchange for the exchange notes or the most
recent date on which interest was paid or provided for on the existing notes
surrendered for the exchange notes. Accordingly, holders of existing notes that
are accepted for exchange will not receive interest that is accrued but unpaid
on the existing notes at the time of tender. Interest on the exchange notes will
be payable semi-annually on each October 1 and April 1, commencing on April 1,
2001.
PROCEDURES FOR TENDERING
Only a holder may tender its existing notes in the exchange offer. Any
beneficial owner whose existing notes are registered in the name of his broker,
dealer, commercial bank, trust company or other nominee or are held in
book-entry form and who wishes to tender should contact the registered holder
promptly and instruct the registered holder to tender on his behalf. If the
beneficial owner wishes to tender on his own behalf, the beneficial owner must,
prior to completing and executing the letter of transmittal and delivering his
existing notes, either make appropriate arrangements to register ownership of
the existing notes in the owner's name or obtain a properly completed bond power
from the registered holder. The transfer of record ownership may take
considerable time.
The tender by a holder will constitute an agreement between the holder, us
and the exchange agent according to the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
A holder who desires to tender existing notes and who cannot comply with
the procedures set forth herein for tender on a timely basis or whose existing
notes are not immediately available must comply with the procedures for
guaranteed delivery set forth below.
THE METHOD OF DELIVERY OF EXISTING NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDERS. DELIVERY OF SUCH DOCUMENTS WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT OR DEEMED RECEIVED UNDER THE ATOP
PROCEDURES DESCRIBED BELOW. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE DELIVERY TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE. NO LETTER OF
TRANSMITTAL OR EXISTING NOTES SHOULD BE SENT TO US. HOLDERS MAY ALSO REQUEST
THAT THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES EFFECT THE TENDER FOR HOLDERS IN EACH CASE AS DESCRIBED IN THIS
PROSPECTUS AND IN THE LETTER OF TRANSMITTAL.
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Existing Notes Held in Certificated Form
For a holder to validly tender existing notes held in physical form, the
exchange agent must receive, prior to 5:00 p.m. New York city time on the
expiration date, at its address set forth in this prospectus:
- a properly completed and validly executed letter of transmittal, or a
manually signed facsimile thereof, together with any signature guarantees
and any other documents required by the instructions to the letter of
transmittal, and
- certificates for tendered existing notes.
Existing Notes Held in Book-Entry Form
We understand that the exchange agent will make a request promptly after
the date of the prospectus to establish accounts for the existing notes at DTC
for the purpose of facilitating the exchange offer, and subject to their
establishment, any financial institution that is a participant in DTC may make
book-entry delivery of existing notes by causing DTC to transfer the existing
notes into the exchange agent's account for the existing notes using DTC's
procedures for transfer.
If you desire to transfer existing notes held in book-entry form with DTC,
the exchange agent must receive, prior to 5:00 p.m. New York City time on the
expiration date, at its address set forth in this prospectus, a confirmation of
book-entry transfer of the existing notes into the exchange agent's account at
DTC, which is referred to in this prospectus as a "book-entry confirmation,"
and:
- a properly completed and validly executed letter of transmittal, or
manually signed facsimile thereof, together with any signature guarantees
and other documents required by the instructions in the letter of
transmittal; or
- an agent's message transmitted pursuant to DTC's Automated Tender Offer
Program.
Tender of Existing Notes Using DTC's Automated Tender Offer Program (ATOP)
The exchange agent and DTC have confirmed that the exchange offer is
eligible for DTC's Automated Tender Offer Program. Accordingly, DTC participants
may electronically transmit their acceptance of the exchange offer by causing
DTC to transfer existing notes held in book-entry form to the exchange agent in
accordance with DTC's ATOP procedures for transfer. DTC will then send a book-
entry confirmation, including an agent's message to the exchange agent.
The term "agent's message" means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry confirmation, which states
that DTC has received an express acknowledgment from the participant in DTC
tendering existing notes that are the subject of that book-entry confirmation
that the participant has received and agrees to be bound by the terms of the
letter of transmittal, and that we may enforce such agreement against such
participant. If you use ATOP procedures to tender existing notes you will not be
required to deliver a letter of transmittal to the exchange agent, but you will
be bound by its terms just as if you had signed it.
Signatures
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act, unless the existing notes tendered with the
letter of transmittal are tendered:
- by a registered holder who has not completed the box entitled "Special
Registration Instructions" or "Special Delivery Instructions" in the
letter of transmittal; or
- for the account of an institution eligible to guarantee signatures.
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If the letter of transmittal is signed by a person other than the
registered holder or DTC participant who is listed as the owner, the existing
notes must be endorsed or accompanied by appropriate bond powers which authorize
the person to tender the existing notes on behalf of the registered holder or
DTC participant who is listed as the owner, in either case signed as the name of
the registered holder(s) who appears on the existing notes or the DTC
participant who is listed as the owner. If the letter of transmittal or any
existing notes or bond powers are signed or endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, those persons should so
indicate when signing, and unless waived by us, evidence satisfactory to us of
their authority to so act must be submitted with the letter of transmittal.
If you tender your notes through ATOP, signatures and signature guarantees
are not required.
Determinations of Validity
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered existing notes will be
determined by us in our sole discretion. This determination will be final and
binding. We reserve the absolute right to reject any and all existing notes not
properly tendered or any existing notes our acceptance of which would, in the
opinion of our counsel, be unlawful. We also reserve the absolute right to waive
any irregularities or conditions of tender as to particular existing notes. Our
interpretation of the terms and conditions of the exchange offer, including the
instructions in the letter of transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of existing notes must be cured within the time we shall determine. Although we
intend to notify holders of defects or irregularities related to tenders of
existing notes, neither we, the exchange agent nor any other person shall be
under any duty to give notification of defects or irregularities related to
tenders of existing notes nor shall any of them incur liability for failure to
give notification. Tenders of existing notes will not be considered to have been
made until the irregularities have been cured or waived. Any existing notes
received by the exchange agent that we determine are not properly tendered or
the tender of which is otherwise rejected by us and as to which the defects or
irregularities have not been cured or waived by us will be returned by the
exchange agent to the tendering holder unless otherwise provided in the letter
of transmittal, as soon as practicable following the expiration date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their existing notes and:
- whose existing notes are not immediately available;
- who cannot complete the procedure for book-entry transfer on a timely
basis;
- who cannot deliver their existing notes, the letter of transmittal or any
other required documents to the exchange agent prior to the expiration
date; or
- who cannot complete a tender of existing notes held in book-entry form
using DTC's ATOP procedures on a timely basis;
may effect a tender if they tender through an eligible institution described
under "-- Procedures for Tendering -- Signatures," or, if they tender using
ATOP's guaranteed delivery procedures.
A tender of existing notes made by or through an eligible institution will
be accepted if:
- prior to 5:00 p.m., New York City time, on the expiration date, the
exchange agent receives from an eligible institution a properly completed
and duly executed notice of guaranteed delivery, by facsimile
transmittal, mail or hand delivery, that:
(1) sets forth the name and address of the holder, the certificate number
or numbers of the holder's existing notes and the principal amount of
the existing notes tendered,
(2) states that the tender is being made, and
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<PAGE> 27
(3) guarantees that, within five business days after the expiration date,
a properly completed and validly executed letter of transmittal or
facsimile, together with a certificate(s) representing the existing
notes to be tendered in proper form for transfer, or a confirmation of
book-entry transfer into the exchange agent's account at DTC of
existing notes delivered electronically, and any other documents
required by the letter of transmittal will be deposited by the
eligible institution with the exchange agent; and
- the properly completed and executed letter of transmittal or a facsimile,
together with the certificate(s) representing all tendered existing notes
in proper form for transfer, or a book-entry confirmation, and all other
documents required by the letter of transmittal are received by the
exchange agent within five business days after the expiration date.
A tender made through DTC's Automated Tender Offer Program will be accepted
if:
- prior to 5:00 p.m., New York City time, on the expiration date, the
exchange agent receives an agent's message from DTC stating that DTC has
received an express acknowledgment from the participant in DTC tendering
the existing notes that they have received and agree to be bound by the
notice of guaranteed delivery; and
- the exchange agent receives, within five business days after the
expiration date, either:
(1) a book-entry conformation, including an agent's message, transmitted
via DTC's ATOP procedures; or
(2) a properly completed and executed letter of transmittal or a
facsimile, together with the certificate(s) representing all tendered
existing notes in proper form for transfer, or a book-entry
confirmation, and all other documents required by the letter of
transmittal.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their existing notes according to the
guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of existing notes
may be withdrawn at any time prior to 5:00 p.m., New York City time, on the
expiration date. To withdraw a tender of existing notes in the exchange offer:
- a written or facsimile transmission of a notice of withdrawal must be
received by the exchange agent at its address listed below prior to 5:00
p.m., New York City time, on the expiration date; or
- you must comply with the appropriate procedures of DTC's Automated Tender
Offer Program.
Any notice of withdrawal must:
- specify the name of the person having deposited the existing notes to be
withdrawn;
- identify the existing notes to be withdrawn, including the certificate
number or numbers and principal amount of the existing notes or, in the
case of existing notes transferred by book-entry transfer, the name and
number of the account at the depositary to be credited;
- be signed by the same person and in the same manner as the original
signature on the letter of transmittal by which the existing notes were
tendered, including any required signature guarantee, or be accompanied
by documents of transfer sufficient to permit the trustee for the
existing notes to register the transfer of the existing notes into the
name of the person withdrawing the tender; and
- specify the name in which any of these existing notes are to be
registered, if different from that of the person who deposited the
existing notes to be withdrawn.
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All questions as to the validity, form and eligibility, including time of
receipt, of the withdrawal notices will be determined by us, whose determination
shall be final and binding on all parties. Any existing notes so withdrawn will
be judged not to have been tendered according to the procedures in this
prospectus for purposes of the exchange offer, and no exchange notes will be
issued in exchange for those existing notes unless the existing notes so
withdrawn are validly retendered. Any existing notes that have been tendered but
are not accepted for exchange will be returned to the holder of the existing
notes without cost to the holder or, in the case of existing notes tendered by
book-entry transfer into the holder's account at DTC according to the procedures
described above. This return or crediting will take place as soon as practicable
after withdrawal, rejection of tender or termination of the exchange offer.
Properly withdrawn existing notes may be retendered by following one of the
procedures described above under "-- Procedures for Tendering" at any time prior
to the Expiration Date.
CONDITIONS
The exchange offer is subject only to the following conditions:
- the compliance of the exchange offer with securities laws;
- the tender of the existing notes;
- the representation by the holders of the existing notes that they are not
our affiliate, that the exchange notes they will receive are being
acquired by them in the ordinary course of their business and that at the
time the exchange offer is completed the holder had no plan to
participate in the distribution of the exchange notes; and
- no judicial or administrative proceeding is pending or shall have been
threatened that would limit us from proceeding with the exchange offer.
EXCHANGE AGENT
State Street Bank and Trust Company, the trustee under the indenture, has
been appointed as exchange agent for the exchange offer. In this capacity, the
exchange agent has no fiduciary duties and will be acting solely on the basis of
our directions. Requests for assistance and requests for additional copies of
this prospectus or of the letter of transmittal should be directed to the
exchange agent. You should send certificates for existing notes, letters of
transmittal and any other required documents to the exchange agent addressed as
follows:
<TABLE>
<S> <C>
By Mail: State Street Bank and Trust Company
Corporate Trust
P. O. Box 778
Boston, Massachusetts 02110-0778
By Hand Delivery or Overnight Courier: State Street Bank and Trust Company
2 Avenue de Lafayette
5th Floor, Corporate Trust Division
Boston, Massachusetts 02110-1724
Facsimile Transmission: (617) 662-1525
Confirm by Telephone: (617) 662-1452
</TABLE>
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS LISTED
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS DESCRIBED
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF THE LETTER OF TRANSMITTAL.
SOLICITATION OF TENDERS; FEES AND EXPENSES
We will bear the expenses of requesting that holders of existing notes
tender those notes for exchange notes. The principal solicitation under the
exchange offer is being made by mail. Additional solicitations
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<PAGE> 29
may be made by our officers and regular employees and our affiliates in person,
by telegraph, telephone or telecopier.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or other persons
soliciting acceptances of the exchange offer. We, however, will pay the exchange
agent reasonable and customary fees for its services and will reimburse the
exchange agent for its reasonable out-of-pocket costs and expenses in connection
with the exchange offer and will indemnify the exchange agent for all losses and
claims incurred by it as a result of the exchange offer. We may also pay
brokerage houses and other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of this prospectus,
letters of transmittal and related documents to the beneficial owners of the
existing notes and in handling or forwarding tenders for exchange.
We will pay the expenses to be incurred in connection with the exchange
offer, including fees and expenses of the exchange agent and trustee and
accounting and legal fees and printing costs.
You will not be obligated to pay any transfer tax in connection with the
exchange, except if you instruct us to register exchange notes in the name of,
or request that notes not tendered or not accepted in the exchange offer be
returned to, a person other than you, you will be responsible for the payment of
any applicable transfer tax.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
existing notes, as reflected in our accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by us upon the closing of the exchange offer. We will amortize the
expenses of the exchange offer over the term of the exchange notes.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion generally summarizes the principal U.S. federal
income tax consequences of the exchange of existing notes for exchange notes.
This discussion is based upon the U.S. federal income tax laws in effect and
available on the date of this prospectus, including the Internal Revenue Code of
1986, as amended, the related Treasury Regulations and judicial and
administrative interpretations of the Internal Revenue Code and Treasury
Regulations. All of these laws are subject to change, possibly retroactively, or
different interpretation. We cannot assure you that the Internal Revenue Service
will not challenge one or more of the tax consequences described in this
prospectus. We have not obtained, nor do we intend to obtain, a ruling from the
Internal Revenue Service with respect to the U.S. federal income tax
consequences of the exchange offer. This discussion does not purport to address
all aspects of U.S. federal income taxation that may be relevant to you in light
of your specific circumstances, or if you are subject to special treatment under
the Internal Revenue Code. This discussion also does not address the effect of
any applicable U.S. federal estate and gift tax laws or state, local or foreign
tax laws.
The exchange of existing notes for exchange notes pursuant to the exchange
offer will not be a taxable event for U.S. federal income tax purposes. You will
not recognize gain or loss upon the receipt of exchange notes. If you are not
exempt from U.S. federal income tax you will be subject to such tax on the same
amount, in the same manner and at the same time as you would have been as a
result of holding the existing notes. If you are a cash-basis holder who is
exchanging existing notes for exchange notes, you will not recognize in income
any accrued and unpaid interest on the existing notes by reason of the exchange.
The basis and holding period of the exchange notes will be the same as the basis
and holding period of the corresponding existing notes.
THIS DESCRIPTION IS INCLUDED IN THIS PROSPECTUS FOR GENERAL INFORMATION
ONLY. ACCORDINGLY, YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR CONCERNING THE
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER WITH RESPECT TO YOUR
PARTICULAR SITUATION, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND
FOREIGN INCOME AND OTHER TAX LAWS.
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<PAGE> 30
PARTICIPATION IN THE EXCHANGE OFFER; UNTENDERED NOTES
Participation in the exchange offer is voluntary. Holders of the existing
notes are urged to consult their financial and tax advisors in making their own
decisions on what action to take.
As a result of the making of, and upon acceptance for exchange of all
existing notes tendered under the terms of, this exchange offer, we will have
fulfilled a covenant contained in the terms of the registration agreement.
Holders of the existing notes who do not tender in the exchange offer will
continue to hold their existing notes and will be entitled to all the rights,
and subject to the limitations, applicable to the existing notes under the
indenture. Holders of existing notes will no longer be entitled to any rights
under the registration agreement that by their term terminate or cease to have
further effect as a result of the making of this exchange offer. See
"Description of the Exchange Notes." All untendered existing notes will continue
to be subject to the restrictions on transfer described in the indenture. To the
extent that existing notes are tendered and accepted in the exchange offer, the
trading market for untendered existing notes could be adversely affected. This
is because there will probably be many fewer remaining existing notes
outstanding following the exchange, significantly reducing the liquidity of the
untendered notes.
We may in the future seek to acquire untendered existing notes in the open
market or through privately negotiated transactions, through subsequent exchange
offers or otherwise. We intend to make any acquisitions of existing notes
following the applicable requirements of the Exchange Act, and the rules and
regulations of the SEC under the Exchange Act, including Rule 14e-1, to the
extent applicable. We have no present plan to acquire any existing notes that
are not tendered in the exchange offer or to file a registration statement to
permit resales of any existing notes that are not tendered in the exchange
offer.
DESCRIPTION OF THE EXCHANGE NOTES
We will issue the exchange notes under an indenture entered into between us
and State Street Bank and Trust Company, as trustee, dated September 26, 2000.
The following description is a summary of selected provisions of the indenture
and the exchange notes. We have not restated the indenture in its entirety. We
will provide you a copy of the indenture for the exchange notes without charge
if you request it from us. You should read the indenture because the indenture,
and not this description, will control your rights as a holder of exchange
notes. For purposes of this section of this prospectus, references to the
"Company," "Nuevo," "we," "us," "our" or "ours" means Nuevo Energy Company,
excluding our subsidiaries. The definitions of some of the terms used in the
following summary are set forth below under "-- Material Definitions."
The exchange notes and the existing notes will be treated as a single class
for all purposes of the indenture, and references in this section to the
exchange notes include the existing notes.
The indenture provides for the issuance of up to $300,000,000 of notes, We
will issue a maximum principal amount of $150,000,000 of exchange notes in
exchange for the existing notes in the exchange offer. All other issuances of
notes in the future will be subject to the debt incurrence test described under
"-- Material Covenants -- Incurrence of Indebtedness." All of the exchange notes
will be identical in all respects to all other notes issued under this indenture
other than the price at which we issue the notes and the date an which we issue
the notes.
PRINCIPAL, MATURITY AND INTEREST OF THE EXCHANGE NOTES
The exchange notes will be our general unsecured senior subordinated
obligations. The exchange notes will mature on October 1, 2010. Interest on the
exchange notes will accrue at the rate of 9 3/8% per annum and will be payable
semiannually in arrears on October 1 and April 1. Interest payments will be made
to the person in whose names the exchange notes are registered at the close of
business on the September 15 or March 15 preceding the interest payment date.
Interest on the exchange notes will accrue from the date of issuance of the
existing notes or, if interest has already been paid on the existing notes, from
the date it was most recently paid. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
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Principal, interest and premium on the exchange notes will be paid as
described under "-- Book-Entry, Delivery and Form" below.
SUBORDINATION
The payment of the principal of, and premium and interest on, the exchange
notes will be subordinated in right of payment to the prior payment in full of
Senior Indebtedness (Section 14.1). The subordination provisions prohibit us
from making payments with respect to the exchange notes if the events described
below occur. If triggered, the subordination provisions prohibit us from paying
any amounts with respect to the exchange notes, including:
- payments of principal or interest;
- payments of any premium; and
- repurchases of the exchange notes, including repurchases in connection
with a Change of Control or Asset Sale, as described under "-- Repurchase
at the Option of Holders -- Change of Control" and "-- Asset Sales."
If we:
- become subject to insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or similar case;
- liquidate, dissolve or otherwise wind-up our business; or
- make an assignment for the benefit of our creditors or marshal our assets
or liabilities;
the holders of Senior Indebtedness will be entitled to receive full payment of
all amounts owed to them prior to any payments being made to the holders of
exchange notes. We will not be required to repay all Senior Indebtedness in full
in connection with our consolidation or merger or our liquidation or dissolution
following the disposition of all or substantially all of our properties upon the
terms described under the subheading "-- Material Covenants -- Merger,
Consolidation or Sale of Assets" as a condition to any payments on the exchange
notes. If the trustee for the exchange notes receives any payment from us when
the subordination provisions prohibit payment of amounts owed on the exchange
notes, the trustee is required to return the payments to us or our receiver or
custodian for payment to holders of Senior Indebtedness. The subordination
provisions apply to payments of any nature, including payments:
- of cash;
- of property, assets or securities; and
- by way of set-off.
The subordination provisions, however, do not prohibit the payment of principal,
interest and premium on the exchange notes if the payment is made in Permitted
Junior Securities.
Additionally, we may not make any payment in respect of the exchange notes,
other than payments of Permitted Junior Securities, if a Payment Event of
Default occurs on our Specified Senior Indebtedness and the trustee receives
written notice of the default. We must resume payment in respect of the exchange
notes, including any missed payments, when we cure or obtain a waiver of the
Payment Event of Default or it otherwise ceases to exist. We must also resume
payment in respect of the exchange notes, including any missed payments, if we
pay in full or discharge the Specified Senior Indebtedness.
We also may not make any payment in respect of the exchange notes, other
than payments of Permitted Junior Securities, for the period specified below
("Payment Blockage Period") if a Non-payment Event of Default occurs on our
Specified Senior Indebtedness and the trustee and we receive written notice of
the default from any holder of Specified Senior Indebtedness. The Payment
Blockage
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Period will commence upon the earlier of the date of receipt by the trustee or
us of such notice of the default (the "Payment Blockage Notice") and will end on
the earliest of:
- 179 days after it begins;
- the date on which the holders of Specified Senior Indebtedness notify the
trustee or us that the Non-payment Event of Default no longer exists or
that the Specified Senior Indebtedness has been discharged; and
- the date we or the trustee receives notice from the person initiating the
Payment Blockage Period that the period has been terminated.
We must resume making payments in respect of the exchange notes after the
Payment Blockage Period ends, including any missed payments, unless we are
otherwise prohibited by the other subordination provisions of the indenture. No
more than one Payment Blockage Period may commence during any period of 360
consecutive days. No Non-payment Event of Default that existed on the date of
delivery of a Payment Blockage Notice to the trustee can be made the basis for a
subsequent Payment Blockage Notice. (Section 14.3)
If we fail to make any payment on the exchange notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions described above, the failure will constitute an Event of Default
under the indenture and will entitle the holders of the exchange notes to
exercise the rights described under "-- Events of Default and Remedies."
(Section 5.1)
As a result of such subordination provisions described above, in the event
of a distribution of assets upon our liquidation, receivership, reorganization
or insolvency, our creditors who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the exchange notes, and assets which would
otherwise be available to pay obligations in respect of the exchange notes will
be available only after we have paid all Senior Indebtedness in full, and there
may not be sufficient assets remaining to pay amounts due on any or all of the
exchange notes.
The subordination provisions described above will cease to be applicable to
the exchange notes upon any Legal Defeasance or Covenant Defeasance of the
exchange notes as described under "-- Legal Defeasance and Covenant Defeasance."
SUBSIDIARY GUARANTEES OF NOTES
None of our Restricted Subsidiaries will guarantee the exchange notes
unless the Restricted Subsidiary also guarantees or secures any of our Pari
Passu Indebtedness or Subordinated Indebtedness. If one of our Restricted
Subsidiaries guarantees or secures any of our Pari Passu Indebtedness or
Subordinated Indebtedness, we will cause it to be bound by the terms of the
indenture and to unconditionally guarantee the performance of our obligations
under the indenture and the exchange notes. (Sections 10.13 and 13.1)
The obligations of each Subsidiary Guarantor will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or made by or on behalf of any other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
indenture, result in the obligations of such Subsidiary Guarantor under its
Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law. Each Subsidiary Guarantor that makes a
payment or distribution under its Subsidiary Guarantee shall be entitled to a
contribution from each other Subsidiary Guarantor, if any, in a pro rata amount
based on the Adjusted Net Assets of each Subsidiary Guarantor. (Section 13.4)
Each Subsidiary Guarantor may consolidate with or merge into or sell or
otherwise dispose of all or substantially all of its properties and assets to us
or another Subsidiary Guarantor without limitation, except to the extent any
such transaction is subject to the "Merger, Consolidation or Sale or Assets"
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covenant of the indenture. Each Subsidiary Guarantor may consolidate with or
merge into or sell all or substantially all of its properties and assets to a
Person other than us or another Subsidiary Guarantor, whether or not Affiliated
with the Subsidiary Guarantor, provided that:
- if the surviving Person is not the Subsidiary Guarantor, the surviving
Person agrees to assume the Subsidiary Guarantor's Subsidiary Guarantee
and all its obligations pursuant to the indenture, except to the extent
the following paragraph would result in the release of such Subsidiary
Guarantee; and
- such transaction does not violate any of the covenants described under
the heading "-- Material Covenants" or result in a Default or Event of
Default immediately thereafter that is continuing. (Section 13.2)
Upon the sale or other disposition, by merger or otherwise, of a Subsidiary
Guarantor of all or substantially all of its assets to a Person other than us or
another Subsidiary Guarantor and pursuant to a transaction that is otherwise in
compliance with the indenture, including as described in the foregoing
paragraph, such Subsidiary Guarantor shall be deemed released from its
Subsidiary Guarantee and the related obligations set forth in the indenture. Any
such termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, our or our
Restricted Subsidiaries' other Indebtedness shall also terminate upon such sale
or other disposition. In addition, all of the Subsidiary Guarantors shall be
deemed released from their respective Subsidiary Guarantees and the related
obligations set forth in the indenture in the event that all obligations of the
Subsidiary Guarantors under all of their guarantees of, and under all of their
pledges of assets or other security interests which secure our or our Restricted
Subsidiaries' other Indebtedness, excluding any Senior Indebtedness, shall also
terminate. (Section 13.3)
The obligations of each Subsidiary Guarantor under its Subsidiary Guarantee
will be subordinated to the prior payment in full of all Guarantor Senior
Indebtedness of such Subsidiary Guarantor to substantially the same extent as
the exchange notes are subordinated to Senior Indebtedness. (Section 13.8)
REDEMPTION AT OUR OPTION
We may not redeem the exchange notes at our option prior to October 1,
2005. Thereafter, we may redeem the exchange notes at our option, in whole or in
part, at the redemption prices expressed as percentages of principal amount set
forth below. If we redeem the notes at our option, we must also pay interest
accrued and unpaid to the applicable redemption date. The redemption prices
during the twelve-month period beginning on June 1 of the years indicated are
set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2005..................................................... 104.6875%
2006..................................................... 103.1250
2007..................................................... 101.5625
2008 and thereafter...................................... 100.0000
</TABLE>
In addition, prior to October 1, 2003 we may redeem up to 33 1/3% of the
aggregate principal amount of the exchange notes originally issued at a
redemption price of 109.375% of the principal amount, plus accrued and unpaid
interest to the date of redemption, with the net proceeds of one or more Equity
Offerings. We may not cause a redemption from the proceeds of the Equity
Offering unless:
- at least 66 2/3% of the aggregate principal amount of the exchange notes
originally issued under the indenture at any time prior to such
redemption remain outstanding after the redemption; and
- the redemption occurs within 90 days after the closing of the Equity
Offering. (Section 11.1)
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If we redeem less than all of the exchange notes, selection of exchange
notes for redemption will be made by the trustee on a pro rata basis. We will
not, however, redeem notes in principal amounts of less than $1,000. (Section
11.4) We will mail notice of a redemption at least 30 and not more than 60 days
before the redemption date. The notice will describe the amount of notes being
redeemed, if less than the entire principal amount. (Section 11.5) Interest will
cease to accrue on exchange notes which are redeemed on the redemption date.
(Section 11.7)
MANDATORY REDEMPTION
We will not be required to make mandatory redemption or sinking fund
payments with respect to the exchange notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, we will be obligated to make an offer to
purchase all of the outstanding exchange notes. The purchase price we are
required to offer is 101% of the aggregate principal amount plus accrued and
unpaid interest to the date of purchase. We are required to purchase all
exchange notes tendered under the offer which are not withdrawn.
In order to effect a Change of Control offer, we must mail a notice of the
Change of Control to the trustee and each holder of exchange notes no later than
30 days after the Change of Control occurs. We are obligated to close the
purchase of notes tendered under the Change of Control offer no less than 30 and
no more than 60 days after the notice is mailed. The notice will describe the
Change of Control and the procedures that must be followed to participate in the
offer.
Our bank credit facility states that events which constitute a Change of
Control constitute a default under the bank credit facility. In addition, our
bank credit facility prohibits the repurchase of both the existing notes and the
exchange notes. Future agreements relating to our Senior Indebtedness may
contain similar provisions. In the event a Change of Control occurs at a time
when we are prohibited from purchasing exchange notes, we could seek the consent
of our lenders to the purchase of exchange notes or could attempt to refinance
the borrowings that contain a prohibition. If we do not obtain a consent or
repay the borrowings, we will be prohibited from purchasing exchange notes,
which will constitute an Event of Default under the Indenture. A default under
the indenture for the exchange notes will also be a default under the bank
credit facility and may be a default under other current and future agreements
to which we are or may become a party. In such circumstances, the subordination
provisions in the indenture may prevent payments to the holders of exchange
notes required by the Change of Control.
We will not be required to make a Change of Control offer if a third party
makes the Change of Control offer at the same purchase price, at the same times
and otherwise in substantial compliance with the requirements applicable to a
Change of Control offer made by us and purchases the exchange notes properly
tendered and not withdrawn. (Section 10.16)
Asset Sales
We may not, and may not permit our Restricted Subsidiaries to, engage in
any Asset Sale unless the consideration received equals the fair market value of
the assets and properties sold or otherwise disposed of as determined by our
board of directors, and the consideration is either:
- cash, Cash Equivalents, Liquid Securities or Exchanged Properties
("Permitted Consideration"); or
- the property or assets received that do not constitute Permitted
Consideration have an aggregate fair market value of no more than 10.0%
of our Adjusted Consolidated Net Tangible Assets.
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If we do not invest the Net Cash Proceeds of Asset Sales which occur after
the date of the indenture in properties and assets that will be used in the Oil
and Gas Business within 365 days after the closing of the Asset Sale, we must
either:
- repay Indebtedness under the Credit Facility;
- repay or purchase other Indebtedness (other than Subordinated
Indebtedness or Pari Passu Indebtedness) of ours or our Restricted
Subsidiaries, provided that any related loan commitment is permanently
reduced by the amount of such Indebtedness repaid; or
- offer to repurchase exchange notes as described below.
The amount of Net Cash Proceeds from all Asset Sales which occur after the date
of the indenture not used for one of the purposes described in this paragraph
will constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds is equal to or more than $10
million:
- we must make an offer to purchase the exchange notes and any outstanding
Pari Passu Indebtedness required to be repurchased in connection with an
Asset Sale, provided that the amount of the Pari Passu Indebtedness
repurchased is permanently reduced;
- we must make an offer to purchase exchange notes in the principal amount
calculated by multiplying the Excess Proceeds by a fraction, the
numerator of which is the outstanding principal amount of the exchange
notes and the denominator of which is the sum of the outstanding
principal amount of the exchange notes plus any Pari Passu Indebtedness
that we must offer to repurchase;
- the offer price for the exchange notes will be payable in cash in an
amount equal to 100% of the principal amount of the exchange notes
tendered, plus accrued and unpaid interest to the date of payment; and
- if more exchange notes are tendered than we have Excess Proceeds to
purchase, we will pro rate the exchange notes tendered.
If the amount of exchange notes tendered is less than the amount of exchange
notes we offered to purchase, we may use the Excess Proceeds not used to
repurchase exchange notes for general corporate purposes. The use of Excess
Proceeds for general corporate purposes must comply with the other provisions of
the indenture, including the covenant described under "-- Material
Covenants -- Restricted Payments."
After we make an Excess Proceeds offer as described above, the amount of
Excess Proceeds will be reset to zero. We will not permit any of our Restricted
Subsidiaries to be a party to any agreement that would place any restriction on
our right to make an offer to repurchase exchange notes following an Asset Sale.
(Section 10.17)
Securities Law Compliance
We will comply with the requirements of Rule 14e-1 under the Securities
Exchange Act of 1934 and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of the exchange notes as a result of a Change of Control or Asset
Sale. These rules require that we keep the offer open for 20 business days. They
also require that we notify holders of exchange notes of changes in the offer
and extend the offer for specified time periods if we amend the offer. If the
provisions of any securities laws or regulations conflict with the provisions in
the indenture relating to a Change of Control or Asset Sale offer, we will
comply with the applicable securities laws and regulations and will not be
deemed to have breached our obligations under the indenture.
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MATERIAL COVENANTS
Ownership of Capital Stock
We may not permit any Restricted Subsidiary to issue any Capital Stock
other than to us or a Wholly Owned Restricted Subsidiary. Also, we may not
permit any Person other than us or a Wholly Owned Restricted Subsidiary to own
any Capital Stock of a Restricted Subsidiary, except for:
- directors' qualifying shares;
- Capital Stock of a Restricted Subsidiary organized in a foreign
jurisdiction required to be owned by the government of the foreign
jurisdiction or citizens of the foreign jurisdiction in order for the
Restricted Subsidiary to transact business in the foreign jurisdiction;
- a sale of all or substantially all of the Capital Stock of a Restricted
Subsidiary effected in accordance with the "Asset Sales" covenant;
- Qualifying TECONS; and
- the Capital Stock of a Restricted Subsidiary owned by a Person at the
time the Restricted Subsidiary became a Restricted Subsidiary or which is
acquired by the Person in connection with the formation of the Restricted
Subsidiary.
The Capital Stock owned by us or another Restricted Subsidiary will be treated
as an Investment for purposes of the "Restricted Payments" covenant, if the
amount of such Capital Stock represents less than a majority of the Voting Stock
of such Restricted Subsidiary. (Section 10.14)
Restricted Payments
The indenture will define the following as Restricted Payments if done by
us or any of our Restricted Subsidiaries:
- the declaration or payment of any dividend or distribution on our Capital
Stock, including Eligible Convertible Securities and Qualifying TECONS,
other than dividends or distributions payable solely in shares of our
Qualified Capital Stock or in options, warrants or other rights to
purchase our Qualified Capital Stock;
- the purchase or acquisition of our Capital Stock, including Eligible
Convertible Securities and Qualifying TECONS, or that of our Affiliates,
other than Capital Stock issued by a Wholly Owned Restricted Subsidiary,
or any options, warrants or other rights to acquire such Capital Stock;
- making any principal payment on, or repurchase or other acquisition of,
any Subordinated Indebtedness prior to any scheduled principal payment,
scheduled sinking fund payment or maturity, except using the Excess
Proceeds remaining after compliance with the provisions described under
"-- Repurchase at the Option of Holders -- Asset Sales," and to the
extent required by the indenture or other agreement or instrument
pursuant to which such Subordinated Indebtedness was issued;
- the declaration or payment of any dividend or other distribution on
shares of Capital Stock of any Restricted Subsidiary, other than to us or
any Wholly Owned Restricted Subsidiary, or the purchase, redemption or
other acquisition or retirement of any Capital Stock of any Restricted
Subsidiary or any options, warrants or other rights to acquire any such
Capital Stock, other than for Capital Stock held by us or any Wholly
Owned Restricted Subsidiary; or
- making of any Investment, other than any Permitted Investment.
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We may not make a Restricted Payment, unless at the time of and after
giving effect to the proposed Restricted Payment:
- no Default or Event of Default shall have occurred and be continuing,
- we could incur $1.00 of additional Indebtedness, other than Permitted
Indebtedness, in accordance with the covenant described under
"-- Incurrence of Indebtedness"; and
- the aggregate amount of all Restricted Payments declared or made after
the date of the indenture shall not exceed the sum, without duplication,
of the following:
(1) 50% of our aggregate Consolidated Net Income accrued on a cumulative
basis during the period beginning on July 1, 2000 and ending on the
last day of our last fiscal quarter ending prior to the date of such
proposed Restricted Payment (or, if such aggregate Consolidated Net
Income shall be a loss, minus 100% of such loss); plus
(2) the aggregate net cash proceeds or the fair market value of any
property or assets other than cash, received after the date of the
indenture by us as capital contributions to us, other than from any
Restricted Subsidiary; plus
(3) the aggregate net cash proceeds or the fair market value of any
property or assets other than cash, received by us after the date of
the indenture from the issuance or sale, other than to any of our
Restricted Subsidiaries, of our Qualified Capital Stock or any option,
warrants or rights to purchase our Qualified Capital Stock; plus
(4) the aggregate net cash proceeds received after the date of the
indenture by us, other than from any of our Restricted Subsidiaries,
upon the exercise of any options, warrants or rights to purchase our
Qualified Capital Stock; plus
(5) the aggregate net cash proceeds received after the date of the
indenture by us from the issuance or sale, other than to any of our
Restricted Subsidiaries, of debt securities or shares of Redeemable
Capital Stock that have been converted into or exchanged for our
Qualified Capital Stock, together with the aggregate cash received by
us at the time of such conversion or exchange; plus
(6) the aggregate net cash proceeds or the fair market value of any
property or assets received after the date of the indenture by us or
our Restricted Subsidiaries, computed on a consolidated basis,
constituting a return of capital on an Investment, other than a
Permitted Investment, made by us or any of our Restricted Subsidiaries
after the date of indenture; plus
(7) $25.0 million.
However, we and our Restricted Subsidiaries may take the following actions
so long as, at the time thereof, no Default or Event of Default shall have
occurred and be continuing, except in the case of the first clause below, and,
in the case of the sixth clause below, we could incur $1.00 of additional
Indebtedness, excluding Permitted Indebtedness, in accordance with the covenant
described under "-- Incurrence of Indebtedness":
- the payment of any dividend on any of our or any Restricted Subsidiary's
Capital Stock within 60 days after the date of declaration thereof, if at
such declaration date such declaration complied with the covenant, and
such payment shall be deemed to have been paid on such date of
declaration for purposes of making any calculation under this covenant;
- the repurchase or other acquisition or retirement of any shares of our or
of any of our Restricted Subsidiaries' Capital Stock, in exchange for, or
out of the aggregate net cash proceeds of, a substantially concurrent
issue and sale of our Qualified Capital Stock, other than a sale to a
Restricted Subsidiary;
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- the repurchase or other acquisition or retirement for value of any
Subordinated Indebtedness, other than Redeemable Capital Stock, in
exchange for, or out of the aggregate net cash proceeds of, a
substantially concurrent issue and sale of our Qualified Capital Stock,
other than to a Restricted Subsidiary;
- the purchase or other acquisition or retirement for value of Subordinated
Indebtedness in exchange for, or out of the aggregate net cash proceeds
of, a substantially concurrent incurrence, other than to a Restricted
Subsidiary, of Subordinated Indebtedness so long as:
(1) the principal amount of such new Indebtedness does not exceed the
principal amount, or, if such Subordinated Indebtedness being
refinanced provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration
thereof, such lesser amount as of the date of determination, of the
Indebtedness being so purchased, acquired or retired, plus the amount
of any premium required to be paid in connection with such refinancing
pursuant to the terms of the Indebtedness refinanced or the amount of
any premium reasonably determined by us as necessary to accomplish
such refinancing, plus the amount of our expenses incurred in
connection with such refinancing,
(2) such new Indebtedness is subordinated to the exchange notes at least
to the same extent as such Indebtedness so purchased, acquired or
retired,
(3) such new Indebtedness has an Average Life to Stated Maturity that is
longer than the Average Life to Stated Maturity of the exchange notes,
and
(4) such new Indebtedness has a Stated Maturity for its final scheduled
principal payment that is at least 91 days later than the Stated
Maturity for the final scheduled principal payment of the exchange
notes;
- the repurchase or other acquisition or retirement for value of any of our
or our Subsidiaries' Qualified Capital Stock held by any of our or our
Subsidiaries' current or former officers, directors or employees pursuant
to the terms of agreements, including employment agreements, or plans
approved by our board of directors, including any such repurchase,
acquisition or retirement of such Qualified Capital Stock that is deemed
to occur upon the exercise of stock options or similar rights if such
shares represent all or a portion of the exercise price or are
surrendered in connection with satisfying Federal income tax obligations;
provided, however, that the aggregate amount of such repurchases,
acquisitions and retirements shall not exceed the sum of:
(1) $1.0 million in any twelve-month period, and
(2) the aggregate net proceeds, if any, received by us during such
twelve-month period from any issuance of such Qualified Capital Stock
pursuant to such agreements or plans; and
- the repurchase or other acquisition of our Qualified Capital Stock in an
amount not to exceed 50% of the net after-tax gain from Specified
Property Sales, less the aggregate purchase price of Qualified Capital
Stock purchased by us and our Restricted Subsidiaries since June 8, 1998.
The actions described in the first clause of this paragraph are Restricted
Payments that will be permitted to be taken in accordance with this paragraph
but shall reduce the amount that would otherwise be available for Restricted
Payments. The actions described in the second through the sixth clauses above
will be Restricted Payments that will be permitted to be taken in accordance
with this paragraph and will not reduce the amount that would otherwise be
available for Restricted Payments.
We or any of our Restricted Subsidiaries may make a Restricted Payment, if
at the time we first incurred a commitment for the Restricted Payment the
Restricted Payment could have been made, if all commitments incurred and
outstanding are treated as if they were Restricted Payments expended by us or a
Restricted Subsidiary at the time the commitments were incurred, except that
commitments incurred and outstanding which are treated as a Restricted Payment
and which are ultimately not made shall no
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longer be treated as a Restricted Payment expended by us; and provided, further,
that at the time such Restricted Payment is made no Default or Event of Default
shall have occurred and be continuing and we must be able to incur $1.00 of
additional Indebtedness, other than Permitted Indebtedness, in accordance with
the "Incurrence of Indebtedness" covenant. (Section 10.10)
Incurrence of Indebtedness
We may not, and may not permit any of our Restricted Subsidiaries to,
create, incur, assume, guarantee or otherwise become directly or indirectly
liable for the payment of (collectively, "incur") any Indebtedness, including
any Acquired Indebtedness but excluding Permitted Indebtedness, unless at the
time of such event and after giving effect thereto on a pro forma basis, the
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding such event, taken as one period, would have been at least
equal to 2.5 to 1.0. (Section 10.12)
Liens
We may not, and may not permit any Restricted Subsidiary to, directly or
indirectly, create, incur, assume or suffer to exist any Lien of any kind,
except for Permitted Liens, upon any of our or any Restricted Subsidiary's
assets or properties, whether now owned or acquired after the date of the
indenture, or any income or profits therefrom to secure any Pari Passu
Indebtedness or Subordinated Indebtedness, unless prior to or contemporaneously
therewith the exchange notes are directly secured equally and ratably, provided
that:
- if such secured Indebtedness is Pari Passu Indebtedness, the Lien
securing such Pari Passu Indebtedness shall be subordinate and junior to,
or pari passu with, the Lien securing the exchange notes; and
- if such secured Indebtedness is Subordinated Indebtedness, the Lien
securing such Subordinated Indebtedness shall be subordinate and junior
to the Lien securing the exchange notes at least to the same extent as
such Subordinated Indebtedness is subordinated to the exchange notes.
The foregoing covenant will not apply to any Lien securing Acquired
Indebtedness, provided that any such Lien extends only to the properties or
assets that were subject to such Lien prior to the related acquisition and was
not created, incurred or assumed in contemplation of such transaction. (Section
10.15)
Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries
We may not, and may not permit any Restricted Subsidiary to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any
Restricted Subsidiary to:
- pay dividends, in cash or otherwise, or make any other distributions on
or in respect of its Capital Stock to us or any other Restricted
Subsidiary;
- pay any Indebtedness owed to us or any other Restricted Subsidiary;
- make an Investment in us or any other Restricted Subsidiary; or
- transfer any of its properties or assets to us or any other Restricted
Subsidiary.
However, with respect to the fourth clause of this paragraph only,
- our Restricted Subsidiaries may have restrictions in the form of Liens
which are not prohibited as described in the "Liens" covenant and which
contain customary limitations on the transfer of collateral; and
- our Restricted Subsidiaries may have customary restrictions contained in
asset sale agreements limiting the transfer of such assets pending the
closing of such sale.
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In addition, the indenture will not prohibit the following encumbrances and
restrictions which exist pursuant to:
- the indenture, the Credit Facility or any other agreement in effect as of
the date of the indenture;
- any agreement or other instrument of a Person acquired by us or any
Restricted Subsidiary in existence at the time of such acquisition which
was not created in contemplation of the acquisition which encumbrance or
restriction is not applicable to any other Person, or the properties or
assets of any other Person, other than the Person, or the property or
assets of the Person, so acquired;
- customary restrictions in leases and licenses relating to the property
covered thereby and entered into in the ordinary course of business; or
- any agreement that extends, renews, refinances or replaces the agreements
containing the foregoing restrictions, if the terms and conditions of
those restrictions are not materially less favorable to the holders of
the exchange notes than those under or pursuant to the agreements so
extended, renewed, refinanced or replaced. (Section 10.19)
Limitation on Layering Debt
We may not have any Indebtedness, including Acquired Indebtedness and
Permitted Indebtedness, that is subordinated in right of payment to Senior
Indebtedness, unless such Indebtedness also ranks equal with, or subordinated in
right of payment to, the exchange notes pursuant to subordination provisions
substantially similar to those applicable to the exchange notes. (Section 10.11)
Merger, Consolidation or Sale of Assets
We may not, in any single transaction or series of related transactions,
consolidate or merge with or into any other Person, or sell, assign, convey,
transfer, lease or otherwise dispose of all or substantially all of our and our
Restricted Subsidiaries' properties and assets on a consolidated basis to any
person or group of Affiliated Persons, and we may not permit any of our
Restricted Subsidiaries to enter into any such transaction or series of related
transactions if such transaction or series of related transactions would result
in such a disposition of all or substantially all of our and our Restricted
Subsidiaries' properties and assets on a consolidated basis, unless at the time
and after giving effect thereto:
- either:
(1) if the transaction is a merger or consolidation, we are the surviving
Person of the merger or consolidation, or
(2) the Person formed by the consolidation or into which we are merged or
to which our or our Restricted Subsidiaries' properties and assets are
disposed of (referred to as the "Surviving Entity") is a corporation
organized and existing under the laws of the United States of America,
any state thereof or the District of Columbia and, in either case,
expressly assumes by a supplemental indenture to the indenture
executed and delivered to the trustee, in form satisfactory to the
trustee, all of our obligations under the exchange notes and the
indenture and the indenture remains in effect;
- immediately after giving effect to the transaction or series of
transactions on a pro forma basis and treating any Indebtedness not
previously an obligation of ours or our Restricted Subsidiaries in
connection with or as a result of such transaction as having been
incurred at the time of the transaction or series of transactions, no
Default or Event of Default shall have occurred and be continuing;
- except in the case of the consolidation or merger of any Restricted
Subsidiary with or into us, immediately after giving effect to the
transaction or series of transactions on a pro forma basis, our or the
Surviving Entity's Consolidated Net Worth is at least equal to our
Consolidated Net Worth immediately before such transaction or
transactions;
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- except in the case of our consolidation or merger with or into a Wholly
Owned Restricted Subsidiary or any Restricted Subsidiary with or into us
or any of our Wholly Owned Restricted Subsidiaries, immediately after
giving effect to the transaction or transactions on a pro forma basis
assuming that the transaction or transactions occurred on the first day
of the relevant period of fiscal quarters under the "Incurrence of
Indebtedness" covenant ending immediately prior to the consummation of
the transaction or transactions, with the appropriate adjustments with
respect to the transaction or transactions being included in the pro
forma calculation, we or the Surviving Entity could incur $1.00 of
additional Indebtedness other than Permitted Indebtedness pursuant to
such covenant;
- if any of our or our Restricted Subsidiaries' properties or assets would
upon the transaction or series of related transactions become subject to
any Lien, other than a Permitted Lien, the creation or imposition of such
Lien shall have been in compliance with the "Liens" covenant; and
- if we are not the continuing obligor under the Indenture, then any
Subsidiary Guarantor, unless it is the Surviving Entity, shall have
confirmed that its Subsidiary Guarantee will continue to apply following
the transaction or transactions.
If we are not the continuing or surviving corporation following any of the
foregoing transaction or transactions, the Surviving Entity shall be substituted
for us under the indenture with the same effect as if the Surviving Entity had
been named as Nuevo therein, and thereafter we will be discharged from all
obligations and covenants under the indenture and the exchange notes, except in
the case of a lease. (Article VIII)
Transactions with Affiliates
We may not, and may not permit any of our Restricted Subsidiaries to,
directly or indirectly, engage in any transaction or series of related
transactions with any of our Affiliates, other than us or a Restricted
Subsidiary, unless:
- such transaction or series of related transactions is on terms that are
no less favorable to us or such Restricted Subsidiary, as the case may
be, than would be available in a comparable transaction in arm's-length
dealings with an unrelated third party; and
- with respect to a transaction or series of related transactions involving
payments in excess of $1.0 million in the aggregate, we deliver an
officers' certificate to the trustee certifying that such transaction
complies with the foregoing clause.
In addition, if the transaction or series of related transactions involves
payments in excess of $5.0 million in the aggregate, the officers' certificate
also must state that such transaction or series of related transactions has been
approved by a majority of our Disinterested Directors. If the transaction or
series of related transactions involves payments of $25.0 million or more in the
aggregate, we must also have received the written opinion of a nationally
recognized investment banking firm or appraisal firm in the United States that
such transaction or series of transactions is fair, from a financial point of
view, to us or our Restricted Subsidiary.
The foregoing restriction shall not apply to:
- the provision of services and payments under any of the existing
agreements with Torch Energy Advisors Incorporated or its subsidiaries so
long as each of the agreements, including any modifications or amendments
entered into on or after the date of the indenture, has been approved by
a majority of our Disinterested Directors;
- loans or advances to our or our Restricted Subsidiaries' officers,
directors and employees made in the ordinary course of business and
consistent with past practices in an aggregate amount not to exceed
$3,000,000 outstanding at any one time;
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- the payment of reasonable and customary regular fees to our or our
Restricted Subsidiaries' directors who are not our employees or employees
of our Affiliates;
- our employee compensation and other benefit arrangements;
- indemnities of our and any Subsidiary's officers and directors consistent
with applicable bylaws and statutory provisions; or
- Restricted Payments permitted by the indenture. (Section 10.18)
Reports
We must file on a timely basis with the SEC, to the extent such filings are
accepted by the SEC and whether or not we have a class of securities registered
under the Exchange Act, the annual reports, quarterly reports and other
documents that we would be required to file if we were subject to Section 13 or
15 of the Exchange Act. These include an annual report on Form 10-K and
quarterly reports on Form 10-Q. We will also be required:
- to file with the trustee, with exhibits, and provide to each holder of
exchange notes, without cost to such holder, copies of reports and
documents, without exhibits, within 30 days after the date on which we
file the reports and documents with the SEC or the date on which we would
be required to file the reports and documents if we were required to, and
- if filing such reports and documents with the SEC is not accepted by the
SEC or is prohibited under the Exchange Act, to supply at our cost copies
of such reports and documents, including any exhibits, to any holder of
exchange notes, securities analyst or prospective investor promptly upon
written request. (Section 10.09)
EVENTS OF DEFAULT AND REMEDIES
Each of the following will be an "Event of Default":
- failure to pay interest on the exchange notes when due for 30 days,
whether or not prohibited by the subordination provisions of the exchange
notes;
- failure to pay the principal of or premium on the exchange notes, whether
such payment is due at Stated Maturity, upon redemption, upon repurchase
pursuant to a Change of Control offer or an Asset Sales offer, upon
acceleration or otherwise, whether or not prohibited by the subordination
provisions;
- failure to comply with the covenant described under "-- Material
Covenants -- Merger, Consolidation or Sale of Assets";
- failure to comply with the covenant described under "-- Repurchase at the
Option of Holders -- Change of Control";
- failure to comply with the covenant described under "-- Repurchase at the
Option of Holders -- Asset Sales";
- failure by us or any Subsidiary Guarantor to comply with any other
covenant contained in the exchange notes, any Subsidiary Guarantee or the
indenture for a period of 60 days after written notice of such failure
given to us by the trustee or to us and the trustee by the holders of at
least 25% in aggregate principal amount of the exchange notes then
outstanding;
- the occurrence and continuation beyond any applicable grace period of any
default in the payment of the principal of, premium, if any, on or
interest on any of our or any Restricted Subsidiary's Indebtedness, other
than the exchange notes, for money borrowed when due, or any other
default resulting in acceleration of any of our or any Restricted
Subsidiary's Indebtedness for money borrowed, if the aggregate principal
amount of such Indebtedness exceeds $10,000,000, or, in the case of
Non-Recourse Purchase Money Indebtedness, $40,000,000, and provided,
further, that if
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any such default is cured or waived or any such acceleration rescinded,
or such Indebtedness is repaid, within a period of 10 days from the
continuation of such default beyond the applicable grace period or the
occurrence of such acceleration, as the case may be, such Event of
Default under the indenture and any consequential acceleration of the
exchange notes shall be automatically rescinded, so long as such
rescission does not conflict with any judgment or decree;
- any Subsidiary Guarantor shall for any reason cease to be, or be asserted
by us or any Subsidiary Guarantor not to be, in full force and effect and
enforceable in accordance with its terms, except pursuant to the release
or termination of such Subsidiary Guarantee in accordance with the
indenture;
- final judgments or orders rendered against us or any Restricted
Subsidiary that are unsatisfied and that require the payment in money,
either individually or in an aggregate amount, that is more than
$10,000,000 over the coverage under applicable insurance policies and
either:
(1) commencement by any creditor of an enforcement proceeding upon such
judgment, other than a judgment that is stayed by reason of pending
appeal or otherwise, or
(2) the occurrence of a 60-day period during which a stay of such judgment
or order, by reason of pending appeal or otherwise, was not in effect;
- the entry of a decree or order by a court having jurisdiction in the
premises:
(1) for relief in respect of us or any Material Subsidiary in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law, or
(2) adjudging us or any Material Subsidiary bankrupt or insolvent, or
approving a petition seeking reorganization, arrangement, adjustment
or composition of us or any Material Subsidiary under any applicable
federal or state law, or appointing under any such law a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of us or any Material Subsidiary or of a substantial part of
our or any Material Subsidiary's consolidated assets, or ordering the
winding up or liquidation of our or any Material Subsidiary's affairs,
and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60
consecutive days; or
- the commencement by us or any Material Subsidiary of a voluntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or any other case or proceeding to be
adjudicated bankrupt or insolvent, or the consent by us or any Material
Subsidiary to the entry of a decree or order for relief in an involuntary
case or proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against us or any
Material Subsidiary, or the filing by us or any Material Subsidiary of a
petition or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by us or any Material Subsidiary
under any such law to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of us or any
Material Subsidiary or of any substantial part of our or any Material
Subsidiary's consolidated assets, or the making by us or any Material
Subsidiary of an assignment for the benefit of creditors under any such
law, or the admission by us or any Material Subsidiary in writing of our
or any Material Subsidiary's inability to pay debts generally as they
become due or the taking of corporate action by us or any Material
Subsidiary in furtherance of any such action. (Section 5.1)
If any Event of Default, other than those specified in the last two clauses
above, occurs and is continuing, the trustee, by written notice to us, or the
holders of at least 25% in aggregate principal amount of the exchange notes then
outstanding, by notice to the trustee and us, may, and the trustee upon the
request of the holders of not less than 25% in aggregate principal amount of the
exchange notes then outstanding shall, declare the principal of, premium, if
any, and accrued interest on all of the exchange
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notes due and payable immediately, upon which declaration all amounts payable in
respect of the exchange notes shall be immediately due and payable. If an Event
of Default specified in the last two clauses above occurs and is continuing,
then the principal of, premium, if any, and accrued interest on all of the
exchange notes shall automatically become and be immediately due and payable
without any declaration, notice or other act on the part of the trustee or any
holder of exchange notes.
After a declaration of acceleration under the indenture, but before a
judgment or decree for payment of the money due has been obtained by the
trustee, the holders of a majority in aggregate principal amount of the
outstanding exchange notes, by written notice to us, any Subsidiary Guarantors
and the trustee, may rescind such declaration if:
- we or any Subsidiary Guarantor has paid or deposited with the trustee a
sum sufficient to pay
(1) all sums paid or advanced by the trustee under the indenture and the
reasonable compensation, expenses, disbursements and advances of the
trustee, its agents and counsel,
(2) all overdue interest on all exchange notes,
(3) the principal of and premium, if any, on any exchange notes which have
become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the exchange notes, and
(4) to the extent that payment of such interest is lawful, interest upon
overdue interest and overdue principal at the rate borne by the
exchange notes without duplication of any amount paid or deposited
pursuant to sub-clause (2) or (3);
- the rescission would not conflict with any judgment or decree of a court
of competent jurisdiction; and
- all Events of Default, other than the nonpayment of principal of,
premium, if any, on or interest on the exchange notes that has become due
solely by such declaration of acceleration, have been cured or waived.
(Section 5.2)
No holder of the exchange notes will have any right to institute any
proceeding with respect to the indenture or any remedy thereunder, unless
- such holder has notified the trustee or a continuing Event of Default,
- the holders of at least 25% in aggregate principal amount of the
outstanding exchange notes have made written request, and offered
reasonable indemnity, to the trustee to institute such proceeding,
- the trustee has failed to institute such proceeding within 60 days after
receipt of such notice, and
- the trustee, within such 60-day period, has not received directions
inconsistent with such written request by holders of a majority in
aggregate principal amount of the outstanding exchange notes. (Section
5.7)
Such limitations will not apply, however, to a suit instituted by a holder of a
exchange note for the enforcement of the payment of the principal of, premium or
interest on a exchange note on or after the respective due dates expressed in
the exchange note. (Section 5.8)
During the existence of an Event of Default, the trustee will be required
to exercise the rights and powers vested in it under the indenture and use the
same degree of care and skill in its exercise thereof as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
Subject to the provisions of the indenture relating to the duties of the trustee
in case an Event of Default shall occur and be continuing, the trustee will not
be under any obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders of exchange notes
unless such holders shall have offered to the trustee reasonable security or
indemnity. (Sections 6.1 and 6.2) Subject to certain provisions concerning the
rights of the trustee, the holders of a majority in aggregate principal
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amount of the outstanding exchange notes will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee, or exercising any trust or power conferred on the trustee under the
indenture. (Section 5.12)
If a Default occurs and is continuing and is known to the trustee, the
trustee shall mail to each holder of exchange notes notice of the Default within
60 days after the occurrence thereof. Except in the case of a Default in payment
of principal of, premium on or interest on any exchange notes, the trustee may
withhold the notice to the holders of exchange notes if the trustee determines
in good faith that withholding the notice is in the interest of such holders.
(Section 6.13)
We will be required to deliver to the trustee annual and quarterly
statements regarding compliance with the indenture. We also will be required,
upon becoming aware of any Default or Event of Default, to deliver to the
trustee a statement specifying such Default or Event of Default. (Section 10.8)
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Legal Defeasance
As long as we take steps to make sure that you receive all of your payments
under the exchange notes and are able to transfer the exchange notes, we can
elect to legally release ourselves and any of our Subsidiaries that may
guarantee the exchange notes from any obligations on the exchange notes (called
"legal defeasance") other than:
- the rights of holders of outstanding notes to receive payments in respect
of the principal of, premium on and interest on the exchange notes when
these payments are due;
- our obligation to replace any temporary exchange notes, register the
transfer or exchange of any exchange notes, replace mutilated, lost or
stolen exchange notes, compensate and reimburse the trustee, remove and
appoint a successor trustee, maintain an office or agency for payments in
respect of the notes and qualify the indenture under the Trust Indenture
Act;
- the rights, powers, trusts, duties and immunities of the trustee, and
- the legal defeasance provisions of the indenture. (Section 12.2)
In order to accomplish legal defeasance, the following must occur:
- We or any Subsidiary Guarantor must irrevocably deposit with the trustee
cash and/or U.S. government and/or U.S. government agency securities that
will generate enough cash to make interest, principal and any other
payments on the exchange notes on their various due dates.
- Such defeasance shall not cause the trustee to have a conflict of
interest.
- There must be a change in current U.S. federal tax law or an IRS ruling
that lets us make that deposit without causing you to be taxed on the
exchange notes any differently than if we did not make the deposit and
just repaid the exchange notes ourselves. Under current U.S. federal tax
law, the deposit and our legal defeasance from the notes would be treated
as though we took back your notes and gave you your share of the cash
and/or securities deposited in trust. In that event, you could recognize
gain or loss on the notes you give back to us.
- We must deliver to the trustee a legal opinion of our counsel confirming
the tax law change described above and that all of the conditions to
legal defeasance in the indenture have been fulfilled.
We will not be able to achieve legal defeasance if there is a continuing
Default or Event of Default under the indenture or if doing so would violate any
other material agreement to which we are a party. (Section 12.4) If we ever did
accomplish legal defeasance as described above, you would have to rely solely on
the trust deposit for repayment of the exchange notes. You could not look to us
for repayment in the unlikely event of any shortfall.
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Covenant Defeasance
Under current federal tax law, we can make the same type of deposit
described above and be released from covenants relating to the exchange notes.
The release from these covenants is called covenant defeasance. In that event,
you would lose the protection of these covenants but would gain the protection
of having money and/or securities set aside in trust to repay the exchange
notes. In order to achieve covenant defeasance, we must:
- Deposit in trust for the benefit of the holders of exchange notes cash
and/or U.S. government or U.S. government agency securities that will
generate enough cash to make interest, principal and any other payments
on the exchange notes on their various due dates.
- Deliver to the trustee a legal opinion of our counsel confirming that
under current U.S. federal tax law we may make that deposit without
causing you to be taxed on the exchange notes any differently than if we
did not make the deposit and just repaid the exchange notes ourselves.
The opinion also must state that all of the conditions to covenant
defeasance in the indenture have been fulfilled.
Further, such defeasance shall not cause the trustee to have a conflict of
interest.
We will not be able to achieve covenant defeasance if there is a continuing
Default or Event of Default under the indenture or if doing so would violate any
other material agreements to which we are a party. The indenture describes the
covenants we may fail to comply with without causing an Event of Default if we
accomplish covenant defeasance. (Sections 12.3 and 12.4)
If we elect to make a deposit resulting in covenant defeasance, the amount
of money and/or U.S. government or U.S. government agency securities deposited
in trust would be sufficient to pay amounts due on the notes at the time of
their maturity. However, if the maturity of the exchange notes is accelerated
due to the occurrence of an Event of Default, the amount in trust may not be
sufficient to pay all amounts due on the notes. We would remain liable for the
shortfall as described in the indenture.
SATISFACTION AND DISCHARGE OF THE INDENTURE
We will have no further obligations under the indenture as to all
outstanding exchange notes, other than surviving rights of registration of
transfers of the exchange notes, when:
- all exchange notes have been delivered to the trustee for cancellation,
except lost, stolen or destroyed exchange notes that we have replaced or
paid or exchange notes for which we have deposited in trust money and/or
U.S. government obligations; or all exchange notes have become due and
payable or, within one year, will become due and payable or be redeemed
and we have deposited with the trustee funds sufficient to pay interest,
principal and any other payments on all outstanding exchange notes on
their various due dates;
- we have paid all other sums then due and payable under the indenture by
us; and
- we have delivered to the trustee an officers' certificate and an opinion
of counsel, which, taken together, state that we have complied with all
conditions precedent under the indenture relating to the satisfaction and
discharge of the indenture. (Section 4.1)
AMENDMENT AND WAIVER
We generally may amend the indenture with the written consent of the
holders of at least a majority in aggregate principal amount of the outstanding
exchange notes. The holders of at least a majority in aggregate principal amount
also may waive our compliance with most covenants. (Section 10.20) We
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must, however, obtain the consent of each holder of exchange notes affected by
an amendment or waiver which does any of the following.
- reduces the principal amount of exchange notes that must consent to an
amendment or waiver;
- reduces the principal of or changes the Stated Maturity of any exchange
note or alter the provisions with respect to the redemption of the
exchange notes, other than provisions relating to the covenants described
above under the caption "-- Repurchase at the Option of Holders";
- reduces the rate of or changes the time for payment of interest on any
exchange note;
- waives a Default or Event of Default in the payment of principal of,
premium, if any, on or interest on the exchange notes, except a
rescission of acceleration of the exchange notes by the holders of at
least a majority in aggregate principal amount of the exchange notes and
a waiver of the payment default that resulted from such acceleration;
- makes any exchange note payable in money other than that stated in the
exchange notes;
- makes any change in the provisions of the indenture relating to waivers
of past Defaults or the rights of holders of exchange notes to receive
payments of principal of, premium, if any, on or interest on the exchange
notes;
- waives a redemption payment with respect to any exchange note, other than
a payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders";
- reduces the relative ranking of the exchange notes or any Subsidiary
Guarantees; or
- makes any change in the foregoing amendment and waiver provisions.
(Section 9.2)
In addition, without the consent of any holder of exchange notes we and the
trustee may amend the indenture:
- to cure any ambiguity, defect or inconsistency;
- to add or release any Subsidiary Guarantor pursuant to the terms of the
indenture;
- to provide for uncertificated exchange notes in addition to or in place
of certificated exchange notes;
- to provide for the assumption of our obligations to holders of exchange
notes in the case of a merger or consolidation;
- to make any change that would provide any additional rights or benefits
to the holders of exchange notes;
- to add any additional Events of Default;
- to appoint a successor trustee;
- to secure the exchange notes; or
- to comply with requirements of the SEC in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act. (Section
9.1)
We may not change the indenture in a manner that would adversely affect the
rights of the holders of Senior Indebtedness under the subordination provisions
described under "-- Subordination" or the holders of Guarantor Senior
Indebtedness under the subordination provisions described under "-- Subsidiary
Guarantees of Notes," unless we obtain the consent of such holders that are
required to consent to such change pursuant to the agreements evidencing such
Senior Indebtedness or Guarantor Senior Indebtedness. (Section 9.8)
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CONCERNING THE TRUSTEE
State Street Bank and Trust Company will serve as trustee under the
indenture. State Street Bank and Trust Company currently serves as trustee under
the indentures for the existing notes, our 9 1/2% Senior Subordinated Notes due
2006 and our 9 1/2% Senior Subordinated Notes due 2008. Such bank also maintains
normal banking relationships with us and may perform services for and transact
other business with us from time to time in the ordinary course of business.
The indenture and the provisions of the Trust Indenture Act incorporated by
reference into the indenture will contain limitations on the rights of the
trustee, should it become a creditor of ours, to obtain payment of claims or to
realize on certain property received by it in respect of any such claims, as
security or otherwise. The indenture will permit the trustee to engage in other
transactions. If the trustee acquires any conflicting interest as defined in the
Trust Indenture Act it must eliminate such conflict or resign. (Sections 6.8 and
6.9)
GOVERNING LAW
The Indenture, the exchange notes and any Subsidiary Guarantees will be
governed by the laws of the State of New York. (Section 15.10)
BOOK-ENTRY, DELIVERY AND FORM
The existing notes were, and any exchange notes issued in exchange for
existing notes tendered pursuant to The Depository Trust Company's Automated
Tender Offer Program will be, issued in the form of one or more fully registered
global certificates. Each global certificate will be deposited with the trustee
who will hold the global certificate for The Depository Trust Company ("DTC").
Each global certificate will be registered in the name of DTC or its nominee.
Except as set forth below, a global certificate may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. (Section 3.6)
DTC has advised us as follows: It is a limited-purpose trust company which
was created to hold securities for its participating organizations and to
facilitate the clearance and settlement of transactions in such securities
between its participants through electronic book-entry changes in accounts of
its participants. Participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's book-entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. Persons who are
not participants may beneficially own securities held by DTC only through
participants or indirect participants.
DTC has also advised that pursuant to procedures established by it:
- upon our issuance of the exchange notes, DTC will credit the accounts of
participants designated by the exchange agent with the principal amount
of the exchange notes exchanged for existing notes, and
- ownership of beneficial interests in any global certificate will be shown
on, and the transfer of that ownership will be effected only through,
records maintained by DTC, with respect to participants' interests, the
participants and the indirect participants.
The laws of some states require that certain persons take physical delivery
in definitive form of securities which they own. Consequently, the ability to
transfer beneficial interests in a global certificate is limited to such extent.
So long as DTC or its nominee is the registered owner of a global
certificate, DTC or such nominee will be considered the sole owner or holder of
the exchange notes for all purposes under the indenture. Except as provided
below, owners of beneficial interests in a global certificate will not be
entitled to have exchange notes registered in their names, will not receive or
be entitled to receive physical delivery of
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exchange notes in definitive form and will not be considered the owners or
holders thereof under the indenture. (Section 3.6)
Neither us, the trustee, the paying agent nor the registrar of the exchange
notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
global certificate, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Principal and interest payments on a global certificate registered in the
name of DTC or its nominee will be made by us, either directly or through a
paying agent, to DTC or its nominee as the registered owner of such global
certificate. Under the terms of the indenture, we and the trustee will treat the
persons in whose names the exchange notes are registered as the owners of those
notes for the purpose of receiving payments of principal and interest on those
notes and for all other purposes whatsoever, (Section 3.8) Therefore, neither
us, the trustee nor any paying agent has any direct responsibility or liability
for the payment of principal or interest on the exchange notes to owners of
beneficial interests in a global certificate. DTC has advised us and the trustee
that its present practice is, upon receipt of any payment of principal or
interest to credit immediately the accounts of the participants with payment in
amounts proportionate to their respective holdings in principal amount of
beneficial interests in a global certificate as shown on the records of DTC.
Payments by participants and indirect participants to owners of beneficial
interests in a global certificate will be governed by standing instructions and
customary practices, as is now the cast with securities held for the accounts of
customers in bearer form or registered in "street name" and will be the
responsibility of such participants or indirect participants.
As long as the exchange notes are represented by a global certificate,
DTC's nominee will be the holder of the exchange notes and therefore will be the
only entity that can exercise a right to repayment or repurchase of the exchange
notes. See "-- Repurchase at the Option of Holders -- Change of Control" and
"-- Asset Sales." Notice by participants or indirect participants or by owners
of beneficial interests in a global certificate held through such participants
or indirect participants of the exercise of the option to elect repayment of
beneficial interests in exchange notes represented by a global certificate must
be transmitted to DTC in accordance with its procedures on a form required by
DTC and provided to participants. In order to ensure that DTC's nominee will
timely exercise a right to repayment with respect to a particular exchange note,
the beneficial owner of such exchange note must instruct the broker or other
participant or indirect participant through which it holds an interest in such
exchange note to notify DTC of its desire to exercise a right to repayment.
Different firms have different cut-off times for accepting instructions from
their customers and, accordingly, each beneficial owner should consult the
broker or other participant or indirect participant through which it holds an
interest in a exchange note in order to ascertain the cutoff time by which such
an instruction must be given in order for timely notice to be delivered to DTC.
We will not be liable for any delay in delivery of notices of the exercise
of the option to elect repayment.
CERTIFICATED NOTES
We will issue exchange notes in definitive form in exchange for a global
certificate if, and only if, either:
- DTC is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by us within 90 days; or
- an Event of Default has occurred and is continuing and the exchange notes
registrar has received a request from DTC to issue exchange notes in
definitive form in lieu of all or a portion of such global certificate.
In either instance, an owner of a beneficial interest in a global certificate
will be entitled to have exchange notes equal in principal amount to such
beneficial interest registered in its name and will be entitled to
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physical delivery of such exchange notes in definitive form. Exchange notes so
issued in definitive form will be issued in denomination of $1,000 and integral
multiples thereof and will be issued in registered form only, without coupons.
(Section 3.6)
MATERIAL DEFINITIONS
Set forth below are definitions of some of the terms used in the indenture
which we believe are material to an understanding of the indenture.
"Acquired Indebtedness" means Indebtedness of a Person:
- assumed in connection with an acquisition of properties or assets from
such Person; or
- outstanding at the time such Person becomes a Subsidiary of any other
Person.
Acquired Indebtedness does not include Indebtedness incurred in connection
with, or in contemplation of, such acquisition or such Person becoming a
Subsidiary. Acquired Indebtedness shall be deemed to be incurred on the date of
the related acquisition of properties or assets from any Person or the date the
acquired Person becomes a Subsidiary.
"Adjusted Consolidated Net Tangible Assets" means, without duplication, as
of the date of determination, the sum of:
- Discounted future net cash flows from our and our Restricted
Subsidiaries' proved oil and gas reserves calculated in accordance with
SEC guidelines but before any state or federal income taxes, as estimated
by a nationally recognized firm of independent petroleum engineers in a
reserve report prepared as of the end of our most recently completed
fiscal year. Discounted future net cash flows will be increased pursuant
to clauses (1) and (2) below and decreased pursuant to clauses (3) and
(4) below, as of the date of determination, by the estimated discounted
future net cash flows, calculated in accordance with SEC guidelines but
before any state or federal income taxes and utilizing the prices
utilized in such year-end reserve report, from:
(1) estimated proved oil and gas reserves acquired since the date of such
year-end reserve report;
(2) estimated oil and gas reserves attributable to extensions, discoveries
and other additions and upward revisions of estimates of proved oil
and gas reserves since the date of such year-end reserve report due to
exploration, development, exploitation, production or other
activities;
(3) estimated proved oil and gas reserves produced or disposed of since
the date of such year-end reserve report; and
(4) estimated oil and gas reserves attributable to downward revisions of
estimates of proved oil and gas reserves since the date of such
year-end reserve report due to exploration, development, exploitation,
production or other activities.
In the case of each of the determinations made pursuant to clauses (1) through
(4) above, such increases and decreases shall be as estimated by our petroleum
engineers, except that in the event there is a Material Change as a result of
such acquisitions, dispositions, or revisions, then the discounted future net
cash flows utilized for purposes of this clause shall be confirmed in writing by
a nationally recognized firm of independent petroleum engineers.
- The capitalized costs that are attributable to our and our Restricted
Subsidiaries' oil and gas properties to which no proved oil and gas
reserves are attributable, based on our books and records as of a date no
earlier than the date of our latest annual or quarterly financial
statements.
- The Net Working Capital on a date no earlier than the date of our latest
annual or quarterly financial statements.
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- The greater of:
(1) the net book value on a date no earlier than the date of our latest
annual or quarterly financial statements, or
(2) the appraised value, as estimated by independent appraisers, of our or
our Restricted Subsidiaries' other tangible assets, including, without
duplication, Investments in unconsolidated Restricted Subsidiaries, as
of the date no earlier than the date of our latest audited financial
statements.
Minus the sum of:
- Minority interests, other than a minority interest in a Finance Person.
- Any of our or our Restricted Subsidiaries' net gas balancing liabilities
reflected in our latest audited financial statements.
- To the extent included in the first clause of this definition, the
discounted future net cash flows, calculated in accordance with SEC
guidelines but before any state or federal income taxes and utilizing the
prices utilized in the Company's year-end reserve report, attributable to
reserves which are required to be delivered to third parties to fully
satisfy our and our Restricted Subsidiaries' obligations with respect to
Volumetric Production Payments on the schedules specified with respect
thereto.
- The discounted future net cash flows, calculated in accordance with SEC
guidelines but before any state or federal income taxes, attributable to
reserves subject to Dollar-Denominated Production Payments which, based
on the estimates of production and price assumptions included in
determining the discounted future cash flows specified in the first
clause of this definition, would be necessary to fully satisfy our and
our Restricted Subsidiaries' payment obligations with respect to
Dollar-Denominated Production Payments on the schedules specified with
respect thereto.
"Adjusted Net Assets" of a Subsidiary Guarantor at any date means the
amount by which the fair value of the properties and assets of such Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities, after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date, but excluding
liabilities under its Subsidiary Guarantee, of such Subsidiary Guarantor at such
date.
"Affiliate" of any specified Person means:
- any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person; or
- any other Person who is a director or executive officer of:
(1) such specified Person; or
(2) any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person.
For the purposes of this definition, "control," as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than us or any of our Restricted Subsidiaries,
including, without limitation, by way of merger or
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consolidation, (collectively, for purposes or this definition, a "transfer"),
directly or indirectly, in one or a series of related transactions, of:
- any Capital Stock of any Restricted Subsidiary held by us or any
Restricted Subsidiary, other than directors' qualifying shares and shares
owned by foreign shareholders to the extent required by applicable local
laws in the foreign countries;
- all or substantially all of our or any of our Restricted Subsidiaries'
properties and assets; or
- any other of our or any of our Restricted Subsidiaries' properties or
assets other than:
(1) a disposition of hydrocarbons or other mineral products, inventory,
accounts receivable, cash, Cash Equivalents or other property in the
ordinary course of business;
(2) any lease, abandonment, disposition, relinquishment or farm-out of any
oil and gas property in the ordinary course of business;
(3) the liquidation of property or assets received in settlement of debts
owing to us or any Restricted Subsidiary as a result of foreclosure,
perfection or enforcement of any Lien or debt, which debts were owing
to us or any Restricted Subsidiary in the ordinary course of our or
such Restricted Subsidiary's business; or
(4) the issuance and sale of Qualified Capital Stock by a Finance Person.
For the purposes of this definition, the term "Asset Sale" shall not
include:
- any transfer of properties or assets that is governed by, and made in
accordance with, the provisions described under "-- Material
Covenants -- Merger, Consolidation or Sale of Assets";
- any transfer of properties or assets to an Unrestricted Subsidiary, if
permitted under the "Restricted Payments" covenant of the indenture; or
- any transfer, in one or a series of related transactions, of properties
or assets having a fair market value of less than $2,500,000.
"Average Life" means, with respect to any Indebtedness, as at any date of
determination, the quotient obtained by dividing:
- The sum of the products of:
(1) the number of years, and any portion thereof, from the date of
determination to the date or dates of each successive scheduled
principal payment, including, without limitation, any sinking fund or
mandatory redemption payment requirements, of such Indebtedness,
multiplied by
(2) the amount of each such principal payment; by
- the sum of all such principal payments.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests, however designated, in such Person, and any rights other than debt
securities convertible into an equity interest that do not constitute Eligible
Convertible Securities, warrants or options exercisable for, exchangeable for or
convertible into such an equity interest in such Person. Our Capital Stock
includes any Qualifying TECONS and any Eligible Convertible Securities.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of or other agreement conveying the right to use any
property, whether real, personal or mixed, that is required to be classified and
accounted for as a capital lease obligation under GAAP, and, for the purpose of
the indenture, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
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"Cash Equivalents" means:
- any evidence of Indebtedness with a maturity of 180 days or less issued
or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof, provided that the full
faith and credit of the United States of America is pledged in support
thereof;
- demand and time deposits and certificates of deposit or acceptances with
a maturity of 180 days or less of any financial institution that is a
member of the Federal Reserve System having combined capital and surplus
and undivided profits of not less than $500,000,000;
- commercial paper with a maturity of 180 days or less issued by a
corporation that is not an Affiliate of us and is organized under the
laws of any state of the United States or the District or Columbia and
rated at least A-1 by S&P or at least P-1 by Moody's;
- repurchase obligations with a term of not more than seven days for
underlying securities of the types described in the first clause above
entered into with any commercial bank meeting the specifications of the
second clause above;
- overnight bank deposits and bankers' acceptances at any commercial bank
meeting the qualifications specified in the second clause above;
- deposits available for withdrawal on demand with any commercial bank not
meeting the qualifications specified in the second clause above but which
is organized under the laws of any country in which we or any Restricted
Subsidiary maintains an office or is engaged in the Oil and Gas Business,
provided that:
(1) all such deposits are required to be made in such accounts in the
ordinary course of business,
(2) such deposits do not at any one time exceed $5,000,000 in the
aggregate, and
(3) no funds so deposited remain on deposit in such bank for more than 30
days;
- deposits available for withdrawal on demand with any commercial bank not
meeting the qualifications specified in the second clause above but which
is a lending bank under any of our or any Restricted Subsidiary's credit
facilities, provided all such deposits do not exceed $5,000,000 in the
aggregate at any one time; and
- investments in money market funds substantially all of whose assets
comprise securities of the types described in any of the first five
clauses above.
"Change of Control" means the occurrence of any of the following events:
- any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
more than 50% of our total Voting Stock;
- we are merged with or into or consolidated with another Person and,
immediately after giving effect to the merger or consolidation:
(1) less than 50% of the total voting power of the outstanding Voting
Stock of the surviving or resulting Person is then "beneficially
owned" (within the meaning of Rule 13d-3 under the Exchange Act) in
the aggregate by our stockholders immediately prior to such merger or
consolidation, and
(2) any "person" or "group" (as defined in Section 13(d)(3) or 14(d)(2) of
the Exchange Act) has become the direct or indirect "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act) of more than 50% of
the total voting power of the Voting Stock of the surviving or
resulting Person;
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- we, either individually or in conjunction with one or more Restricted
Subsidiaries, sell, assign, convey, transfer, lease or otherwise dispose
of, or the Restricted Subsidiaries sell, assign, convey, transfer, lease
or otherwise dispose of, all or substantially all of our and the
Restricted Subsidiaries' properties and assets, taken as a whole, either
in one transaction or a series of related transactions, including Capital
Stock of the Restricted Subsidiaries, to any Person other than us or a
Wholly Owned Restricted Subsidiary,
- during any consecutive two-year period, individuals who at the beginning
of such period constituted our board of directors, together with any new
directors whose election by such board of directors or whose nomination
for election by our stockholders was approved by a vote of a majority of
the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of
our board of directors then in office; or
- our liquidation or dissolution; or
- so long as any Existing Notes are outstanding, any other event
constituting a Change of Control pursuant to the Indentures for the
Existing Notes.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Exploration Expenses" means, for any period, our and our
Restricted Subsidiaries' exploration expenses for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of:
- the sum of our and our Restricted Subsidiaries' Consolidated Net Income,
Consolidated Interest Expense, the portion of Consolidated Exploration
Expenses deducted in computing Consolidated Net Income, Consolidated
Income Tax Expense and Consolidated Non-cash Charges deducted in
computing Consolidated Net Income, in each case, for such period, on a
consolidated basis, all determined in accordance with GAAP, decreased, to
the extent included in determining Consolidated Net Income, by the sum
of:
(1) the amount of deferred revenues that are amortized during such period
and are attributable to reserves that are subject to Volumetric
Production Payments, and
(2) amounts recorded in accordance with GAAP as repayments of principal
and interest pursuant to Dollar-Denominated Production Payments; to
- the sum of such Consolidated Interest Expense for such period.
Provided, however, that
- the Consolidated Fixed Charge Coverage Ratio shall be calculated on the
assumption that:
(1) the Indebtedness to be incurred and all other Indebtedness incurred
after the first day of the period of four full fiscal quarters under
the covenant described under "-- Material Covenants -- Incurrence of
Indebtedness" through and including the date of determination and, if
applicable, the application of the net proceeds therefrom, and from
any other such Indebtedness, including to refinance other
Indebtedness, had been incurred on the first day of such four-quarter
period and, in the case of Acquired Indebtedness, on the assumption
that the related transaction, whether by means of purchase. merger or
otherwise, also had occurred on such date with the appropriate
adjustments with respect to such acquisition being included in such
pro forma calculation, and
(2) any acquisition or disposition by us or any Restricted Subsidiary of
any properties or assets outside the ordinary course of business, or
any repayment of any principal amount of any of
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our or any Restricted Subsidiary's Indebtedness prior to the Stated
Maturity thereof, in either case since the first day of such
four-quarter period through and including the date of determination,
had been consummated on such first day of such four-quarter period;
- in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness required to be computed on a
pro forma basis in accordance with the covenant described under
"-- Material Covenants -- Incurrence of Indebtedness" and:
(1) bearing a floating interest rate shall be computed as if the rate in
effect on the date of computation had been the applicable rate for the
entire period, and
(2) which was not outstanding during the period for which the computation
is being made but which bears, at our option, a fixed or floating rate
of interest, shall be computed by applying, at our option, either the
fixed or floating rate;
- in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit
facility required to be computed on a pro forma basis in accordance with
the covenant described under "-- Material Covenants -- Incurrence of
Indebtedness" shall be computed based upon the average daily balance of
such Indebtedness during the applicable period, provided that such
average daily balance shall be reduced by the amount of any repayment of
Indebtedness under a revolving credit facility during the applicable
period, which repayment permanently reduced the commitments or amounts
available to be reborrowed under such facility,
- notwithstanding the second and third clauses of this proviso, interest on
Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations, shall be deemed to have accrued at the rate per annum
resulting after giving effect to the operation of such agreements;
- in making such calculation, Consolidated Interest Expense shall exclude
interest attributable to Dollar-Denominated Production Payments; and
- if after the first day of the period referred to in the first clause of
this definition, we have retired any Indebtedness out of the net cash
proceeds of the issue and sale of our Qualified Capital Stock within 30
days of such issuance and sale, Consolidated Interest Expense shall be
calculated on a pro forma basis as if such Indebtedness had been retired
on the first day of such period.
"Consolidated Income Tax Expense" means, for any period, the provision for
our and our Restricted Subsidiaries' federal, state, local and foreign income
taxes, including any state franchise taxes accounted for as income taxes in
accordance with GAAP, for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of:
- our and our Restricted Subsidiaries' interest expense for such period as
determined on a consolidated basis in accordance with GAAP, including,
without limitation, to the extent attributable to such period:
(1) any amortization of debt discount,
(2) the net cost under Interest Rate Protection Obligations, including any
amortization of discounts,
(3) the interest portion of any deferred payment obligation constituting
Indebtedness,
(4) all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, and
(5) all accrued interest;
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- to the extent any Indebtedness of any Person other than us or a
Restricted Subsidiary is guaranteed by us or any Restricted Subsidiary,
the aggregate amount of interest paid, to the extent not accrued in a
prior period, or accrued by such other Person during such period
attributable to any such Indebtedness, in each case to the extent
attributable to that period;
- the aggregate amount of the interest component of Capitalized Lease
Obligations paid, to the extent not accrued in a prior period, accrued
and/or scheduled to be paid or accrued by us and our Restricted
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP; and
- the aggregate amount of dividends paid, to the extent not accrued in a
prior period, or accrued on our and our Restricted Subsidiaries'
Redeemable Capital Stock, to the extent such Redeemable Capital Stock is
owned by Persons other than us or our Restricted Subsidiaries, and to the
extent such dividends are not paid in Common Stock.
The following shall not be included in the calculation of Consolidated
Interest Expense:
- Amortization of our and our Restricted Subsidiaries' capitalized debt
issuance costs during such period;
- fees and expenses associated with the exchange offer, consent
solicitations and related transactions in connection with the exchange in
August 1999 of our 9 1/2% Senior Subordinated Notes due 2008 for our then
existing and outstanding Senior Subordinated Notes, to the extent
deducted in determining consolidated net income (or loss);
- fees and expenses associated with the exchange offer;
- dividends on Qualifying TECONS; and
- non-cash interest on Eligible Convertible Securities.
"Consolidated Net Income" means, for any period, our and our Restricted
Subsidiaries' consolidated net income (or loss) for such period as determined in
accordance with GAAP, adjusted by excluding:
- net after-tax extraordinary gains or losses, less all fees and expenses
relating thereto;
- net after-tax gains or losses, less all fees and expenses relating
thereto, attributable to Asset Sales;
- the net income (or net loss) of any Person, other than us or any of our
Restricted Subsidiaries, in which we or any of our Restricted
Subsidiaries has an ownership interest, except to the extent of the
amount of dividends or other distributions or interest on indebtedness
actually paid to us or any of our Restricted Subsidiaries in cash by such
other Person during such period, regardless of whether such cash
dividends, distributions or interest on indebtedness is attributable to
net income (or net loss) of such Person during such period or during any
prior period;
- net income (or net loss) of any Person combined with us of any of our
Restricted Subsidiaries on a "pooling of interests" basis attributable to
any period prior to the date of combination;
- the net income of any Restricted Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by that
Restricted Subsidiary is not at the date of determination permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders;
- fees and expenses associated with the exchange offer, to the extent
deducted in determining consolidated net income (or loss);
- dividends paid on Qualifying TECONS;
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- fees and expenses associated with the August 1999 exchange offer, consent
solicitations and related transactions referred to in the definition of
"Consolidated Interest Expense;"
- non-cash interest on Eligible Convertible Securities, to the extent
deducted in determining consolidated net income (or loss);
- Consolidated Exploration Expenses and any writedowns or impairments of
noncurrent assets less an amount equal to the amortization on a quarterly
basis of the cumulative Consolidated Exploration Expenses and writedowns
or impairments of non-current assets, calculated as two and one-half
percent of the cumulative net balance of such costs; and
- for purposes of calculating the Consolidated Fixed Charge Coverage Ratio
with respect to periods ending on or prior to March 31, 2000, net gains
or losses on oil and natural gas price hedging arrangements during such
periods.
"Consolidated Net Worth" means, at any date, our and our Restricted
Subsidiaries' consolidated stockholders' equity less the amount of such
stockholders' equity attributable to our and our Restricted Subsidiaries'
Redeemable Capital Stock or treasury stock, as determined in accordance with
GAAP.
"Consolidated Non-Cash Charges" means, for any period, our and our
Restricted Subsidiaries' aggregate depreciation, depletion, amortization and
other non-cash expenses reducing Consolidated Net Income for such period,
determined on a consolidated basis in accordance with GAAP, excluding any such
non-cash charge to the extent required as an accrual of or reserve for cash
charges for any future period.
"Credit Facility" means that certain Third Restated Credit Agreement among
us, certain of our Subsidiaries, Bank of America, N.A., as Administrative Agent,
Morgan Guaranty Trust Company of New York, as Documentation Agent, and certain
lenders named therein, as the same may be amended, modified, supplemented,
extended, restated, replaced, renewed or refinanced from time to time.
"Default" means any event that is or with the passage or time or the giving
of notice or both would be an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which our board of directors is required to
deliver a resolution of the board of directors under the indenture, a member of
our board of directors who does not have any material direct or indirect
financial interest other than an interest arising solely from the beneficial
ownership of our Capital Stock in or with respect to such transaction or series
of transactions.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Eligible Convertible Securities" means any security issued by us that:
- is subordinated in right of payment to the exchange notes,
- has a final Stated Maturity at least 91 days after the final Stated
Maturity of the exchange notes, and
- by its terms or by the terms of any security into which it is convertible
or by contract or otherwise requires no scheduled payments, including
principal, premium, interest and fees, prior to its final Stated
Maturity, other than payments payable only in shares of our Common Stock
or in options, warrants or other rights to purchase our Common Stock.
"Equity Offering" means a bona fide underwritten sale to the public of our
Common Stock pursuant to a registration statement, other than on Form S-8 or any
other form relating to securities issuable under any employee benefit plan of
ours, that is declared effective by the SEC following the Issue Date.
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"Event of Default" has the meaning set forth above under the caption
"-- Events of Default and Remedies."
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor act thereto.
"Exchanged Properties" means properties or assets used or useful in the Oil
and Gas Business received by us or a Restricted Subsidiary, whether directly or
indirectly through the acquisition of the Capital Stock of a Person holding such
assets so that such Person becomes our Wholly Owned Restricted Subsidiary, in
trade or as a portion of the total consideration for such other properties or
assets.
"Existing TECONS" means our Obligated Mandatorily Redeemable Convertible
Preferred Securities issued by Nuevo Financing I, a statutory business trust
wholly owned by us, on December 23, 1996, in an aggregate liquidation amount of
$115.0 million.
"Finance Person" means a Subsidiary of ours, the Common Stock of which is
owned by us, that does not engage in any activity other than:
- the holding of Subordinated Indebtedness with respect to which payments
of interest on such Subordinated Indebtedness can, at the election of the
issuer thereof, be deferred for one or more payment periods;
- the issuance of Qualifying TECONS and Common Stock and/or debt
securities; and
- any activity necessary, incidental or related to the foregoing.
"GAAP" means generally accepted accounting principles, consistently
applied, that are set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States of America, which were
effective as of September 26, 2000.
The term "guarantee" means, as applied to any obligation:
- a guarantee, other than by endorsement of negotiable instruments or
documents for collection in the ordinary course of business, direct or
indirect, in any manner, of any part or all of such obligation; and
- an agreement, direct or indirect, contingent or otherwise, the practical
effect of which is to assure in any way the payment or performance, or
payment of damages in the event of non-performance, of all or any part of
such obligation, including, without limiting the foregoing, the payment
of amounts drawn down by letters of credit;
A guarantee by any Person shall not include a contractual commitment by one
Person to invest in another Person provided that such Investment is otherwise
permitted by the indenture. When used as a verb, "guarantee" shall have a
corresponding meaning.
"Guarantor Senior Indebtedness" means the principal of, premium, if any,
on, interest on, including interest accruing after the filing of a petition
initiating any proceeding pursuant to any bankruptcy law, and other amounts due
on or in connection with, including any fees, premiums, expenses, including
costs of collection, and indemnities, any Indebtedness of a Subsidiary
Guarantor, whether outstanding on the date of the indenture or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness will be
pari passu with or subordinated in right of payment to its
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Subsidiary Guarantee. Notwithstanding the foregoing, Guarantor Senior
Indebtedness of a Subsidiary Guarantor will not include:
- Indebtedness of such Subsidiary Guarantor evidenced by its Subsidiary
Guarantee;
- Indebtedness of such Subsidiary Guarantor that is expressly pari passu
with its Subsidiary Guarantee or is expressly subordinated in right of
payment to any Guarantor Senior Indebtedness of such Subsidiary Guarantor
or its Subsidiary Guarantee;
- Indebtedness of such Subsidiary Guarantor to the extent incurred in
violation of the "Incurrence of Indebtedness" covenant of the indenture;
- Indebtedness of such Subsidiary Guarantor to us or any of our other
Subsidiaries or to any Affiliate of us or any Subsidiary of such
Affiliate; and
- any Indebtedness which when incurred and without regard to any election
under Section 1111(b) of the Federal Bankruptcy Code is without recourse
to such Subsidiary Guarantor.
"holder" means a Person in whose name an exchange note is registered in the
Note Register.
"Indebtedness" means, with respect to any Person, without duplication:
- all liabilities of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade accounts
payable and other accrued current liabilities incurred in the ordinary
course of business, and all liabilities of such Person incurred in
connection with any letters of credit, bankers' acceptances or other
similar credit transactions or any agreement to purchase, redeem,
exchange, convert or otherwise acquire for value any Capital Stock of
such Person, or any warrants, rights or options to acquire such Capital
Stock outstanding on the date of the indenture or thereafter, if, and to
the extent, any of the foregoing would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP;
- all obligations of such Person evidenced by bonds, notes, debentures or
other similar instruments, if, and to the extent, any of the foregoing
would appear as a liability upon a balance sheet of such Person prepared
in accordance with GAAP;
- all Indebtedness of such Person created or arising under any conditional
sale or other title retention agreement with respect to property acquired
by such Person even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession
or sale of such property, but excluding trade accounts payable arising in
the ordinary course of business;
- all Capitalized Lease Obligations of such Person;
- all Indebtedness referred to in the preceding clauses of other Persons
and all dividends of other Persons, the payment of which is secured by,
or for which the holder of such Indebtedness has an existing right to be
secured by, any Lien upon property, including, without limitation,
accounts and contract rights, owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness (the amount of such obligation being deemed to be the lesser
of the value of such property or asset or the amount of the obligation so
secured);
- all guarantees by such Person of Indebtedness referred to in this
definition, including, with respect to any Production Payment, any
warranties or guaranties of production or payment by such Person with
respect to such Production Payment but excluding other contractual
obligations of such Person with respect to such Production Payment;
- all Redeemable Capital Stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued
dividends; and
- all obligations of such Person under or in respect of currency exchange
contracts, oil or natural gas price hedging arrangements and Interest
Rate Protection Obligations.
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Indebtedness shall not include either Eligible Convertible Securities or
Qualifying TECONS and Indebtedness, including guarantees thereof, relating to
Qualifying TECONS and held by a Finance Person; provided, however, Indebtedness
shall include Existing TECONS and, for purposes of the seventh clause under
"-- Events of Default and Remedies" only, debt securities issued in connection
with Eligible Convertible Securities and debt securities issued in connection
with Qualifying TECONS shall be deemed to be Indebtedness. Subject to the sixth
clause of the first sentence of this definition, neither Dollar-Denominated
Production Payments nor Volumetric Production Payments shall be deemed to be
Indebtedness.
For purposes hereof, the "maximum fixed repurchase price" of any Redeemable
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Redeemable Capital Stock as if such
Redeemable Capital Stock were purchased on any date on which Indebtedness shall
be required to be determined pursuant to the indenture, and if such price is
based upon, or measured by, the fair market value of such Redeemable Capital
Stock, such fair market value shall be determined in good faith by the board of
directors of the issuer of such Redeemable Capital Stock; provided, however,
that if such Redeemable Capital Stock is not at the date of determination
permitted or required to be repurchased, the "maximum fixed repurchase price"
shall be the book value of such Redeemable Capital Stock.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by Such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's and any of its Subsidiaries' exposure to
fluctuations in interest rates.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution by means of any transfer of cash or other property or assets to
others or any payment for property, assets or services for the account or use of
others, or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities, including derivatives, or
evidences of Indebtedness issued by, any other Person. In addition, the fair
market value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary is designated an Unrestricted Subsidiary shall be
deemed to be an "Investment" made by us in such Unrestricted Subsidiary at such
time, and the designation of any Unrestricted Subsidiary as a Restricted
Subsidiary shall result in a return of an "Investment" in an amount not to
exceed the lesser of (x) the book value of the Investments previously made in
such Unrestricted Subsidiary that were treated as Restricted Payments, and (y)
the fair market value of such Unrestricted Subsidiary. "Investments" shall
exclude:
- extensions of trade credit under a joint operating agreement or otherwise
in the ordinary course of business, workers' compensation, utility, lease
and similar deposits and prepaid expenses made in the ordinary course of
business;
- Interest Rate Protection Obligations entered into in the ordinary course
of business or as required by any Permitted Indebtedness or any other
Indebtedness incurred in compliance with the "Incurrence of Indebtedness"
covenant, but only to the extent that the stated aggregate notional
amounts of such Interest Rate Protection Obligations do not exceed 105%
of the aggregate principal amount of such Indebtedness to which such
Interest Rate Protection Obligations relate;
- bonds, notes, debentures or other securities received in compliance with
the "Asset Sales" covenant; and
- endorsements of negotiable instruments and documents for collection in
the ordinary course of business.
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"Issue Date" means the date on which the exchange notes were first issued
under the indenture.
"Lien" means any mortgage, charge, pledge, statutory or other, lien,
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance or similar agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing, upon or with respect to any property of any kind. A Person shall be
deemed to own subject to a Lien any property which such Person has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement.
"Liquid Securities" means securities:
- of an issuer that is not an Affiliate of us; and
- that are publicly traded on the New York Stock Exchange, the American
Stock Exchange, the Toronto Stock Exchange, the Australian Stock
Exchange, the London Stock Exchange or the NASDAQ National Market.
Securities meeting the requirements of the two preceding clauses shall be
treated as Liquid Securities from the date of receipt thereof until and only
until the earlier of :
- the date on which such securities, or securities exchangeable for, or
convertible into, such securities, are sold or exchanged for cash or Cash
Equivalents; and
- 180 days following the date of receipt of such securities.
If such securities, or securities exchangeable for, or convertible into,
such securities, are not sold or exchanged for cash or Cash Equivalents within
180 days of receipt thereof, for purposes of determining whether the transaction
pursuant to which we or a Restricted Subsidiary received the securities was in
compliance with the provisions of the indenture described under "-- Repurchase
at the Option or Holders -- Asset Sales," such securities shall be deemed not to
have been Liquid Securities until 181 days following the date of receipt of such
securities.
"Material Change" means an increase or decrease, excluding changes that
result solely from changes in prices, of more than 30% during a fiscal quarter
in the estimated discounted future net cash flows from our and our Restricted
Subsidiaries' proved oil and gas reserves, calculated in accordance with the
first clause of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change:
- any acquisitions during the quarter of oil and gas reserves that have
been estimated by a nationally recognized firm of independent petroleum
engineers and on which a report or reports exist; and
- any disposition of properties held at the beginning of such quarter that
have been disposed of as provided in the covenant described under the
caption "-- Repurchase at the Option of Holders -- Asset Sales."
"Material Subsidiary" means, at any particular time, as shown on our and
our Restricted Subsidiaries' consolidated financial statements for our most
recently completed fiscal year, any Restricted Subsidiary that, together with
its Subsidiaries:
- accounted for more than 5% of our and our Restricted Subsidiaries'
consolidated revenues for such fiscal year; or
- was the owner of more than 5% of our and our Restricted Subsidiaries'
consolidated assets at the end of such fiscal year.
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"Maturity" means, with respect to any new note, the date on which any
principal of such exchange note becomes due and payable as provided therein or
in the indenture, whether at the Stated Maturity with respect to such principal
or by declaration of acceleration, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form or cash or Cash Equivalents, including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents except to the extent that such obligations are financed or sold with
recourse to us or any Restricted Subsidiary, net of:
- brokerage commissions and other fees and expenses, including fees and
expenses of legal counsel and investment banks related to such Asset
Sale,
- provisions for all taxes payable as a result of such Asset Sale;
- amounts required to be paid to any Person other than us or any Restricted
Subsidiary owning a beneficial interest in the assets subject to the
Asset Sale; and
- appropriate amounts to be provided by us or any Restricted Subsidiary, as
the case may be, as a reserve required in accordance with GAAP
consistently applied against any liabilities associated with such Asset
Sale and retained by us or any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated
with such Asset Sale, all as reflected in an Officers' Certificate
delivered to the trustee; provided, however, that any amounts remaining
after adjustments, revaluations or liquidations of such reserves shall
constitute Net Cash Proceeds.
"Net Working Capital" means, as set forth in our consolidated financial
statements prepared in accordance with GAAP:
- all of our and our Restricted Subsidiaries' current assets, less
- all of our and our Restricted Subsidiaries' current liabilities, except
current liabilities included in Indebtedness.
"Non-payment Event of Default" means any event, other than a Payment Event
of Default, the occurrence of which, with or without notice or the passage of
time, entities one or more Persons to accelerate the maturity of any Specified
Senior Indebtedness.
"Non-Recourse Purchase Money Indebtedness" means:
- our and any Restricted Subsidiary's Indebtedness, other than Capital
Lease Obligations, incurred in connection with the acquisition by us or
such Restricted Subsidiary in the ordinary course of business of fixed
assets used in the Oil and Gas Business, including office buildings and
other real property used by us or such Restricted Subsidiary in
conducting our or its operations; and
- any renewals and refinancings of such Indebtedness.
For Indebtedness described in the two preceding clauses to qualify as
Non-Recourse Purchase Money Indebtedness, the holders of such Indebtedness must
agree that they will look solely to the fixed assets so acquired which secure
such Indebtedness, subject to customary exceptions such as indemnifications for
environmental, title, fraud and other matters, and neither we nor any Restricted
Subsidiary may;
(1) be directly or indirectly liable for such Indebtedness; or
(2) provide credit support, including any undertaking, guarantee,
agreement or instrument that would constitute Indebtedness, other than
the grant of a Lien on such acquired fixed assets.
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"Note Register" means the register maintained by or for us in which we
shall provide for the registration of the exchange notes and of transfer of the
notes.
"Oil and Gas Business" means:
- the acquisition, exploration, development, operation and disposition of
interests in oil, gas and other hydrocarbon properties;
- the gathering, marketing, treating, processing, storage, selling and
transporting of any production from such interests or properties;
- any business relating to or arising from exploration for or development,
production, treatment, processing, storage, transportation or marketing
of oil, gas and other minerals and products produced in association
therewith;
- any power generation and electrical transmission business in a
jurisdiction outside of North America where fuel required by such
business is supplied, directly or indirectly, from production reserves
substantially from blocks in which we or our Restricted Subsidiaries
participate; and
- any activity necessary, appropriate or incidental to the activities
described in the foregoing clauses of this definition.
"Pari Passu Indebtedness" means any of our Indebtedness that is pari passu
in right of payment to the exchange notes, including, without limitation, the
existing notes, our 9 1/2% Senior Subordinate Notes due 2006 and our 9 1/2%
Senior Subordinate Notes due 2008.
"Payment Event of Default" means any default in the payment or required
prepayment of principal of, premium, if any, on or interest on any Specified
Senior Indebtedness when due, whether at final maturity, upon scheduled
installment, upon acceleration or otherwise.
"Permitted Indebtedness" means any of the following:
- Indebtedness under the Credit Facility in an aggregate principal amount
at any one time outstanding not to exceed the greater of:
(1) $400,000,000, less any amounts of principal of such Indebtedness
repaid using the Net Cash Proceeds of an Asset Sale pursuant to the
covenant described under "-- Repurchase at the Option of
Holders -- Asset Sales" and any amounts of principal of such
Indebtedness that could only be refinanced pursuant to the tenth
clause of this definition; or
(2) the borrowing base thereunder,
provided, both subclauses (1) and (2) shall include any guarantee of any such
Indebtedness and any fees, premiums, expenses, including costs of collection,
indemnities and other amounts payable in connection with such Indebtedness;
- Indebtedness under the existing notes issued in the exchange offer and
any Subsidiary Guarantees relating thereto or to any exchange notes;
- Indebtedness outstanding on the date of the indenture, including, without
limitation our 9 1/2% Senior Subordinate Notes due 2006;
- our Indebtedness to a Wholly Owned Restricted Subsidiary or a Finance
Person and Indebtedness of a Restricted Subsidiary to us or a Wholly
Owned Restricted Subsidiary or a Finance Person; provided, however, that
upon any subsequent issuance or transfer of any Capital Stock or any
other event which results in any such Wholly Owned Restricted Subsidiary
ceasing to be a Wholly Owned Restricted Subsidiary or such Finance Person
ceasing to be a Finance Person, as the case may be, any other subsequent
transfer of any such Indebtedness except to us or a Wholly Owned
Restricted Subsidiary or Finance Person, such Indebtedness shall be
deemed, in each case, to be incurred and shall be treated as an
incurrence for purposes of the "Incurrence of Indebtedness"
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covenant at the time the Wholly Owned Restricted Subsidiary or Finance
Person in question ceased to be a Wholly Owned Restricted Subsidiary or
Finance Person, as the case may be;
- in-kind obligations relating to net gas balancing positions arising in
the ordinary course of business and consistent with past practice;
- Indebtedness in respect of bid, performance or surety bonds issued for
our or any Restricted Subsidiary's account in the ordinary course of
business, including guaranties and letters of credit supporting such bid,
performance or surety obligations, in each case other than for an
obligation for money borrowed;
- any guarantee of Senior Indebtedness or Guarantor Senior Indebtedness,
incurred in compliance with the "Incurrence of Indebtedness" covenant, by
us or a Restricted Subsidiary;
- Non-Recourse Purchase Money Indebtedness,
- any renewals substitutions, exchanges, refinancings or replacements
(each, for purposes of this clause, a "refinancing") by us or a
Restricted Subsidiary of any Indebtedness incurred pursuant to the
provisions of the "Incurrence of Indebtedness" covenant or pursuant to
clause one, two or three of this definition, including any successive
refinancings by us or such Restricted Subsidiary, so long as:
(1) any such new Indebtedness shall be in a principal amount that does not
exceed the principal amount, or, if such Indebtedness being refinanced
provides for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration thereof, such
lesser amount as of the date of determination, so refinanced plus the
amount of any premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness refinanced or
the amount of any premium reasonably determined by us or such
Restricted Subsidiary as necessary to accomplish such refinancing,
plus the amount of our or such Restricted Subsidiary's expenses
incurred in connection with such refinancing,
(2) in the case or any refinancing of our Indebtedness that is not Senior
Indebtedness, such new Indebtedness is either pari passu with the
exchange notes or subordinated to the exchange notes at least to the
same extent as the Indebtedness being refinanced,
(3) in the case of any refinancing of our Indebtedness pursuant to clause
one, such new Indebtedness is either Pari Passu Indebtedness or
Subordinated Indebtedness and has a final Stated Maturity at least 91
days after the final Stated Maturity of the exchange notes, and
(4) such new Indebtedness has an Average Life equal to or longer than the
Average Life of the Indebtedness being refinanced and a final Stated
Maturity equal to or later than the final Stated Maturity of the
Indebtedness being refinanced;
- any additional Indebtedness in an aggregate principal amount not to
exceed $25.0 million.
"Permitted Investments" means any of the following:
- Investments in Cash Equivalents;
- Investments in us or any of our Restricted Subsidiaries;
- Investments in any amount not to exceed $10,000,000 at any one time
outstanding;
- Investments by us or any of our Restricted Subsidiaries in another
Person, if as a result of such Investment:
(1) such other Person becomes a Restricted Subsidiary, or
(2) such other Person is merged or consolidated with or into, or transfers
or conveys all or substantially all of its properties and assets to,
us or a Restricted Subsidiary;
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- investments and expenditures made in the ordinary course of, and of a
nature that is or shall have become customary in, the Oil and Gas
Business as a means of actively exploiting, exploring for, acquiring,
developing, processing, gathering, marketing or transporting oil and gas
through agreements, transactions, interests or arrangements which permit
a Person to share risks or costs, comply with regulatory requirements
regarding local ownership or satisfy other objectives customarily
achieved through the conduct of Oil and Gas Business jointly with third
parties, including, without limitation:
(1) ownership interests in oil and gas properties or gathering systems,
and
(2) Investments and expenditures in the form of or pursuant to operating
agreements, processing agreements, farm-in agreements, farm-out
agreements, development agreements, area of mutual interest
agreements, unitization agreements, pooling arrangements, joint
bidding agreements, service contracts, joint venture agreements,
general or limited partnership agreements, subscription agreements,
stock purchase agreements and other similar agreements with third
parties, including Unrestricted Subsidiaries;
- entry into any hedging arrangements in the ordinary course of business
for the purpose of protecting our or any Restricted Subsidiary's
production against fluctuations in oil or natural gas prices;
- entry into any currency exchange contract in the ordinary course of
business;
- Investments in obligations or securities received as a result of any
Asset Sale;
- advances and loans to officers, directors and employees in the ordinary
course of business;
- Investments pursuant to any agreement or obligation in effect on the date
of the indenture;
- Investments in obligations or securities received in settlement of debts
owing to us or a Restricted Subsidiary as a result of bankruptcy or
insolvency proceeding or upon the foreclosure, perfection or enforcement
of any Lien in favor of us or a Restricted Subsidiary, in each case as to
debt owing to us or a Restricted Subsidiary that arose in the ordinary
course of our or any such Restricted Subsidiary's business; and
- contributions to Unrestricted Subsidiaries of our interests in 24
undeveloped federal leases offshore California, known as the COOGER
acreage, included in seven units, Bonita, Sword, Point Sal, Gato Canyon,
Lion Rock, Purisina Point and Santa Maria.
"Permitted Junior Securities" means any of our or any successor obligor's
equity securities or subordinated debt securities with respect to the Senior
Indebtedness provided for by a plan of reorganization or readjustment that, in
the case of any such subordinated debt securities, are subordinated in right of
payment to all Senior Indebtedness that may at the time be outstanding to
substantially the same degree as, or to a greater extent than, the exchange
notes are so subordinated as provided in the indenture.
"Permitted Liens" means the following types of Liens:
- Liens existing as of the date of the indenture, and any renewal,
extension, refunding, exchange or refinancing of any such Lien provided
that thereafter such Lien extends only to the properties that were
subject to such Lien prior to the renewal, extension, refunding, exchange
or refinancing thereof,
- Liens securing the exchange notes or the Subsidiary Guarantees relating
thereto; and
- Liens in favor of us.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
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"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents, however designated, of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of the indenture, including, without limitation, all classes and series
of preferred or preference stock of such Person.
"Production Payments" means, collectively, Dollar-Denominated Production
Payments and Volumetric Production Payments.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock, provided that, with respect to
us, Qualified Capital Stock includes, without limitation, any Qualifying TECONS
and any Eligible Convertible Securities.
"Qualifying TECONS" means preferred trust securities or similar securities
issued by a Finance Person after the date of the indenture.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or by contract or otherwise, is, or upon the happening of an event or passage of
time would be, required to be redeemed prior to the final Stated Maturity of the
exchange notes or is redeemable at the option of the holder thereof at any time
prior to such final Stated Maturity, or is convertible into or exchangeable for
debt securities at any time prior to such final Stated Maturity; provided,
however, that Redeemable Capital Stock shall not include any security by virtue
of the fact that it may be exchanged or converted at the option of the holder or
at our option for our Common Stock,
"Restricted Subsidiary" means any Subsidiary of ours, whether existing on
or after the date of the indenture, unless such Subsidiary is an Unrestricted
Subsidiary or is designated as an Unrestricted Subsidiary pursuant to the terms
of the indenture.
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"Senior Indebtedness" means the principal of, premium, if any, on, interest
on, including interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law, and other amounts due on or in
connection with, including any fees, premiums, expenses, including costs of
collection, and indemnities, any of our Indebtedness, whether outstanding on the
date of the indenture or thereafter created, incurred or assumed, unless, in the
case of any particular Indebtedness, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Indebtedness will be pari passu with or subordinated in right of payment to the
exchange notes. Notwithstanding the foregoing, "Senior Indebtedness" will not
include:
- Indebtedness evidenced by the exchange notes;
- our Indebtedness that is Pari Passu Indebtedness or is expressly
subordinated in right of payment to any other of our Indebtedness;
- Indebtedness that is represented by Redeemable Capital Stock,
- our Indebtedness to the extent incurred in violation of the covenant
described under "-- Material Covenants -- Incurrence of Indebtedness;"
- our Indebtedness to any of our Subsidiaries or any other Affiliate of
ours or any subsidiary of such Affiliate; and
- Indebtedness which when incurred and without regard to any election under
Section 1111(b) of the Federal Bankruptcy Code is without recourse to us.
"Specified Property Sales" means the sales of any of our and our Restricted
Subsidiaries'
- East Texas Oil and gas properties sold in January 1999; and
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- real properties, other than our or our Restricted Subsidiaries' mineral
interests, owned on the date of the indenture and located in the Counties
of Fresno, Kern, Kings, Los Angeles, Orange, Santa Barbara, and Ventura
in the State of California.
"Specified Senior Indebtedness" means:
- all of our Senior Indebtedness in respect of the Credit Facility and any
renewals, amendments, extensions, supplements, modifications, deferrals,
refinancings, or replacements (each, for purposes of this definition, a
"refinancing") thereof by us, including any successive refinancings
thereof by us; and
- any other Senior Indebtedness and any refinancings thereof by us having a
principal amount of at least $10,000,000 as of the date of determination
and provided that the agreements, indentures or other instruments
evidencing such Senior Indebtedness or pursuant to which such Senior
Indebtedness was issued specifically designates such Senior Indebtedness
as "Specified Senior Indebtedness" for purposes of the indenture.
For purposes of this definition, a refinancing of any Specified Senior
Indebtedness shall be treated as a Specified Senior Indebtedness only if the
Indebtedness issued in such refinancing ranks or would rank pari passu with the
Specified Senior Indebtedness refinanced and only if Indebtedness issued in such
refinancing is permitted by the covenant described under "-- Material
Covenants -- Incurrence of Indebtedness."
"Stated Maturity" means, when used with respect to any note or any
installment of interest thereon, the date specified in such new note as the
fixed date on which the principal of such exchange note or such installment of
interest is due and payable, and, when used with respect to any other
Indebtedness or any installment of interest thereon, means the date specified in
the instrument evidencing or governing such Indebtedness as the fixed date on
which the principal of such Indebtedness or such installment of interest is due
and payable.
"Subordinated Indebtedness" means our Indebtedness which is expressly
subordinated in right of payment to the exchange notes.
"Subsidiary" means, with respect to any Person:
- a corporation a majority of whose Voting Stock is at the time, directly
or indirectly, owned by such Person, by one or more Subsidiaries of such
Person or by such Person and one or more Subsidiaries thereof; or
- any other Person other than a corporation, including, without limitation,
a joint venture, in which such Person, one or more Subsidiaries thereof
or such Person and one or more Subsidiaries thereof, directly or
indirectly, at the date of determination thereof, have at least majority
ownership interest entitled to vote in the election of directors,
managers, trustees or other Persons performing similar functions.
"Subsidiary Guarantee" means an unconditional, unsecured, senior
subordinated guarantee of the exchange notes by any Restricted Subsidiary
pursuant to the terms of the indenture.
"Subsidiary Guarantor" means, unless released from their Subsidiary
Guarantees as permitted by the indenture, any Restricted Subsidiary that becomes
a guarantor of the exchange notes in compliance with the provisions of the
indenture and executes a supplemental indenture in which such Restricted
Subsidiary agrees to be bound by the terms of the indenture.
"Unrestricted Subsidiary" means:
- any Subsidiary of ours that at the time of determination will be
designated an Unrestricted Subsidiary by our board of directors as
provided below; and
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- any Subsidiary of an Unrestricted Subsidiary.
Our board of directors may designate any Subsidiary of ours as an
Unrestricted Subsidiary so long as:
- neither we nor any Restricted Subsidiary is directly or indirectly liable
pursuant to the terms of any Indebtedness of such Subsidiary;
- no default with respect to any Indebtedness of such Subsidiary would
permit, upon notice, lapse of time or otherwise, any holder of any of our
or any Restricted Subsidiary's other Indebtedness to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity;
- neither we nor any Restricted Subsidiary has made an Investment in such
Subsidiary unless such Investment was made pursuant to, and in accordance
with, the "Restricted Payments" covenant, other than Investments of the
type described in the fourth and twelfth clauses of the definition of
Permitted Investment; and
- such designation shall not result in the creation or imposition of any
Lien on any of our or any Restricted Subsidiary's properties, other than
any Permitted Lien or any Lien the creation or imposition of which shall
have been in compliance with the "Liens" covenant.
With respect to the first clause of the second paragraph of this
definition, we or a Restricted Subsidiary may be liable for Indebtedness of an
Unrestricted Subsidiary if:
- such liability constituted a Permitted Investment or a Restricted Payment
permitted by the "Restricted Payments" covenant, in each case at the time
of incurrence; or
- the liability would be a Permitted Investment at the time of designation
of such Subsidiary as an Unrestricted Subsidiary.
Any such designation by our board of directors shall be evidenced to the
trustee by filing a board resolution with the trustee giving effect to such
designation. Our board of directors may designate any Unrestricted Subsidiary as
a Restricted Subsidiary if, immediately after giving effect to such designation:
- no Default or Event of Default shall have occurred and be continuing;
- we could incur $1.00 of additional Indebtedness, other than Permitted
Indebtedness, under the "Incurrence of Indebtedness" covenant; and
- if any of our or any of our Restricted Subsidiaries' properties or assets
would upon such designation become subject to any Lien, other than a
Permitted Lien, the creation or imposition of such Lien shall have been
in compliance with the "Liens" covenant.
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person, irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent:
- all of the Capital Stock or other ownership interests in such Restricted
Subsidiary, other than any directors' qualifying shares mandated by
applicable law, is owned directly or indirectly by us; or
- such Restricted Subsidiary is organized in a foreign jurisdiction and is
required by the applicable laws and regulations of such foreign
jurisdiction to be partially owned by the government of such
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foreign jurisdiction or individual or corporate citizens of such foreign
jurisdiction in order for such Restricted Subsidiary to transact business
in such foreign jurisdiction, provided that we, directly or indirectly,
own the remaining Capital Stock or ownership interest in such Restricted
Subsidiary and, by contract or otherwise, control the management and
business of such Restricted Subsidiary and derive the economic benefits
of ownership of such Restricted Subsidiary to substantially the same
extent as if such Restricted Subsidiary were a wholly owned Subsidiary.
REGISTRATION RIGHTS
We have entered into a registration agreement with the dealer managers
under which we have agreed, for the benefit of the holders of the existing
notes, at our cost, to use our reasonable best efforts:
- to file with the SEC the registration statement of which this prospectus
is a part related to the exchange offer of the exchange notes by December
18, 2000;
- to cause this exchange offer registration statement to be declared
effective under the Securities Act by February 16, 2001;
- to keep this exchange offer registration statement effective until the
closing of the exchange offer; and
- to cause this exchange offer to be completed by March 18, 2001.
The registration agreement shall be governed by, and construed under, the
laws of the State of New York. If you have further questions about registration
rights, you should refer to the registration agreement, a copy of which is
available upon request to us. The registration agreement is also attached as an
exhibit to this registration statement. In addition, the information described
above under "The Exchange Offer" concerning interpretations of and positions
taken by the staff of the SEC is not intended to constitute legal advice, and
prospective investors should consult their own advisors on these matters.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material U.S. federal income tax
consequences of this exchange offer and the ownership and disposition of the
exchange notes thereafter, and represents the opinion of our counsel, Haynes and
Boone, L.L.P., as to these matters. Unless otherwise stated, this discussion is
limited to the tax consequences to those persons who exchange existing notes and
will hold the exchange notes for exchange notes pursuant to this exchange offer
and who hold the existing notes and will hold the exchange notes as capital
assets under Section 1221 of the Internal Revenue Code of 1986, as amended. The
discussion does not address specific tax consequences that may be relevant to
particular persons including, for example, financial institutions,
broker-dealers, insurance companies, tax-exempt organizations, and persons in
special situations, such as those who hold notes as part of a straddle, hedge,
conversion transaction, or other integrated investment. In addition, this
discussion does not address U.S. federal alternative minimum tax consequences or
any aspect of state, local or foreign taxation. This discussion is based upon
current U.S. federal income tax laws, regulations, rulings and judicial
decisions, all of which are subject to change, possibly with retroactive effect.
In our counsel's opinion, the existing notes and the exchange notes qualify as
indebtedness and as securities for federal income tax purposes, and the
following discussion assumes that this treatment is correct.
For purposes of this discussion, you are a "U.S. Holder" if you are a
beneficial owner of an existing note or an exchange note and are a U.S. citizen
or resident, a corporation, partnership or other entity created or organized in
or under the laws of the U.S. or of any political subdivision thereof, an
estate, the income of which is subject to U.S. federal income taxation
regardless of its source, or a trust if a U.S. court is able to exercise primary
supervision over its administration and one or more U.S. persons have the
authority to control all of its substantial decisions, including for purposes of
this discussion any
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specific electing trusts in existence as of August 20, 1996. You are a "Non-U.S.
Holder" if you are a holder of a note who is not a U.S. Holder.
HOLDERS OF EXISTING NOTES ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING
THE SPECIFIC U.S. FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO THEM OF THIS
EXCHANGE OFFER AND OF OWNING AND DISPOSING OF THE EXCHANGE NOTES, AS WELL AS THE
APPLICATION OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
TAX CONSEQUENCES TO U.S. HOLDERS
Exchange Offer
The exchange offer described above under "The Exchange Offer" through which
U.S. Holders will be entitled to exchange their existing notes for exchange
notes, should not produce, for federal income tax purposes, recognizable gain or
loss to any U.S. Holder of an existing note because the exchange notes will be
identical in all material respects to the existing notes, except that the
exchange notes will be registered and, therefore, not subject to transfer
restrictions. A U.S. Holder will have an initial adjusted tax basis and holding
period in the existing note, determined as of the time of the exchange. Your
adjusted tax basis in the existing notes generally will be your cost for the
existing notes, less any principal payments you receive prior to the exchange or
already have received on the existing notes.
Taxation of Interest
If you are a U.S. Holder, interest on your exchange notes generally will be
taxable as ordinary interest income at the time payments are accrued or are
received in accordance with your regular method of accounting for federal income
tax purposes. The exchange notes are not expected to be issued to investors with
"original issue discount" for U.S. federal income tax purposes.
Sale, Exchange or Retirement of the Exchange Notes
Upon the sale, exchange or retirement of the exchange notes, you will
recognize gain or loss equal to the difference, if any, between the amount
realized upon the sale, exchange or retirement (less any portion allocable to
accrued and unpaid interest) and your adjusted tax basis in the exchange notes.
Your adjusted tax basis in the exchange notes generally will be your initial
adjusted tax basis in the exchange notes, less any principal payments you
receive on the exchange notes. Please read "-- Exchange Offer" above.
The gain or loss you recognize on the sale, exchange or retirement of the
exchange notes will be capital gain or loss. The capital gain or loss will be
long-term capital gain or loss if you have held the notes for more than twelve
months. Long-term capital gain is subject to a maximum federal tax rate of 20%
for U.S. Holders other than corporations. The deductibility of capital losses by
U.S. Holders is subject to limitation.
To the extent that the amount realized represents accrued but unpaid
interest, that amount must be taken into account as interest income, if it was
not previously included in your income. Please read "-- Taxation of Interest"
above.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
Taxation of Interest on the Exchange Notes
If you are a Non-U.S. Holder, you generally will not be subject to U.S.
federal income or withholding tax on interest paid on the exchange notes so long
as that interest is not effectively connected with your conduct of a trade or
business within the U.S., and you:
- do not actually or constructively own 10% or more of the total combined
voting power of all of our stock;
- are not a "controlled foreign corporation" with respect to which we are a
"related person" within the meaning of the Code; and
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- are not a bank receiving the interest pursuant to a loan agreement in the
ordinary course of your trade or business.
In addition, for the exemption from withholding taxes to apply a Non-U.S.
Holder must provide us with a properly completed and executed Form W-8 BEN, or
other applicable form, as provided for in the Treasury Regulations certifying
that the beneficial owner of the exchange note is a foreign person. If these
conditions are not satisfied, then interest paid on the exchange notes will be
subject to U.S. federal income and withholding tax at a rate of 30% unless that
rate is reduced or eliminated pursuant to an applicable tax treaty.
Sale, Exchange or Retirement of the Exchange Notes
Generally, any capital gain you recognize on the sale, exchange, retirement
or other taxable disposition of an exchange note will be exempt from U.S.
federal income and withholding tax, provided that:
- the gain is not effectively connected with your conduct of a trade or
business within the U.S.; and
- if you are an individual, you are not present in the U.S. for 183 days or
more during the taxable year.
Effectively Connected Income
If interest, gain or other income you recognize on an exchange note is
effectively connected with your conduct of a trade or business within the U.S.,
you will be exempt from the withholding tax previously discussed if you provide
us with a properly completed and executed Form W-8 ECI, but generally will be
subject to U.S. federal income tax on the interest, gain or other income at
regular federal income tax rates. In addition to regular U.S. federal income
tax, if you are a corporation, you may be subject to a branch profits tax equal
to 30% of your effectively connected earnings and profits, as adjusted for
certain items, unless you qualify for a lower rate under an applicable tax
treaty.
Federal Estate Taxes
An exchange note held by an individual who at the time of death is not a
citizen or resident of the U.S. will not be subject to U.S. federal estate tax
as a result of such individual's death, provided that the individual does not
actually or constructively own 10% or more of the combined voting power of all
our stock and that the interest accrued on the exchange notes was not
effectively connected with that holder's conduct of a trade or business within
the U.S.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We will, where required, report to you and the Internal Revenue Service the
amount of any interest paid on the exchange notes in each calendar year and the
amounts of tax withheld, if any, with respect to those payments. A noncorporate
U.S. Holder may be subject to information reporting and to backup withholding at
a rate of 31% with respect to payments of interest made on an exchange note, or
proceeds of the disposition of an exchange note before maturity, unless the U.S.
Holder provides a correct taxpayer identification number or proof of an
applicable exemption and otherwise complies with applicable requirements of the
information reporting and backup withholding rules.
In the case of payments of interest to Non-U.S. Holders, current Treasury
Regulations provide that the 31% backup withholding tax and certain information
reporting requirements will not apply to payments with respect to which either
the requisite certification, as described above, has been received or an
exemption has otherwise been established, provided that neither we nor our
payment agent has actual knowledge that the holder is a U.S. person or that the
conditions of any other exemption are not in fact satisfied.
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Under current Treasury Regulations, information reporting and backup
withholding requirements will apply, however, to the gross proceeds paid to a
Non-U.S. Holder on the disposition of the exchange notes by or though a U.S.
office of a U.S. or foreign broker, unless the Non-U.S. Holder provides the
certification described above or otherwise establishes an exemption. Information
reporting requirements, but not backup withholding, will also apply to payment
of the proceeds of a disposition of the exchange notes by or through a foreign
office of a U.S. broker or foreign brokers with certain types of relationships
to the U.S. unless the broker has documentary evidence in its file that the
holder of the exchange notes is not a U.S. person and the broker has no actual
knowledge to the contrary, or the holder establishes an exemption. Neither
information reporting nor backup withholding generally will apply to payment of
the proceeds of a disposition of the exchange notes by or through a foreign
office of a foreign broker not subject to the preceding sentence.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against the holder's U.S.
federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service.
New Treasury Regulations effective January 1, 2001, have been issued with
respect to the certification requirements described above. You should consult
your own tax advisor as to how these new requirements may affect you.
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for existing notes where the
existing notes were acquired as a result of market-making activities or other
trading activities. We have agreed that, for a period of 90 days after the
consummation of the exchange offer, we will make this prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale, if required under applicable securities laws and upon prior written
request.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
in the exchange offer may be sold from time to time in one or more transactions
in the over-the-counter market, in negotiated transactions, through the writing
of options on the exchange notes or a combination of these methods of resale, at
market prices prevailing at the time of resale, at prices related to those
prevailing market prices or at negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer or
the purchasers of any exchange notes. Any broker-dealer that resells exchange
notes that were received by it for its own account in the exchange offer and any
broker or dealer that participates in a distribution of the exchange notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on any resale of exchange notes and any commission or concessions
received by such person may be considered underwriting compensation under the
Securities Act. The letter of transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be
regarded as admitting that it is an "underwriter," within the meaning of the
Securities Act.
For a period of 90 days after the consummation of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer, including the expenses of one counsel for the holders of the
existing notes, other than commissions or concessions of any brokers or dealers
and will indemnify the holders of the existing notes, including any
broker-dealers, against certain liabilities, including liabilities under the
Securities Act.
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LEGAL MATTERS
The validity of the issuance of the exchange notes will be passed upon by
our attorneys, Haynes and Boone, L.L.P.
EXPERTS
The consolidated financial statements of Nuevo Energy Company as of
December 31, 1999 and 1998 and for each of the years in the three-year period
ended December 31, 1999 incorporated by reference in this prospectus and in the
registration statement have been incorporated by reference herein in reliance
upon the report of KPMG LLP, independent certified public accountants, and upon
the authority of such firm as experts in accounting and auditing.
Information incorporated by reference in this prospectus about our
estimated net proved reserves and the future net cash flows attributable to
these reserves as of December 31, 1999, 1998 and 1997 was prepared by Ryder
Scott Company, L.P.
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GLOSSARY OF OIL AND GAS TERMS
TERMS USED TO DESCRIBE QUANTITIES OF OIL AND NATURAL GAS
- Bbl -- One stock tank barrel, or 42 US gallons liquid volume, of crude
oil or other liquid hydrocarbons.
- Bcf -- One billion cubic feet of natural gas.
- Bcfe -- One billion cubic feet of natural gas equivalent.
- BOE -- One barrel of oil equivalent, converting gas to oil at the ratio
of 6 Mcf of gas to 1 Bbl of oil.
- MBbl -- One thousand Bbls.
- Mcf -- One thousand cubic feet of natural gas.
- Mcfe -- One thousand cubic feet of natural gas equivalent.
- MMBbl -- One million Bbls of oil or other liquid hydrocarbons.
- MMcf -- One million cubic feet of natural gas.
- MMcfe -- One million cubic feet of natural gas equivalent.
- MBOE -- One thousand BOE.
- MMBOE -- One million BOE.
TERMS USED TO DESCRIBE OUR INTERESTS IN WELLS AND ACREAGE
- Gross oil and gas wells or acres -- Our gross wells or gross acres
represents the total number of wells or acres in which we own a working
interest.
- Net oil and gas wells or acres -- Determined by multiplying "gross" oil
and natural gas wells or acres by the working interest that we own in
such wells or acres represented by the underlying properties.
TERMS USED TO ASSIGN A PRESENT VALUE TO OUR RESERVES
- Standard measure of proved reserves -- The present value, discounted at
10%, of the pre-tax future net cash flows attributable to estimated net
proved reserves. We calculate this amount by assuming that we will sell
the oil and gas production attributable to the proved reserves estimated
in our independent engineer's reserve report for the prices we received
for the production on the date of the report, unless we had a contract to
sell the production for a different price. We also assume that the cost
to produce the reserves will remain constant at the costs prevailing on
the date of the report. The assumed costs are subtracted from the assumed
revenues resulting in a stream of future net cash flows. Estimated future
income taxes using rates in effect on the date of the report are deducted
from the net cash flow stream. The after-tax cash flows are discounted at
10% to result in the standardized measure of our proved reserves.
- Pre-tax discounted present value -- The discounted present value of
proved reserves is identical to the standardized measure, except that
estimated future income taxes are not deducted in calculating future net
cash flows. We disclose the discounted present value without deducting
estimated income taxes to provide what we believe is a better basis for
comparison of our reserves to the producers who may have different tax
rates.
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TERMS USED TO CLASSIFY OUR RESERVE QUANTITIES
- Proved reserves -- The estimated quantities of crude oil, natural gas and
natural gas liquids which, upon analysis of geological and engineering
data, appear with reasonable certainty to be recoverable in the future
from known oil and natural gas reservoirs under existing economic and
operating conditions.
The SEC definition of proved oil and gas reserves, per Article 4-10(a)(2)
of Regulation S-X, is as follows:
Proved oil and gas reserves. Proved oil and gas reserves are the
estimated quantities of crude oil, natural gas, and natural gas liquids
which geological and engineering data demonstrate with reasonable certainty
to be recoverable in future years from known reservoirs under existing
economic and operating conditions, i.e., prices and costs as of the date
the estimate is made. Prices include consideration of changes in existing
prices provided only by contractual arrangements, but not on escalations
based upon future conditions.
(a) Reservoirs are considered proved if economic producibility is
supported by either actual production or conclusive formation test. The
area of a reservoir considered proved includes (A) that portion delineated
by drilling and defined by gas-oil and/or oil-water contacts, if any; and
(B) the immediately adjoining portions not yet drilled, but which can be
reasonably judged as economically productive on the basis of available
geological and engineering data. In the absence of information on fluid
contacts, the lowest known structural occurrence of hydrocarbons controls
the lower proved limit of the reservoir.
(b) Reserves which can be produced economically through application of
improved recovery, techniques (such as fluid injection) are included in the
"proved" classification when successful testing by a pilot project, or the
operation of an installed program in the reservoir, provides support for
the engineering analysis on which the project or program was based.
(c) Estimates of proved reserves do not include the following: (1) oil
that may become available from known reservoirs but is classified
separately as "indicated additional reserves"; (2) crude oil, natural gas,
and natural gas liquids, the recovery of which is subject to reasonable
doubt because of uncertainty as to geology, reservoir characteristics, or
economic factors; (3) crude oil, natural gas, and natural gas liquids, that
may occur in undrilled prospects; and (4) crude oil, natural gas, and
natural gas liquids, that may be recovered from oil shales, coal, gilsonite
and other such sources.
- Proved developed reserves -- Proved reserves that can be expected to be
recovered through existing wells with existing equipment and operating
methods.
- Proved undeveloped reserves -- Proved reserves that are expected to be
recovered from new wells on undrilled acreage, or from existing wells
where a relatively major expenditure is required.
TERMS WHICH DESCRIBE THE COST TO ACQUIRE OUR RESERVES
- Finding costs -- Our finding costs compare the amount we spent to
acquire, explore and develop our oil and gas properties, explore for oil
and gas and to drill and complete wells during a period, with the
increases in reserves during the period. This amount is calculated by
dividing the net change in our evaluated oil and property costs during a
period by the change in proved reserves plus production over the same
period. Our finding costs as of December 31 of any year represent the
average finding costs over the three-year period ending December 31 of
that year. Our finding costs as of June 30, 1999 represent average
finding costs over a two and one half year period ending on June 30,
2000.
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TERMS WHICH DESCRIBE THE PRODUCTIVE LIFE OF A PROPERTY OR GROUP OF PROPERTIES
- Reserve life index -- A measure of the productive life of an oil and gas
property or a group of oil and gas properties, expressed in years.
Reserve life index for the years ended December 31, 1997, 1998 or 1999
equal the estimated net proved reserves attributable to a property or
group of properties divided by production from the property or group of
properties for the four fiscal quarters preceding the date as of which
the proved reserves were estimated. In order to reflect the divestiture
of the East Texas properties and the Star acquisition, our reserve life
index for June 30, 1999 was calculated by dividing estimated net proved
reserves at June 30, 1999 by our annualized pro forma production for the
first six months of 1999, assuming we closed the Star acquisition on
January 1, 1999.
TERMS USED TO DESCRIBE THE LEGAL OWNERSHIP OF OUR OIL AND GAS PROPERTIES
- Royalty interest -- A real property interest entitling the owner to
receive a specified portion of the gross proceeds of the sale of oil and
natural gas production or, if the conveyance creating the interest
provides, a specific portion of oil and natural gas produced, without any
deduction for the costs to explore for, develop or produce the oil and
natural gas. A royalty interest owner has no right to consent to or
approve the operation and development of the property, while the owners
of the working interests have the exclusive right to exploit the mineral
on the land.
- Working interest -- A real property interest entitling the owner to
receive a specified percentage of the proceeds of the sale of oil and
natural gas production or a percentage of the production, but requiring
the owner of the working interest to bear the cost to explore for,
develop and produce such oil and natural gas. A working interest owner
who owns a portion of the working interest may participate either as
operator or by voting his percentage interest to approve or disapprove
the appointment of an operator and drilling and other major activities in
connection with the development and operation of a property.
TERMS USED TO DESCRIBE SEISMIC OPERATIONS
- Seismic data -- Oil and gas companies use seismic data as their principal
source of information to locate oil and gas deposits, both to aid in
exploration for new deposits and to manage or enhance production from
known reservoirs. To gather seismic data, an energy source is used to
send sound waves into the subsurface strata. These waves are reflected
back to the surface by underground formations, where they are detected by
geophones which digitize and record the reflected waves. Computers are
then used to process the raw data to develop an image of underground
formations.
- 2-D seismic data -- 2-D seismic survey data has been the standard
acquisition technique used to image geologic formations over a broad
area. 2-D seismic data is collected by a single line of energy sources
which reflect seismic waves to a single line of geophones. When
processed, 2-D seismic data produces an image of a single vertical plane
of sub-surface data.
- 3-D seismic -- 3-D seismic data is collected using a grid of energy
sources, which are generally spread over several miles. A 3-D survey
produces a three dimensional image of the subsurface geology by
collecting seismic data along parallel lines and creating a cube of
information that can be divided into various planes, thus improving
visualization. Consequently, 3-D seismic data is a more reliable
indicator of potential oil and natural gas reservoirs in the area
evaluated.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware,
pursuant to which the Company is incorporated, provides generally and in
pertinent part that a Delaware corporation may indemnify its directors,
officers, employees and agents (or persons serving at the request of the Company
as a director, officer, employee or agent of another entity) against expenses,
judgments, fines, and settlements actually and reasonably incurred by them in
connection with any civil, criminal, administrative, or investigative suit or
action except actions by or in the right of the corporation if, in connection
with the matters in issue, they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and in connection with any criminal suit or proceeding, if in
connection with the matters in issue, they had no reasonable cause to believe
their conduct was unlawful. Section 145 further provides that in connection with
the defense or settlement of any action by or in the right of the corporation, a
Delaware corporation may indemnify its directors, officers, employees and agents
(or persons serving at the request of the Company as a director, officer,
employee or agent of another entity) against expenses actually and reasonably
incurred by them if, in connection with the matters in issue, they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue, or matter as to which such person has been adjudged
liable to the corporation unless the Delaware Court of Chancery or other court
in which such action or suit is brought approves such indemnification. Section
145 further permits a Delaware corporation to grant its directors and officers
additional rights of indemnification through bylaw provisions and otherwise, and
or purchase indemnity insurance on behalf of its directors and officers. Article
Nine of the Certificate of Incorporation of the Company, as amended, and Article
VII of the Bylaws of the Company, as amended, provide, in general, that the
Company may indemnify its directors, officers, employees and agents (or persons
serving at the request of the Company as a director, officer, employee or agent
of another entity) to the full extent of Delaware law.
The Company has purchased directors and officers liability insurance policy
which insures, among other things, (i) the officers and directors of the Company
from any claim arising out of an alleged wrongful act by such persons while
acting as directors and officers of the Company and (ii) the Company to the
extent that the Company has indemnified the directors and officers for such
loss.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(1) -- Underwriting Agreement*
(2) -- Plan of acquisition, reorganization, arrangement,
liquidation or succession*
(4) -- Instruments defining the rights of security holders,
including indentures
4.1 -- Indenture dated April 1, 1996 among Nuevo Energy Company
as Issuer, various Subsidiaries as the Guarantors, and
State Street Bank and Trust Company as the
Trustee -- 9 1/2% Senior Subordinated Notes due 2006.
(Incorporated by reference from Registration Statement on
Form S-3 (No. 333-1504)).
4.2 -- Form of Amended and Restated Declaration of Trust dated
December 23, 1996, among the Company, as Sponsor,
Wilmington Trust Company, as Institutional Trustee and
Delaware Trustee, and Michael D. Watford, Robert L.
Gerry, III and Robert M. King, as Regular Trustees.
(Incorporated by reference from Exhibit 4.1 to Current
Report on Form 8-K filed on January 6, 1997).
</TABLE>
II-1
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.3 -- Form of Subordinated Indenture dated November 25, 1996,
between the Company and Wilmington Trust Company, as
Indenture Trustee. (Incorporated by reference from
Exhibit 4.2 to Current Report on Form 8-K filed on
January 6, 1997).
4.4 -- Form of First Supplemental Indenture dated December 23,
1996, between the Company and Wilmington Trust Company,
as Indenture Trustee. (Incorporated by reference from
Exhibit 4.3 to Current Report on Form 8-K filed on
January 6, 1997).
4.5 -- Form of Preferred Securities Guarantee Agreement dated
December 23, 1996, between the Company and Wilmington
Trust Company, as Guarantee Trustee. (Incorporated by
reference from Exhibit 4.4 to Current Report on Form 8-K
filed on January 6, 1997).
4.6 -- Form of Certificate representing TECONS. (Incorporated by
reference from Exhibit 4.5 to Current Report on Form 8-K
filed on January 6, 1997).
4.7 -- Release and Termination of Subsidiary Guarantees with
respect to the 9 1/2% Senior Subordinated Notes due 2006.
(Incorporated by reference from Exhibit 4.11 to Annual
Report on Form 10-K for the year ended December 31,
1997).
4.8 -- Second Supplemental Indenture to the Indenture dated
April 1, 1996, dated August 9, 1999 between Nuevo Energy
Company and State Street Bank and Trust Company -- 9 1/2%
Senior Subordinated Notes due 2006. (Incorporated by
reference from Exhibit 4.10 to Registration Statement on
Form S-4 filed on November 3, 1999)
4.9 -- Indenture dated August 20, 1999, between Nuevo Energy
Company and State Street Bank and Trust Company, as
Trustee. (Incorporated by reference from Exhibit 4.11 to
Registration Statement on Form S-4 filed on November 3,
1999)
4.10 -- Indenture dated September 26, 2000 between Nuevo Energy
Company and State Street Bank and Trust Company, as
Trustee. (Incorporated by reference from Exhibit 4.12 to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000).
4.11 -- Registration Agreement dated September 26, 2000 between
Nuevo Energy Company, Banc of America Securities LLC,
Banc One Capital Markets, Inc. and J.P. Morgan and
Company. (Incorporated by reference from Exhibit 4.13 to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000).
(5) -- Opinion regarding legality
5.1 -- Opinion of Haynes and Boone, L.L.P.**
(8) -- Opinion regarding tax matters*
(12) -- Statements regarding computation of ratios
12.1 -- Computation of ratio of earnings to fixed charges.**
(15) -- Letter regarding unaudited interim financial information*
(23) -- Consents of experts and counsel
23.1 -- Consent of Haynes and Boone, L.L.P. (included in Exhibit
5.1).
23.2 -- Consent of KPMG LLP.**
23.3 -- Consent of Ryder Scott Company.**
(24) -- Power of Attorney
24.1 -- (included on page II-6)
</TABLE>
II-2
<PAGE> 79
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(25) -- Statement of eligibility of trustee
25.1 -- Statement of Eligibility and Qualification on Form T-1 of
Trustee.**
(26) -- Invitations for competitive Bids*
(27) -- Financial Data Schedule*
(99) -- Additional Exhibits
99.1 -- Form of Letter of Transmittal.**
99.2 -- Form of Notice of Guaranteed Delivery.**
</TABLE>
---------------
* Inapplicable to this filing.
** Filed herewith.
ITEM 2. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
(c) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-3
<PAGE> 80
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on the 29th day of November, 2000.
NUEVO ENERGY COMPANY
By: /s/ DOUGLAS L. FOSHEE
------------------------------------
Douglas L. Foshee
Chairman of the Board, Chief
Executive Officer and President
II-4
<PAGE> 81
NOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Douglas L. Foshee and Robert M. King his
or her true and lawful attorneys-in fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign, execute and file with the
Securities and Exchange Commission and any state securities regulatory board or
commission any documents relating to the proposed issuance and registration of
the securities offered pursuant to this Registration Statement on Form S-4 under
the Securities Act of 1933, as amended, including any amendment or amendments
relating thereto (and, in addition, any Registration Statement filed pursuant to
Rule 462(b) under the Securities Act of 1933, as amended, for the offering to
which this Registration Statement relates), with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he or she might or
could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITIES DATE
--------- ---------- ----
<C> <S> <C>
/s/ DOUGLAS L. FOSHEE Chairman of the Board, Chief November 29, 2000
----------------------------------------------------- Executive Officer and President
Douglas L. Foshee (Principal Executive Officer)
/s/ ROBERT M. KING Senior Vice President and Chief November 29, 2000
----------------------------------------------------- Financial Officer (Principal
Robert M. King Accounting and Financial
Officer)
/s/ ISAAC ARNOLD, JR. Director November 29, 2000
-----------------------------------------------------
Isaac Arnold, Jr.
/s/ THOMAS D. BARROW Director November 29, 2000
-----------------------------------------------------
Thomas D. Barrow
/s/ DAVID H. BATCHELDER Director November 29, 2000
-----------------------------------------------------
David H. Batchelder
/s/ CHARLES M. ELSON Director November 29, 2000
-----------------------------------------------------
Charles M. Elson
/s/ ROBERT L. GERRY III Director November 29, 2000
-----------------------------------------------------
Robert L. Gerry III
/s/ GARY R. PETERSEN Director November 29, 2000
-----------------------------------------------------
Gary R. Petersen
/s/ DAVID ROSS III Director November 29, 2000
-----------------------------------------------------
David Ross III
/s/ ROBERT W. SHOWER Director November 29, 2000
-----------------------------------------------------
Robert W. Shower
</TABLE>
II-5
<PAGE> 82
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(1) -- Underwriting Agreement*
(2) -- Plan of acquisition, reorganization, arrangement,
liquidation or succession*
(4) -- Instruments defining the rights of security holders,
including indentures
4.1 -- Indenture dated April 1, 1996 among Nuevo Energy Company
as Issuer, various Subsidiaries as the Guarantors, and
State Street Bank and Trust Company as the
Trustee -- 9 1/2% Senior Subordinated Notes due 2006.
(Incorporated by reference from Registration Statement on
Form S-3 (No. 333-1504)).
4.2 -- Form of Amended and Restated Declaration of Trust dated
December 23, 1996, among the Company, as Sponsor,
Wilmington Trust Company, as Institutional Trustee and
Delaware Trustee, and Michael D. Watford, Robert L.
Gerry, III and Robert M. King, as Regular Trustees.
(Incorporated by reference from Exhibit 4.1 to Current
Report on Form 8-K filed on January 6, 1997).
4.3 -- Form of Subordinated Indenture dated November 25, 1996,
between the Company and Wilmington Trust Company, as
Indenture Trustee. (Incorporated by reference from
Exhibit 4.2 to Current Report on Form 8-K filed on
January 6, 1997).
4.4 -- Form of First Supplemental Indenture dated December 23,
1996, between the Company and Wilmington Trust Company,
as Indenture Trustee. (Incorporated by reference from
Exhibit 4.3 to Current Report on Form 8-K filed on
January 6, 1997).
4.5 -- Form of Preferred Securities Guarantee Agreement dated
December 23, 1996, between the Company and Wilmington
Trust Company, as Guarantee Trustee. (Incorporated by
reference from Exhibit 4.4 to Current Report on Form 8-K
filed on January 6, 1997).
4.6 -- Form of Certificate representing TECONS. (Incorporated by
reference from Exhibit 4.5 to Current Report on Form 8-K
filed on January 6, 1997).
4.7 -- Release and Termination of Subsidiary Guarantees with
respect to the 9 1/2% Senior Subordinated Notes due 2006.
(Incorporated by reference from Exhibit 4.11 to Annual
Report on Form 10-K for the year ended December 31,
1997).
4.8 -- Second Supplemental Indenture to the Indenture dated
April 1, 1996, dated August 9, 1999 between Nuevo Energy
Company and State Street Bank and Trust Company -- 9 1/2%
Senior Subordinated Notes due 2006. (Incorporated by
reference from Exhibit 4.10 to Registration Statement on
Form S-4 filed on November 3, 1999)
4.9 -- Indenture dated August 20, 1999, between Nuevo Energy
Company and State Street Bank and Trust Company, as
Trustee. (Incorporated by reference from Exhibit 4.11 to
Registration Statement on Form S-4 filed on November 3,
1999)
4.10 -- Indenture dated September 26, 2000 between Nuevo Energy
Company and State Street Bank and Trust Company, as
Trustee. (Incorporated by reference from Exhibit 4.12 to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000).
4.11 -- Registration Agreement dated September 26, 2000 between
Nuevo Energy Company, Banc of America Securities LLC,
Banc One Capital Markets, Inc. and J.P. Morgan and
Company. (Incorporated by reference from Exhibit 4.13 to
Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000).
(5) -- Opinion regarding legality
</TABLE>
<PAGE> 83
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
5.1 -- Opinion of Haynes and Boone, L.L.P.**
(8) -- Opinion regarding tax matters*
(12) -- Statements regarding computation of ratios
12.1 -- Computation of ratio of earnings to fixed charges.**
(15) -- Letter regarding unaudited interim financial information*
(23) -- Consents of experts and counsel
23.1 -- Consent of Haynes and Boone, L.L.P. (included in Exhibit
5.1).
23.2 -- Consent of KPMG LLP.**
23.3 -- Consent of Ryder Scott Company.**
(24) -- Power of Attorney
24.1 -- (included on page II-6)
(25) -- Statement of eligibility of trustee
25.1 -- Statement of Eligibility and Qualification on Form T-1 of
Trustee.**
(26) -- Invitations for competitive Bids*
(27) -- Financial Data Schedule*
(99) -- Additional Exhibits
99.1 -- Form of Letter of Transmittal.**
99.2 -- Form of Notice of Guaranteed Delivery.**
</TABLE>
---------------
* Inapplicable to this filing.
** Filed herewith.
