<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 033-58285
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 8, 1995
13,071,992 SHARES
[SANTA FE LOGO] SANTA FE ENERGY RESOURCES, INC.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
------------------------
Of the 13,071,992 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), of Santa Fe Energy Resources, Inc., a Delaware corporation (the
"Company"), being offered hereby, 8,064,005 shares of Common Stock are being
offered by Itel Corporation ("Itel"), and 5,007,987 shares of Common Stock are
being offered by Zell/Chilmark Fund, L.P. ("Zell/Chilmark," and collectively
with Itel, the "Selling Stockholders"). Each of the Selling Stockholders is
offering all of the shares of Common Stock it owns and upon completion of this
offering neither of the Selling Stockholders will be a holder of any Common
Stock. See "Selling Stockholders."
The Company will not receive any proceeds from the sale of the Common
Stock.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "INVESTMENT CONSIDERATIONS" SET FORTH IN THE
PROSPECTUS TO WHICH THIS IS A SUPPLEMENT.
The Common Stock is listed on the New York Stock Exchange under the symbol
"SFR." The last reported sale price of the Company's Common Stock on the New
York Stock Exchange on May 22, 1995 was $9.25 per share.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The shares of Common Stock offered hereby (the "Shares") will be purchased
from each of the Selling Stockholders by Goldman, Sachs & Co. as the
Underwriters at a price of $9.00 per share (resulting in $72,576,045 and
$45,071,883 aggregate net proceeds (before expenses) to Itel and Zell/Chilmark,
respectively). The Company will pay certain expenses of the offering estimated
at approximately $110,000.00.
The Shares may be offered by the Underwriters from time to time in one or
more transactions (which may involve block transactions) on the New York Stock
Exchange or on other national securities exchanges on which the Common Stock is
traded, in the over-the-counter market, through negotiated transactions or
otherwise at market prices prevailing at the time of the sale or at prices
otherwise negotiated, subject to prior sale, when, as and if delivered to and
accepted by the Underwriters. See "Plan of Distribution" herein.
The Company and each of the Selling Stockholders have agreed to indemnify
the Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
------------------------
The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters. It is expected that the Shares will be ready for delivery in
New York, New York on or about May 31, 1995.
GOLDMAN, SACHS & CO.
------------------------
The date of this Prospectus Supplement is May 23, 1995.
<PAGE> 2
SELLING STOCKHOLDERS
Based upon advice received by Zell/Chilmark from the United States Federal
Trade Commission with respect to the distribution to be made by HC Associates, a
Delaware general partnership, prior to any sales by Zell/Chilmark pursuant
hereto, such distribution will not require compliance with the reporting and
waiting period requirements of the Hart Scott Rodino Antitrust Improvements Act
of 1976, as amended.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement, Itel and Zell/Chilmark have agreed to sell, and the Underwriters have
agreed to purchase, 8,064,005 and 5,007,987 shares of Common Stock,
respectively. Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Shares being sold by
each of the Selling Stockholders if any of the Shares are taken from such
Selling Stockholder.
It is expected that all or a substantial portion of the Shares may be sold
by the Underwriters to institutional purchasers in one or more transactions
(which may involve block transactions) on the New York Stock Exchange or on
other national securities exchanges on which the Common Stock is traded or
otherwise. The distribution of the Shares may also be effected from time to time
in special offerings, exchange distributions and/or secondary distributions
pursuant to and in accordance with the rules of the New York Stock Exchange or
such other exchanges, in the over-the-counter market, in negotiated transactions
through the writing of options on Shares (whether such options are listed on an
options exchange or otherwise) or otherwise, or in a combination of such at
prevailing market prices or at negotiated prices. The Underwriters may effect
such transactions by selling Shares to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the Underwriters and/or the purchasers of such Shares for whom they may act as
agents or to whom they may sell as principal.
In connection with the sale of the Shares, the Underwriters will receive
compensation from the Selling Stockholders in the form of commissions or
discounts and may receive compensation from purchasers of the Shares for whom
they may act as agents or to whom they may sell as principal in the form of
commissions or discounts, in each case in amounts which will not exceed those
customary in the types of transactions involved. Underwriters and dealers that
participate in the distribution of the Shares may be deemed to be underwriters,
and any discounts received by them from either of the Selling Stockholders and
any compensation received by them on the resale of the Shares by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Company and the Selling Stockholders have agreed, during the 120-day
period beginning from the date of this Prospectus Supplement, not to effect any
public sale or public distribution of any securities of the Company that are
substantially similar to the Shares, and, in the case of the Company, any
securities convertible into or exchangeable or exercisable for such securities
(except pursuant to registration on Form S-4 or S-8 or any successor form,
registration of securities in connection with dividend reinvestment plans, and
issuances of Common Stock upon conversion of the Company's outstanding preferred
stock), without the prior written consent of the Underwriters.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
VALIDITY OF COMMON STOCK
The validity of the Common Stock offered hereby will be passed upon for the
Company by Andrews & Kurth L.L.P., Houston, Texas, and will be passed upon for
the Underwriters by Sullivan & Cromwell, New York, New York.
S-2
<PAGE> 3
PROSPECTUS
13,071,992 SHARES
SANTA FE ENERGY RESOURCES, INC. [SANTA FE LOGO]
COMMON STOCK
This Prospectus relates to the offer and sale from time to time of 13,071,992
shares (the "Offered Shares") of common stock, par value $0.01 per share (the
"Common Stock"), of Santa Fe Energy Resources, Inc., a Delaware corporation (the
"Company"), by the selling stockholders named herein (the "Selling
Stockholders"). The Company will receive no part of the proceeds of the sales of
the Offered Shares, but will incur certain expenses in connection with the
offering. See "Selling Stockholders." The closing sales price of the Common
Stock as reported by the New York Stock Exchange ("NYSE") on May 5, 1995 was
$9 5/8 per share.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS, SEE "INVESTMENT CONSIDERATIONS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Selling Stockholders may from time to time offer and sell all or a portion
of the Offered Shares in transactions on the NYSE, in the over-the-counter
market, on any other national securities exchange on which the Common Stock is
listed or traded, in negotiated transactions or otherwise, at prices then
prevailing or related to the then-current market price or at negotiated prices.
The Offered Shares may be sold directly or through agents or broker-dealers
acting as principal or agent, or in block trades or pursuant to a distribution
by one or more underwriters on a firm commitment or best-efforts basis. To the
extent required, the names of any agent or broker-dealer and applicable
commissions or discounts and any other required information with respect to any
particular offer will be set forth in this Prospectus under the caption "Plan of
Distribution" or an accompanying Prospectus Supplement. Each of the Selling
Stockholders reserves the sole right to accept or reject, in whole or in part,
any proposed purchase of the Offered Shares to be made directly or through
agents. The Selling Stockholders and any agents or broker-dealers participating
in the distribution of the Offered Shares may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and any profit on the sale of Offered Shares by the Selling Stockholders
and any commissions received by any such agents or broker-dealers may be deemed
to be underwriting commissions or discounts under the Securities Act. The
Company will not receive any of the proceeds from the sale of any Offered Shares
by the Selling Stockholders, but has agreed to bear certain expenses of
registration of the Offered Shares under Federal and state securities laws.
THE OFFERED SHARES HAVE NOT BEEN REGISTERED FOR SALE BY THE SELLING STOCKHOLDERS
UNDER THE SECURITIES LAWS OF ANY STATE AS OF THE DATE OF THIS PROSPECTUS.
BROKERS OR DEALERS EFFECTING TRANSACTIONS IN THE OFFERED SHARES SHOULD CONFIRM
THE REGISTRATION THEREOF UNDER THE SECURITIES LAWS OF THE STATES IN WHICH SUCH
TRANSACTIONS OCCUR, OR THE EXISTENCE OF AN EXEMPTION FROM REGISTRATION.
The date of this Prospectus is May 8, 1995.
<PAGE> 4
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the Securities
and Exchange Commission (the "Commission") pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference: (i) the Company's Annual Report on Form 10-K
for the year ended December 31, 1994; (ii) information set forth under the
captions "Election of Directors," "Security Ownership of Certain Beneficial
Owners," "Certain Relations and Related Transactions," "Summary Compensation
Table," "Aggregated Options/SAR Exercises in 1994 and 1994 Year End Option/SAR
Values," "Performance Graph," "Benefit Plans" and "Stock Ownership of Directors
and Executive Officers" of the Company's Proxy Statement, dated as of March 21,
1995 for the 1995 Annual Meeting of Stockholders, (iii) the Company's Current
Report on Form 8-K dated April 20, 1995 and (iv) the description of the Common
Stock contained in the Company's Registration Statement on Form 8-A (File No.
1-7667) filed on February 21, 1990.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Offered Shares shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Any person receiving a copy of this Prospectus may obtain without charge,
upon written or oral request, a copy of any of the documents incorporated by
reference herein, except for the exhibits to such documents (unless such
exhibits are specifically incorporated by reference into such documents).
Requests should be addressed to the Company at its principal executive offices
at Santa Fe Energy Resources, Inc., 1616 South Voss Road, Suite 1000, Houston,
Texas 77057 (telephone (713) 507-5000); Attention: Mark A. Older, Senior Counsel
and Secretary.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and the rules and regulations promulgated thereunder and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by the Company
with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549-1004, and at the following Regional
Offices of the Commission: Chicago Regional Office, CitiCorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60621 2511; and New York Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of
such material may also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549-1004. The Company's Common Stock, its
Convertible Preferred Stock, Series 7% and its $.732 Series A Convertible
Preferred Stock are listed for trading on the NYSE. The Company's registration
statements, reports, proxy statements and other information may also be
inspected at the offices of the NYSE, 20 Broad Street, New York 10005.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.
2
<PAGE> 5
THE COMPANY
Santa Fe Energy Resources, Inc. is engaged in the exploration, development
and production of oil and natural gas in the continental United States and in
certain foreign areas. At December 31, 1994, the Company had estimated worldwide
proved reserves of oil and natural gas totaling 298.7 million barrels of oil
equivalent (consisting of approximately 258.3 million barrels of oil and
approximately 242.4 billion cubic feet of natural gas), of which approximately
92% were domestic reserves and approximately 8% were foreign reserves. During
1994, the Company's worldwide production aggregated approximately 88.5 thousand
barrels of oil equivalent per day, of which approximately 74% was crude oil and
approximately 26% was natural gas. A substantial portion of the Company's
domestic oil production is in long-lived fields with well-established production
histories. The Company has focused its activities on its three domestic core
areas--the Permian Basin in Texas and New Mexico, the offshore Gulf of Mexico
and the San Joaquin Valley of California--as well as in Argentina and Indonesia.
USE OF PROCEEDS
The Company will not receive any of the proceeds from sales of the Offered
Shares by the Selling Stockholders. All costs and expenses incurred in
connection with the registration under the Securities Act of the offering made
hereby will be paid by the Company, other than any brokerage fees and
commissions, fees and disbursements of legal counsel for the Selling
Stockholders and stock transfer and other taxes attributable to the sale of the
Offered Shares, which will be paid by the Selling Stockholders.
INVESTMENT CONSIDERATIONS
Prospective investors should carefully consider all of the information
contained in and incorporated by reference in this Prospectus, and in particular
the investment considerations described in the following paragraphs.
EFFECTS OF CHANGING PRODUCT PRICES
The Company's profitability is determined in large part by the difference
between the prices received for the oil and natural gas that it produces and the
costs of finding and producing such resources. Prices for oil and gas have been
subject to wide fluctuations, which continue to reflect imbalances in supply and
demand as well as other market conditions and the world political situation as
it affects OPEC, the Middle East (including the current embargo of Iraqi crude
oil from worldwide markets), Eastern Europe, the former Soviet Union and other
producing countries. Moreover, the price of oil and natural gas may be affected
by the price and availability of alternative sources of energy, weather
conditions and the general state of the economy. Even relatively modest changes
in oil and gas prices may significantly change the Company's revenues, results
of operations, cash flows and proved reserves. Since the Company is primarily an
oil producer, a change in the price paid for its oil production more
significantly affects its results of operations than a change in natural gas
prices.
The Company's cash flow from operating activities is a function of the
volumes of oil and gas produced from the Company's properties and the sales
prices realized therefor. Crude oil and natural gas are depleting assets.
Therefore, unless the Company replaces over the long term the oil and natural
gas produced from the Company's properties, the Company's assets will be
depleted over time and its ability to service and incur debt at constant or
declining prices will be reduced.
EFFECTS OF HEAVY OIL PRODUCTION
A substantial portion of the Company's oil production consists of heavy oil
produced from the Midway-Sunset Field. The market for such heavy crude oil
production differs substantially from the remainder of the domestic crude oil
market, due principally to the higher transportation and refining costs
associated with heavy crude. As a result, the profit margin realized from the
sale of heavy oil is generally
3
<PAGE> 6
lower than that realized from the sale of light oil, because the costs to
produce heavy oil are generally higher, and the price paid for heavy crude oil
is generally lower, than the price paid for light crudes. Furthermore, there is
currently an oversupply of crude oil in the California market that has had an
adverse effect on the prices paid for crude oil in that market.
POSSIBLE IMPAIRMENT OF OIL AND GAS PROPERTIES
The Company follows the successful efforts method of accounting for its oil
and gas exploration and production activities. Under this method, costs (both
tangible and intangible) of productive wells and development dry holes, as well
as the costs of prospective acreage, are capitalized. The costs of drilling and
equipping exploratory wells which do not result in proved reserves are expensed
upon the determination that the well does not justify commercial development.
Other exploratory costs, including geological and geophysical costs and delay
rentals, are charged to expense as incurred.
The Company periodically reviews individual proved properties to determine
if the carrying value of the field as reflected in its accounting records
exceeds the estimated undiscounted future net revenues from proved oil and gas
reserves attributable to the field. Based on this review and the continuing
evaluation of development plans, economics and other factors, if appropriate,
the Company records impairments (additional depletion and depreciation) to the
extent that the carrying value exceeds the estimated undiscounted future net
revenues. Such impairments constitute a charge to earnings which does not impact
the Company's cash flow from operating activities. However, such writedowns
impact the amount of the Company's stockholders' equity and, therefore, the
ratio of debt-to-equity. The risk that the Company will be required to write
down the carrying value of its oil and natural gas properties increases when oil
and natural gas prices are depressed. For example, the Company recorded
impairments of $99.3 million in 1993; none were recorded in 1994. No assurance
can be given that the Company will not experience additional impairments in the
future.
GOVERNMENTAL AND ENVIRONMENTAL REGULATION
The Company's activities are subject to various federal, state and local
laws and regulations covering the discharge of material into the environment or
otherwise relating to protection of the environment. In particular, the
Company's oil and gas exploration, development, production and enhanced oil
recovery operations, its activities in connection with storage and
transportation of liquid hydrocarbons and its use of facilities for treating,
processing, recovering or otherwise handling hydrocarbons and waste therefrom
are subject to stringent environmental regulation by governmental authorities.
Such regulations have increased the costs of planning, designing, drilling,
installing, operating and abandoning the Company's oil and gas wells and other
facilities.
The Company has expended significant resources, both financial and
managerial, to comply with environmental regulations and permitting requirements
and anticipates that it will continue to do so in the future. Although the
Company believes that its operations and facilities are in general compliance
with applicable environmental regulations, risks of substantial costs and
liabilities are inherent in oil and gas operations, and there can be no
assurance that significant costs and liabilities will not be incurred in the
future. Moreover, it is possible that other developments, such as increasingly
strict environmental laws, regulations and enforcement policies thereunder, and
claims for damages to property, employees, other persons and the environment
resulting from the Company's operations, could result in substantial costs and
liabilities in the future.
UNCERTAINTIES IN ESTIMATES OF PROVED RESERVES
Proved reserves of crude oil and natural gas are estimated quantities that
geological and engineering data demonstrate with reasonable certainty to be
economically producible under existing conditions. There are numerous
uncertainties inherent in estimating quantities of proved reserves and in
projecting future rates of production and timing of development expenditures.
All reserve estimates are to some degree speculative and various classifications
of reserves only constitute attempts to define the degree
4
<PAGE> 7
of speculation involved. The accuracy of any reserve estimate is a function of
the quality of available data and engineering and geological interpretation and
judgment and the assumptions used regarding prices for crude oil, natural gas
liquids and natural gas. Results of drilling, testing and production and changes
in crude oil, natural gas liquids and natural gas prices after the date of the
estimate may require substantial upward or downward revisions. Although a
substantial portion of the Company's proved oil reserves is in long-lived fields
with well-established production histories where enhanced oil recovery and other
development projects are employed to produce such reserves, the external factors
discussed above will directly affect the Company's determination to proceed with
any of such projects and, therefore, the quantity of reserves in these fields
classified as proved. The reserve estimates incorporated by reference in this
Prospectus were prepared as of a date prior to the date of this Prospectus and
could be materially different from the quantities of crude oil, natural gas
liquids and natural gas that ultimately will be recovered from the Company's
properties.
In addition, actual future net cash flows from production of the Company's
reserves will be affected by factors such as actual production, supply and
demand for oil and natural gas, curtailments or increases in consumption by
natural gas purchasers, changes in governmental regulations or taxation and the
impact of inflation on costs. The timing of actual future net revenues from
proved reserves, and thus their actual present value, can be affected by the
timing of the incurrence of expenditures in connection with development of oil
and gas properties. The 10% discount factor, which is required by the Commission
to be used to calculate present value for reporting purposes, is not necessarily
the most appropriate discount factor based on interest rates in effect from time
to time and risks associated with the oil and gas industry. Discounted present
value, no matter what discount rate is used, is materially affected by
assumptions as to the amount and timing of future production, which may and
often do prove to be inaccurate.
INDUSTRY CONSIDERATIONS
The Company's business is the exploration for, and the development and
production of, oil and natural gas. Exploration for oil and natural gas involves
many risks, which even a combination of experience, knowledge and careful
evaluation may not be able to overcome. In addition, there is strong competition
relating to all aspects of the oil and gas industry, and in particular in the
exploration and development of new oil and gas reserves. The Company must
compete with a substantial number of other oil and natural gas companies, many
of which have significantly greater financial resources.
All of the Company's oil and gas activities are subject to the risks
normally incident to exploration for and production of oil and gas, including
blowouts, cratering, spillage and fires, each of which could result in damage to
life and property. Offshore operations are subject to usual marine perils,
including hurricanes and other adverse weather conditions, and governmental
regulations as well as interruption or termination by governmental authorities
based on environmental and other considerations. In accordance with customary
industry practices, the Company carries insurance against some, but not all, of
the risks associated with the Company's business. Losses and liabilities arising
from such events would reduce revenues and increase costs to the Company to the
extent not covered by insurance.
Another risk inherent in the oil and gas industry is the risk that a well
will be a dry hole or a marginal producer that will not, in either case, repay
the entire cost of drilling, testing, completing and equipping the well. There
can be no assurance, therefore, that the Company's future exploration and
development wells will be financially successful.
INTERNATIONAL OPERATIONS
Foreign properties, operations or investment may be adversely affected by
local political and economic developments, exchange controls, currency
fluctuations, royalty and tax increases, retroactive tax claims, expropriation,
import and export regulations and other foreign laws or policies as well as by
laws and policies of the United States affecting foreign trade, taxation and
investment. In addition, in the event of a dispute arising from foreign
operations, the Company may be subject to the exclusive
5
<PAGE> 8
jurisdiction of foreign courts or may not be successful in subjecting foreign
persons to the jurisdiction of courts in the United States. The Company may also
be hindered or prevented from enforcing its rights with respect to a
governmental instrumentality because of the doctrine of sovereign immunity.
RESTRICTIONS ON PAYMENT OF DIVIDENDS
Certain of the Company's credit agreements restrict the payment of
dividends to the holders of the Company's capital stock, including the Common
Stock. Under the most restrictive covenant, dividends on the Common Stock are
limited to generally (i) the sum of (a) $50 million plus (b) 50% (or minus 50%
in the case of a deficit) of the Company's consolidated net earnings for the
period commencing on April 1, 1994 and ending as of the most recent quarter
preceding the date of determination plus (c) the net cash proceeds from certain
sales of capital stock less (ii) the sum of all restricted investments and
restricted payments previously made. For a description of the aggregate amount
that the Company could pay as a dividend on the Common Stock as of a recent
date, see "Management's Discussion and Analysis of Financial Condition and
Results of Operation" most recently incorporated herein by reference. In
addition, the terms of the Company's outstanding Preferred Stock restrict any
dividend payment by the Company to holders of Common Stock unless all dividends
on the Preferred Stock for all past dividend periods shall have been paid, or
declared and a sum sufficient for the payment thereof set apart. Annual
dividends payable on the shares of Preferred Stock outstanding as of May 1, 1995
total approximately $14.8 million per year, none of which are currently in
arrears. The determination of the amount of future cash dividends, if any, to be
declared and paid is in the sole discretion of the Company's Board of Directors
and will depend on dividend requirements with respect to the Company's Preferred
Stock, the Company's financial condition, earnings and funds from operations,
the level of its capital and exploration expenditures, dividend restrictions in
its financing agreements, its future business prospects and other matters as the
Company's Board of Directors deems relevant.
SELLING STOCKHOLDERS
This Prospectus relates to the sale by Itel Corporation ("Itel") from time
to time of up to 8,064,005 Offered Shares. The shares to be offered by Itel were
originally acquired by Itel in connection with the spinoff of the Company's
shares by Santa Fe Pacific Corporation, formerly the parent corporation of the
Company, which distribution was made on December 4, 1990. Rod F. Dammeyer, the
President, Chief Executive Officer and a director of Itel, has been a director
of the Company since 1990. Mr. Dammeyer has advised the Company that if,
following the sale by Itel of Offered Shares, Itel's remaining ownership
interest in the Company is substantially reduced, Mr. Dammeyer intends to resign
his position as a director of the Company.
This Prospectus also relates to the sale by Zell/Chilmark Fund, L.P.
("Zell/Chilmark") from time to time of up to 5,007,987 Offered Shares. The
shares to be offered by Zell/Chilmark are currently included in the shares
reported as owned by HC Associates, a Delaware general partnership ("HC") of
which Zell/Chilmark is currently a partner. As reported at February 1, 1994, HC
is the owner of 10,211,078 shares of Common Stock. Zell/Chilmark has advised the
Company that, prior to any sales by Zell/Chilmark pursuant to this Prospectus,
HC will undergo either a partial or complete liquidation pursuant to which
Zell/Chilmark will receive a distribution or distributions of the 5,007,987
Offered Shares that may be offered and sold by Zell/Chilmark pursuant to this
Prospectus. The distribution to Zell/Chilmark of the 5,007,987 Offered Shares
will require compliance with the reporting and waiting period requirements of
the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended. David M.
Schulte, whose relationship to Zell/Chilmark is described in footnote 4 to the
following table, has been a director of the Company since 1994. Mr. Schulte has
advised the Company that if Zell/Chilmark sells all of the Offered Shares that
it owns, Mr. Schulte intends to resign his position as a director of the
Company.
6
<PAGE> 9
The following table provides certain information with respect to Itel and
Zell/Chilmark (collectively, the "Selling Stockholders") and the number of
shares of Common Stock currently owned, offered hereby and to be owned by the
Selling Stockholders after this offering assuming all Offered Shares are sold in
this offering.
<TABLE>
<CAPTION>
MAXIMUM NUMBER OF SHARES
NUMBER OF SHARES NUMBER OF SHARES TO BE OWNED
NAME AND ADDRESS OF OWNED BEFORE TO BE SOLD IN AFTER
SELLING STOCKHOLDER THE OFFERING(1) THE OFFERING(2) THE OFFERING(2)
---------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Itel Corporation(3)..................... 8,064,005 8,064,005 -0-
Two North Riverside Plaza
Chicago, Illinois 60606
Zell/Chilmark Fund, L.P.(4)............. 5,007,987 5,007,987 -0-
Two North Riverside Plaza
Suite 1500
Chicago, Illinois 60606
</TABLE>
---------------
(1) Each Selling Stockholder has claimed sole voting and investment power
concerning these shares except as noted below.
(2) There is no assurance that the Selling Stockholders will sell any or all of
the Offered Shares.
(3) At February 17, 1994, Samuel Zell and Anne Lurie, by virtue of their
positions as trustees and beneficiaries of trusts, and Sheli Rosenberg by
virtue of her position as co-trustee of one of the trusts, might be deemed
to be beneficial owners of approximately 26% of Itel's outstanding common
stock. Mr. Zell, Mrs. Lurie and Mrs. Rosenberg might be considered to be
controlling persons of Itel and, accordingly, might be deemed to own
beneficially the Company's Common Stock described above. Mr. Zell, Mrs.
Lurie and Mrs. Rosenberg have disclaimed beneficial ownership of the
Company's Common Stock held by Itel.
(4) The sole general partner of Zell/Chilmark is ZC Limited Partnership, an
Illinois limited partnership ("ZC Limited"). No limited partner in
Zell/Chilmark acts as a general partner or has control over Zell/Chilmark.
The sole general partner of ZC Limited is ZC Partnership, a Delaware general
partnership ("ZC"). ZC's partners are ZC, Inc., an Illinois corporation
("ZCI"), and CZ Inc., a Delaware corporation ("CZI"). The terms of the
partnership agreements of ZC Limited and ZC give the shareholders of ZCI and
CZI indirect control over ZC Limited and therefore, ultimately,
Zell/Chilmark. Samuel Zell is the sole director and president, Donald W.
Phillips is vice president, Sheli Z. Rosenberg is vice president and
secretary and Arthur A. Greenberg is vice president and treasurer of ZCI.
David M. Schulte is sole director and sole shareholder, president, secretary
and treasurer, Joel S. Friedland is vice president and assistant secretary
and Matthew Rosenberg is vice president and assistant secretary of CZI.
Melvyn N. Klein, a director of the Company, serves as a director of Itel.
Additionally, Samuel Zell, president and sole director of ZCI (which may be
deemed to control a partner of HC), is Chairman of the Board, and may be
deemed to be a principal stockholder, of Itel. Itel beneficially owns
8,064,005 shares of the Company's Common Stock. Itel is not a partner of HC,
and there are no contracts, arrangements or understandings between HC and
Itel with respect to any securities of the Company and HC, as well as
Messrs. Zell and Klein, disclaim beneficial ownership of the shares of
Common Stock beneficially owned by Itel. Mr. Klein is also the sole director
and stockholder of a corporation that is a general partner of a limited
partnership that serves as the general partner of GKH Investments, L.P.
("GKHPLP") and as the manager of GKH Private Limited ("GKHPL"). GKHPLP and
GKHPL currently own a combined approximate 49% interest in HC. Mr. Klein
disclaims beneficial ownership of the shares of Common Stock owned by
KHPLP, GKHPL and HC.
7
<PAGE> 10
PLAN OF DISTRIBUTION
Either of the Selling Stockholders may from time to time, in one or more
transactions, sell all or a portion of the Offered Shares on the NYSE, in the
over-the-counter market, on any other national securities exchange on which the
Common Stock is listed or traded, in negotiated transactions, in underwritten
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The offering price of the Offered
Shares from time to time will be determined by the Selling Stockholders and, at
the time of such determination, may be higher or lower than the market price of
the Common Stock on the NYSE. In connection with an underwritten offering,
underwriters or agents may receive compensation in the form of discounts,
concessions or commissions from a Selling Stockholder or from purchasers of
Offered Shares for whom they may act as agents, and underwriters may sell
Offered Shares to or through dealers, and such dealers may receive compensation
in the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents. Under
agreements that may be entered into by the Company, underwriters, dealers and
agents who participate in the distribution of Offered Shares may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments which such underwriters, dealers or agents may be required to make in
respect thereof. The Offered Shares may be sold directly or through
broker-dealers acting as principal or agent, or pursuant to a distribution by
one or more underwriters on a firm commitment or best-efforts basis. The methods
by which the Offered Shares may be sold include (a) a block trade in which the
broker-dealer so engaged will attempt to sell the Offered Shares as agent but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(d) an exchange distribution in accordance with the rules of the NYSE; (e)
privately-negotiated transactions; and (f) underwritten transactions. The
Selling Stockholders and any underwriters, dealers or agents participating in
the distribution of the Offered Shares may be deemed to be "underwriters" within
the meaning of the Securities Act, and any profit on the sale of the Offered
Shares by the Selling Stockholders and any commissions received by any such
broker-dealers may be deemed to be underwriting commissions under the Securities
Act.
When a Selling Stockholder elects to make a particular offer of Offered
Shares, a prospectus supplement, if required, will be distributed that will
identify any underwriters, dealers or agents and any discounts, commissions and
other terms constituting compensation from such Selling Stockholder and any
other required information.
In order to comply with the securities laws of certain states, if
applicable, the Offered Shares may be sold only through registered or licensed
brokers or dealers. In addition, in certain states, the Offered Shares may not
be sold unless they have been registered or qualified for sale in such state or
an exemption from such registration or qualification requirement is available
and is complied with.
The Company has agreed to pay all costs and expenses incurred in connection
with the registration under the Securities Act of the Offered Shares, including,
without limitation, all registration and filing fees, printing expenses and fees
and disbursements of counsel and accountants for the Company. The Selling
Stockholders will pay any brokerage fees and commissions, fees and disbursements
of legal counsel for the Selling Stockholders and stock transfer and other taxes
attributable to the sale of the Offered Shares. The Company also has agreed to
indemnify each of the Selling Stockholders and their respective partners,
officers and directors and each person who controls (within the meaning of the
Securities Act) such Selling Stockholder against certain losses, claims, damages
and expenses arising under the securities laws in connection with this offering.
Each of the Selling Stockholders has agreed to indemnify the Company, its
officers, directors and stockholders and each person who controls (within the
meaning of the Securities Act) the Company against other losses, claims, damages
and expenses arising under the securities laws in connection with this offering
with respect to written information furnished to the Company by such Selling
Stockholder; provided, however, that the indemnification obligation is several,
not joint, as to each Selling Stockholder.
8
<PAGE> 11
There is no assurance that the Selling Stockholders will sell any or all of
the Offered Shares.
LEGAL OPINION
Certain matters with respect to the legality of the securities offered
hereby will be passed upon for the Company by Andrews & Kurth L.L.P., Houston,
Texas.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1994, have been
so incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
Certain information incorporated in this Prospectus by reference regarding
the estimated quantities of reserves of the oil and natural gas properties owned
by the Company, the future net revenues from such reserves and the present value
thereof is based on estimates of such reserves and present values prepared by
Ryder Scott Company, independent petroleum engineers.
9
<PAGE> 12
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Selling Stockholders.................. S-2
Plan of Distribution.................. S-2
Validity of Common Stock.............. S-2
PROSPECTUS
Documents Incorporated by Reference... 2
Available Information................. 2
The Company........................... 3
Use of Proceeds....................... 3
Investment Considerations............. 3
Selling Stockholders.................. 6
Plan of Distribution.................. 8
Legal Opinion......................... 9
Experts............................... 9
</TABLE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
13,071,992 SHARES
SANTA FE ENERGY
RESOURCES, INC.
COMMON STOCK
(PAR VALUE $0.01 PER SHARE)
------------------------
[SANTA FE LOGO]
------------------------
GOLDMAN, SACHS & CO.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
