<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 29, 1996
REGISTRATION NO. 333-00753
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
Amendment No. 2
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SANTA FE ENERGY RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 36-2722169
(STATE OR OTHER JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>
1616 SOUTH VOSS ROAD, SUITE 1000, HOUSTON, TEXAS 77057 (713) 507-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
DAVID L. HICKS, 1616 SOUTH VOSS ROAD, SUITE 1000, HOUSTON, TEXAS 77057 (713)
507-5000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPY TO:
<TABLE>
<S> <C> <C>
STEPHEN T. GIOVE G. MICHAEL O'LEARY TIMOTHY G. MASSAD
SHEARMAN & STERLING ANDREWS & KURTH L.L.P. CRAVATH, SWAINE & MOORE
599 LEXINGTON AVENUE 4200 TEXAS COMMERCE TOWER WORLDWIDE PLAZA
NEW YORK, NEW YORK 10022 HOUSTON, TEXAS 77002 825 EIGHTH AVENUE
(212) 848-4000 (713) 220-4200 NEW YORK, NEW YORK 10019
(212) 474-1000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
***************************************************************************
* *
* 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. *
* *
***************************************************************************
SUBJECT TO COMPLETION DATED FEBRUARY 29, 1996
PROSPECTUS
7,920,297 SHARES
SANTA FE ENERGY RESOURCES, INC.
COMMON STOCK
------------------
This Prospectus relates to the offer and sale of 7,920,297 shares (the
"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
Minorco (U.S.A.) Inc. (the "Selling Stockholder"). The Company will not receive
any part of the proceeds from the sale of the Shares. See "Selling Stockholder."
The Common Stock is listed on the New York Stock Exchange (the "NYSE")
under the symbol "SFR." The closing sales price of the Common Stock as reported
by the NYSE on February , 1996 was $ per share.
------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS
PROSPECTUS.
------------------
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.
------------------
<TABLE>
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- -----------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS TO
DISCOUNT AND SELLING
PRICE TO PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
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<S> <C> <C> <C>
Per Share......................................... $ $ $
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Total(3).......................................... $ $ $
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- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). See
"Underwriting."
(2) Expenses payable by the Company are estimated at $172,000.
(3) The Selling Stockholder has granted the Underwriters an option for 30 days
to purchase up to an additional 792,030 shares at the initial price to
public per share, less the underwriting discount and commissions, solely to
cover over-allotments. If such option is exercised in full, the total
initial price to public, underwriting discount and commissions and proceeds
to Selling Stockholder will be $ , $ and $ ,
respectively. See "Underwriting."
-----------------------
The Shares are offered, subject to prior sale, when, as and if delivered to
and accepted by the Underwriters, subject to approval of certain matters by
counsel for the Underwriters and certain other conditions. The Underwriters
reserve the right to withdraw, cancel or modify such offer and to reject orders
in whole or in part. It is expected that the Shares will be ready for delivery
in New York, New York on or about , 1996.
LAZARD FRERES & CO. LLC
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
------------------
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE OR OTHERWISE. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (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, and at the following Regional Offices of the Commission: Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621;
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. 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.
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
Exchange Act are incorporated herein by reference: (i) the Company's Annual
Report on Form 10-K for the year ended December 31, 1995; and (ii) 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, Associate
General Counsel and Secretary.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following information is a summary of the more detailed information and
financial statements incorporated by reference in this Prospectus and is
qualified in its entirety by reference thereto. Unless otherwise indicated or
required by the context, references to "Santa Fe" and the "Company" include its
consolidated subsidiaries. As used herein, gas is converted into a barrel of oil
equivalent ("BOE") at the ratio of six thousand cubic feet ("Mcf") of natural
gas to one barrel of oil ("Bbl").
THE COMPANY
GENERAL
Santa Fe Energy Resources, Inc. is an independent oil and gas company
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,
1995, the Company had estimated worldwide proved reserves of oil and natural gas
totaling 320.1 million barrels of oil equivalent ("MMBOE," consisting of
approximately 279.2 million barrels of oil ("MMBbls") and approximately 245.1
billion cubic feet of natural gas ("Bcf")), of which approximately 92% were
domestic reserves and approximately 8% were foreign reserves. During 1995, the
Company's worldwide production aggregated approximately 33.3 MMBOE, of which
approximately 72% was crude oil and approximately 28% was natural gas. The
Company's three domestic core areas are the San Joaquin Valley of California
(the "Western Division"), the Permian Basin in Texas and New Mexico (the
"Central Division") and the offshore Gulf of Mexico (the "Gulf of Mexico
Division"), and its two international core areas are in Argentina and Indonesia.
The address and telephone number of the Company's principal executive offices
are 1616 South Voss Road, Suite 1000, Houston, Texas 77057, (713) 507-5000.
Most of the Company's domestic crude oil production is located in
California and Texas, while its domestic natural gas production comes primarily
from the Gulf of Mexico, New Mexico and Texas. A substantial portion of the
Company's domestic oil production is in long-lived fields with well-established
production histories and where enhanced oil recovery ("EOR") methods are
employed. As of December 31, 1995, approximately 65% of the Company's domestic
proved crude oil and liquids reserves and 53% of its 1995 average daily domestic
production of crude oil and liquids were attributable to the Midway-Sunset field
in the San Joaquin Valley of California. Nearly all of the reserves in this
field are heavy oil (i.e., low gravity, high viscosity crude oil).
The Company's foreign production is located in the El Tordillo and Sierra
Chata fields in Argentina and in the Salawati Basin and Salawati Island area of
Indonesia. Production from the Argentine operations averaged 2,600 Bbls per day
in 1995 and 11.9 million cubic feet ("MMcf") per day of natural gas (which gas
production did not commence until the latter part of the second quarter of
1995). Production from the Indonesian operations averaged 5,200 Bbls of oil per
day in 1995. In addition, the Company has recently announced discoveries at
Mudi, Geragai and Betara in Indonesia and a discovery at Tchatamba in waters
offshore Gabon, all of which are in various stages of delineation.
In 1993, the Company embarked upon a comprehensive restructuring program
that was completed in 1994. The restructuring resulted in an improved capital
structure, greater liquidity and financial flexibility (as a result of a
significant reduction in indebtedness and the sale of the Company's non-core
assets), as well as a reduction in the Company's cost structure (which was
achieved through the sale of its higher cost, non-core properties, the reduction
in the salaried work force by approximately 20%, an improvement in the
efficiency of its information systems and reductions in other general and
administrative costs). In 1995, the Company increased its capital spending by
approximately 58% to an annual level of approximately $205 million to exploit
more fully its inventory of domestic projects and to continue the expansion of
its international operations. Oil production for 1995 averaged 66.3 thousand
barrels of oil ("MBbls") per day, up from 65.7 MBbls per day in 1994, and
natural gas production in 1995 averaged 150.0 MMcf per day compared with 136.6
MMcf per day the previous year. During the fourth quarter of 1995, average daily
production rates grew to 68.4 MBbls of oil and 160.2 MMcf of natural gas as
compared to 64.8 MBbls of oil and 125.1 MMcf of natural gas in the fourth
quarter of 1994. At the end of 1995, the Company's efforts had added more than
54 MMBOE of proved reserves, or approximately 164% of its 1995 production, at an
average replacement cost of approximately $4.18 per BOE.
3
<PAGE> 5
OPERATING STRATEGY
The Company's operating strategy in 1996 is to continue increasing its cash flow
and earnings through the sustained growth of its oil and gas reserves and
production. This operating strategy is designed to permit the Company to take
advantage of the balance sheet strength and reduced cost structure per BOE of
production that were achieved in its 1994 restructuring as it more fully
exploits its inventory of domestic and international drilling projects. The key
components of this strategy are discussed below.
- Capital Spending. A key component of the Company's strategy is to
continue in 1996 the increased level of capital spending that it
initiated last year. In 1995, the Company spent $168.7 million and $35.9
million on development and exploration, respectively, and in 1996 it
intends to spend $162.2 million on development and $38.3 million on
exploration. The Company believes that the increased 1995 capital
spending was a principal factor contributing to the Company's sustained
production growth throughout last year and that the 1996 capital spending
levels can lead to further growth.
- Domestic Project Inventory. A second component of the Company's strategy
is its extensive inventory of identified drilling projects in its
domestic core areas to be exploited in 1996. In the Western Division, the
Company successfully drilled and completed 224 development wells during
1995 (for a 100% success rate) and added estimated proved reserves of
23.8 MMBbls as of December 31, 1995. The Company intends to drill 197
development wells in this Division during 1996. In the Gulf of Mexico
Division, the Company successfully completed all 8 development wells
drilled during 1995 and 9 of the 12 exploration wells drilled during such
period, resulting in 9.6 MMBOE of estimated proved reserve additions at
December 31, 1995. The success of last year's drilling program has added
to the Company's inventory in this Division, and in 1996 it plans to
drill 8 development and 13 exploration wells in this Division. In the
Central Division, the Company successfully completed 52 of the 56
development wells drilled during 1995 and 13 of the 15 exploratory wells
drilled last year. In addition, during 1995 the Company took advantage of
selected property acquisition opportunities available in this Division,
resulting in total estimated proved reserve additions from drilling and
acquisition activities of 15.5 MMBOE at December 31, 1995. In 1996, the
Company plans to drill 70 development and 20 exploratory wells in the
Central Division and to consider additional property acquisitions.
- International Project Inventory. In addition to its domestic inventory,
the Company has built a significant inventory of international projects,
predominantly due to its exploration activities conducted since 1993. In
1995, the Company spent $25.4 million on development projects and $8.9
million on exploration projects. The major portion of the development
capital related to the Company's 1993 natural gas discovery in the Sierra
Chata field, where facilities were installed and production commenced in
1995. The balance of the 1995 international development expenditures were
principally incurred in the El Tordillo field in Argentina and in the
Mudi field in Indonesia (discovered by the Company in 1994). The 1995
international exploration expenditures resulted in the successful
completion of 5 of the 8 wells drilled with discoveries announced at
Geragai and Betara in Indonesia and at Tchatamba offshore Gabon. In 1996,
the Company plans to spend $22.8 million for international development
expenditures and $12.7 million for international exploration
expenditures. The planned development expenditures include funds for 28
development wells, including 23 wells in Argentina, 4 wells in Indonesia
and one well in Gabon. The planned exploration expenditures include funds
for 11 exploratory wells, including 2 wells in Argentina, 6 wells in
Indonesia, 2 wells in Ecuador and one well in Gabon.
The discussion of operating strategy set forth above includes forward-looking
statements that are based upon numerous assumptions with respect to the volume
of the Company's production, the oil and gas prices to be received for its
production, the future results of its drilling activities and other factors
affecting the Company's business that are beyond the Company's control. Many of
such factors are discussed herein under the caption "Risk Factors." Any changes
in such factors could produce significantly different results. As used herein,
(i) capital expenditures include expenditures for exploration, development and
property acquisitions, (ii) expenditures related to the acquisition of proved
properties are treated as development expenditures and (iii) in all cases the
number of wells refers to gross wells.
4
<PAGE> 6
THE OFFERING
The Selling Stockholder is Minorco (U.S.A.) Inc., an indirect wholly owned
subsidiary of Minorco, a Luxembourg societe anonyme ("Minorco"). The Shares were
originally acquired by the Selling Stockholder in 1992 in connection with the
acquisition by the Company of Adobe Resources Corporation, of which the Selling
Stockholder was a stockholder at the time of such acquisition.
<TABLE>
<S> <C>
Shares offered hereby....................................... 8,712,327(a)
Shares outstanding before and after the offering............ 90,329,311(b)
Use of proceeds............................................. The Company will not receive any
of the proceeds from the sale of
the Shares.
NYSE Trading Symbol......................................... SFR
</TABLE>
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(a) Assumes that the Underwriters' over-allotment option to purchase 792,030
shares of Common Stock from the Selling Stockholder is exercised in full.
See "Underwriting."
(b) Based on the number of shares outstanding as of February 1, 1996, which
excludes a total of 14,456,500 shares of Common Stock subject to issuance
upon conversion of the outstanding shares of the Company's Series A
Convertible Preferred Stock and its Convertible Preferred Stock, Series 7%,
and a total of 4,431,548 shares of Common Stock subject to issuance under
stock options outstanding as of such date.
5
<PAGE> 7
SUMMARY FINANCIAL INFORMATION
The following table presents summary historical financial information for
the periods presented and should be read in conjunction with the historical
consolidated financial statements, including the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which is incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
----------- -------- -------- -------- ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............................... $ 442.0 $ 391.4 $ 436.9 $ 427.5 $379.8
Production and operating expenses...... 154.9 150.0 163.8 153.4 134.6
Exploration expenses................... 23.4 20.4 31.0 25.5 18.7
General and administrative............. 26.9 27.3 32.3 30.9 27.8
Depreciation, depletion and
amortization......................... 133.2 121.3 152.7 146.3 106.6
Impairment of oil and gas properties... 30.2(a) -- 99.3(a) -- --
Restructuring charges.................. -- 7.0(b) 38.6(c) -- --
Income (loss) from operations.......... 53.9 48.2 (113.0) 57.5 64.4
Interest expense(d).................... 32.5 27.5 45.8 55.6 47.3
Net income (loss)...................... 26.6 17.1 (77.1) (1.4) 18.5
Earnings (loss) to common stock........ 11.8 5.4 (84.1) (5.7) 18.5
Earnings (loss) per share of common
stock................................ $ 0.13 $ 0.06 $ (0.94) $ (0.07) $ 0.29
Weighted average number of shares of
common stock outstanding............. 90.2 89.9 89.7 79.0 63.8
CASH FLOW DATA:
Net cash provided by operating
activities........................... $ 174.5 $ 124.5 $ 160.2 $ 141.5 $128.4
Capital expenditures, including
acquisitions......................... 223.2 138.8 159.7 102.9 136.6
Preferred dividends.................... 14.8 11.7 7.0 4.3 --
BALANCE SHEET DATA (AT END OF PERIOD):
Properties and equipment, net.......... $ 889.5 $ 843.0 $ 832.7 $1,101.8 $797.4
Total assets........................... 1,064.8 1,071.4 1,076.9 1,337.2 911.9
Long-term debt......................... 344.4 350.4 405.4 492.8 440.8
Convertible Preferred Stock, Series
7%................................... 80.0 80.0 80.0 80.0 --
Shareholders' equity................... 437.7 423.3 323.6 416.6 225.1
</TABLE>
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(a) Reflects a non-cash charge of $30.2 million recorded in 1995, for the
impairment of oil and gas properties associated with the adoption of FAS No.
121, a new accounting standard, and $99.3 million recorded in 1993 for the
impairment of oil and gas properties. For further description of the
impairments recorded in 1995 and 1993, see Note 1 of the Notes to the
historical consolidated financial statements incorporated herein by
reference.
(b) Reflects non-recurring charges relating to the Company's restructuring
program of $7.0 million recorded in the first quarter of 1994 comprised of
severance, benefits and relocation expenses.
(c) Reflects non-recurring charges relating to implementation of the Company's
restructuring program of $38.6 million recorded in 1993, comprised of (i)
losses on property dispositions of $27.8 million; (ii) long-term debt
prepayment penalties of $8.6 million; and (iii) accruals for certain
personnel benefits and related costs of $2.2 million.
(d) Includes capitalized interest of $5.8 million, $3.6 million, $4.3 million,
$4.9 million and $7.7 million for the years 1995, 1994, 1993, 1992 and 1991,
respectively.
6
<PAGE> 8
SUMMARY OPERATING DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
DAILY PRODUCTION:
Oil (MBbls per day)(a)..................... 66.3 65.7 66.7(i) 62.5 55.5
Natural gas (MMcf per day)(a).............. 150.0 136.6 165.4(i) 126.3 95.2
Oil equivalent (MBOE per day)(a)........... 91.3 88.5 94.3(i) 83.6 71.4
AVERAGE SALES PRICE:
Oil (per Bbl)(b)........................... $14.15 $12.41 $12.93 $14.96 $16.16
Natural gas (per Mcf)(b)................... $ 1.43 $ 1.73 $ 1.89 $ 1.70 $ 1.49
COSTS PER BOE:
Production costs(c)........................ $ 5.15 $ 5.30 $ 5.39 $ 5.66 $ 6.06
Exploration costs, including dry hole
costs................................... $ 0.70 $ 0.63 $ 0.90 $ 0.84 $ 0.72
General and administrative costs........... $ 0.81 $ 0.85 $ 0.94 $ 1.01 $ 1.07
Depletion, depreciation and
amortization(d)......................... $ 3.96 $ 3.76 $ 4.44 $ 4.79 $ 4.09
Interest, net(e)........................... $ 0.93 $ 1.08 $ 1.30 $ 1.58 $ 1.43
FIVE-YEAR AVERAGE REPLACEMENT COSTS PER
BOE(F)..................................... $ 4.89 $ 4.97 $ 4.80 $ 4.05 $ 3.66
ANNUAL RESERVE REPLACEMENT RATIO(G).......... 164% 126% 121% 262% 127%
ESTIMATED RESERVE LIFE (IN YEARS)(H)......... 9.6 9.2 8.5(i) 9.9 9.9
</TABLE>
- ---------------
(a) Includes production attributable to certain net profits interests sold by
the Company to unaffiliated persons, which interests burden the Company's
working or royalty interests held in certain properties.
(b) Includes revenues and expenses realized in connection with the Company's
hedging program. As of December 31, 1995, the Company had hedged for 1996
an average of approximately 15,000 Bbls of oil per day from January through
April at a New York Mercantile Exchange ("NYMEX") West Texas Intermediate
("WTI") price of $18.52 per Bbl, and, provided that if the WTI price is
greater than $16.80 per barrel, up to an additional 15,000 barrels of oil
per day is hedged for the period January through March at a NYMEX WTI price
of $18.65 per barrel. For its 1996 natural gas production, the Company has
hedged for the entire year an average of 55 MMcf per day of its Gulf Coast
natural gas production at an average NYMEX price of $1.82 per Mcf and 30
MMcf per day of its Permian Basin production at an average index price of
$1.53 per Mcf. Due to its location, the Company's Permian Basin natural gas
traditionally sells at a discount to its Gulf Coast gas. Based upon
prevailing NYMEX futures prices and other index prices for oil and natural
gas as of February 5, 1996, the Company estimates it would realize hedging
expenses of approximately $4.5 million for the quarter ending March 31,
1996. Actual hedging expenses realized could vary significantly from such
estimates if prices vary significantly from those used in calculating the
estimates.
(c) Includes related production, severance and ad valorem taxes.
(d) Excludes effect of unproved property writedown of $0.03 per BOE in 1995.
(e) Excludes effects of the (i) benefit of federal income tax audit refund of
$0.25 per BOE in 1995; (ii) benefit of an adjustment to certain financing
costs recorded in a prior period of $0.05 per BOE in 1995; (iii) benefit of
adjustments to provisions for potential state income tax obligations of
$0.15 per BOE in 1995 and $0.36 per BOE in 1994; (iv) benefit of adjustment
to provisions made in prior periods with respect to interest on certain
federal income tax audit adjustments of $0.07 per BOE in 1994; and (v)
benefit of federal income tax audit refund and revised tax sharing
agreement with the Company's former parent of $0.36 per BOE in 1993.
(f) Reflects the average replacement cost per BOE during the five years ended
December 31 as of the year reflected in the column.
(g) The annual reserve replacement ratio is a fraction, of which the numerator
is the estimated number of reserves added during a year through additions
of estimated proved reserves from exploratory and development drilling,
acquisitions of proved properties, improved recovery techniques and
revisions of previous estimates, and of which the denominator is the oil
and natural gas produced during that year.
(h) Based upon a fraction, of which the numerator is estimated proved reserves
at year end and of which the denominator is annual production during that
year.
(i) Includes production attributable to properties sold in 1993 and other
properties sold in 1994. Production attributable to such properties during
the year ended December 31, 1993 totaled approximately 4.1 MBbls of oil and
21.7 MMcf of natural gas per day (7.7 MBOE per day).
7
<PAGE> 9
SUMMARY OIL AND GAS RESERVE INFORMATION
The following table sets forth summary information with respect to the
Company's proved oil and gas reserves estimated by Ryder Scott Company,
independent petroleum engineers, as of the dates indicated.
<TABLE>
<CAPTION>
NET PROVED RESERVES AS OF DECEMBER 31,(A)
-----------------------------------------------------
1995 1994 1993(B) 1992 1991
-------- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
Crude oil, condensate and natural gas liquids
(MMBbls)................................... 279.2 258.3 248.2 255.1 229.2
Natural gas (Bcf)............................ 245.1 242.4 263.0 277.5 170.8
Proved reserves (MMBOE)...................... 320.1 298.7 292.0 301.5 257.7
Total proved developed reserves (MMBOE)...... 253.6 224.5 225.5 248.4 210.3
Present value pre-tax future net cash flows
(in millions)(c)........................... $1,257.2 $970.8 $567.8 $915.2 $602.6
</TABLE>
- ---------------
(a) Includes estimated proved reserves attributable to certain net profits
interests sold by the Company to unaffiliated persons, which interests
burden the Company's working or royalty interests held in certain
properties.
(b) The estimates set forth in this table for 1993 give effect to the sale by
the Company of approximately 8.0 MMBOE of proved reserves, which sale closed
in April 1994.
(c) Represents the present value (discounted at 10%) of the future net cash
flows estimated to result from production of the Company's estimated proved
reserves using estimated sales prices and estimates of production costs, ad
valorem and production taxes and future development costs necessary to
produce such reserves. The sales prices used in the determination of proved
reserves and of estimated future net cash flows are based on the prices in
effect at year end, which at December 31, 1995 averaged $14.87 for oil and
$1.79 for natural gas. The average sales prices realized by the Company for
its production during 1995 were $14.15 ($14.05 unhedged) per barrel for oil
and $1.43 ($1.44 unhedged) per Mcf for natural gas.
8
<PAGE> 10
RISK FACTORS
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.
VOLATILITY OF OIL AND NATURAL GAS PRICES
The Company's profitability is dependent upon prevailing prices for oil and
natural gas. Prices for oil and natural 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), 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 natural 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.
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 transportation and refining requirements
associated with heavy crude. As a result, the profit margin realized from the
sale of heavy crude oil is generally lower than that realized from the sale of
light crude oil, because the costs of producing heavy oil are generally higher,
and the sales price realized for heavy crude oil is generally lower, than the
comparable costs and prices paid for light crude oils.
POSSIBLE IMPAIRMENT OF OIL AND GAS PROPERTIES
The Company follows the successful efforts method of accounting for its oil
and natural 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 oil and
natural 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) pursuant to Statement of Financial Accounting Standards No. 121 to
the extent that the net book values of its properties exceed the expected
discounted 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 shareholders'
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. The Company recorded impairments of $30.2 million in 1995
associated with the adoption of FAS No. 121. No assurance can be given that the
Company will not record 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 natural gas exploration, development, production and enhanced
oil recovery
9
<PAGE> 11
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 natural 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 based on various assumptions and are, therefore,
inherently speculative, and various classifications of reserves only constitute
attempts to define the degree 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
quantities of recoverable oil and natural gas reserves and prices for crude oil,
natural gas liquids and natural gas. Actual prices, production, development
expenditures, operating expenses and quantities of recoverable oil and natural
gas reserves will vary from those assumed in the estimates, and such variances
may be significant. Any significant variance from the assumptions could result
in the actual quantity of the Company's reserves and future net cash flow
therefrom being materially different from the estimates set forth in this
Prospectus. In addition, 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 natural 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 natural 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; COMPETITION; OPERATING RISKS
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
10
<PAGE> 12
relating to all aspects of the oil and natural gas industry, and in particular
in the exploration and development of new oil and natural gas reserves. The
Company must compete with a substantial number of other oil and natural gas
companies, many of which have significantly greater financial and other
resources than the Company.
All of the Company's oil and natural gas activities are subject to the
risks normally incident to exploration for and production of oil and gas,
including blowouts, cratering, watering out, spillage and fires, the occurrence
of any of which could result in substantial losses to the Company. 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. Accordingly, the Company may be subject to liability or
losses due to events that are not insured.
Other risks inherent in the oil and gas industry are the risks that a well
will be a dry hole or will not be sufficiently productive to provide an economic
return on the capital expended to drill the well or to repay the entire cost of
drilling, testing, completing and equipping the well. Crude oil and natural gas
are depleting assets, and the Company's producing properties are characterized
by a high initial production rate, followed by a steep decline in production. As
a result, the Company must locate and develop or acquire new oil and natural gas
reserves to replace those being depleted by production. Without successful
exploration or acquisition activities, the Company's reserves and revenues will
decline over time. There can be no assurance that the Company's future
exploration and development wells will be financially successful. In addition,
the continuing development of reserves will require significant capital
expenditures. If the Company's cash flow from operations is not sufficient for
that purpose, there can be no assurance that additional debt or equity financing
will be available to the Company.
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 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
The Company has not paid dividends on its Common Stock since the third
quarter of 1993 and does not expect to pay dividends to holders of Common Stock
in the foreseeable future. In addition, 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 Operations" 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 December 31, 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
11
<PAGE> 13
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.
USE OF PROCEEDS
The Selling Stockholder will receive the net proceeds from the sale of the
Shares, and none of such proceeds will be available for use by the Company or
otherwise for the Company's benefit.
SELLING STOCKHOLDER
The Selling Stockholder, a Colorado corporation, is an indirect wholly
owned subsidiary of Minorco. The Selling Stockholder acquired 8,712,327 shares
of Common Stock in 1992 in connection with the acquisition by the Company of
Adobe Resources Corporation. This Prospectus relates to the registration and
offering of 8,712,327 shares of Common Stock (including shares subject to the
Underwriters' over-allotment option), which represented approximately 9.6% of
the shares of Common Stock outstanding as of February 1, 1996. The shares
offered hereby constitute all of the shares of Common Stock owned by the Selling
Stockholder and Minorco.
Pursuant to the terms of a Stock Ownership and Registration Rights
Agreement dated December 10, 1991, among the Company, the Selling Stockholder
and Minorco, the Selling Stockholder is currently entitled to have one designee
appointed to the Board of Directors of the Company. Reuben F. Richards, the
Chairman, President and Chief Executive Officer of the Selling Stockholder,
currently serves as a designee of the Selling Stockholder on the Company's Board
of Directors for a term expiring in 1996. The right of the Selling Stockholder
to have one designee appointed to the Board of Directors will terminate
automatically upon consummation of this offering. Mr. Richards has agreed to
remain as a director of the Company after consummation of this offering.
The following table provides certain information with respect to the
Selling Stockholder and the number of shares of Common Stock currently owned,
offered hereby and to be owned by the Selling Stockholder after this offering,
assuming the Underwriters' over-allotment option is exercised in full.
<TABLE>
<CAPTION>
MAXIMUM NUMBER OF SHARES
NUMBER OF SHARES NUMBER OF SHARES TO BE OWNED
NAME AND ADDRESS OF OWNED PRIOR TO TO BE SOLD IN AFTER
SELLING STOCKHOLDER THE OFFERING(1) THE OFFERING(2) THE OFFERING
- -------------------------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
Minorco (U.S.A.) Inc........................ 8,712,327 8,712,327 0
30 Rockefeller Plaza
Suite 4212
New York, NY 10112
</TABLE>
- ---------------
(1) The Selling Stockholder shares voting and investment powers concerning the
Shares with its parent, Minorco.
(2) Assumes the Underwriters' over-allotment option to purchase 792,030 shares
of Common Stock from the Selling Stockholder is exercised in full. See
"Underwriting."
12
<PAGE> 14
UNDERWRITING
Subject to the terms and conditions of the underwriting agreement (the
"Underwriting Agreement), among the Company, the Selling Stockholder and each of
the Underwriters named below (the "Underwriters"), for whom Lazard Freres & Co.
LLC, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc are acting as
representatives (the "Representatives"), each of the Underwriters has severally
agreed to purchase, and the Selling Stockholder has agreed to sell, the
respective number of Shares set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
---------
<S> <C>
Lazard Freres & Co. LLC...........................................
Morgan Stanley & Co. Incorporated.................................
Salomon Brothers Inc..............................................
---------
Total........................................................ 7,920,297
=========
</TABLE>
The Selling Stockholder has been advised by the Representatives that the
several Underwriters propose to offer the Shares offered hereby directly to the
public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of $ per share to certain other
dealers. After the offering, the public offering price and such concessions may
be changed.
The Selling Shareholder has granted the Underwriters an option exercisable
for 30 days after the date of this Prospectus to purchase, at the initial price
to public less the underwriting discount, as set forth on the cover page of this
Prospectus, up to an aggregate of 792,030 additional shares of Common Stock to
cover over-allotments, if any.
The Company and the Selling Stockholder have agreed with the Underwriters
not to publicly offer, sell or otherwise dispose of any shares of Common Stock
(or securities convertible into or exercisable or exchangeable for Common Stock
or any rights to purchase or acquire Common Stock) for a period of 90 days after
the date of this Prospectus without the prior written consent of Lazard Freres &
Co. LLC except pursuant to employee benefit plans described in (or descriptions
of which are incorporated by reference in) this Prospectus.
The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required to
make in respect thereof.
Lazard Freres & Co. LLC and Salomon Brothers Inc served as financial
advisors to the Company during 1995 for which they were paid customary fees by
the Company. In addition, certain Underwriters and their affiliates have from
time to time provided investment banking and commercial banking services to the
Company in the ordinary course of business, for which they received customary
fees.
13
<PAGE> 15
LEGAL OPINIONS
The validity of the Common Stock and certain other legal matters will be
passed upon for the Company by Andrews & Kurth L.L.P., Houston, Texas. Certain
legal matters will be passed upon for (i) the Selling Stockholder by Ben L.
Keisler, General Counsel for the Selling Stockholder, and (ii) the Underwriters
by Cravath, Swaine & Moore, New York, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1995, 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.
14
<PAGE> 16
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS 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, 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
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Documents Incorporated by Reference... 2
Prospectus Summary.................... 3
Risk Factors.......................... 9
Use of Proceeds....................... 12
Selling Stockholder................... 12
Underwriting.......................... 13
Legal Opinions........................ 14
Experts............................... 14
</TABLE>
================================================================================
================================================================================
LOGO
7,920,297 SHARES
SANTA FE ENERGY
RESOURCES, INC.
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
LAZARD FRERES & CO. LLC
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
, 1996
================================================================================
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meanings assigned to them in the Prospectus which forms
a part of this Registration Statement.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by the Company in connection with this
offering are as follows:
<TABLE>
<S> <C>
SEC registration fee...................................................... $ 27,610
Accounting fees and expenses.............................................. 30,000
Legal fees and expenses................................................... 80,000
Printing expenses......................................................... 20,000
Blue sky fees and expenses................................................ 10,000
Miscellaneous............................................................. 4,390
-------
Total*.......................................................... $172,000
=======
</TABLE>
- ---------------
* Total expenses to be paid by the Company will not include underwriters' and
brokers' discounts or commissions, if any, attributable to the sale of the
Shares by the Selling Stockholder.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware empowers a corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he 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 shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section 145
or in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified party
may be entitled; that indemnification provided by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and
II-1
<PAGE> 18
shall inure to the benefit of such person's heirs, executors and administrators;
and empowers the corporation to purchase and maintain insurance on behalf of a
director or officer of the corporation against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Article NINTH of the Company's Restated Certificate of Incorporation states
that:
"No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages from breach of
fiduciary duty by such director as a director; provided, however, that this
Article NINTH Shall not eliminate or limit the liability of a director to
the extent provided by applicable law (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No amendment to or
repeal of this Article NINTH shall apply to, or have any effect on, the
liability or alleged liability of any director of the Corporation for or
with respect to any facts or omissions of such director occurring prior to
such amendment or repeal. If the General Corporation Law of the State of
Delaware is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of the State of Delaware,
as so amended."
Article VI of the Company's Bylaws further provides that the Company shall
indemnify its officers, directors, employees and agents to the fullest extent
permitted by law. Pursuant to such provision, the Company has entered into
agreements with various of its officers, directors and employees which provide
for indemnification of such persons.
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<S> <C>
1.1* Form of Underwriting Agreement.
4.1 Specimen certificate representing shares of Common Stock (filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Reg.
No. 33-32831) and incorporated herein by reference).
5.1** Opinion of Andrews & Kurth L.L.P.
23.1* Consent of Price Waterhouse LLP.
23.2** Consent of Andrews & Kurth L.L.P. (included in their opinion filed as
Exhibit 5.1).
23.3* Consent of Ryder Scott Company, independent petroleum engineers.
24.1** A power of attorney, pursuant to which amendments to this Registration
Statement may be filed, is included on the signature page contained in
Part II of this Registration Statement.
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
II-2
<PAGE> 19
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered 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
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 of this Registration
Statement, 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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus 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.
II-3
<PAGE> 20
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 2 TO
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON FEBRUARY 29, 1996.
SANTA FE ENERGY RESOURCES, INC.
By: /s/ JAMES L. PAYNE*
------------------------------------
James L. Payne, Chairman of the Board,
President and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- ------------------
<S> <C> <C>
* Chairman of the Board, President
- ------------------------------------- and Chief Executive Officer and
James L. Payne Director (Principal Executive
Officer)
* Senior Vice President and Chief
- ------------------------------------- Financial Officer (Principal
R. Graham Whaling Financial and Accounting Officer)
* Director
- -------------------------------------
William E. Greehey
* Director
- -------------------------------------
Melvyn N. Klein
* Director
- -------------------------------------
Robert D. Krebs
* Director
- -------------------------------------
Allan V. Martini
* Director
- -------------------------------------
Michael A. Morphy
*
- ------------------------------------- Director
Reuben F. Richards
* Director
- -------------------------------------
Marc J. Shapiro
* Director
- -------------------------------------
Robert F. Vagt
* Director
- -------------------------------------
Kathryn D. Wriston
* By: /s/ DAVID L. HICKS February 29, 1996
- -------------------------------------
DAVID L. HICKS
ATTORNEY-IN-FACT
</TABLE>
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------ ----------------------------------------------------------------------
<S> <C>
1.1* Form of Underwriting Agreement
4.1 Specimen certificate representing shares of Common Stock (filed as
Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Reg.
No. 33-32831) and incorporated herein by reference)
5.1** Opinion of Andrews & Kurth L.L.P.
23.1* Consent of Price Waterhouse LLP
23.2** Consent of Andrews & Kurth L.L.P. (included in their opinion filed as
Exhibit 5.1)
23.3* Consent of Ryder Scott Company, independent petroleum engineers
24.1** A power of attorney, pursuant to which amendments to this Registration
Statement may be filed, is included on the signature page contained in
Part II of this Registration Statement
</TABLE>
- ---------------
* Filed herewith.
** Previously filed.
<PAGE> 1
EXHIBIT 1.1
[Draft--2/27/96]
7,920,297 Shares
Santa Fe Energy Resources, Inc.
COMMON STOCK
($0.01 PAR VALUE)
UNDERWRITING AGREEMENT
March __, 1996
Lazard Freres & Co. LLC
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc
As Representatives for the several
Underwriters named in Schedule I
c/o Lazard Freres & Co. LLC
30 Rockefeller Plaza
New York, New York 10020
Dear Sirs:
SECTION 1. Introductory. Minorco (U.S.A.) Inc. (the "Selling
Stockholder"), a Colorado corporation and stockholder of Santa Fe Energy
Resources, Inc. (the "Company") proposes to sell to the several underwriters
named in Schedule I hereto (the "Underwriters") for whom Lazard Freres & Co.
LLC, Morgan Stanley & Co. Incorporated and Salomon Brothers Inc are acting as
representatives (the "Representatives"), an aggregate of 7,920,297 shares of the
Company's Common Stock, par value $0.01 per share (the "Firm Shares"). The
Selling Stockholder also proposes to sell to the Underwriters, upon the terms
and conditions set forth in Section 4 hereof, up to an additional 792,030 shares
of the Company's Common Stock, par value $.01 per share (the "Additional
Shares"). The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the "Shares".
The Company and the Selling Stockholder hereby, severally and
not jointly, agree with the Underwriters as follows:
<PAGE> 2
2
SECTION 2. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to, and agrees with, the
Underwriters and the Selling Stockholder that:
(a) The Company meets the registrant requirements for use of
Form S-3 under the Securities Act of 1933, as amended (the "Act"). A
registration statement on Form S-3 (File No. 333-00753), including a
form of prospectus relating to the Shares, has been filed by the
Company pursuant to the Act, with the Securities and Exchange
Commission (the "Commission"). The Company may have filed one or more
amendments thereto, including the related preliminary prospectus, each
of which has previously been furnished to you. The Company will next
file with the Commission either (i) prior to effectiveness of such
registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (ii) after
effectiveness of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4) under the Act. In the
case of clause (ii), the Company has included or shall include in such
registration statement, as amended at the Effective Time (as defined
below), all information (other than information permitted to be omitted
from the Registration Statement when it becomes effective pursuant to
Rule 430A ("Rule 430A Information")) required by the Act and the rules
and regulations thereunder (the "Rules and Regulations") to be included
in the final prospectus with respect to the Shares and the offering
thereof. As filed, such amendment and form of final prospectus, or such
final prospectus, shall contain all Rule 430A Information, together
with all other such required information, with respect to the Shares
and the offering thereof, and, except to the extent you shall agree in
writing to a modification, shall be in all substantive respects in the
form furnished to you prior to the execution of this Agreement or, to
the extent not completed at such time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior to
the execution of this Agreement, will be included or made therein. For
purposes of this Agreement, "Effective Time" means the time as of which
such registration statement, or the most recent post-effective
amendment thereto, if any, was or is declared
<PAGE> 3
3
effective by the Commission and each date after the date hereof on
which a document incorporated by reference in the Registration
Statement is filed. "Preliminary Prospectus" means each prospectus
included in such registration statement, or amendments thereof, before
it becomes effective under the Act, any prospectus filed with the
Commission by the Company pursuant to Rule 424(a) and any prospectus
included in the Registration Statement at the Effective Time that omits
Rule 430A Information. Such registration statement, as amended at the
Effective Time, including incorporated documents, exhibits and
financial statements, and including all Rule 430A Information, if any,
is hereinafter referred to as the "Registration Statement", and the
form of prospectus relating to the Shares and the offering thereof, as
first filed with the Commission pursuant to and in accordance with Rule
424(b) or, if no such filing is required, as included in the
Registration Statement, is hereinafter referred to as the "Prospectus".
Any reference herein to the Registration Statement, a Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of 1934
(the "Exchange Act") on or before the Effective Time of the
Registration Statement or the issue date of such Preliminary Prospectus
or the Prospectus, as the case may be, and references to information
being "included", "contained" or "set forth in" any such document (or
similar expressions) shall be similarly construed; and any reference
herein to the terms "amend", "amendment" or supplement" with respect to
the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Time of the
Registration Statement, or the issue date of any Preliminary Prospectus
or the Prospectus, as the case may be, deemed to be incorporated
therein by reference.
(b) At the Effective Time, the Registration Statement did or
will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as defined in
Section 4), the Prospectus (and any supplements thereto) will, comply
in all material respects with the applicable requirements of the Act
and the Rules and Regulations;
<PAGE> 4
4
at the Effective Time, the Registration Statement did not or will not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, at the Effective Time,
the Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus (together with any supplements thereto)
will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The preceding sentence does not apply to information
contained in or omitted from the Registration Statement or the
Prospectus (or any supplement thereto) based upon and in conformity
with written information furnished to the Company by the
Representatives specifically for use therein as specified in Section
9(a) (the "Underwriters' Information") or to written information
furnished to the Company by the Selling Stockholder specifically for
use therein as specified in Section 9(a) (the "Selling Stockholder's
Information").
(c) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder, and, at the time of such
filing, none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus, when such documents are filed with the Commission, will
conform in all material respects to the requirements of the Exchange
Act and the rules and regulation of the Commission thereunder and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
<PAGE> 5
5
(d) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and no
proceedings for that purpose shall have been instituted or, to the
Company's knowledge, threatened by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the Rules and Regulations,
and did not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; except that this representation and warranty shall not
apply to any statements or omissions made based upon and in conformity
with the Underwriters' Information or the Selling Stockholder's
Information.
(e) The consolidated financial statements included in the
Registration Statement and Prospectus (and any amendment or supplement
thereto) present fairly in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as
of the dates indicated and the results of their operations, the
statements of their cash flows and the changes in their financial
position for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis during the periods involved; and the
supporting schedules, if any, included in the Registration Statement
present fairly the information required to be stated therein.
(f) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as incorporated by reference,
set forth or contemplated in the Prospectus, which had a material
adverse effect on the financial condition, business, or results of
operations of the Company and its subsidiaries considered as a whole (a
"Material Adverse Effect"); and, since the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has not been (i) any change in
<PAGE> 6
6
the outstanding capital stock of the Company, (ii) any increase in
long-term debt of the Company or any of its subsidiaries or (iii) any
material adverse change, or any development involving a material
adverse change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth or
contemplated in the Prospectus, which, with respect to any case
referred to in sub-clause (i), (ii) or (iii) would be reasonably likely
to have a Material Adverse Effect.
(g) (i) The Company and each of its subsidiaries have good
title to their producing oil and gas properties, free and clear of all
liens, encumbrances and defects, except (W) those described in the
Prospectus, (X) liens securing taxes and other governmental charges, or
claims of materialmen, mechanics and similar persons, not yet due and
payable, (Y) liens and encumbrances under oil and gas leases, options
to lease, operating agreements, unitization and pooling agreements,
participation and drilling concession agreements and gas sales
contracts, securing payment of amounts not yet due and payable and of a
scope and nature customary in the oil and gas industry and (Z) liens,
encumbrances and defects that do not, singly or in the aggregate,
materially affect the value of such oil and gas properties or
materially interfere with the use made or proposed to be made of such
properties by the Company and its subsidiaries; and (ii) except to the
extent described in the Prospectus, the leases, options to lease,
drilling concessions or other arrangements held by the Company and its
subsidiaries reflect in all material respects the right of the Company
and its subsidiaries to explore the unexplored and undeveloped acreage
described in the Prospectus and the care taken by the Company and its
subsidiaries with respect to acquiring or otherwise procuring such
leases, options to lease, drilling concessions and other arrangements
was generally consistent with standard industry practices for acquiring
or procuring leases to explore acreage for hydrocarbons.
(h) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation with
power
<PAGE> 7
7
and authority to own, lease and operate their properties and conduct
their businesses as described in the Registration Statement and
Prospectus; and each of them is duly qualified as a foreign corporation
to transact business and is in good standing in each jurisdiction in
which it owns or leases properties or in which the conduct of its
business requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
Material Adverse Effect.
(i) The Company has an authorized capitalization as set forth
in the Prospectus, and all shares of capital stock outstanding,
including the Shares, have been duly authorized, are validly issued,
fully paid and non-assessable, and conform in all material respects to
the description thereof contained in the Prospectus. The sale of the
Shares is not subject to pre-emptive or other similar rights or to
restrictions on transfer (other than those imposed by the Act, the
Rules and Regulations or state securities or Blue Sky laws and other
than restrictions on transfers contained in that certain Stock
Ownership and Registration Rights Agreement, dated December 10, 1991,
among Minorco, a Luxembourg societe anonyme, the Selling Stockholder
and the Company (the "Stock Ownership Agreement") which have been
met). The Shares are duly listed and admitted for trading on the
New York Stock Exchange (the "NYSE").
(j) Neither the Company nor any of its subsidiaries is in
violation of its or any of their Certificate of Incorporation or Bylaws
or other organizational documents or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to which it or
any of them is a party or by which it or any of them or their
properties may be bound, except any violation or default that would not
have a Material Adverse Effect; the execution, delivery and performance
of this Agreement, compliance by the Company with all the provisions
hereof and the consummation by the Company of the transactions
contemplated by this Agreement will not violate or constitute a breach
of any of the terms or provisions of, or a default (with the passage of
time or otherwise) under, the
<PAGE> 8
8
Certificate of Incorporation or Bylaws or other organizational
documents of the Company or any of its subsidiaries or any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan agreement, note, lease or other agreement
or instrument to which it or any of them is a party or by which it or
any of them or their properties may be bound, or violate or breach with
any laws, administrative regulations or rulings or court decrees
applicable to the Company, any of its subsidiaries or their respective
property.
(k) No consent, approval, authorization, order, registration,
filing or qualification of or with any court or governmental authority
or agency or of the NYSE is required for the sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except such as may be required under the Act, the Rules and
Regulations or state securities or Blue Sky laws in connection with the
distribution of the Shares by the Underwriters.
(l) The Company and its subsidiaries are in compliance in all
material respects with all laws and regulations applicable to them and
their respective properties and possess all certificates, authorities
or permits issued by, and have made all filings with, the appropriate
state, local, federal or foreign regulatory agencies or bodies
necessary or desirable to conduct the business now operated by them,
except where noncompliance with such laws or regulations or the failure
to possess or make the same would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor any
of its subsidiaries has received any notice of proceedings relating to
the revocation, termination or modification of any such certificate,
authority, permit or filing.
(m) Except as described in the Prospectus, there are no
actions, suits or proceedings before or by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge
of the Company, contemplated or threatened against the Company or any
of its subsidiaries, or to which any of their respective properties is
subject, which, if adversely determined, would individually or in the
aggregate be reasonably likely to result in any Material Adverse
<PAGE> 9
9
Effect or adversely affect the sale of the Shares in the manner
contemplated by the Prospectus.
(n) This Agreement has been duly authorized,
executed and delivered by the Company.
(o) The Company has complied with all the provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(p) Other than the Stock Ownership Agreement and that certain
agreement dated March 24, 1995 between HC Associates and the Company,
there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to
any securities of the Company owned or to be owned by such person or to
require the Company to include such securities under the Registration
Statement.
(q) Except as set forth in the Prospectus under the caption
"Underwriting" or as incorporated by reference therein, neither the
Company nor any of its officers, directors or, to the Company's
knowledge, holders of five percent or more of any class of its capital
stock or any of their respective affiliates is a member of, or is
associated or affiliated with a member of, the National Association of
Securities Dealers, Inc.
SECTION 3. Representations, Warranties and Agreements of the
Selling Stockholder. The Selling Stockholder represents and warrants to, and
agrees with, the Underwriters and the Company that:
(a) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder.
(b) The Selling Stockholder has the legal right and power to
execute and deliver this Agreement and to sell, transfer and deliver
the Shares to be sold by the Selling Stockholder in the manner provided
in this Agreement, and no such action will contravene any provision of
applicable law, or the certificate of incorporation or by-laws or other
organizational document of the Selling Stockholder, or any agreement
<PAGE> 10
10
or other instrument binding upon the Selling Stockholder [(after giving
effect to the waiver by the Company of the restrictions on transfer
contained in the Stock Ownership Agreement)] or any administrative or
court, decree or order, and no consent, approval, authorization, order,
filing, registration or qualification of or with any court or
governmental authority or agency is required for the execution and
delivery of this Agreement and the consummation of the transactions
contemplated herein by the Selling Stockholder, except such as may be
required under the Act and the Rules and Regulations or state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters.
(c) The Selling Stockholder has, and will deliver to the
Underwriters, good and marketable title to the Shares to be sold by the
Selling Stockholder, free and clear of any mortgage, pledge, lien,
encumbrance, adverse claim or equity (collectively, a "Lien").
(d) During the 90-day period beginning from the date hereof,
the Selling Stockholder will not, except as provided hereunder, sell
any equity securities of the Company or any securities convertible into
or exchangeable or exercisable for any such equity securities without
the prior written consent of Lazard Freres & Co. LLC.
(e) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(f) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with the Selling Stockholder Information, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement and
the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of
<PAGE> 11
11
the Act and the rules and regulations of the Commission thereunder and
such Registration Statement and Prospectus will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein (and, in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.
(g) In order to document an exemption from any liability for
withholding under Section 1445(a) of the Internal Revenue Code of 1986,
as amended, with respect to the transactions herein contemplated, the
Selling Stockholder will deliver to you prior to or at the Closing Date
a certification of non-foreign status substantially similar to the
sample certification provided in Treasury Regulations Section 1.1445-
2(b)(2)(iii)(B).
SECTION 4. Purchase, Sale and Delivery of Shares. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Selling Stockholder hereby
agrees to sell to the Underwriters, and the Underwriters agree to purchase from
the Selling Stockholder, at a purchase price of $______ per Share (the "purchase
price per Share"), the Firm Shares.
The Selling Stockholder will deliver the Firm Shares to you
for your account, against payment of the purchase price therefor by wire
transfer of same day funds (subject to payment to Lazard Freres & Co. LLC by the
Selling Stockholder of one day's interest on the amount of such purchase price
at a rate determined by Lazard Freres & Co. LLC to reflect its cost of funds) to
an account specified in writing by the Selling Stockholder. Payment for the Firm
Shares shall be made at the office of Cravath, Swaine & Moore at 10:00 A.M., New
York Time, on March __, 1996 or at such other place or time not later than three
full business days thereafter as you and the Company determine (the "Initial
Closing Date").
The Selling Stockholder hereby agrees to sell to the
Underwriters and, on the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set forth, the
Underwriters shall have the right to purchase, severally and not jointly, from
the Selling Stockholder, pursuant to an option to be
<PAGE> 12
12
exercised in the 30-day period commencing on the date of this Agreement, all or
less than all of the Additional Shares at the purchase price per Share.
Additional Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter agrees, severally and
not jointly, to purchase from the Selling Stockholder that proportion of the
total number of Additional Shares (subject to adjustment by you to eliminate
fractions) to be purchased as the number of Firm Shares set forth opposite the
name of such Underwriter in Schedule I hereto bears to the total number of Firm
Shares.
The Selling Stockholders will deliver the Additional Shares to
be purchased by you for the accounts of the Underwriters, against payment of the
purchase price therefor by wire transfer of same day funds (subject to payment
to Lazard Freres & Co. LLC by the Selling Stockholder of one day's interest on
the amount of such purchase price at a rate determined by Lazard Freres & Co.
LLC to reflect its cost of funds) to an account specified in writing by the
Selling Stockholder, at the office of Cravath, Swaine & Moore on such date and
at such time (the "Option Closing Date") as shall be specified in the notice
from Lazard Freres & Co. LLC to the Selling Stockholder exercising the option to
purchase Additional Shares. The Option Closing Date may be the same as the
Initial Closing Date but shall in no event be earlier than the Initial Closing
Date nor earlier than two nor later than ten business days after the giving of
the notice hereinafter referred to. Such notice may be given, by letter or by
telecopy or other facsimile transmission or by telephone (if subsequently
confirmed in writing), to the Selling Stockholder at any time within 30 days
after the date of this Agreement. The Option Closing Date may be varied by
agreement between the Underwriters and the Selling Stockholder. The Initial
Closing Date and the Option Closing Date are herein collectively referred to as
the "Closing Date".
The certificates for all the Shares so to be delivered will be
made available at the office of Lazard Freres & Co., New York, New York for
checking and packaging at least one full business day prior to the Initial
Closing Date or the Option Closing Date, as the case may be.
SECTION 5. Offering by Underwriters. After the
Registration Statement becomes effective the Underwriters
<PAGE> 13
13
will offer the Shares for sale to the public on the terms and conditions as set
forth in the Prospectus.
SECTION 6. Covenants of the Company. The Company covenants and
agrees with the Underwriters and the Selling Stockholder that:
(a) If the Effective Time is prior to the execution and
delivery of this Agreement, the Company will file the Prospectus with
the Commission pursuant to and in accordance with subparagraph (1) (or,
if applicable, and with your consent, subparagraph (4)) of Rule 424(b)
within the time period prescribed by such rule. The Company will advise
you promptly of any proposal to amend or supplement the Registration
Statement as filed, or the related Prospectus, prior to the Closing
Date, and will not effect such amendment or supplement without your
consent; the Company will also advise you promptly of the effectiveness
of the Registration Statement (if the Effective Time is subsequent to
the execution and delivery of this Agreement), of the filing and
effectiveness of any amendment or supplement to the Registration
Statement or the Prospectus, and of the issuance by the Commission of
any stop order in respect of the Registration Statement or of any order
preventing or suspending the use of any Preliminary Prospectus or any
Prospectus relating to the Shares or the initiation of proceedings for
any such purpose, of the suspension of the qualification of the Shares
for offering or sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or of any request by
the Commission to amend or supplement the Registration Statement or
Prospectus or for additional information and will use its best efforts
to prevent the issuance of any such stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or any
prospectus relating to the Shares or suspending any such qualification
and to obtain as soon as possible its lifting, if issued.
(b) If, at any time prior to the expiration of nine months
after the Effective Date when a prospectus relating to the Shares is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact, or omit to state a material fact
necessary to make the
<PAGE> 14
14
statements therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary at any time to amend
or supplement the Prospectus to comply with the Act, the Rules and
Regulations or any other law, the Company promptly will prepare and
file with the Commission an amendment or supplement which will correct
such statement or omission or an amendment which will effect such
compliance and will notify you and, upon your request, prepare and
furnish without charge to the Underwriters, the Selling Stockholder and
to any dealer in securities as many copies as you may from time to time
reasonably request, of an amended Prospectus or a supplement to the
Prospectus complying with Section 10(a) of the Act which will correct
such statement or omission or effect such compliance.
(c) The Company will make generally available to the Company's
security holders as soon as practicable an earnings statement which
will satisfy the provisions of Section 11(a) of the Act and the Rules
and Regulations thereunder (including Rule 158).
(d) The Company will deliver to you as many signed and
conformed copies of the Registration Statement (as originally filed)
and of each amendment thereto (including exhibits filed therewith) and
copies of each Preliminary Prospectus and the Prospectus as you may
reasonably request.
(e) The Company will take such action as you may reasonably
request, in cooperation with you, to qualify the Shares for offering
and sale under the applicable securities laws of such states and other
jurisdictions of the United States as you may designate, and will
maintain such qualifications in effect for as long as may be required
for the distribution of the Shares provided, however, that in no event
shall the Company be obligated in connection therewith to qualify as a
foreign corporation, or to execute a general consent to service of
process. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Shares have been
qualified as above provided.
(f) The Company will not effect any public sale or public
distribution of its equity securities, or any securities convertible
into or exchangeable or
<PAGE> 15
15
exercisable for such securities, during the 90-day period beginning
from the date hereof (except (i) pursuant to (A) registration on Form
S-8 or any successor form, (B) registration on Form S-4 or any
successor form, or (C) registration of securities in connection with a
dividend reinvestment plan on form(s) applicable to such securities, or
(ii) the issuance of shares of common stock upon the conversion by
holders of shares of preferred stock of the Company outstanding on the
date hereof) without the prior written consent of Lazard Freres & Co.
LLC.
SECTION 7. Conditions of the Obligations of the Underwriters.
The obligations of the Underwriters to purchase and pay for the Firm Shares on
the Initial Closing Date will be subject (i) in the case of representations and
warranties qualified as to materiality, to the accuracy of such representations
and warranties in all respects, and in the case of representations and
warranties not qualified as to materiality, to the accuracy of such
representations and warranties in all material respects taken as a whole, in
each case on the part of the Company and the Selling Stockholder herein as of
the date hereof and as of the Initial Closing Date with the same force and
effect as if made as of that date, (ii) to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, (iii) to the
performance by the Company and the Selling Stockholder of their respective
obligations hereunder and (iv) to the following additional conditions precedent:
(a) If the Effective Time is not prior to the execution and
delivery of this Agreement, the Effective Time shall have occurred not
later than (i) 6:00 p.m. New York City time on the date of
determination of the offering price, if such determination occurred at
or prior to 3:00 p.m. New York City time on such date or (ii) 12:00
noon New York City time on the business day following the day on which
the offering price was determined if such determination occurred after
3:00 p.m. New York City time on such date. If the Effective Time is
prior to the execution and delivery of this Agreement, the Company
shall have filed the Prospectus with the Commission pursuant to Rule
424(b) within the applicable time period prescribed for such filing by
the Rules and Regulations and in accordance with Section 6(a) hereof.
In either case, prior to the Initial Closing Date no stop order
suspending the
<PAGE> 16
16
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened by the Commission; and the Company shall have complied in
all material respects with all requests for additional information on
the part of the Commission to your reasonable satisfaction.
(b) You shall not have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement
thereto, contains any untrue statement of fact or omits to state any
fact which, you have concluded, is material and in the case of an
omission is required to be stated therein or is necessary to make the
statements therein not misleading.
(c) You and the Selling Stockholder shall each have received a
favorable opinion of Andrews & Kurth L.L.P., counsel for the Company,
dated the Initial Closing Date, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware with corporate power and
authority to own, and operate its properties and conduct its
businesses in all material respects as described in the
Prospectus.
(ii) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued and
outstanding shares of capital stock of the Company (including
the Shares) have been duly and validly authorized and issued
and are fully paid and non-assessable; and the Shares conform
in all material respects to the description of such stock
contained in the Prospectus.
(iii) This Agreement has been duly authorized,
executed and delivered by the Company.
(iv) The compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions herein contemplated will breach or result in
violation of (a) any of the provisions of the Certificate of
Incorporation or Bylaws of the Company or (b) any
<PAGE> 17
17
statute or any order, rule or regulation of the United States
(or any state, territory or possession thereof) known to such
counsel of any court or governmental agency or body of the
United States (or any state, territory or possession thereof)
having jurisdiction over the Company or any of its
subsidiaries or any of their properties other than, in the
case of clause (b) above, any violation which, individually or
in the aggregate, will not have a Material Adverse Effect.
(v) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental authority or agency or body of the United States
(or any state, territory or possession thereof) having
jurisdiction over the Company or any of its subsidiaries or of
the NYSE is required for the sale of the Shares or the
consummation by the Company of the transactions contemplated
by this Agreement, except (a) the registration under the Act
of the Shares, and (b) such consents, approvals,
authorizations, registrations or qualifications (1) as have
been, or prior to the Initial Closing Date will be, obtained
or (2) as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the
Shares by the Underwriters.
(vi) The Registration Statement is effective under
the Act and to their knowledge, no stop order suspending the
effectiveness of the Registration Statement or any part
thereof has been issued under the Act and no proceedings
therefor have been initiated or threatened by the Commission.
(vii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made
by the Company prior to the Initial Closing Date (other than
the financial statements and related schedules and other
financial data therein, other financial data and information
included therein that is extracted from a report of Ryder
Scott Company pertaining to natural resource reserves that is
referred to or included therein, as to which such counsel need
express no opinion), when they became effective or
<PAGE> 18
18
were filed with the Commission, as the case may be, conformed
in all material respects to the requirements of the Act or the
Exchange Act, as applicable and the rules and regulations of
the Commission thereunder; and such counsel does not believe
that any of such documents, when such documents became
effective or were so filed, as the case may be, contained an
untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made when such documents were so filed, not misleading.
(viii) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to the Initial Closing Date (other than the
financial statements and related schedules and other financial
data and information that is extracted from a report of Ryder
Scott Company pertaining to natural resource reserves that is
referred to or included therein, as to which such counsel need
express no opinion) appeared on their face to be appropriately
responsive in all material respects with the requirements of
the Act and the rules and regulations thereunder; they do not
believe that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company
prior to the Initial Closing Date (other than the financial
statements and related schedules and other financial data
therein, other financial data and information included therein
that is extracted from a report of Ryder Scott Company
pertaining to natural resource reserves that is referred to or
included therein, as to which such counsel need express no
opinion) contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or
that, as of its date or as of the Initial Closing Date, the
Prospectus or any further amendment or supplement thereto made
by the Company prior to the Initial Closing Date (other than
the financial statements and related schedules and other
financial data therein, other financial data and information
included therein that is extracted from a report of Ryder
Scott
<PAGE> 19
19
Company pertaining to natural resource reserves that is
referred to or included therein, as to which such counsel need
express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and they do not
know of any amendment to the Registration Statement required
to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the
Registration Statement or required to be incorporated by
reference into the Prospectus or required to be described in
the Registration Statement or the Prospectus which are not
filed or incorporated by reference or described as required.
(d) David L. Hicks, General Counsel for the Company, shall
have furnished to you and the Selling Stockholder his written opinion,
dated the Initial Closing Date, in form and substance satisfactory to
you and the Selling Stockholder, to the effect that:
(i) The Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business,
so as to require such qualification, except to the extent that
the failure to be so qualified or be in good standing would
not have a Material Adverse Effect (such counsel being
entitled to rely in respect of the opinion in this clause upon
opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company, provided that he
shall state that he believes that both you and he are
justified in relying upon such opinions and certificates).
(ii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation,
except to the extent that the failure to be so qualified or be
in good standing would not have a Material Adverse Effect; and
all of the issued shares of capital stock of each such
subsidiary have been duly and
<PAGE> 20
20
validly authorized and issued, are fully paid and
non-assessable, and, except as disclosed in the Prospectus or
incorporated therein by reference, are owned directly or
indirectly by the Company, free and clear of all Liens (such
counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect of
matters of fact upon certificates of officers of the Company
or its subsidiaries, provided that he shall state that he
believes that both you and he are justified in relying upon
such opinions and certificates).
(iii) The sale of the Shares is not subject to
pre-emptive or other similar rights or to restrictions on
transfer (other than those imposed by the Act, the Rules and
Regulations or state securities or Blue Sky laws and other
than restrictions on transfers contained in that Stock
Ownership Agreement or other agreements to which the Selling
Stockholder may be a party or to which its property may be
subject which are not known to such counsel), and the Shares
are duly listed and admitted for trading on the NYSE.
(iv) To such counsel's knowledge after reasonable
investigation and other than as set forth in the Prospectus,
there are no legal or governmental proceedings now pending,
contemplated or threatened to which the Company or any of its
subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its
subsidiaries, would be likely, individually or in the
aggregate, to have a Material Adverse Effect, or adversely
affect the sale of the Shares.
(v) Neither the Company nor any of its
subsidiaries is in violation of its or any of their
Certificate of Incorporation or Bylaws or other organizational
documents or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument to
which it or any of them is a party or by which it or any of
them or their properties
<PAGE> 21
21
may be bound, except any violation or default that would not
have a Material Adverse Effect.
(vi) The compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions herein contemplated will not result in a breach
or violation of any of the terms or provisions of, or
constitute a default under, any contract indenture, mortgage,
deed of trust, loan agreement, note, lease or other agreement
or instrument known to such counsel to which the Company or
any of its subsidiaries is a party or by which the Company or
any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries
is subject other than any breach, default or violation which,
individually or in the aggregate, will not have a Material
Adverse Effect.
(vii) The Registration Statement is effective under
the Act and to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement or
any part thereof has been issued under the Act and no
proceedings therefor have been initiated or threatened by the
Commission.
(viii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made
by the Company prior to the Initial Closing Date (other than
the financial statements and related schedules and other
financial data therein, other financial data and information
included therein that is extracted from a report of Ryder
Scott Company pertaining to natural resource reserves that is
referred to or included therein, as to which such counsel need
express no opinion), when they became effective or were filed
with the Commission, as the case may be, conformed in all
material respects to the requirements of the Act or the
Exchange Act, as applicable and the rules and regulations of
the Commission thereunder; and such counsel does not believe
that any of such documents, when such documents became
effective or were so filed, as the case may be, contained an
untrue statement of a material fact or omitted to state a
material
<PAGE> 22
22
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when
such documents were so filed, not misleading.
(ix) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to the Initial Closing Date (other than the
financial statements and related schedules and other financial
data therein, other financial data and information included
therein that is extracted from a report of Ryder Scott Company
pertaining to natural resource reserves that is referred to or
included therein, as to which such counsel need express no
opinion) appeared on their face to be appropriately responsive
in all material respects with the requirements of the Act and
the rules and regulations thereunder; he does not believe
that, as of its effective date, the Registration Statement or
any further amendment thereto made by the Company prior to the
Initial Closing Date (other than the financial statements and
related schedules and other financial data therein, other
financial data and information included therein that is
extracted from a report of Ryder Scott Company pertaining to
natural resource reserves that is referred to or included
therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading or
that, as of its date or as of the Initial Closing Date, the
Prospectus or any further amendment or supplement thereto made
by the Company prior to the Initial Closing Date (other than
the financial statements and related schedules and other
financial data therein, other financial data and information
included therein that is extracted from a report of Ryder
Scott Company pertaining to natural resource reserves that is
referred to or included therein, as to which such counsel need
express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; and he does not
know of any amendment
<PAGE> 23
23
to the Registration Statement required to be filed or of any
contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required
to be incorporated by reference into the Prospectus or
required to be described in the Registration Statement or the
Prospectus which are not filed or incorporated by reference or
described as required.
(e) You shall have received an opinion of Ben L. Keisler,
General Counsel for the Selling Stockholder, dated the Initial Closing
Date, to the effect that:
(i) This Agreement has been duly executed and
delivered by or on behalf of the Selling Stockholder; and the
sale of the Shares to be sold by the Selling Stockholder
hereunder and the compliance by the Selling Stockholder with
all of the provisions of this Agreement and the consummation
of the transactions herein contemplated will not conflict with
or result in a breach or violation of any terms or provisions
of, or constitute a default under, any statute, indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Selling
Stockholder is subject [(after giving effect to the waiver by
the Company of the restrictions contained in the Stock
Ownership Agreement)], nor will such action result in any
violation of the provisions of the Certificate of
Incorporation by By-laws of the Selling Stockholder or any
order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over the
Selling Stockholder or the property of the Selling
Stockholder, except that such counsel need express no opinion
as to the state securities or Blue Sky laws or as to
compliance with the anti-fraud provisions of Federal or state
securities laws.
(ii) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation of the transactions contemplated by this
Agreement in connection with the Shares to be sold by the
Selling Stockholder hereunder, except such as have
<PAGE> 24
24
been obtained under the Act and such as may be required under
state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters.
(iii) To the best of such counsel's knowledge after
reasonable inquiry, the Selling Stockholder had full right,
power and authority to sell, assign, transfer and deliver, or
to cause to be sold, assigned, transferred and delivered, the
Shares to be sold by the Selling Stockholder hereunder.
(iv) The sale of the Shares is not subject to
pre-emptive or other similar rights or to restrictions on
transfer, except (a) those imposed by the Act, the Rules and
Regulations or state securities or Blue Sky laws and (b)
restrictions on transfers contained in that Stock Ownership
Agreement which have been met.
(v) The Underwriters have acquired marketable
title to such Shares, free and clear of all Liens, assuming
the Underwriters have acquired such Shares in good faith and
without notice of any adverse claim as used in the Uniform
Commercial Code in effect in the State of New York.
In rendering the foregoing opinion, such counsel may rely upon
certificates of the Selling Stockholder, the Company and the transfer
agent for the Shares in respect of certain identified matters of fact,
provided that such counsel shall state that they believe that both you
and they are justified in relying upon such certificate.
(f) You and the Selling Stockholder shall have received from
Price Waterhouse LLP, independent public accountants, two letters, the
first dated the date of this Agreement and the other dated such Initial
Closing Date, addressed to the Underwriters and the Selling
Stockholder, in a form acceptable to you.
(g) You shall have received from the President or any Senior
Vice President and a principal financial or accounting officer of the
Company a certificate, dated the Initial Closing Date, in which such
officers, shall
<PAGE> 25
25
state that they have carefully examined the Registration Statement and
the Prospectus and that, to the best of their knowledge and after
reasonable investigation, (i) as of the Effective Time, the
Registration Statement and the Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and since the Effective Time, no event has
occurred which should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus; (ii) that there has
not been, since the respective dates as of which information is given
in the Registration Statement and the Prospectus, any change or event
that would be reasonably likely to have a Material Adverse Effect, or
whether or not arising in the ordinary course of business; (iii) the
representations and warranties of the Company contained in Section 2
are true and correct with the same force and effect as though made on
and as of the Initial Closing Date and the Company has complied with
all agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to the Initial Closing Date; and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission.
(h) You shall have received certificates from officers of the
Selling Stockholder satisfactory to you in which such officers, shall
state that they have carefully examined the Registration Statement and
the Prospectus and that, to the best of their knowledge and after
reasonable investigation, (i) as of the Effective Time, the Selling
Stockholder's Information did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; and (ii) the representations and warranties of the Selling
Stockholder contained in Section 3 are true and correct with the same
force and effect as though made on the Initial Closing Date and the
Selling Stockholder has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Initial Closing Date.
<PAGE> 26
26
(i) You shall have received from Ryder Scott Company a letter,
dated as of the Initial Closing Date, to the effect that (other than
changes in prices received by the Company for the sale of its
hydrocarbon production, which changes have occurred since December 31,
1995), as of such date nothing has come to its attention which would
cause them to change any opinion expressed by it in its report dated
January 22, 1996, from which information included in the Prospectus was
extracted with respect to its estimates of proved developed and proved
undeveloped oil and gas reserves of the Company and its subsidiaries as
a whole as at December 31, 1995, and the estimated future net cash
flows from such reserves as described in the Prospectus.
(j) At the Initial Closing Date, the Company shall have
furnished to you a letter substantially in the form of Exhibit B hereto
from each officer and director of the Company addressed to you, in
which each such person agrees not to offer, sell or contract to sell,
or otherwise dispose of, directly or indirectly, or announce an
offering of, any shares of equity securities of the Company
beneficially owned by such person or any securities convertible into or
exchangeable or exercisable for any such equity securities for a period
of 90 days following the Initial Closing Date without the prior written
consent of Lazard Freres & Co. LLC, other than shares of Common Stock
disposed of as bona fide gifts.
(k) At the Initial Closing Date counsel for the Underwriters
shall have been furnished with such other documents and opinions as
they may reasonably require.
The several obligations of the Underwriters to purchase the
Additional Shares hereunder are subject to (i) the accuracy of and compliance
with the representations and warranties of the Company and the Selling
Stockholder contained herein on and as of the Option Closing Date, (ii)
satisfaction on and as of the Option Closing Date of the conditions set forth in
subsections (a) to (l) of this Section 7, inclusive (and, for purposes thereof,
each reference therein to the Initial Closing Date shall be deemed to refer to
the Option Closing Date), and (iii) the absence of circumstances on or prior to
the Option Closing Date which would permit termination of this Agreement
pursuant to Section 11.
<PAGE> 27
27
SECTION 8. Payment of Expenses. The Company will pay all
costs, expenses, fees, disbursements and taxes incident to (i) the preparation
by the Company, printing, filing and distribution of the Registration Statement
(including financial statements and exhibits), the Prospectus, each Preliminary
Prospectus and all amendments and supplements to any of them prior to or during
the period specified in Section 6(b), (ii) the printing, reproduction and
distribution of this Agreement, and all other underwriting and selling group
documents by mail, telex or other means, (iii) the registration with the
Commission of the Shares, (iv) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the several states
and the preparation, printing and distribution of Preliminary and Supplemental
Blue Sky Memoranda and Legal Investment Survey (including the reasonable fees
and disbursements of your counsel relating to the foregoing), (v) filing fees
with the National Association of Securities Dealers, Inc. in connection with the
offering, (vi) the fees and expenses of the Registrar and Transfer Agent for the
Shares and its counsel and (viii) the performance by the Company of its other
obligations under this Agreement. Fees and expenses of counsel to the Selling
Stockholder and all other expenses of the Selling Stockholder in connection with
the foregoing and the transactions contemplated herein shall be paid by the
Company to the extent set forth in Section 3.7 of the Stock Ownership Agreement.
If the sale of the Shares provided for herein is not
consummated because of the failure to satisfy any condition to the obligations
of the Underwriters set forth in Section 7 (other than Sections 7(e) or 7(h))
hereof, because of any termination pursuant to Section 11 hereof or because of
any refusal, failure or inability of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by the
Underwriters, the Company shall reimburse you for all of your reasonable
out-of-pocket expenses incurred in connection with marketing and preparing for
the offering of the Shares, including the reasonable fees and disbursements of
counsel for the Underwriters.
If the sale of the Shares provided for herein is not
consummated because of the failure to satisfy any condition to the obligations
of the Selling Stockholders set forth in Section 7(e) or 7(h) hereof or because
of any refusal, failure or inability of the Selling Stockholder to
<PAGE> 28
28
perform any agreement herein or comply with any provision hereof other than by
reason of a default by the Underwriters, the Selling Stockholder shall reimburse
you for all of your reasonable out-of-pocket expenses incurred in connection
with marketing and preparing for the offering of the Shares, including the
reasonable fees and disbursements of counsel for the Underwriters.
SECTION 9. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each of
the Underwriters and the Selling Stockholder and each person, if any,
who controls any such Underwriter or the Selling Stockholder within the
meaning of either Section 15 of the Act or Section 20 of the Exchange
Act, from and against any and all losses, claims, damages and
liabilities (or actions in respect thereof) (including, without
limiting the foregoing, the reasonable legal and other expenses
incurred in connection with investigating or defending or preparing to
defend or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action, as such expenses are
incurred) arising out of or based on any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or the Prospectus or any Preliminary Prospectus, or caused by
any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, except the Company shall not be liable to any
Underwriter under the indemnity agreement in this subsection (a) with
respect to any Preliminary Prospectus to the extent that any such loss,
claim, damage or liability of such Underwriter results solely from the
fact that such Underwriter sold Shares to a person as to whom there was
not sent or given, at or prior to the written confirmation of such
sale, a copy of the Prospectus or of the Prospectus as then amended or
supplemented in any case where such delivery is required by the Act if
the loss, claim, damage or liability of such Underwriter results from
an untrue statement or omission of a material fact contained in the
Preliminary Prospectus which was corrected in the Prospectus or in the
Prospectus as then amended or supplemented and (b) insofar as such
losses, claims, damages, liabilities or expenses are caused by any such
untrue statement or omission or alleged untrue
<PAGE> 29
29
statement or omission based upon (x) the following information
furnished to the Company by you in (i) the last paragraph of text on
the cover page of the Prospectus concerning the terms of the offering
by the Underwriters, (ii) the first paragraph on page 2 of the
Prospectus concerning stabilization and over-allotment by the
Underwriters and (iii) the first two paragraphs and the last paragraph
of text under the caption "Underwriting" in the Prospectus (all of the
foregoing the "Underwriters' Information") or (y) the information in
the section captioned "Selling Stockholder" (the "Selling Stockholder's
Information"). This indemnity agreement will be in addition to any
liability which the Company may otherwise have to the persons referred
to above in this Section 9(a).
(b) The Selling Stockholder agrees to indemnify and hold
harmless each of the Underwriters and each person, if any, who controls
any such Underwriter within the meaning of either Section 15 of the Act
or Section 20 of the Exchange Act and the Company, its directors, its
officers who sign the Registration Statement and each person, if any,
who controls the Company within the meaning of either such Section,
from and against any and all losses, claims, damages and liabilities
(or actions in respect thereof) (including, without limiting the
foregoing, the reasonable legal and other expenses incurred in
connection with investigating or defending or preparing to defend or
appearing as a third party witness in connection with any such loss,
claim, damage liability or action, as such expenses are incurred)
caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus
or any Preliminary Prospectus or caused by any omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only in
each case with respect to the Selling Stockholder Information, except
the Selling Stockholder shall not be liable to any Underwriter under
the indemnity agreement in this subsection (b) with respect to any
Preliminary Prospectus to the extent that any such loss, claim, damage
or liability of such Underwriter results solely from the fact that such
Underwriter sold Shares to a person as to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of
the Prospectus or
<PAGE> 30
30
of the Prospectus as then amended or supplemented in any case where
such delivery is required by the Act if the loss, claim, damage or
liability of such Underwriter results from an untrue statement or
omission of a material fact contained in the Preliminary Prospectus
which was corrected in the Prospectus or in the Prospectus as then
amended or supplemented. This indemnity agreement will be in addition
to any liability which the Selling Stockholder may otherwise have to
the persons referred to above in this Section 9(b).
(c) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Selling Stockholder, the
directors of the Company, the officers of the Company who sign the
Registration Statement and each person, if any, who controls the
Company or the Selling Stockholder within the meaning of either Section
15 of the Act or Section 20 of the Exchange Act from and against any
and all losses, claims, damages and liabilities (or actions in respect
thereof) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or the
Prospectus or any Preliminary Prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, but
only with reference to the Underwriters' Information. This indemnity
agreement will be in addition to any liability which any Underwriter
may otherwise have to the persons referred to above in this Section
9(c).
(d) In case any action or proceeding (including any
governmental or regulatory investigation or proceeding) shall be
instituted involving any person in respect of which indemnity may be
sought pursuant to any of the three preceding paragraphs, such person
(hereinafter called the indemnified party) shall promptly notify the
person against whom such indemnity may be sought (hereinafter called
the indemnifying party) in writing; however, the omission to so notify
the indemnifying party shall relieve the indemnifying party from
liability under the three preceding paragraphs only to the extent
prejudiced thereby. The indemnifying party, upon request of the
indemnified party, shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the
<PAGE> 31
31
indemnified party to represent the indemnified party and any others
that the indemnifying party may designate and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
action or proceeding any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and, based upon the advice
of counsel to the indemnified party, representation of both parties by
the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the
indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (a) the
reasonable fees and expenses of more than one separate firm (in
addition to any local counsel) for the Underwriters and all persons, if
any, who control any such Underwriter within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act, (b) the
reasonable fees and expenses of more than one separate firm (in
addition to any local counsel) for the Company, its directors, its
officers who sign the Registration Statement and each person, if any,
who controls the Company within the meaning of either such Section and
(c) the reasonable fees and expenses of more than one separate firm (in
addition to any local counsel) for the Selling Stockholder and all
persons, if any, who control the Selling Stockholder within the meaning
of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm
for the Underwriters and such control persons of such Underwriters,
such firm shall be designated in writing by Lazard Freres & Co. LLC. In
the case of any such separate firm for the Company, and such directors,
officers and control persons of the Company, such firm shall be
designated in writing by the Company. In the case of any such separate
firm for the Selling Stockholder and such controlling persons of the
Selling Stockholder, such firm shall be designated in writing by the
Selling Stockholder.
<PAGE> 32
32
(e) If the indemnification provided for in this Section 9 is
insufficient or unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and expenses (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company
and the Selling Stockholder on the one hand and the Underwriters on the
other from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law or if
the indemnified party shall have failed to the prejudice of the
indemnifying party to give the notice required by Section 9(d), in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the
Company and the Selling Stockholder on the one hand and the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities
or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the other shall be
deemed to be in the same proportions as the total net proceeds from the
offering (before deducting expenses) received by the Selling
Stockholder bear to the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault of the Company and
the Selling Stockholder on the one hand and the Underwriters on the
other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Stockholder or by
the Underwriters and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. As between the Company and the Selling Stockholder,
contribution payments under this subsection (e) in every circumstance
shall be in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Selling Stockholder on
<PAGE> 33
33
the other in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof).
(f) The Company, the Selling Stockholder and each of the
Underwriters agree that it would not be just and equitable if
contribution pursuant to Section 9(e) were determined by pro rata
allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages or liabilities (or actions
in respect thereof) referred to in the immediately preceding paragraph
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
Section 9(e), in no event shall any of the Underwriters be required to
contribute any amount in excess of the amount by which the total price
at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(g) The Company and the Selling Stockholder agree that any
claims that the Company may have against the Selling Stockholder and
any claims that the Selling Stockholder may have against the Company in
each case arising out of or based on any untrue statement or alleged
untrue statement in the Registration Statement or the Prospectus or any
Preliminary Prospectus, or caused by any omission or alleged omission
to state therein a material fact, or otherwise arising out of or based
upon the sale of Shares (each a "Cross-Claim"), shall be subordinated
in right of payment as set forth below to the prior indefeasible
payment in full in cash of any and all claims any Underwriters may have
against the Selling Stockholder or the Company, as the case may be,
arising out of or based on any untrue statement or
<PAGE> 34
34
alleged untrue statement in the Registration Statement or the
Prospectus or any Preliminary Prospectus, or caused by any omission or
alleged omission to state therein a material fact, or otherwise arising
out of or based upon the sale of Shares under this Agreement (each an
"Underwriter Claim"). The Company and the Selling Stockholder agree
that they will provide notice to Lazard Freres & Co. LLC within three
business days of the making by them of any Cross-Claim, and that such
notice shall provide reasonable detail as to the factual and legal
basis for the Cross-Claim and the amount claimed. Thereafter, no amount
may be paid by the Company or the Selling Stockholder in respect of any
such Cross-Claim until the date that is 45 days after the receipt by
Lazard Freres & Co. LLC of the foregoing notice; provided, however,
that if Lazard Freres & Co. LLC shall have prior to such 45th day
notified the Company or the Selling Stockholder, as the case may be,
who made such Cross-Claim or against whom such Cross-Claim was made of
any Underwriter Claim that any Underwriter is making or may make
against it, then no amount may be paid by the Company or the Selling
Stockholder with respect to such Cross-Claim without the prior written
approval of Lazard Freres & Co. LLC until the prior indefeasible
payment in full in cash of each such Underwriter Claim or until it has
been established in a final adjudication by a court of competent
jurisdiction that such Underwriter is not entitled to receive any
payment from the Company or the Selling Stockholder in respect of such
Underwriter Claim. If a payment or distribution is made to the Company
or the Selling Stockholder that because of this Section 9(g) should not
have been made to it, the Company or the Selling Stockholder receiving
such payment or distribution shall hold it in trust for the
Underwriters and pay it over to it or its designee as its interests
shall appear.
(h) The Company and the Selling Stockholder agree with the
Underwriters that any indemnity provision of any agreement between the
Company on the one hand and the Selling Stockholder on the other shall
not be deemed to modify or supersede any provision of this Section 9.
SECTION 10. Representations, Warranties and Agreements to
Survive Delivery. All representations,
<PAGE> 35
35
warranties and agreements contained in the Agreement, or contained in
certificates of officers of the Company or the Selling Stockholder submitted
pursuant hereto, including indemnity and contribution agreements, shall remain
operative and in full force and effect, regardless of any termination of this
Agreement, or any investigation, or any statement as to the results thereof,
made by or on behalf of any Underwriter or any person controlling such
Underwriter or by or on behalf of the Company, its officers or directors or
controlling persons, or by the Selling Stockholder or any person controlling the
Selling Stockholder, and shall survive acceptance of and payment for Shares
hereunder.
SECTION 11. Termination. This Agreement may be terminated for
any reason at any time prior to the delivery of and payment for the Shares on
the Initial Closing Date by the Underwriters upon the giving of written notice
by Lazard Freres & Co. LLC of such termination to the Company, if prior to such
time (i) there has been, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (A) any material adverse
change in the condition, financial or otherwise, earnings, business or prospects
of the Company and its subsidiaries (considered as a whole, whether or not
arising in the ordinary course of business or (ii) there has occurred any
outbreak or escalation of hostilities or other calamity or crisis or material
change in existing national or international financial, political, economic or
securities market conditions, the effect of which is such as to make it, in the
judgement Lazard Freres & Co. LLC, impracticable or inadvisable to market the
Shares in the manner contemplated in the Prospectus or enforce contracts for the
sale of the Shares, or (iii) trading in the Common Stock of the Company has been
suspended by the Commission or a national securities exchange, or trading
generally on either the American Stock Exchange or the New York Stock Exchange
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of said
exchanges or by order of the Commission or any other governmental authority, or
a banking moratorium has been declared by either Federal or New York
authorities. In the event of any such termination, the provisions of Section 8,
the indemnity agreement and contribution provisions set forth in Section 9, and
the provisions of Sections 10 and 15 shall remain in effect.
SECTION 12. Notices. All notices and other communications
hereunder shall be in writing and shall be
<PAGE> 36
36
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to you c/o
Lazard Freres & Co. LLC, 30 Rockefeller Plaza, New York, NY 10020, Attention:
Syndicate Department; notices to the Company shall be directed to it at Sante Fe
Energy Resources, Inc., 1616 South Voss Road, 10th Floor, Houston, TX 77057,
facsimile transmission no. (713) 507-5341, Attention: David L. Hicks with a copy
to the Treasurer; and notices to the Selling Stockholder shall be directed to
Minorco (U.S.A.) Inc., 30 Rockefeller Plaza, New York, NY 10020, Attention:
Ben L. Keisler.
SECTION 14. Parties. This Agreement shall inure to the benefit
of and be binding upon the Company, its directors and officers who signed the
Registration Statement, the Underwriters, the Selling Stockholder, any
controlling persons referred to herein and their respective successors and
assigns. Nothing expressed or mentioned in this Agreement is intended or shall
be construed to give any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. No purchaser of Shares from the Underwriter shall be
deemed to be a successor by reason merely of such purchase.
SECTION 15. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the law of the State of New York.
SECTION 16. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
<PAGE> 37
37
If the foregoing is in accordance with your understanding of
our agreement, please sign this Agreement and return to us counterparts hereof.
Very truly yours,
SANTA FE ENERGY RESOURCES,
INC.,
By
-------------------------
Name:
Title:
MINORCO (U.S.A.) INC.,
By
-------------------------
Name:
Title:
Confirmed and Accepted, as of the
date first above written:
LAZARD FRERES & CO. LLC
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
By:
--------------------------------
Lazard Freres & Co. LLC
By:
--------------------------------
Name:
Title:
Acting on behalf of themselves as
Representatives of the several Underwriters
named in Schedule I hereto
<PAGE> 38
Schedule I
<TABLE>
<CAPTION>
Number of Shares
Underwriters To be Purchased
- ------------ ---------------
<S> <C>
Lazard Freres & Co. LLC
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc
=========
Total 7,920,297
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 23, 1996 appearing on Page 31 of Santa Fe Energy Resources,
Inc.'s Annual Report on Form 10-K for the year ended December 31, 1995. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Houston, Texas
February 29, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS
We hereby consent to the incorporation by reference in the Prospectus
forming a part of this Registration Statement on Form S-3 of references to our
firm appearing in Santa Fe Energy Resources, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1995. We also consent to the reference to us
under the headings "Summary Oil and Gas Reserve Information" and "Experts" in
such Prospectus.
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
February 29, 1996
