<PAGE> 1
Filed pursuant to Rule No. 424(b)(5)
Registration No. 333-78265
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 4, 1999)
$125,000,000
SANTA FE SNYDER CORPORATION
[Santa Fe Logo] 8.05% SENIOR NOTES DUE JUNE 15, 2004
------------------
The notes will bear interest at the rate of 8.05% per year. Interest on the
notes is payable on June 15 and December 15 of each year, beginning on December
15, 1999. The notes will mature on June 15, 2004. Santa Fe Snyder may redeem
some or all of the notes at any time. The redemption prices are discussed under
the caption "Description of Notes -- Optional Redemption" on page S-19.
The notes will be senior obligations of Santa Fe Snyder and will rank
equally with all of Santa Fe Snyder's other unsecured senior indebtedness.
------------------
This investment involves risks. See "Risk Factors" beginning on page S-12.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the related prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
------------------
<TABLE>
<CAPTION>
PER SENIOR
NOTE TOTAL
---------- ------------
<S> <C> <C>
Public Offering Price 98.758% $123,447,500
Underwriting Discount 1.500% $ 1,875,000
Proceeds to Santa Fe Snyder (before expenses) 97.258% $121,572,500
</TABLE>
Interest on the notes will accrue from June 15, 1999 to date of delivery.
------------------
The underwriters are offering the notes subject to various conditions. The
underwriters expect to deliver the notes to purchasers on or about June 15,
1999.
------------------
JOINT LEAD/JOINT BOOK
SALOMON SMITH BARNEY DONALDSON, LUFKIN & JENRETTE
CO-MANAGERS
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
ABN AMRO INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
CREDIT LYONNAIS SECURITIES
June 11, 1999
<PAGE> 2
IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
This document is in two parts. The first part is this prospectus
supplement, which describes the terms of the notes. The second part is the
accompanying prospectus, which gives more general information, some of which may
not apply to the notes. Generally, the term "prospectus" refers to both parts
combined. In this prospectus supplement, "Santa Fe Snyder," "we," "us," and
"our" refer to Santa Fe Snyder Corporation and its subsidiaries.
IF THE DESCRIPTION OF THE NOTES VARIES BETWEEN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION IN THIS
PROSPECTUS SUPPLEMENT.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. SANTA
FE SNYDER HAS NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
SANTA FE SNYDER IS NOT MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE
THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED
BY THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS SUPPLEMENT.
------------------
This prospectus includes cross references to captions where you can find
further related discussions. The following table of contents tells you where to
find these captions.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Where You Can Find Additional Information................... ii
Prospectus Supplement Summary............................... S-1
Risk Factors................................................ S-12
Use of Proceeds............................................. S-14
Capitalization.............................................. S-14
Pro Forma Ratio of Earnings to Fixed Charges................ S-15
Management.................................................. S-16
Description of Notes........................................ S-19
Certain United States Federal Tax Consequences for
Non-United States Holders................................. S-25
Description of Certain Indebtedness......................... S-27
Underwriting................................................ S-28
Experts..................................................... S-29
Legal Matters............................................... S-30
Glossary of Commonly Used Oil and Gas Terms................. A-1
PROSPECTUS
About This Prospectus....................................... 1
Where You Can Find More Information......................... 1
Forward-Looking Statements.................................. 2
Santa Fe Snyder Corporation................................. 2
The Trusts.................................................. 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 4
Plan of Distribution........................................ 4
Description of Debt Securities.............................. 5
Description of Equity Securities............................ 12
Description of Trust Preferred Securities................... 16
Description of Trust Preferred Securities Guarantees........ 17
Relationship Among the Trust Preferred Securities, the
Subordinated Debt Securities and the Guarantees........... 20
Legal Opinions.............................................. 21
Experts..................................................... 21
</TABLE>
i
<PAGE> 3
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. Our SEC filings are available to the public over the Internet or at the
SEC's web site at http://www.sec.gov. You may also read and copy any document we
file at the SEC's public reference rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus supplement, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934:
- Snyder Oil Corporation's Annual Report on Form 10-K/A as amended by
Amendment No. 2 on April 30, 1999 for the fiscal year ended December 31,
1998;
- Santa Fe Energy Resources, Inc.'s Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1998;
- Santa Fe Energy Resources, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999;
- Santa Fe Snyder Corporation's Current Report on Form 8-K filed on May 6,
1999 announcing the consummation of the merger of Snyder Oil Corporation
with and into Santa Fe Energy Resources, Inc.;
- Santa Fe Snyder's Current Report on Form 8-K/A filed on May 25, 1999
containing pro forma financial information giving effect to the merger;
and
- the descriptions of our common stock and preferred stock contained in our
registration statements on Form S-2 (File No. 33-32831) filed on February
21, 1990 and on Form 8-A filed February 28, 1997, as amended by Form
8-A/A filed on May 11, 1999.
You may request a copy of these filings, at no cost, by writing or calling
us at the following address:
Kathy E. Hager
Corporate Communications
Santa Fe Snyder Corporation
1616 S. Voss Road
Houston, Texas 77057
(713) 507-5315
ii
<PAGE> 4
PROSPECTUS SUPPLEMENT SUMMARY
This summary highlights information appearing in other sections of this
prospectus supplement or the accompanying prospectus. It may not contain all of
the information that is important to you. You should read the entire prospectus
supplement and the accompanying prospectus carefully, including the "Risk
Factors" section and the financial statements and the footnotes to those
statements incorporated by reference in this document. Unless otherwise
specified, all production, reserve and operating data contained in this
prospectus supplement summary are presented on a pro forma combined basis.
SANTA FE SNYDER CORPORATION
GENERAL
Santa Fe Snyder Corporation is a large independent oil and gas company with
operations in the United States, Southeast Asia, South America and West Africa.
Santa Fe Snyder was formed by the merger on May 5, 1999 of Snyder Oil
Corporation into Santa Fe Energy Resources, Inc. We are among the 15 largest
independent exploration and production companies in the United States based on
reported proved reserves. At year end 1998, we had proved reserves of 315
million barrels of oil equivalent (MMBOE) and during 1998 we produced at an
average rate of 101 thousand barrels of oil equivalent (MBOE) per day.
We have a balanced asset base with significant exploitation inventory and
exploration potential. Approximately 70% of our March 31, 1999 production is
derived from our domestic properties and 55% is composed of natural gas. Our
reserves are geographically diversified, with domestic reserves comprising about
65% of our 1998 year-end proved reserves. This asset diversification is key in
reducing our overall risk profile of current production by diversifying revenue
and cash flow sources. Furthermore, 95% of our natural gas reserves are
domestic, which is the most developed natural gas market in the world.
Our domestic properties are located in three core areas in the United
States, including the Rocky Mountains, the Permian Basin region in West Texas
and Southeastern New Mexico, and in the Gulf of Mexico. Our international
operations are located in five core areas, including Indonesia, Argentina,
Gabon, Brazil and China, with other interests in the Cote d'Ivoire, Malaysia,
Thailand and Ghana. We have recently placed discoveries in Indonesia and Gabon
on production. We also conduct exploration activities in each of our core areas,
particularly Southeast Asia and West Africa, the Gulf of Mexico and Southeastern
New Mexico.
OUR CORE PROPERTIES
The following table sets forth the average daily production rate during
1998 and estimated net proved reserves as of December 31, 1998 for our core
domestic and international properties.
<TABLE>
<CAPTION>
ESTIMATED NET
1998 AVERAGE DAILY PROVED RESERVES
PRODUCTION RATE AT DECEMBER 31, 1998
------------------ --------------------
(MBOE) (MMBOE)
<S> <C> <C>
Core Domestic Areas:
Permian Basin........................................... 29.1 81.9
Rocky Mountains......................................... 15.0 78.0
Gulf of Mexico.......................................... 33.3 42.1
Core International Areas:
Indonesia............................................... 12.3 60.8
Argentina............................................... 9.7 25.7
Gabon................................................... 1.8 12.8
Brazil.................................................. -- 13.9
China................................................... -- --
----- -----
Total:.......................................... 101.2 315.2
</TABLE>
Production in Brazil is expected to commence in the year 2000 and
production in China is expected to commence in the year 2001.
S-1
<PAGE> 5
Domestic Operations -- The majority of our current domestic proved reserves
and production is located in the Rocky Mountains, the Gulf of Mexico and the
Permian Basin. Our domestic production in 1998 totaled 77.4 MBOE per day, or 76%
of our total production.
- Rocky Mountains: The Rocky Mountain region represents 39% of our domestic
proved reserves. These estimated reserves are 78% natural gas. We drilled
61 Rocky Mountain wells (45.2 net) in 1998, of which 59 were development
and 2 were exploratory, continuing our commitment to long-term growth in
the region. Our 1998 capital program in the Rocky Mountains was directed
primarily to our natural gas development projects in the Washakie and
Wind River Basins.
- Permian Basin: Our West Texas properties consist primarily of long-lived
enhanced oil recovery properties in mature fields where we are engaged in
development activities through the use of secondary waterfloods and
tertiary CO(2) floods. Our Southeastern New Mexico properties consist of
shorter life oil and gas properties in the primary phase of production.
Our 1998 production in the Permian Basin consisted of approximately 39%
gas.
- Gulf of Mexico: Our offshore properties are primarily located in the
shallow waters of the Gulf of Mexico, and are concentrated in the Main
Pass area and the South Timbalier complex. In connection with our recent
merger we embarked on a strategy to upgrade our combined Gulf of Mexico
assets. We drilled a total of 33 wells (10.9 net) in this region during
1998.
International Operations -- Our 1998 international production reflected an
86% increase on a BOE basis from our average production rate in l997. Crude oil
and liquids comprised approximately 95% of our international proved reserves at
year-end l998. We participated in 61 gross (19.5 net) development wells in l998,
of which 59 (18.9 net) were successful. Our international development
expenditures in l998 were approximately $70 million. We expect these
expenditures to be slightly higher in l999, primarily due to:
- the continuation of development projects on our Jabung and Tuban Blocks
in Indonesia and on our Kowe Block in Gabon;
- the commencement of drilling in China of an appraisal well associated
with our 1998 discovery; and
- the commencement of a new development project offshore Brazil consisting
of six separate fields previously discovered by the Brazilian oil company
Petrobras.
The following is a brief description of our core international areas:
- Indonesia: In l998, our Indonesian production was derived from four
producing concessions. We sell our Indonesian oil production for U.S.
dollars to markets outside Indonesia, except for our production from the
Jabung Block, which we sell to the Indonesian state oil company,
Pertamina.
- Argentina: Our Argentine oil production comes from our 22% working
interest in the El Tordillo field in the San Jorge Basin and our 100%
working interest in the Tupungato field in the Cuyo Basin. Our natural
gas production comes from our 20% working interest in the Sierra Chata
field in the Neuquen Basin.
- Gabon: We commenced oil production in January 1998 from the Tchatamba
Marine field in the offshore Kowe Block. We own an 18.75% participatory
interest, net of the Gabonese government's 25% interest, in the
exploitation license area covering the Tchatamba Marine field, and a 25%
participatory interest in the remainder of the block's exploration area.
- China: Our first operated well in offshore China, the Ursa Prospect
PY4-2-1 on Block 15/34, was successfully completed as a discovery in
April 1998. In September and October l998, we acquired a 1,600 square
mile 3-D survey across Block 15/34. We own a 50% working interest in
Block 15/34.
- Brazil: In December l998, we entered into a contract with Petrobras to
develop the Carauna Block in the Potiguar Basin offshore Brazil. We
operate this block and own a 51.4% working interest.
S-2
<PAGE> 6
During 1999 we plan to re-enter several wells previously drilled by Petrobras.
The drilling of two appraisal wells is also budgeted for 1999.
BUSINESS STRATEGY AND COMPETITIVE STRENGTHS
We have a superior record of production and reserve growth both in the
United States and internationally with a large exploitation inventory and a
substantial portfolio of exploration prospects to support future growth. Our
capital structure provides cost-effective financing capacity and flexibility for
funding continued growth in North America and international areas. We plan to
continue our disciplined growth through the following strategy:
- grow our reserves and production through the drill bit, emphasizing
international growth, with targeted growth in international production
expected to average 20% over the five years ending December 31, 2003;
- pursue selective acquisitions of geographically concentrated assets with
significant exploitation potential in a cost effective manner;
- continue to improve our financial flexibility; and
- continue to maintain a low cost structure.
We plan to implement this strategy by emphasizing the following key
competitive strengths:
- Large inventory of development and exploration
opportunities. Domestically, we have identified 170 onshore development
drilling locations in the Rocky Mountains and Permian Basin to be drilled
over the next 24 months and we plan to drill 20 development and
exploration wells in the Gulf of Mexico during 1999. We are continuing
the development of our international discoveries in Indonesia, China,
Gabon and Argentina and the exploitation of our properties in Brazil. In
addition, we have exploration prospects in China, Thailand, Malaysia,
Ghana and Brazil. Internationally, our strategy emphasizes geological
discipline, multiple targets, moderate risk and timely development.
- Financial strength and flexibility. Our capitalization allows us to
access the capital necessary to cost-effectively fund the development and
exploration of our projects. We plan to:
-- continue to improve our capital structure;
-- minimize our cost of funding;
-- maximize our financial and operating flexibility; and
-- achieve credit ratings consistent with our financial strength.
- Low cost structure. We believe that our finding and development costs,
which averaged $4.94 per barrel during 1998, are among the lowest in the
industry. We plan to focus our cost reduction efforts on reducing lease
operating expenses, general and administrative expenses and interest
expense and divesting higher cost properties.
- Balanced asset base. Our reserve base is 59% oil and 41% natural gas.
Sixty-four percent of our proved reserves are domestic and 36% are
international. Our domestic core areas of operation are the Rocky
Mountains, Gulf of Mexico and the Permian Basin and our international
core areas are South America, West Africa, China and Southeast Asia.
RECENT DEVELOPMENTS
We were formed on May 5, 1999, by the merger of Snyder into Santa Fe. We
expect to realize annual cost savings of $20 million by the fourth quarter of
1999 from rationalizing our combined operations. As of May 31, 1999, we had
already eliminated duplicate corporate overhead and operating staff equal to 18%
of the combined work force, which accounts for a majority of the expected annual
cost savings.
S-3
<PAGE> 7
In early May, we replaced our borrowing base credit facility with a new
corporate $500 million global credit facility. The facility is structured with a
$350 million five-year tranche and a $150 million 364-day tranche. This new
credit facility is unsecured, but amounts outstanding are guaranteed by some of
our subsidiaries. Interest is calculated, at our option, by using either the
London Interbank Offered Rate (LIBOR) or Chase's prime rate, and in each case
adding a margin that depends on our credit rating and our ratio of total debt to
EBITDAX, or earnings before interest, taxes, depreciation, depletion,
amortization, exploration charges and non-cash impairments. We have the option
to increase the amount available under the credit facility to $600 million by
adding additional lenders. For a further description of our new corporate credit
facility, see "Description of Certain Indebtedness -- Credit Facility."
On May 4, 1999 Santa Fe called for redemption all of the $100 million
principal amount of its 11% senior subordinated debentures due 2004. The
redemption date is June 30, 1999. A portion of the proceeds of this offering
will be used to pay the redemption price of the debentures. See "Use of
Proceeds."
THE OFFERING
Securities Offered......... $125 million principal amount senior notes due
2004.
Maturity Date.............. June 15, 2004.
Interest Payment Dates..... June 15 and December 15, commencing December 15,
1999.
Optional Redemption........ We may redeem any or all of the notes at any time
in principal amounts of $1,000 or any integral
multiple thereof. We will pay a redemption price
which is described under the heading "Description
of Notes -- Optional Redemption" beginning on page
S-19. We will also pay accrued and unpaid interest
to the redemption date.
Ranking.................... The notes:
- are unsecured;
- rank equally with all of our existing and future
senior debt;
- are senior to any existing and future
subordinated debt; and
- are effectively junior to all existing and future
secured indebtedness and the indebtedness and
other liabilities of our subsidiaries.
Covenants.................. We will issue the notes under an indenture
containing certain covenants for your benefit.
These covenants restrict our ability, with certain
exceptions, to:
- incur indebtedness secured by liens;
- enter into sale and leaseback transactions; and
- consolidate, merge or dispose of assets.
Use of Proceeds............ The net proceeds will be used to (1) pay the
approximately $104.1 million redemption price of
our 11% senior subordinated debentures that have
been called for redemption and (2) to reduce
borrowings under our bank credit facility, as more
fully described under the heading "Use of
Proceeds."
S-4
<PAGE> 8
Absence of Public Markets
for the Notes.............. There is no existing market for the notes, and we
cannot guarantee that a market for the notes will
develop. We cannot provide any assurance about:
- the liquidity of any markets that may develop for
the notes;
- your ability to sell your notes; and
- the prices at which you will be able to sell your
notes.
Any future sales price for the notes will depend on
many factors, including:
- prevailing interest rates;
- our operating results;
- ratings of the notes; and
- the market for similar securities.
The underwriters have advised us that they
currently intend to make a market in the notes.
They have, however, no obligation to make a market
in the notes after completion of the offering and
may discontinue their market making activities at
any time without notice. In addition, we do not
intend to apply for listing of the notes on any
securities exchange or for quotation of the notes
in any automated dealer quotation system.
Form and Denominations..... The notes will be issued in fully registered form
only in denominations of $1,000 and in integral
multiples of $1,000 in excess thereof.
DTC Eligibility............ The notes will be represented by a Global
Certificate deposited with, or on behalf of, DTC or
its nominee. See "Description of Notes --
Book-Entry, Delivery and Form" beginning on page
S-20.
Same-Day Settlement........ Any trades of beneficial interests in the notes
will occur in DTC's Same-Day Funds Settlement
System, and will therefore be settled in
immediately available funds.
Trustee, Registrar and
Paying Agent............... The Bank of New York.
S-5
<PAGE> 9
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following table sets forth summary unaudited pro forma combined
financial data that is presented to give effect to the merger on May 5, 1999 of
Snyder with and into Santa Fe. The information was prepared based on the
following assumptions:
- The merger has been accounted for as a purchase business combination
under generally accepted accounting principles.
- The income statement data is presented as if the merger had been
consummated on January 1, 1998.
- The balance sheet data is presented as if the merger had been consummated
on March 31, 1999.
You should consider the following:
- The unaudited pro forma combined financial data is not necessarily
indicative of the results of operations or the financial position that
would have occurred had the merger been consummated on January 1, 1998,
nor is it necessarily indicative of future results of operations or
financial position.
- The unaudited pro forma combined financial data excludes the cost savings
expected to be realized through the consolidation of the corporate
headquarters of the two companies and the elimination of duplicate staff
and expenses.
The unaudited pro forma combined financial statements should be read
together with the pro forma financial information giving effect to the merger
incorporated by reference in this document from our Current Report on Form 8-K/A
filed on May 25, 1999 and the historical consolidated financial statements of
Santa Fe and Snyder incorporated by reference in this document and the unaudited
pro forma condensed combined financial statements incorporated by reference in
this document. See "Where You Can Find Additional Information."
S-6
<PAGE> 10
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, ---------------------
1998 1999 1998
------------ ------------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
INCOME STATEMENT DATA
Revenues............................................ $ 429.0 $ 98.8 $102.5
Production and operating expenses................... 146.8 35.8 32.3
Exploration expenses................................ 119.4 23.1 15.4
General and administrative.......................... 36.1 9.7 8.6
Depreciation, depletion, and amortization........... 215.9 51.9 45.6
Impairments......................................... 93.3 -- --
Income (loss) from operations....................... (204.5) (26.4) (5.3)
Interest expense, net............................... 30.5 9.9 6.0
Net income (loss)................................... (140.2) (23.8) (2.2)
BALANCE SHEET DATA (AT END OF PERIOD)
Properties and equipment, net....................... $1,452.6
Total assets........................................ 1,638.8
Long-term debt...................................... 567.8
Stockholders' equity................................ 763.1
OTHER FINANCIAL DATA
EBITDAX(a).......................................... $ 222.3 $ 48.3 $ 55.7
Ratio of EBITDAX to gross interest expense
(including capitalized interest).................. 5.9 4.3 7.2
Ratio of earnings to fixed charges(b)............... (c) (c) (c)
</TABLE>
- ---------------
(a) Earnings before interest, taxes, depreciation, depletion, amortization,
exploration expenses, non-cash impairments and other non-cash gains or
losses. EBITDAX should not be considered in isolation or as a substitute
for net income, cash flow or other income or cash flow data prepared in
accordance with generally accepted accounting principles or as a measure of
our profitability or liquidity.
(b) Fixed charges consist of interest expense, amounts capitalized and
amortization of debt costs.
(c) Earnings during the year ended December 31, 1998 and the three months ended
March 31, 1999 and 1998 were insufficient to cover fixed charges by $231.1
million, $36.6 million and $9.2 million, respectively.
S-7
<PAGE> 11
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA
SANTA FE ENERGY RESOURCES, INC.
The following table sets forth selected historical financial information of
Santa Fe Energy Resources for the five years ended December 31, 1998 and for the
three months ended March 31, 1999 and 1998. This financial information was
derived from the consolidated financial statements of Santa Fe. This data should
be read in conjunction with the consolidated financial statements of Santa Fe
and Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the reports incorporated by reference in this document.
On July 25, 1997, Santa Fe Energy Resources completed the spin-off of
Monterey Resources, Inc., which comprised substantially all of the assets and
properties of Santa Fe's western division. The consolidated financial statements
for the year ended December 31, 1997 include seven months of Monterey's results.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------- ---------------
1998 1997 1996 1995 1994 1999 1998
------- ------ -------- -------- -------- ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues.............................. $ 291.0 $514.7 $ 583.3 $ 449.4 $ 404.2 $ 68.2 $ 68.8
Production and operating expenses..... 112.5 180.9 209.2 162.3 162.8 28.3 25.3
Exploration expenses.................. 71.1 49.1 34.5 23.4 20.4 11.2 12.2
General and administrative............ 19.7 28.1 30.1 26.9 27.3 5.4 4.4
Depreciation, depletion and
amortization........................ 136.1 127.8 148.2 133.2 121.3 31.9 28.1
Impairments........................... 87.8 -- 57.4 30.2 -- -- --
Income (loss) from operations......... (154.0) 110.8 89.5 53.9 48.2 (12.2) (5.3)
Interest expense, net................. 14.8 17.1 32.4 26.7 23.9 5.5 2.1
Income (loss) before extraordinary
item................................ (98.7) 54.7 42.4 26.6 17.1 (12.1) (0.3)
Extraordinary item.................... -- -- (6.0) -- -- -- --
Net income (loss)..................... (98.7) 54.7 36.4 26.6 17.1 (12.1) (0.3)
Earnings (loss) attributable to common
shares.............................. $ (98.7) $ 42.7 $ (10.8) $ 11.8 $ $5.4 $(12.1) $ (0.3)
Basic and diluted per share data
Before extraordinary item........... $ (0.96) $ 0.43 $ (0.05) $ 0.13 $ 0.06 $(0.12) --
Extraordinary item-- debt
extinguishment.................... -- -- (0.07) -- -- -- --
Per common share.................... $ (0.96) $ 0.43 $ (0.12) $ 0.13 $ 0.06 $(0.12) --
Weighted average number of shares
outstanding......................... 102.6 98.6 90.6 90.2 89.9 102.2 102.7
STATEMENT OF CASH FLOWS DATA
Net cash provided by operating
activities.......................... 115.1 254.6 228.1 174.5 124.5 30.4 14.5
Net cash provided by (used in)
investing activities................ (307.5) (375.6) (206.8) (160.8) (57.7) (62.1) (69.0)
Net cash provided by (used in)
financing activities................ 198.9 112.0 (49.3) (24.8) (17.9) 31.1 52.6
BALANCE SHEET DATA (AT PERIOD END)
Properties and equipment, net......... $ 718.3 $649.7 $ 909.8 $ 889.5 $ 843.0 $701.4 $676.7
Total assets.......................... 859.0 788.9 1,129.1 1,073.8 1,081.0 844.0 815.1
Long-term debt........................ 330.6 121.7 278.5 344.4 350.4 361.9 178.8
Convertible preferred stock........... -- -- 19.7 80.0 80.0 -- --
Stockholders' equity.................. 348.4 454.7 526.8 437.7 423.3 336.5 450.7
</TABLE>
S-8
<PAGE> 12
SNYDER OIL CORPORATION
The following table sets forth selected historical financial information of
Snyder for the five years ended December 31, 1998 and the three months ended
March 31, 1999 and 1998. This financial information was derived from the
consolidated financial statements of Snyder. This data should be read in
conjunction with the consolidated financial statements of Snyder and
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the reports incorporated by reference in this document.
The following table includes the results of Patina Oil and Gas Corporation
through the third quarter of 1997 when Snyder sold its interest in Patina.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ ----------------
1998 1997 1996 1995 1994 1999 1998
------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues............................. $141.1 $255.7 $285.1 $197.3 $262.3 $ 31.0 $ 33.7
Production and operating expenses.... 41.8 55.2 64.7 81.9 140.4 9.0 8.8
Exploration expenses................. 48.3 17.0 4.2 8.0 6.5 11.9 3.2
General and administrative........... 16.4 20.4 17.1 17.7 12.9 4.3 4.2
Depreciation, depletion and
amortization....................... 54.0 79.9 84.5 76.4 70.8 13.9 11.8
Impairments.......................... 5.5 7.3 2.8 27.4 5.8 -- --
Interest expense, net................ 15.7 25.5 23.6 21.7 10.3 4.4 3.9
Income (loss) before extraordinary
item............................... (24.7) 35.5 63.0 (39.8) 12.4 (8.1) 1.8
Extraordinary item................... -- (2.8) -- -- -- -- --
Net income (loss).................... (24.7) 32.6 63.0 (39.8) 12.4 (8.1) 1.8
Earnings (loss) attributable to
common shares...................... (24.7) 26.6 56.7 (46.0) 1.6 (8.1) 1.8
Diluted per share data
Before Extraordinary item.......... (0.74) 0.96 1.81 (1.53) 0.07 (0.24) 0.06
Extraordinary Item................. -- (0.09) -- -- -- -- --
Per common share................... (0.74) 0.86 1.72 (1.53) 0.07 (0.24) 0.06
Weighted average number of shares
outstanding........................ 33.4 30.6 31.3 30.2 23.7 33.4 33.4
STATEMENT OF CASH FLOWS DATA
Net cash provided by operating
activities......................... 75.2 122.0 101.7 69.1 86.4 13.7 21.3
Net cash provided by (used in)
investing activities............... (188.3) 31.8 (62.4) 32.4 (245.5) (0.7) (37.5)
Net cash provided by (used in)
financing activities............... 29.8 92.3 (38.7) (96.0) 169.9 (7.9) (0.8)
BALANCE SHEET DATA (AT PERIOD END)
Properties and equipment, net........ $374.3 $289.1 $651.7 $454.0 $557.5 $346.0 $302.1
Total assets......................... 433.9 546.1 879.5 555.5 673.3 409.0 515.8
Long-term debt....................... 212.8 173.6 372.1 234.1 300.0 206.8 173.7
Convertible preferred stock.......... -- -- 10.0 10.0 10.0 -- --
Shareholders' equity................. 128.4 263.8 294.7 235.4 274.1 116.3 248.1
Cash dividends declared on common
stock.............................. $ 0.26 $ 0.26 $ 0.26 $ 0.26 $ 0.25 $0.065 $0.065
</TABLE>
S-9
<PAGE> 13
SUMMARY HISTORICAL AND PRO FORMA OIL AND GAS RESERVE INFORMATION
The following table sets forth summary information on Santa Fe's and
Snyder's proved oil and gas reserves at December 31, 1998, and the summary pro
forma combined information on proved oil and gas reserves, assuming the merger
had taken place on December 31, 1998. Snyder's and Santa Fe's historical, and
Santa Fe Snyder's pro forma combined, proved oil and gas reserve information set
forth below and incorporated by reference in this document are only estimates
based primarily on reports prepared by independent petroleum engineers as of
December 31, 1998. The reserve information as of December 31, 1998 is based on
the prices of oil and gas as of that time. The discounted future net cash flows
set forth or incorporated by reference in this document should not be considered
as the current market value of the estimated oil and gas reserves attributable
to Snyder's or Santa Fe's properties. Under the applicable requirements of the
Securities and Exchange Commission, the estimated discounted future net cash
flows from proved reserves are generally based on prices and costs as of the
date of the estimate, while actual future prices and costs may be materially
higher or lower. In addition, the 10% discount factor, which is required by the
Securities and Exchange Commission to be used to calculate discounted future net
cash flows for reporting purposes, is not necessarily the most appropriate
discount factor based on interest rates periodically in effect and risks
associated with Santa Fe Snyder or the oil and gas industry in general.
<TABLE>
<CAPTION>
NATURAL BARRELS OF
CRUDE OIL GAS EQUIVALENTS
--------- ------- -----------
(MMBBLS) (BCF) (MMBOE)
<S> <C> <C> <C>
NET PROVED RESERVES:
Santa Fe (Historical):
Developed................................................. 110.1 229.8 148.4
Undeveloped............................................... 58.5 48.3 66.5
----- ----- ------
Total............................................. 168.6 278.1 214.9
===== ===== ======
Snyder (Historical):
Developed................................................. 17.4 392.0 82.7
Undeveloped............................................... 1.2 98.8 17.6
----- ----- ------
Total............................................. 18.6 490.8 100.3
===== ===== ======
Santa Fe Snyder (Pro Forma Combined):
Developed................................................. 127.5 621.8 231.1
Undeveloped............................................... 59.7 147.1 84.1
----- ----- ------
Total............................................. 187.2 768.9 315.2
===== ===== ======
RESERVE VALUATION INFORMATION (IN MILLIONS):
Santa Fe:
Estimated Future Net Cash Flows (before income taxes)..... $869.8
Present Value of Future Net Cash Flows (before income
taxes) discounted at 10%............................... $518.5
Standardized Measure of Discounted Future Net Cash
Flows.................................................. $482.0
Snyder:
Estimated Future Net Cash Flows (before income taxes)..... $663.5
Present Value of Future Net Cash Flows (before income
taxes) discounted at 10%............................... $365.6
Standardized Measure of Discounted Future Net Cash
Flows.................................................. $322.2
</TABLE>
S-10
<PAGE> 14
SUMMARY OPERATING DATA
The following table sets forth summary pro forma combined production data,
average realized prices and production costs per BOE for each of the five years
in the period ended December 31, 1998 and for the three months ended March 31,
1999.
For the four years ended December 31, 1997, the following table includes
production, sales prices and production costs attributable to Monterey
Resources, which was spun off by Santa Fe in July 1997, and Patina Oil and Gas,
which was sold by Snyder in the third quarter of 1997.
Combined daily production of oil equivalent barrels of Monterey and Patina
for the years ended December 31, 1997, 1996, 1995 and 1994 was 42.8, 67.5, 42.7
and 41.9 MBOE, respectively.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED DECEMBER 31,
MARCH 31, ------------------------------------------
1999 1998 1997 1996 1995 1994
------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Production of oil (MBbl/d)........... 50.2 45.9 69.1 84.9 78.0 77.7
Production of natural gas (Mmcf/d)... 327.3 332.0 345.4 319.5 295.8 256.6
Production of oil equivalent
(MBOE/d)........................... 104.8 101.2 126.7 138.2 127.3 120.5
Average sales price:
Oil ($/Bbl)........................ $10.84 $11.51 $16.80 $17.74 $15.00 $13.18
Natural gas ($/Mcf)................ $ 1.73 $ 1.95 $ 2.26 $ 2.07 $ 1.40 $ 1.71
Production costs per BOE (including
production, severance and ad
valorem taxes)..................... $ 4.25 $ 4.43 $ 4.88 $ 5.16 $ 4.84 $ 4.97
</TABLE>
S-11
<PAGE> 15
RISK FACTORS
Before investing in the notes, you should carefully consider the risks
described below, in addition to other information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus.
DECREASE IN OIL AND NATURAL GAS PRICES WILL ADVERSELY AFFECT OUR FINANCIAL
RESULTS
Prices of oil and natural gas have historically been volatile and have been
at significantly lower prices during the last year than those we are currently
receiving. As a result of these lower prices over the past year, both Santa Fe
and Snyder have incurred substantial losses. Decreases in oil and natural gas
prices from current levels will adversely affect our revenues, results of
operations, cash flows and proved reserves.
If the industry experiences significant prolonged future price decreases,
Santa Fe Snyder may be unable to generate sufficient cash flow from operations
to make planned capital expenditures and to meet its debt services obligations.
WE MAY INCUR ADDITIONAL WRITEDOWNS OF PROPERTIES' CARRYING VALUES
Accounting rules require that we review periodically the carrying value of
our oil and gas properties for possible impairment. Based on specific market
factors and circumstances at the time of prospective impairment reviews, and the
continuing evaluation of development plans, production data, economics and other
factors, we may be required to write down the carrying value of our oil and gas
properties. A writedown constitutes a charge to earnings, which does not impact
our cash flow from operating activities.
Based primarily on its long-term outlook for future commodities prices, our
management expects to record an impairment charge of approximately $150 million
to $250 million, on a pre-tax basis, pursuant to the provisions of Statement of
Financial Accounting Standards No. 121. Any writedown would likely have a
material adverse effect on our net income in the period taken, but would not
affect our cash flows.
OUR OPERATIONS IN FOREIGN COUNTRIES EXPOSE US TO POLITICAL AND ECONOMIC
UNCERTAINTIES
We conduct a significant part of our operations in foreign countries,
including Indonesia, Argentina, Gabon, China and Brazil. Our operations in
foreign countries expose us to the following political, economic and other
risks:
- the risk of war, revolution, civil unrest, border disputes,
expropriation, forced renegotiation or modification of existing
contracts, import, export and transportation regulations and tariffs;
- taxation policies, including royalty and tax increases and retroactive
tax claims;
- exchange controls, currency fluctuations and other uncertainties arising
out of foreign government sovereignty over our international operations;
- laws and policies of the United States affecting foreign trade, taxation
and investment; and
- the possibility of having to be subject to the exclusive jurisdiction of
foreign courts in connection with legal disputes and the possible
inability to subject foreign persons to the jurisdiction of courts in the
United States.
Approximately 20% of our pro forma year-end 1998 reserves are located in
Indonesia. Recent currency devaluation and political instability has caused,
among other things, disruptions in the delivery of services and goods which has
led to delays in operations and associated production. Further political,
economic and social instability in Indonesia could have a material adverse
effect on our operations and future financial performance.
S-12
<PAGE> 16
ESTIMATES OF OUR PROVED RESERVES MAY CHANGE AND WE MAY NOT BE ABLE TO REPLACE
OUR RESERVES
The calculations of proved reserves of crude oil and natural gas included
in this document are only estimates. 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 our estimates, and such variances may be
significant. Any significant variance from the assumptions used could result in
the actual quantity of our reserves and future net cash flow being materially
different from the estimates in our reserve reports. 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 result in substantial
upward or downward revisions.
Without successful exploration, development or acquisition activities, our
reserves and revenues will decline over time. Exploration, the continuing
development of our reserves and acquisition activities will require significant
expenditures. If our cash flow from operations is not sufficient for this
purpose, we may not be able to obtain the necessary funds from other sources.
OUR STRUCTURE RESULTS IN EFFECTIVE SUBORDINATION TO OBLIGATIONS OF OUR
SUBSIDIARIES
A substantial portion of the funds necessary to meet our debt service
obligations may be provided by distributions or advances from our subsidiaries.
There may be contractual and legal restrictions, as well as the financial
condition and operating requirements of our subsidiaries, that could limit our
ability to obtain cash from our subsidiaries for the purpose of meeting our debt
service obligations, including the payment of principal and accrued interest on
the notes. Additionally, the claims of creditors of our subsidiaries, including
the lenders under our credit facility, which is secured by guarantees of some of
our subsidiaries, effectively have priority with respect to the assets and
earnings of our subsidiaries over the claims of our creditors, including the
holders of the notes. As of June 1, 1999 our subsidiaries did not have any
outstanding indebtedness, other than trade payables and the guarantees under our
new credit facility. However, our subsidiaries may incur indebtedness in the
future.
WE ARE EXPOSED TO RISKS RELATED TO OUR HEDGING ACTIVITIES
Periodically, we enter into hedging arrangements relating to a portion of
our oil and natural gas production to achieve a more predictable cash flow, as
well as to reduce our exposure to adverse price fluctuations of oil and natural
gas. Hedging instruments used are fixed price swaps, collars and options. While
the use of these types of hedging instruments limits the downside risk of
adverse price movements, they are subject to a number of risks, including
instances in which:
- the benefit to revenues is limited when commodity prices increase; and
- counterparties to our futures contract will be unable to meet the
financial terms of the transaction.
S-13
<PAGE> 17
USE OF PROCEEDS
The net proceeds from the offering of the notes are expected to be
approximately $121 million, after deducting underwriting discounts and our
estimated expenses of the offering. We expect to use these net proceeds (1) to
redeem, on June 30, 1999, all of the $100 million principal amount of our 11%
senior subordinated debentures due 2004 at a total redemption price of
approximately $104.1 million and (2) to reduce borrowings under our bank credit
facility by approximately $16.9 million. Pending the use of a portion of the net
proceeds to pay the redemption price of our 11% debentures, we will reduce
borrowings under our credit facility. For a description of our debentures and
our credit facility, see "Description of Certain Indebtedness."
CAPITALIZATION
The following table sets forth a summary of the short-term debt and
consolidated capitalization of Santa Fe Snyder on a pro forma basis as of March
31, 1999 giving effect to the merger and as adjusted to give effect to the
issuance of the notes and the application of the net proceeds. See "Use of
Proceeds."
<TABLE>
<CAPTION>
MARCH 31, 1999
-----------------------
PRO FORMA AS ADJUSTED
--------- -----------
(EXPRESSED IN MILLIONS)
<S> <C> <C>
SHORT-TERM DEBT:
Short-term borrowings....................................... $ -- $ --
Current portion of long-term debt........................... -- --
-------- --------
Total short-term debt............................. -- --
-------- --------
LONG-TERM DEBT:
11% senior subordinated debentures due 2004................. 99.6 --
8.75% senior subordinated notes due 2007.................... 172.9 172.9
8.05% senior notes due 2004................................. -- 123.4
Credit facility borrowings(2)............................... 295.3 278.4
-------- --------
Total long-term debt.............................. 567.8 574.7
STOCKHOLDERS' EQUITY........................................ 763.1 759.1(1)
-------- --------
Total capitalization.............................. $1,330.9 $1,333.8
======== ========
</TABLE>
- ---------------
(1) Includes the write-off of certain debt issue costs and redemption fees
incurred related to the 11% senior subordinated debentures due 2004, net of
tax.
(2) At May 31, 1999, our borrowings under the credit facility were $356.4
million.
S-14
<PAGE> 18
PRO FORMA RATIO OF EARNINGS TO FIXED CHARGES
The pro forma ratio of earnings to fixed charges represents Santa Fe's
historical ratio of earnings to fixed charges, before giving effect to the
merger with Snyder, adjusted for:
- the increase in interest costs resulting from the issuance of the 8.05%
senior notes due 2004;
- the decrease in interest costs resulting from the retirement of our 11%
senior subordinated debentures due 2004; and
- the decrease in interest costs resulting from the repayment of
approximately $16.9 million in borrowings under our credit facility
assuming the issuance of the notes and the retirement of the debentures had
occurred as of January 1, 1998.
The earnings of Santa Fe during the year ended December 31, 1998 and the
three months ended March 31, 1999 were insufficient to cover pro forma fixed
charges by $165.3 million and $17.5 million, respectively.
Santa Fe Snyder Corporation was created by merger of Snyder with and into
Santa Fe on May 5, 1999. For a presentation of Santa Fe historical ratios of
earnings to fixed charges and earnings to combined fixed charges and preferred
stock dividends see "Ratio of Earnings to Fixed Charges" on page 4 of the
accompanying prospectus. We do not have any outstanding shares of preferred
stock.
The supplemental pro forma ratio of earnings to fixed charges represents
the historical ratio of Santa Fe earnings to fixed charges as adjusted to give
effect to the merger and to the issuance of the notes and the retirement of the
debentures as if both had occurred as of January 1, 1998.
On this basis, our supplemental pro forma earnings during the year ended
December 31, 1998 and the three months ended March 31, 1999 were insufficient to
cover fixed charges by $229.1 million and $36.1 million, respectively.
For the purpose of computing the pro forma ratio of earnings to fixed
charges, earnings means:
- income from continuing operations before income taxes;
- plus fixed charges;
- plus amortization of capitalized interest; and
- less capitalized interest.
Fixed charges means the sum of the following:
- interest, including capitalized interest, on all indebtedness; and
- amortization of debt discount.
S-15
<PAGE> 19
MANAGEMENT
The following tables set forth our management effective as of May 5, 1999,
the date of the consummation of the merger of Snyder with and into Santa Fe.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
James L. Payne......................... 62 Chief Executive Officer and Director
Hugh L. Boyt........................... 53 President -- International
William G. Hargett..................... 49 President -- North America
Duane C. Radtke........................ 50 Executive Vice President -- Production
Timothy S. Parker...................... 46 Executive Vice President -- Exploration
Mark A. Jackson........................ 43 Executive Vice President and Chief Financial Officer
Janet F. Clark......................... 44 Executive Vice President -- Corporate Development
and Administration
David L. Hicks......................... 50 Vice President -- Law and General Counsel
</TABLE>
DIRECTORS
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
John C. Snyder......................... 57 Chairman of the Board
William E. Greehey..................... 62 Director
John A. Hill........................... 57 Director
Melvyn N. Klein........................ 57 Director
Harold R. Logan, Jr. .................. 54 Director
Allan V. Martini....................... 71 Director
James E. McCormick..................... 71 Director
Reuben F. Richards..................... 69 Director
Edward T. Story........................ 55 Director
Kathryn D. Wriston..................... 59 Director
</TABLE>
BACKGROUND OF EXECUTIVE OFFICERS
James L. Payne has served as a director and Chief Executive Officer of
Santa Fe Snyder since the merger in May 1999. Mr. Payne served as a director,
Chairman of the Board and Chief Executive Officer of Santa Fe from January 1990
until the merger with Snyder and as President from January 1990 until April 1,
1998. Mr. Payne was President of Santa Fe Energy Company, a predecessor in
interest of Santa Fe from January 1986 to January 1990, when he became President
of Santa Fe. Mr. Payne is also a director of Pool Energy Services Co. (oilfield
services) and BJ Services Company (oilfield services).
Hugh L. Boyt has served as President -- International of Santa Fe Snyder
since May 1999. Mr. Boyt was President and Chief Operating Officer of Santa Fe
from April 1, 1998 until its merger with Snyder. From March 1, 1990 until April
1998, Mr. Boyt served as Senior Vice President -- Production of Santa Fe.
William G. Hargett has served as President -- North America of Santa Fe
Snyder since May 1999. From April 1997 until the merger, Mr. Hargett served as
President, Chief Operating Officer and a director of Snyder. Prior to joining
Snyder, Mr. Hargett served as President of Greenhill Petroleum Corporation, the
U.S. oil and gas subsidiary of Australian based Western Mining Corporation, from
1994 to 1997, Amax Oil & Gas Inc., a subsidiary of Amax Energy Inc., from 1993
to 1994 and North Central Oil
S-16
<PAGE> 20
Corporation, a private exploration and production company with both U.S. and
international operations, from 1988 to 1993.
Duane C. Radtke has served as Executive Vice President -- Production of
Santa Fe Snyder since May 1999. From April 1, 1998 until the merger, Mr. Radtke
served as Senior Vice President -- Production of Santa Fe. From July 1, 1993 to
April 1998, Mr. Radtke served as President -- Santa Fe Energy Resources, Inc.
Southeast Asia Companies.
Timothy S. Parker has served as Executive Vice President -- Exploration of
Santa Fe Snyder since May 1999. From January 1, 1999 until the merger, Mr.
Parker served as Senior Vice President -- Exploration and Land of Santa Fe. From
April 1, 1998 until January 1, 1999, Mr. Parker served as Vice
President -- Exploration, and from September 1, 1995 until April 1998 he served
as Division Exploration Manager, International of Santa Fe. Mr. Parker served as
Corporate Exploration Manager from May 1, 1994 until September 1, 1995 and from
1988 until May 1, 1994 he served as Division Manager, Exploration of Santa Fe.
Mark A. Jackson has served as Executive Vice President and Chief Financial
Officer of Santa Fe Snyder since May 1999. From August 1997 until the merger,
Mr. Jackson served as Senior Vice President and Chief Financial Officer of
Snyder. Prior to joining Snyder, Mr. Jackson served in various executive
capacities at Apache Corporation including Vice President and Controller from
1988, Vice President, Finance from 1994 and Chief Financial Officer from 1996.
Janet F. Clark has served as Executive Vice President -- Corporate
Development and Administration of Santa Fe Snyder since May 1999. From April 1,
1998 until the merger, Ms. Clark served as Senior Vice President, Chief
Financial Officer and Treasurer of Santa Fe. From January 1, 1997 until April
1998, Ms. Clark served as Vice President and Chief Financial Officer of Santa
Fe. Ms. Clark was with Southcoast Capital Corporation from January 1994 until
she joined Santa Fe. While with Southcoast Capital, Ms. Clark served as Vice
President from January 1994 to June 1996 and as Director, Corporate Finance,
from June 1996 to December 1996.
David L. Hicks has served as Vice President -- Law and General Counsel of
Santa Fe Snyder since May 1999. Mr. Hicks served as Vice President -- Law and
General Counsel of Santa Fe from March 1991 until the merger.
BACKGROUND OF DIRECTORS
John C. Snyder has served as a director and Chairman of the Board of Santa
Fe Snyder since May 1999. From Snyder's inception until the merger, Mr. Snyder
served as Chairman and a director of Snyder. Mr. Snyder founded a predecessor of
Snyder in 1978. Mr. Snyder is a director of SOCO International plc, an
international oil and gas company listed on the London Stock Exchange, a
director of the Community Enrichment Center of Fort Worth, a director of Texas
Capital BancShares, Inc. and is a member of the National Petroleum Council.
William E. Greehey has served as director of Santa Fe Snyder since May
1999. Mr. Greehey served as director of Santa Fe from 1991 until the merger. Mr.
Greehey has served as Chairman of the Board, Chief Executive Officer and
director of Valero Energy Corporation (refining and marketing) since 1983.
John A. Hill has served as a director of Santa Fe Snyder since May 1999.
Mr. Hill served as director of Snyder from 1981 until the merger. Mr. Hill is
Vice Chairman and Managing Director of First Reserve Corporation, an oil and gas
investment management company. Prior to joining First Reserve, Mr. Hill was
President, Chief Executive Officer and Director of Marsh & McLennan Asset
Management Company, the money management subsidiary of Marsh & McLennan
Companies, Inc. Mr. Hill is a trustee of the Putnam Funds in Boston and a
director of Maverick Tube Corporation, a supplier of tubular goods, and
Weatherford-Enterra Corporation (oilfield services).
Melvin N. Klein has served as director of Santa Fe Snyder since May 1999.
Mr. Klein served as director of Santa Fe from 1993 until the merger. Mr. Klein
is an Attorney and Counselor at Law; private
S-17
<PAGE> 21
investor; and the sole stockholder of a general partner in GKH Partners, L.P.,
an investment partnership. Mr. Klein is also a principal of Questor Management
Company, and director of Anixter International (distributor of networking
products), Bayou Steel Corporation (specialty steel manufacturer) and Hanover
Compressor Corporation (provider of full service natural gas compression and
fabricators of compressors and production equipment).
Harold R. Logan, Jr. has served as a director of Santa Fe Snyder since May
1999. Mr. Logan served as director of Snyder from 1997 until the merger. Mr.
Logan is Executive Vice President/Finance and a director of TransMontaigne Oil
Company, a holding company engaged in providing transportation, terminaling and
marketing services to the manufacturers and end-users of refined petroleum
products. From 1984 to 1994, Mr. Logan was Senior Vice President/Finance and a
director of Associated Natural Gas Corporation. Mr. Logan also serves as a
director of Suburban Propane Partners, L.P. and Union Banc Shares, Ltd.
Allan V. Martini has served as director of Santa Fe Snyder since May 1999.
Mr. Martini served as director of Santa Fe from 1990 until the merger. Mr.
Martini is a retired Vice President Exploration and Production and director of
Chevron Corporation (petroleum operations) since August 1988. Mr. Martini served
in that position from July 1986 until his retirement.
James E. McCormick has served as a director of Santa Fe Snyder since May
1999. Mr. McCormick served as director of Snyder from 1992 until the merger. Mr.
McCormick served as President, Chief Operating Officer and a director of Oryx
Energy Company from its inception in November 1988 until his retirement in March
1992. Mr. McCormick serves as a director of Lone Star Technologies, B. J.
Services, Inc. (oilfield services), TESCO Corporation (oil field drilling
systems), and Dallas National Bank.
Reuben F. Richards has served as a director of Santa Fe Snyder since May
1999. Mr. Richards served as director of Santa Fe from 1992 until the merger.
Mr. Richards served as Chairman of the Board, Terra Industries Inc.
(agribusiness) from December 1982 until his retirement in March 1996; Chief
Executive Officer thereof from December 1982 to May 1991 and President thereof
from July 1983 to May 1991; Chairman of the Board, Engelhard Corporation
(specialty chemicals, engineering materials and precious metals management
services) from May 1985 to December 1994 and director thereof since prior to
1990; Chairman of the Board of Minorco (U.S.A.) Inc. from May 1990 to March 1996
and Chief Executive Officer and President from February 1994 to March 1996. Mr.
Richards is also a director of Ecolab, Inc. (cleaning and sanitizing products),
Engelhard Corporation and Potlatch Corporation (forest products).
Edward T. Story has served as a director of Santa Fe Snyder since May 1999.
Mr. Story served as director of Snyder from 1996 until the merger. Mr. Story is
President of SOCO International plc, an independent international oil and gas
company traded on the London Stock Exchange. From 1991 until the formation of
SOCO International plc in 1997 through the consolidation of international
interests of Snyder and various third parties, Mr. Story was Vice
President -- International of Snyder and President of SOCO International, Inc.
Mr. Story serves as a director of Cairn Energy plc, an independent international
oil and gas company traded on the London Stock Exchange, First BanksAmerica,
Inc., a bank holding company listed on the New York Stock Exchange, Hallwood
Realty Corporation, the general partner of Hallwood Realty Partners, L.P., an
American Stock Exchange-listed real estate limited partnership, and Sen Hong
Resources Limited, an oil and gas company listed on the Hong Kong Stock
Exchange.
Kathryn D. Wriston has served as a director of Santa Fe Snyder since May
1999. Ms. Wriston served as director of Santa Fe from 1990 until the merger. For
the past five years, Ms. Wriston has served as director of various corporations
and organizations, including Northwestern Mutual Life Insurance Company (life
insurance) and The Stanley Works (manufacturer of tools).
S-18
<PAGE> 22
DESCRIPTION OF NOTES
We will issue the notes under the indenture referred to in the accompanying
prospectus. The following description, together with the description in the
accompanying prospectus under the caption "Description of Debt Securities" is a
summary of the material provisions of the notes and the indenture. It does not
restate the indenture in its entirety. We urge you to read the indenture because
it, and not this description, defines your rights as holders of the notes. We
have filed a copy of the indenture as an exhibit to the registration statement,
which includes the accompanying prospectus.
This description of the notes supplements, and, to the extent it is
inconsistent, replaces, the description of the general provisions of the notes
and the indenture in the accompanying prospectus. The notes are senior debt
securities as that term is used in the accompanying prospectus. The notes
represent our direct unsecured obligations and rank equally with all of our
other existing and future senior and unsubordinated debt.
With certain exceptions and pursuant to certain requirements set forth in
the indenture, we may discharge our obligations under the indenture with respect
to the notes as described under the caption "Description of Debt
Securities -- Discharge and Defeasance" in the accompanying prospectus.
PRINCIPAL, MATURITY AND INTEREST
The notes will mature on June 15, 2004. Although we are offering $125
million principal amount of the notes, we may issue and sell additional
principal amounts of the notes in the future without the consent of the holders
of the notes. Any additional notes, together with these notes, constitute a
single series of notes under the indenture, and are designated as the 8.05%
Senior Notes due 2004.
Interest on the notes will accrue at the rate of 8.05% per year and will be
payable semi-annually on each June 15 and December 15, commencing December 15,
1999. We will make each interest payment to the person in whose name the notes
are registered at the close of business on the relevant June 1 and December 1
preceding the applicable interest payment date. Interest on the notes will be
computed on the basis of a 360-day year comprised of twelve 30-day months. If
any interest payment date, maturity date or redemption date falls on a day that
is not a business day, the payment will be made on the next business day with
the same force and effect as if made on the relevant interest payment date,
maturity date or redemption date, and, unless we default on the payment, no
interest will accrue for the period from and after the interest payment date,
maturity date or redemption date.
OPTIONAL REDEMPTION
The notes will be redeemable, in whole or in part, at our option
exercisable at any time or from time to time upon not less than 30 and not more
than 60 days' notice as provided in the indenture, on any date prior to their
maturity at a redemption price equal to:
- 100% of the principal amount of such notes; plus
- accrued and unpaid interest thereon, if any, to the redemption date; plus
- a make-whole premium described below, if any.
The redemption price will never be less than 100% of the principal amount of the
relevant notes plus accrued and unpaid interest thereon, if any, to the
redemption date.
The amount of the make-whole premium with respect to any note to be
redeemed will be equal to the excess, if any, of:
(1) the sum of the present values, calculated as of the redemption
date, of:
- each interest payment that, but for such redemption, would have been
payable on the note or portion thereof being redeemed on each interest
payment date occurring after the redemption date (excluding any
accrued interest for the period prior to the redemption date); and
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- the principal amount that, but for such redemption, would have been
payable at the final maturity of the note being redeemed; over
(2) the principal amount of the note being redeemed.
The present values of interest and principal payments referred to in clause
(1) above will be determined in accordance with generally accepted principles of
financial analysis. These present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the redemption date
at a discount rate equal to the comparable treasury yield (as defined below)
plus 25 basis points. The make-whole premium will be calculated by an
independent investment banking institution of national standing appointed by us.
If we fail to appoint an independent investment banker at least 45 days prior to
the redemption date, or if the independent investment banker we appoint is
unwilling or unable to make the calculation, the calculation will be made by
Salomon Smith Barney. If Salomon Smith Barney is unwilling or unable to make the
calculation, we will appoint an independent investment banking institution of
national standing to make the calculation.
For purposes of determining the make-whole premium, comparable treasury
yield means a rate of interest per annum equal to the weekly average yield to
maturity of United States Treasury Securities that have a constant maturity that
corresponds to the remaining term to maturity of the notes, calculated to the
nearest 1/12th of a year. The comparable treasury yield will be determined as of
the third business day immediately preceding the applicable redemption date.
The weekly average yields of United States Treasury Securities will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15 (519) Selected Interest
Rates" or any successor release. If the H.15 statistical release sets forth a
weekly average yield for United States Treasury Securities having a constant
maturity that is the same as the remaining term calculated as set forth above,
then the comparable treasury yield will be equal to such weekly average yield.
In all other cases, the comparable treasury yield will be calculated by
interpolation, on a straight-line basis, between the weekly average yields on
the United States Treasury Securities that have a constant maturity closest to
and greater than the remaining term and the United States Treasury Securities
that have a constant maturity closest to and less than the remaining term (in
each case as set forth in the H.15 statistical release or any successor
release). Any weekly average yields calculated by interpolation will be rounded
to the nearest 1/100th of 1%, with any figure of 1/200th of 1% or above being
rounded upward. If weekly average yields for United States Treasury Securities
are not available in the H.15 statistical release or otherwise, then the
comparable treasury yield will be calculated by interpolation of comparable
rates selected by an independent investment banker selected in the manner
described in the second preceding paragraph.
In the case of any partial redemption, selection of the notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion shall deem to be fair and
appropriate. However, no note of $1,000 in original principal amount or less
shall be redeemed in part. If any note is to be redeemed in part only, the
notice of redemption will state the portion of the principal amount to be
redeemed. A new note in principal amount equal to the unredeemed portion of the
original note will be issued upon the cancellation of the original note.
SINKING FUND
Except as noted above, the notes are not redeemable prior to maturity. The
notes do not provide for any sinking fund.
BOOK-ENTRY, DELIVERY AND FORM
The notes will be issued in the form of a global note registered in the
name of The Depository Trust Company or its nominee, as described under the
caption "Description of Debt Securities -- Global Securities" in the
accompanying prospectus.
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SAME-DAY PAYMENT
The Indenture requires that payment in respect of the notes be made by wire
transfer of immediately available funds to the accounts specified by the holders
of the notes. If no such account is specified, payment shall be made by mailing
a check to the holder's registered address.
CERTAIN COVENANTS
The indenture will not limit the amount of indebtedness or other
obligations that we may incur and will not contain provisions that would give
you as a holder of the notes the right to require us to repurchase your notes in
the event of a decline in the credit rating of our debt securities or upon a
change of control. The indenture will contain covenants including, among others,
the following:
Limitation on Liens. We will not, and will not permit any of our
Subsidiaries to, issue, create assume or guarantee any indebtedness for
borrowed money secured by a lien upon any of our Principal Property (as
defined below) or the Principal Property of any Subsidiary or upon any
shares of stock or indebtedness of any Subsidiary that owns or leases any
Principal Property (whether such Principal Property, shares of stock or
indebtedness is now existing or owned or subsequently created or acquired)
without effectively providing that the notes will be secured equally and
ratably with such secured debt until such time as such debt is no longer
secured by a lien.
The foregoing restriction will not require us to secure the notes if
the liens consist of either Permitted Liens (as defined below) or if the
indebtedness secured by these liens is Exempted Indebtedness (as described
below).
Limitation on Sale and Leaseback Transactions. We will not, and will
not permit any of our Subsidiaries to, enter into any Sale and Leaseback
Transaction (as defined below) with respect to any Principal Property
unless:
- we or our Subsidiary, as the case may be, would be entitled, pursuant
to the provisions of the indenture, to incur indebtedness secured by a
lien on the Principal Property involved in such transaction at least
equal in amount to the Attributable Indebtedness (as defined below)
with respect to that Sale and Leaseback Transaction without equally
and ratably securing the notes pursuant to the covenant described
above in "-- Limitation on Liens";
- within twelve months after the effective date of such transaction, we
apply an amount equal to the Attributable Indebtedness with respect to
such Sale and Leaseback Transaction either (1) to the voluntary
defeasance or retirement of the notes or other debt for borrowed money
of ours or any of our Subsidiaries that matures more than one year
after the creation of such debt or (2) to the acquisition,
construction, development or improvement of any property used or to be
used in our business.
Exempted Indebtedness. Notwithstanding the foregoing limitations on
liens and Sale and Leaseback Transactions, we and our Subsidiaries may
issue, incur, create, assume, or guarantee indebtedness secured by a lien
(other than a Permitted Lien) without securing the notes, or may enter into
Sale and Leaseback Transactions without complying with the preceding
paragraph, or enter into a combination of such transactions, if the sum of
the aggregate principal amount of all such indebtedness and the
Attributable Indebtedness of all such Sale and Leaseback Transactions then
in existence, in each case not otherwise permitted in the preceding three
paragraphs, does not at the time incurred exceed 10% of our Consolidated
Net Tangible Assets.
CERTAIN DEFINITIONS
As used in the foregoing description of certain covenants by which we are
bound pursuant to the indenture, the following terms have the following
meanings:
Attributable Indebtedness means with respect to a Sale and Leaseback
Transaction involving a Principal Property, at the time of determination, the
lesser of:
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- the fair market value of such Principal Property (as determined in good
faith by our Board of Directors);
- the present value of the total net amount of rent required to be paid
under such lease involved in such Sale and Leaseback Transaction during
the remaining term thereof (including any renewal term exercisable at the
lessee's option or period for which such lease has been extended),
discounted at the rate of interest set forth or implicit in the terms of
such lease or, if not practicable to determine such rate, the weighted
average interest rate per annum borne by the notes of each series
outstanding pursuant to the indenture compounded semi-annually; or
- if the obligation with respect to the Sale and Leaseback Transaction
constitutes an obligation that is required to be classified and accounted
for as a capitalized lease for financial reporting purposes in accordance
with generally accepted accounting principles, the amount equal to the
capitalized amount of such obligation determined in accordance with
generally accepted accounting principles and included in the financial
statements of the lessee.
For purposes of the foregoing definition, rent shall not include amounts
required to be paid by the lessee, whether or not designated as rent or
additional rent, on account of or contingent upon maintenance and repairs,
insurance, taxes, assessments, water rates and similar charges. In the case of
any lease that is terminable by the lessee upon the payment of a penalty, such
net amount shall be the lesser of the net amount determined assuming termination
upon the first date such lease may be terminated (in which case the net amount
shall also include the amount of the penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated) or the net amount determined assuming no such termination.
Consolidated Net Tangible Assets means the aggregate amount of assets
included on our most recent quarterly or annual consolidated balance sheet less
applicable reserves reflected in such balance sheet, after deducting in
accordance with generally accepted accounting principles:
- all current liabilities reflected in such balance sheet; and
- all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles reflected in such balance sheet.
Permitted Liens include:
- liens existing at the date of the initial issuance of the notes;
- liens on property, shares of stock, indebtedness or other assets of any
person existing at the time such person is merged into or consolidated
with us or any of our Subsidiaries, provided that such liens are not
incurred in anticipation of such person becoming a Subsidiary or liens
existing at the time of a sale, lease or other disposition of the
properties of a person as an entirety or substantially as an entirety to
us or any of our Subsidiaries;
- liens on property, shares of stock, indebtedness or other assets existing
at the time of acquisition thereof by us or any of our Subsidiaries, or
liens thereon to secure the payment of all or any part of the purchase
price thereof;
- liens on property, shares of stock, indebtedness or other assets to
secure any indebtedness for borrowed money incurred prior to, at the time
of, or within 24 months after, the latest of the acquisition thereof, or,
in the case of property, the completion of construction, the completion
of development or improvements or the commencement of commercial
operation of such property for the purpose of financing all or any part
of the purchase price thereof, such construction or the making of such
development or improvements;
- liens to secure indebtedness owing to us or our Subsidiaries;
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- liens on property to secure all or part of the cost of exploration,
drilling, or development of the property or all or any portion of the
cost of acquiring, constructing, altering, improving, developing or
repairing any property or asset, or improvements used in connection with
that property or liens incurred by us or any of our Subsidiaries to
provide funds for any such activities;
- liens in favor of the United States of America or any state, territory or
possession thereof (or the District of Columbia), or any department,
agency, instrumentality or political subdivision of the United States of
America or any state, territory or possession thereof (or the District of
Columbia), to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase
price or the cost of constructing, developing or improving the property
subject to such liens;
- liens on any property to secure bonds for the construction, installation
or financing of pollution control or abatement facilities, or other forms
of industrial revenue bond financing, or indebtedness issued or
guaranteed by the United States, any state or any department, agency or
instrumentality thereof;
- liens in respect of Production Payments and Reserve Sales and liens
deemed to exist by reason of negative pledges in respect of indebtedness;
and
- liens to secure any refinancing, refunding, extension, renewal or
replacement of any lien referred to in the bullet points above; provided,
however, that any liens permitted by the terms set forth under any of
such bullet points shall not extend to or cover any property of ours or
of any of our Subsidiaries, as the case may be, other than the property
specified in such clauses and improvements thereto or proceeds therefrom.
Principal Property means any property interest in oil and gas reserves
owned by us or any of our Subsidiaries and which, as of the time of such
determination, is capable of producing crude oil, condensate, natural gas,
natural gas liquids or other similar hydrocarbon substances in commercial
quantities. Without limitation, the term Principal Property does not include:
- accounts receivable and other obligations of any obligor under a contract
for the sale, exploration, production, drilling, development, processing
or transportation of crude oil, condensate, natural gas, natural gas
liquids or similar hydrocarbon substances by us or any of our
Subsidiaries, and all guarantees, insurance, letters of credit and other
agreements or arrangements of whatever character supporting or securing
payment of such receivables or obligations; or
- the production or any proceeds from production of crude oil, condensate,
natural gas, natural gas liquids or similar hydrocarbon substances.
Production Payments and Reserve Sales means the grant or transfer by us or
any of our Subsidiaries to any person of a royalty, overriding royalty, net
profits interest, production payment (whether volumetric or dollar denominated),
partnership or other interest in oil and gas properties, reserves or the right
to receive all or a portion of the production or the proceeds from the sale of
production attributable to such properties.
Sale and Leaseback Transaction means any arrangement with any person
providing for the leasing by us or any of our Subsidiaries of any Principal
Property, which property has been or is to be sold or transferred by us or such
Subsidiary to such person, other than:
- any such transaction involving a lease for a term of not more than three
years;
- any such transaction between us and any of our Subsidiaries or between
any of our Subsidiaries; or
- any such transaction executed by the time of or within one year after the
latest of the acquisition, the completion of construction, development or
improvement or the commencement of commercial operation of such Principal
Property.
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Subsidiary of any person means:
- any other person in which such person or one or more of the Subsidiaries
of that person or a combination thereof has the power to control by
contract or otherwise the board of directors or equivalent governing body
or otherwise controls such entity, and
- any person of which more than 50% of the outstanding voting stock, at the
time of such determination, is owned or controlled, directly or
indirectly, by any person or one or more of the Subsidiaries of that
person or a combination thereof, and
For purposes of this definition, voting stock means capital stock of the
class or classes which under ordinary circumstances has voting power to elect
the board of directors or equivalent governing body of such person, provided
that capital stock that carries only the right to vote conditionally upon the
occurrence of an event shall not constitute voting stock whether or not such
event shall have occurred.
MERGER, AMALGAMATION, CONSOLIDATION AND SALE OF ASSETS
We will not merge, amalgamate or consolidate with or into any other entity
or sell, transfer, assign, lease, convey or otherwise dispose of all or
substantially all of our property or assets to any person, whether in a single
or series of related transactions, unless:
- either we are the surviving entity or the surviving entity:
-- is an entity organized under the laws of the United States, a state
thereof or the District of Columbia, or Canada or a province thereof;
and
-- expressly assumes by supplemental indenture satisfactory to the
Trustee, the due and punctual payment of the principal of, premium, if
any, and interest on all of the notes, according to their tenor and the
due and punctual performance and observance of all the other covenants
and conditions of the indenture to be performed by us;
- immediately before and after giving effect to such transaction or series
of transactions, no default or event of default has occurred and is
continuing; and
- we have delivered to the Trustee an officer's certificate and opinion of
counsel, each stating that:
-- such consolidation, amalgamation, merger or other disposition, and if a
supplemental indenture is required, the supplemental indenture, comply
with the conditions set forth above; and
-- all other conditions precedent to such transaction have been complied
with.
In addition, we may also sell, transfer, assign, lease, convey or otherwise
dispose of all or substantially all of our property to an Eligible Partnership
if such transaction satisfies the conditions set forth in the second and third
bullet points in the paragraph above, and:
- the Eligible Partnership expressly assumes, jointly and severally with
us, by supplemental indenture satisfactory to the Trustee, the due and
punctual payment of principal of, premium, if any, and interest on all
the notes, according to their tenor;
- the Eligible Partnership expressly assumes jointly and severally with us
by supplemental indenture the due and punctual performance and observance
of all the covenants and conditions of the Indenture to be performed by
us; and
- our board of directors determines that the transaction is not adverse in
any material respect to the interests of the holders of the notes as
evidenced by a board resolution delivered to the Trustee.
In the event of any such transaction, we and the Eligible Partnership will
for all purposes of this series of notes under the indenture be considered to be
one and the same person.
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Eligible Partnership means a limited partnership or limited liability
company organized under the laws of the United States, a state thereof or the
District of Columbia or Canada or a province thereof, and all the outstanding
interests of which are owned directly or indirectly by us or our subsidiaries
and to which all or substantially all of our assets have been transferred in
accordance with the covenant described above.
TRANSFER
The notes will be issued in registered form and will be transferrable only
upon the surrender of the notes being transferred for registration of transfer.
We may require you to pay a sum sufficient to cover any tax, assessment or other
governmental charge payable in connection with certain transfers and exchanges.
CONCERNING THE TRUSTEE
The Bank of New York will serve as Trustee under the indenture. We have
appointed the Trustee to serve as the paying agent and registrar for the notes.
We may have banking relationships in the ordinary course of business with the
Trustee.
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the acquisition, ownership, and
disposition of the notes by an initial purchaser of the notes that is a
"Non-United States Holder." This discussion is based upon the Internal Revenue
Code of 1986, its legislative history, existing and proposed regulations
thereunder, published rulings, and court decisions, all as in effect on the date
of this document, and all of which are subject to change, possibly on a
retroactive basis. For purposes of this discussion, you are a "Non-United States
Holder" if you are a beneficial owner of notes who is not a "United States
person" for United States federal tax purposes. A "United States person" is:
- a citizen or resident of the United States,
- a corporation, partnership, or other entity created or organized in the
United States or under the law of the United States or of any state
thereof including the District of Columbia,
- an estate whose income is subject to United States federal income
taxation regardless of its source, or
- a trust if a U.S. court is able to exercise primary supervision over the
administration of the trust and one or more United States persons have
the authority to control all substantial decisions of the trust.
This discussion only applies to you if you are a Non-United States Holder
who holds the notes as capital assets. The tax treatment of holders of the notes
may vary depending upon their particular situations. Certain holders, including
insurance companies, tax exempt organizations, financial institutions, and
broker-dealers, may be subject to special rules not discussed below. Prospective
investors are urged to consult their tax advisors regarding the particular
United States federal tax consequences of acquiring, holding, and disposing of
notes, as well as any tax consequences that may arise under the laws of any
relevant foreign, state, local, or other taxing jurisdiction or under any
applicable tax treaty.
INTEREST
Interest that we pay to you will not be subject to U.S. withholding tax if
you:
- do not actually or constructively own 10% or more of the total combined
voting power of all classes of our stock,
- are not a controlled foreign corporation with respect to which we are a
related person, and
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- you certify to us, our payment agent, or the person who would otherwise
be required to withhold United States tax, on Form W-8BEN (or applicable
substitute form), under penalties of perjury, that you are not a United
States person and provide your name and address.
If you do not satisfy the three preceding requirements, your interest on a
note would generally be subject to United States withholding tax at a flat rate
of 30% (or a lower applicable treaty rate).
If you are engaged in trade or business in the United States, and if
interest on a note is effectively connected with the conduct of that trade or
business (or in the case of an applicable tax treaty, is attributable to a
permanent establishment maintained by you in the United States), you will be
exempt from U.S. withholding tax but will be subject to regular U.S. federal
income tax on the interest in the same manner as if you were a United States
person. In order to establish an exemption from U.S. withholding tax, you must
provide to us, our payment agent or the person who would otherwise be required
to withhold United States tax, a properly executed IRS Form W-8ECI (or
applicable substitute form). In addition to regular U.S. federal income tax, if
you are a foreign corporation, you may be subject to a U.S. branch profits tax.
GAIN ON DISPOSITION
You generally will not be subject to United States federal income tax with
respect to gain recognized on a sale, redemption, or other disposition of a note
unless:
- the gain is effectively connected with the conduct by you of a trade or
business within the United States, or, under an applicable tax treaty, is
attributable to a permanent establishment maintained by you in the United
States, or
- if you are an individual, you are present in the United States for 183 or
more days in the taxable year and certain other requirements are met.
FEDERAL ESTATE TAXES
If interest on the notes is exempt from withholding of United States
federal income tax under the rules described above, the notes held by an
individual who at the time of death is a Non-United States Holder generally will
not be subject to United States federal estate tax as a result of such
individual's death provided such individual did not at the time of death
actually or constructively own 10% or more of the combined voting power of all
classes of our stock entitled to vote, and provided that, at the time of death,
payments with respect to such note would not have been effectively connected
with the conduct by such individual of a trade or business within the United
States.
INFORMATION REPORTING AND BACKUP WITHHOLDING
We will, when required, report to you and the Internal Revenue Service the
amount of any interest paid on the notes in each calendar year and the amounts
of tax withheld, if any, with respect to such payments.
Backup withholding tax is a withholding tax imposed at the rate of 31% on
certain payments to persons who fail to furnish the information required under
United States information reporting requirements. In the case of payments of
interest to you, backup withholding tax and certain information reporting will
not apply to such payments with respect to which either the certification
described under "-- Interest" above has been received or an exemption has
otherwise been established, provided that neither we nor our payment agent has
actual knowledge that you are a United States person or that the conditions of
any other exemption are not in fact satisfied.
Payments to you of the proceeds from the sale of a note made to or through
a foreign office of a broker generally will not be subject to information
reporting or backup withholding. However, if the broker is a United States
person, a controlled foreign corporation for U.S. tax purposes, or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a
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specified three-year period, information reporting (but not backup withholding)
may apply to such payments, unless the broker has documentary evidence in its
records that you are not a United States person and certain other conditions are
met or you otherwise establish an exemption.
Payments to you of the proceeds from the sale of a note made to or through
the U.S. office of a broker are subject to information reporting and backup
withholding unless you certify under penalties of perjury as to your non-U.S.
status or otherwise establish an exemption from information reporting and backup
withholding.
Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules may be refunded or credited against your United States
federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service.
The United States Treasury Department has issued new regulations regarding
the withholding and information reporting rules discussed above. In general, the
new regulations do not significantly alter the substantive withholding and
information reporting requirements but rather unify current certification
procedures and forms and clarify reliance standards. The new regulations
require, however, that a foreign person furnish its taxpayer identification
number in certain circumstances to claim a reduction in U.S. federal withholding
tax and new rules are provided for foreign persons that hold debt instruments
through a foreign intermediary. The new regulations are generally effective for
payments made after December 31, 2000, subject to certain transition rules. You
should consult your own tax advisor with respect to the impact, if any, of the
new regulations.
DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT FACILITY
On May 5, 1999 we entered into a new $500 million global corporate credit
facility with Chase Bank of Texas, National Association and several other
lenders, including affiliates of each of Salomon Smith Barney Inc., Banc One
Capital Markets, Inc., ABN AMRO Incorporated, and Credit Lyonnais Securities.
The credit facility consists of the following two tranches:
- $350 million five-year tranche maturing on May 5, 2004; and
- $150 million 364-day tranche maturing on May 4, 2000, which converts into
a one-year loan if this tranche is not renewed.
The credit facility is unsecured, but amounts outstanding are guaranteed by
some of our subsidiaries. Interest is calculated, at our option, by using either
LIBOR or Chase's prime rate, in each case adding a margin which depends on our
credit rating and our ratio of total debt to EBITDAX. The current interest rate
for amounts outstanding is LIBOR plus 1.25%. We have agreed to pay a fee of 0.2%
for undrawn amounts under the 364-day tranche and a fee of 0.25% for undrawn
amounts under the five-year tranche. We have the option to increase the amount
available under the credit facility to up to $600 million by adding additional
lenders.
The credit facility provides that we must maintain a consolidated net worth
of not less than $565 million, which may be adjusted. Covenants contained in the
credit facility prevent us from:
- incurring indebtedness in excess 3.5 times EBITDAX for the four most
recent consecutive fiscal quarters;
- paying dividends or repurchasing capital stock if after giving effect to
the dividend payment or the repurchase a default or event of default
would occur; and
- incurring liens other than permitted liens securing indebtedness of up to
$50 million.
We used the amounts borrowed by us under the credit facility during the
last 12 months for working capital purposes.
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SANTA FE DEBENTURES
In a public offering in May 1994, Santa Fe issued $100 million of 11%
senior subordinated debentures due 2004. The debentures were issued for 99.266%
of face value, and Santa Fe received proceeds of $96.1 million after deducting
related costs and expenses of $3.2 million. Interest on the debentures is
payable semi-annually on May 15 and November 15 of each year. The debentures are
unsecured and rank subordinate in right of payment to all existing and future
senior indebtedness, equally and ratably with any future senior subordinated
indebtedness and senior to any future junior subordinated indebtedness of Santa
Fe Snyder. On May 4, 1999, Santa Fe called these debentures for redemption, and
established June 30, 1999 as the redemption date.
SNYDER NOTES
In June 1997, Snyder issued $175.0 million of 8.75% senior subordinated
notes due June 15, 2007. The net proceeds of the offering were $168.3 million
which were used to redeem Snyder's convertible subordinated notes due May 15,
2001, and reduce the balance outstanding under its credit facility. The notes
contain covenants that, among other things, limit the ability of Santa Fe
Snyder, as the successor by merger under the notes, to incur additional
indebtedness, pay dividends, engage in transactions with shareholders and
affiliates, create liens, sell assets, engage in mergers and consolidations and
make investments in unrestricted subsidiaries. These restricted payments are
limited by a formula that includes proceeds from certain securities, cash flow
and other items. Upon the occurrence of a change of control, as defined in the
notes, Santa Fe Snyder would be obligated to make an offer to purchase all
outstanding notes at a price of 101% of the principal amount thereof. In
addition, Santa Fe Snyder would be obligated, subject to certain conditions, to
make offers to purchase the notes with the net cash proceeds of certain asset
sales or other dispositions of assets at a price of 100% of the principal amount
thereof. On May 5, 1999, as a result of the merger, Santa Fe Snyder became the
obligor under these notes.
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement
dated June 10, 1999, each underwriter named below has severally agreed to
purchase, and Santa Fe Snyder has agreed to sell to such underwriter, the
principal amount of notes set forth opposite the name of such underwriter:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME OF NOTES
---- ----------------
<S> <C>
Salomon Smith Barney Inc. .................................. $ 50,000,000
Donaldson, Lufkin & Jenrette Securities Corporation......... 25,312,500
Bear, Stearns & Co. Inc. ................................... 10,937,500
Credit Suisse First Boston Corporation...................... 10,937,500
Goldman, Sachs & Co. ....................................... 10,937,500
ABN AMRO Incorporated....................................... 5,625,000
Banc One Capital Markets, Inc. ............................. 5,625,000
Credit Lyonnais Securities (USA) Inc. ...................... 5,625,000
------------
Total............................................. $125,000,000
============
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the notes if they purchase any of
the notes.
The underwriters propose to offer some of the notes directly to the public
at the public offering price set forth on the cover page of this prospectus
supplement and some of the notes to certain dealers at the public offering price
less a concession not in excess of 0.75% of the principal amount of the notes.
The underwriters may allow, and such dealers may reallow a concession not in
excess of 0.375% of the principal amount of the notes on sales to certain other
dealers. After the initial offering of the notes to the public, the public
offering price and such concessions may be changed by the representatives.
S-28
<PAGE> 32
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by Santa Fe Snyder in connection with this offering
(expressed as percentage of the principal amount of the notes).
<TABLE>
<CAPTION>
PAID BY
SANTA FE SNYDER
---------------
<S> <C>
Per note.................................................... 1.5%
</TABLE>
In connection with the offering, Salomon Smith Barney Inc., on behalf of
the underwriters, may purchase and sell notes in the open market. These
transactions may include over-allotment, syndicate covering transactions and
stabilizing transactions. Over-allotment involves syndicate sales of notes in
excess of the principal amount of notes to be purchased by the underwriters in
the offering, which creates a syndicate short position. Syndicate covering
transactions involve purchases of the notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of notes made for
the purpose of preventing or retarding a decline in the market price of the
notes while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases notes originally sold by that syndicate
member.
Any of these activities may cause the price of the notes to be higher than
the price that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected in the over-the-counter market
or otherwise and, if commenced, may be discontinued at any time.
Santa Fe Snyder estimates that its total expenses of this offering will be
$500,000.
The underwriters have performed certain investment banking and advisory
services for Santa Fe Snyder from time to time for which they have received
customary fees and expenses. The underwriters may, from time to time, engage in
transactions with and perform services for Santa Fe Snyder in the ordinary
course of their business. In connection with the merger of Snyder with and into
Santa Fe, Donaldson, Lufkin & Jenrette Securities Corporation served as a
financial advisor to Santa Fe for which it received a customary fee. Salomon
Brothers Holding Company Inc., an affiliate of Salomon Smith Barney Inc., is a
co-agent and a lender to Santa Fe Snyder under the credit facility. Bank One,
Texas, N.A., an affiliate of Banc One Capital Markets, Inc., is the managing
agent and a lender to Santa Fe Snyder under the credit facility. ABN AMRO Bank
N.V., an affiliate of ABN AMRO Incorporated, is a co-agent and a lender to Santa
Fe Snyder under the credit facility. Credit Lyonnais New York Branch, an
affiliate of Credit Lyonnais Securities, is a co-agent and a lender to Santa Fe
Snyder under the credit facility. Salomon Brothers Holding Company Inc., Bank
One, Texas, N.A., ABN AMRO Bank N.V. and Credit Lyonnais New York Branch will
receive their proportionate share of any repayment by Santa Fe Snyder of amounts
outstanding under the credit facility from the proceeds of the offering.
Santa Fe Snyder has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the underwriters may be required to make in respect of
any of those liabilities.
EXPERTS
The financial statements incorporated in this prospectus supplement by
reference to the Annual Report on Form 10-K/A of Santa Fe Energy Resources, Inc.
for the year ended December 31, 1998, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
S-29
<PAGE> 33
The financial statements incorporated in this prospectus supplement by
reference to Snyder Oil Corporation's Annual Report on Form 10-K/A for the year
ended December 31, 1998, as amended, have been so incorporated in reliance on
the report of Arthur Andersen LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The legality of the notes will be passed upon for us by Andrews & Kurth
L.L.P., Houston, Texas. Certain legal matters with respect to the notes will be
passed upon for the underwriters by Vinson & Elkins L.L.P., Houston, Texas.
Vinson & Elkins L.L.P. provides legal services to Santa Fe Snyder unrelated to
this offering.
S-30
<PAGE> 34
GLOSSARY OF COMMONLY USED OIL AND GAS TERMS
The following are abbreviations and definitions of terms commonly used in
the oil and gas industry and this document. Unless otherwise indicated in this
document, natural gas volumes are stated at the legal pressure base of the state
or area in which the reserves are located and at 60 degrees Fahrenheit.
"Bbl" means a barrel of 42 U.S. gallons of oil.
"Bcf" means billion cubic feet of natural gas.
"BOE" means barrels of oil equivalent. BOEs are determined using the ratio
of six Mcf of natural gas to one Bbl of oil.
"BOEPD" means barrels of oil equivalent per day.
"Btu" or "British Thermal Unit" means the quantity of heat required to
raise the temperature of one pound of water by one degree Fahrenheit.
"MBbls" means thousand barrels of oil.
"MBOE" means thousand barrels of oil equivalent.
"Mcf" means thousand cubic feet of natural gas.
"Mcfe" means a thousand cubic feet equivalent, which is determined using
the ratio of one barrel of oil, condensate or natural gas liquids to six Mcf of
natural gas.
"MMBbls" means million barrels of oil.
"MMBOE" means million barrels of oil equivalent.
"MMBtu" means million British Thermal Units.
"MMcf" means million cubic feet of natural gas.
"Present Value of Future Net Revenues" or "Present Value of Proved
Reserves" means the present value of estimated future revenues to be generated
from the production of proved reserves calculated in accordance with Securities
and Exchange Commission guidelines, net of estimated production and future
development costs, using prices and costs as of the date of estimation without
future escalation, without giving effect to non-property related expenses such
as general and administrative expenses, debt service, future income tax expense
and depreciation, depletion and amortization, and discounted using an annual
discount rate of 10%.
"Standardized Measure of Discounted Future Net Cash Flows" means the
Present Value of Future Net Revenues after income taxes discounted at 10%.
A-1
<PAGE> 35
PROSPECTUS
$500,000,000
SANTA FE SNYDER CORPORATION
DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
SFS CAPITAL TRUST I
SFS CAPITAL TRUST II
TRUST PREFERRED SECURITIES
GUARANTEED BY SANTA FE SNYDER CORPORATION
Santa Fe Snyder Corporation may offer and sell in one or more offerings:
- unsecured debt securities consisting of senior notes and debentures and
subordinated notes and debentures and/or other unsecured evidences of
indebtedness in one or more series;
- shares of preferred stock, in one or more series, which may be
convertible or exchangeable for common stock or debt securities; and
- shares of common stock.
SFS Capital Trust I and SFS Capital Trust II, each a wholly owned
subsidiary of Santa Fe Snyder Corporation, may offer and sell in one or more
offerings:
- trust preferred securities representing undivided beneficial interests in
the assets of each trust. As described in this document, Santa Fe Snyder
will provide a limited guarantee of the payment by each trust of
distributions on the trust preferred securities and the payment upon
liquidation and redemption.
The aggregate initial offering price of the securities that we offer will
not exceed $500,000,000. We will offer the securities in amounts, at prices and
on terms to be determined by market conditions at the time of our offerings.
We will provide the specific terms of the securities in supplements to this
prospectus. You should read this prospectus and the prospectus supplements
carefully before you invest in any of our securities. This prospectus may not be
used to consummate sales of our securities unless it is accompanied by a
prospectus supplement.
Santa Fe Snyder's common stock is listed for trading on the New York Stock
Exchange under the symbol "SFS".
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
June 4, 1999
<PAGE> 36
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information incorporated by reference or provided in
this prospectus or any prospectus supplement is accurate as of any date other
than the date on the front of each of those documents.
TABLE OF CONTENTS
<TABLE>
<S> <C>
About This Prospectus....................................... 1
Where You Can Find More Information......................... 1
Forward-Looking Statements.................................. 2
Santa Fe Snyder Corporation................................. 2
The Trusts.................................................. 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 4
Plan of Distribution........................................ 4
Description of Debt Securities.............................. 5
Description of Equity Securities............................ 12
Description of Trust Preferred Securities................... 16
Description of Trust Preferred Securities Guarantees........ 17
Relationship Among the Trust Preferred Securities, the
Subordinated Debt Securities and the Guarantees........... 20
Legal Opinions.............................................. 21
Experts..................................................... 21
</TABLE>
i
<PAGE> 37
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may, over the next two years, sell different types
of securities described in this prospectus in one or more offerings up to a
total offering amount of $500 million. This prospectus provides you with a
general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering and the securities offered by us in
that offering. The prospectus supplement may also add, update or change
information in this prospectus. You should read both this prospectus and any
prospectus supplement together with additional information described under the
heading "Where You Can Find More Information."
In this prospectus references to "Santa Fe Snyder," "we," "us" and "our"
mean Santa Fe Snyder Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. Our SEC filings are available to the public over the Internet or at the
SEC's web site at http://www.sec.gov. You may also read and copy any document we
file at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities:
- Snyder Oil Corporation's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1998 as amended by Amendment No. 2 filed on April 30,
1999;
- Santa Fe Energy Resources, Inc.'s Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1998;
- Santa Fe Energy Resources, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999;
- Santa Fe Snyder Corporation's Current Report on Form 8-K filed on May 6,
1999 announcing the consummation of the merger of Snyder Oil Corporation
with and into Santa Fe Energy Resources, Inc.;
- Santa Fe Snyder Corporation's Current Report on Form 8-K/A filed on May
24, 1999 containing pro forma financial information giving effect to the
merger; and
- the descriptions of our common stock and preferred stock contained in our
registration statements on Form S-2 (File No. 33-32831) filed on February
21, 1990 and on Form 8-A filed February 28, 1997, as amended by Form
8-A/A filed on May 11, 1999.
You may request a copy of these filings, at no cost, by writing or calling
us at the following address:
Kathy E. Hager
Investor Relations
Santa Fe Snyder Corporation
1616 S. Voss Road
Houston, Texas 77057
(713) 507-5315
1
<PAGE> 38
FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus, any prospectus
supplement and the documents we have incorporated by reference contain
forward-looking statements. Such statements use forward-looking words such as
"anticipate," "believe," "expect," "may," "project," "will" or other similar
words and discuss "forward-looking" information including the following:
- estimated production levels;
- anticipated capital expenditures;
- future cash flows and borrowings;
- pursuit of potential future acquisition opportunities; and
- sources of funding for exploration.
These forward-looking statements are based on assumptions that we believe
are reasonable, but they are open to a wide range of uncertainties and business
risks. Factors that could cause actual results to differ materially from those
anticipated are discussed in our periodic filings with the SEC, including Santa
Fe Energy Resources, Inc.'s Annual Report on Form 10-K/A for the year ended
December 31, 1998, Snyder Oil Corporation's Annual Report on Form 10-K/A for the
year ended December 31, 1998, and Santa Fe Energy Resources, Inc.'s Quarterly
Report on Form 10-Q for the quarter ended March 31, 1999.
When considering these forward-looking statements, you should keep in mind
the risk factors and other cautionary statements in this document, any
prospectus supplement and the documents we have incorporated by reference. We
will not update these forward-looking statements unless the securities laws
require us to do so.
SANTA FE SNYDER CORPORATION
Santa Fe Snyder Corporation was created on May 5, 1999 through the
combination by merger of Snyder Oil Corporation with and into Santa Fe Energy
Resources, Inc. Santa Fe Snyder is a large independent oil and natural gas
exploration and production company with operations in the United States,
Southeast Asia, South America and West Africa. On a pro forma combined basis, as
of January 1, 1999, we had estimated proved reserves of 315 million barrels of
oil equivalent, with 65% domestic reserves and 35% international reserves. 60%
of our estimated proved reserves are oil and 40% are natural gas. Our combined
production for 1999 is estimated to be 105,000 barrels of oil equivalent per
day, with 55% of the combined production natural gas and 70% domestic.
Our principal executive offices are located at 1616 South Voss Road,
Houston, Texas 77057, and our telephone number is (713) 507-5000.
THE TRUSTS
Each of SFS Capital Trust I and SFS Capital Trust II is a statutory
business trust created under Delaware law through the filing of a certificate of
trust with the Delaware Secretary of State. Each trust's business is defined in
a declaration of trust which will be executed by Santa Fe Snyder, as sponsor for
each of the trusts, and the trustees, as defined below, for each of the trusts.
Each declaration will be amended and restated before any sale by that trust of
trust preferred securities. Each declaration will also be qualified as an
indenture under the Trust Indenture Act of 1939, as amended. Each trust exists
for the exclusive purposes of:
- issuing and selling the trust preferred securities and the trust common
securities;
- investing the gross proceeds from the sale of the trust preferred
securities in subordinated debt securities issued by Santa Fe Snyder; and
- engaging in only those other activities necessary or incidental to these
purposes.
2
<PAGE> 39
Santa Fe Snyder will, directly or indirectly, acquire trust common
securities in an aggregate liquidation amount equal to 3% of the total capital
of each of the trusts.
Each trust's business and affairs will be conducted by its trustees. A
majority of the trustees of each trust will be administrative trustees and will
be persons who are employees or officers of or affiliated with Santa Fe Snyder.
One trustee of each trust will be a financial institution that will be
unaffiliated with Santa Fe Snyder and that will act as property trustee and as
indenture trustee for purposes of the Trust Indenture Act, as described in the
applicable prospectus supplement. In addition, unless the property trustees
maintain a principal place of business in the State of Delaware, and otherwise
meet the requirements of applicable law, one trustee of each trust, the Delaware
trustee, will have its principal place of business or reside in the State of
Delaware. The administrative trustees and the property trustees, together with
the Delaware trustee, are referred to in this document as the trustees. Each
trust's business and affairs will be conducted by the trustees appointed by
Santa Fe Snyder, as the direct or indirect holder of all the trust common
securities. Except in limited circumstances, Santa Fe Snyder as the holder of
the trust common securities will be entitled to appoint, remove or replace any
of, or increase or reduce the number of, the trustees of a trust. The
declaration of each trust will govern the duties and obligations of the
trustees. Santa Fe Snyder will pay all fees and expenses related to the trusts
and the offering of trust securities, the payment of which will be guaranteed by
Santa Fe Snyder.
The office of the Delaware trustee for each trust in the State of Delaware
is White Clay Center, Route 273, Newark, Delaware 19711. The principal place of
business of each trust is c/o Santa Fe Snyder Corporation, 1616 South Voss Road,
Suite 1000, Houston, Texas 77057, and its telephone number is (713) 507-5000.
USE OF PROCEEDS
We intend to use the net proceeds we receive from the sale of the
securities offered by this prospectus and the accompanying prospectus supplement
for the repayment of debt and for general corporate purposes, unless we specify
otherwise in the applicable prospectus supplement. General corporate purposes
may include the repayment of existing indebtedness, additions to working
capital, capital expenditures or the financing of possible acquisitions,
including acquisitions of onshore and offshore oil and natural gas properties.
3
<PAGE> 40
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges and
earnings to combined fixed charges and preferred stock dividends of Santa Fe
Energy Resources, Inc., the predecessor of Santa Fe Snyder Corporation, for the
periods indicated. Santa Fe Snyder was created by merger of Snyder Oil
Corporation with and into Santa Fe Energy Resources on May 5, 1999. The
applicable ratios for the combined entity will be set forth in the applicable
prospectus supplement.
<TABLE>
<CAPTION>
SANTA FE ENERGY RESOURCES
----------------------------------------------
THREE
MONTHS
ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
----------- --------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges........................ (a) (a) (a) 4.7 2.3 2.1 1.8
Earnings to Combined Fixed Charges and Preferred
Stock Dividends................................ (b) (b) (b) 2.6 (b) 1.3 1.2
</TABLE>
- ---------------
(a) Earnings during the three months ended March 31, 1999 and 1998 and the year
1998 were insufficient to cover fixed charges (excluding dividends on
preferred stock) by $18 million, $6.3 million and $167.3 million,
respectively.
(b) Earnings during the three months ended March 31, 1999 and 1998 and the
years 1998 and 1996 were insufficient to cover combined fixed charges and
preferred stock dividends by $18 million, $6.3 million, $167.3 million and
$12.7 million, respectively. In the second quarter of 1997, Santa Fe
converted the remaining 1.2 million outstanding shares of Convertible
Preferred Stock, Series 7%, into 2.3 million shares of common stock. Also
in the second quarter of 1997, Santa Fe converted all 10.7 million of its
$.732 Series A Convertible Preferred Stock into 9.1 million shares of
common stock.
For the purpose of computing the ratio of earnings to fixed charges,
earnings means:
- income from continuing operations before income taxes;
- plus fixed charges;
- plus amortization of capitalized interest; and
- less capitalized interest.
Fixed charges means the sum of the following:
- interest, including capitalized interest, on all indebtedness; and
- amortization of debt discount.
PLAN OF DISTRIBUTION
We may sell our securities through agents, underwriters or dealers,
directly to purchasers.
We may designate agents to solicit offers to purchase our securities.
- We will name any agent involved in offering or selling our securities,
and any commissions that we will pay to the agent, in our prospectus
supplement.
- Unless we indicate otherwise in our prospectus supplement, our agents
will act on a best efforts basis for the period of their appointment.
- Our agents may be deemed to be underwriters under the Securities Act of
1933 of any of our securities that they offer or sell.
4
<PAGE> 41
We may use an underwriter or underwriters in the offer or sale of our
securities.
- If we use an underwriter or underwriters, we will execute an underwriting
agreement with the underwriter or underwriters at the time that we reach
an agreement for the sale of our securities.
- We will include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of the
transactions, including the compensation the underwriters and dealers
will receive, in our prospectus supplement.
- The underwriters will use our prospectus supplement to sell our
securities.
We may use a dealer to sell our securities.
- If we use a dealer, we, as principal, will sell our securities to the
dealer.
- The dealer will then sell our securities to the public at varying prices
that the dealer will determine at the time it sells our securities.
- We will include the name of the dealer and the terms of our transactions
with the dealer in our prospectus supplement.
We may directly solicit offers to purchase our securities, and we may
directly sell our securities to institutional or other investors. We will
describe the terms of our direct sales in our prospectus supplement.
We may indemnify agents, underwriters, and dealers against certain
liabilities, including liabilities under the Securities Act of 1933. Our agents,
underwriters, and dealers, or their affiliates, may be customers of, engage in
transactions with or perform services for us, in the ordinary course of
business.
We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering price under
delayed delivery contracts.
- If we use delayed delivery contracts, we will disclose that we are using
them in the prospectus supplement and will tell you when we will demand
payment and delivery of the securities under the delayed delivery
contracts.
- These delayed delivery contracts will be subject only to the conditions
that we set forth in the prospectus supplement.
- We will indicate in our prospectus supplement the commission that
underwriters and agents soliciting purchases of our securities under
delayed delivery contracts will be entitled to receive.
DESCRIPTION OF DEBT SECURITIES
Any debt securities we offer will be our direct, unsecured general
obligations. The debt securities will be either senior debt securities or
subordinated debt securities. The debt securities will be issued under one or
more separate indentures between us and The Bank of New York, as trustee. Senior
debt securities will be issued under a "senior indenture" and subordinated debt
securities will be issued under a "subordinated indenture." Together the senior
indenture and the subordinated indenture are called "indentures."
We have summarized selected provisions of the indentures below. The
following description is a summary of the material provisions of the indentures.
It does not restate those agreements in their entirety. We urge you to read each
of the indentures because each one, and not this description, defines your
rights as holders of the debt securities. The forms of each of the indentures
have been filed as exhibits to the registration statement.
5
<PAGE> 42
GENERAL
The debt securities will be our direct, unsecured obligations. The senior
debt securities will rank equally with all of our other senior and
unsubordinated debt. The subordinated debt securities will have a junior
position to all of our senior debt securities.
If SFS Capital Trust I or SFS Capital Trust II issue trust preferred
securities, Santa Fe Snyder will also issue subordinated debt securities to SFS
Capital Trust I or SFS Capital Trust II or a trustee of either trust. If the
trusts are subsequently dissolved upon the occurrence of the events described in
the prospectus supplement relating to the trust preferred securities, the trusts
or trustees may distribute these subordinated debt securities ratably to the
holders of trust preferred securities.
A prospectus supplement and a supplemental indenture, board resolution or
officers certificate relating to any series of debt securities being offered
will include specific terms relating to the offering. These terms will include
some or all of the following:
- the title and type of the debt securities;
- the total principal amount of the debt securities;
- the percentage of the principal amount at which the debt securities will
be issued and any payments due if the maturity of the debt securities is
accelerated;
- the dates on which the principal of the debt securities will be payable;
- the interest rate which the debt securities will bear and the interest
payment dates for the debt securities;
- the form of the subordinated debt securities Santa Fe Snyder will issue
to the trusts or a trustee if the trusts issue trust preferred
securities;
- in the case of subordinated debt securities issued to the trusts or
trustees, the right to extend payment periods and the duration of that
extension;
- any optional redemption periods;
- any sinking fund or other provisions that would obligate us to repurchase
or otherwise redeem some or all of the debt securities;
- any changes to or additional events of defaults or covenants;
- any special tax implications of the debt securities, including provisions
for original issue discount securities, if offered;
- restrictions on the declaration of dividends or requiring the maintenance
of any asset ratio or the creation or maintenance of reserves; and
- any other terms of the debt securities.
None of the indentures limits the amount of debt securities that may be
issued. Each indenture allows debt securities to be issued up to the principal
amount that may be authorized by us and may be in any currency or currency unit
designated by us.
Debt securities of a series may be issued in registered, bearer, coupon or
global form.
DENOMINATIONS
The prospectus supplement for each issuance of debt securities will state
whether the securities will be issued in registered form of $1,000 each or
multiples thereof or bearer form of $5,000 each.
6
<PAGE> 43
SUBORDINATION
Under the subordinated indenture, payment of the principal, interest and
any premium on the subordinated debt securities will generally be subordinated
and junior in right of payment to the prior payment in full of all senior debt
securities. The subordinated indenture provides that no payment of principal,
interest and any premium on the subordinated debt securities may be made in the
event:
- of any insolvency, bankruptcy or similar proceeding involving us or our
property, or
- we fail to pay the principal, interest, any premium or any other amounts
on any senior debt when due.
The subordinated indenture will not limit the amount of senior debt that we
may incur.
Senior debt includes all notes or other unsecured evidences of
indebtedness, including guarantees given by us, for money borrowed by us, not
expressly subordinate or junior in right of payment to any of our other
indebtedness.
CONSOLIDATION, MERGER OR SALE
Each indenture generally permits a consolidation or merger between us and
another corporation or other entity. They also permit the sale by us of all or
substantially all of our property and assets. If this occurs, the remaining or
acquiring corporation or other entity will assume all of our responsibilities
and liabilities under the indentures, including the payment of all amounts due
on the debt securities and performance of the covenants in the indentures.
However, we will consolidate or merge with or into any other corporation or
other entity or sell all or substantially all of our assets only according to
the terms and conditions of the indentures. The remaining or acquiring
corporation or other entity will be substituted for us in the indentures with
the same effect as if it had been an original party to the indentures.
Thereafter, the successor corporation or other entity may exercise our rights
and powers under any indenture, in our name or in its own name. Any act or
proceeding required or permitted to be done by our board or any of our officers
may be done by the board or officers of the successor corporation or other
entity. If we sell all or substantially all of our assets, we will be released
from all our liabilities and obligations under any indenture and under the debt
securities.
MODIFICATION OF INDENTURES
Under each indenture our rights and obligations and the rights of the
holders may be modified with the consent of the holders of a majority in
aggregate principal amount of the outstanding debt securities of each series
affected by the modification. No modification of the principal or interest
payment terms, and no modification reducing the percentage required for
modifications, is effective against any holder without its consent.
EVENTS OF DEFAULT
"Event of default" when used in an indenture, will mean any of the
following:
- failure to pay the principal of or any premium on any debt security when
due;
- failure to deposit any sinking fund payment when due;
- failure to pay interest on any debt security for 60 days;
- failure to perform any other covenant in the indenture that continues for
90 days after being given written notice;
- certain events in bankruptcy, insolvency or reorganization of Santa Fe
Snyder; or
- any other event of default included in any indenture or supplemental
indenture.
7
<PAGE> 44
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under an indenture. The trustee may withhold notice to the
holders of debt securities of any default, except in the payment of principal or
interest, if it considers such withholding of notice to be in the best interests
of the holders.
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in aggregate principal
amount of the debt securities of the series may declare the entire principal of
all the debt securities of that series to be due and payable immediately. If
this happens, subject to certain conditions, the holders of a majority of the
aggregate principal amount of the debt securities of that series can void the
declaration.
Other than its duties in case of a default, a trustee is not obligated to
exercise any of its rights or powers under any indenture at the request, order
or direction of any holders, unless the holders offer the trustee reasonable
indemnity. If they provide this reasonable indemnification, the holders of a
majority in principal amount of any series of debt securities may direct the
time, method and place of conducting any proceeding or any remedy available to
the trustee, or exercising any power conferred upon the trustee, for any series
of debt securities.
COVENANTS
Under the indentures, we will:
- pay the principal of, and interest and any premium on, the debt
securities when due;
- maintain a place of payment;
- deliver a report to the trustee at the end of each fiscal year reviewing
our obligations under the indentures; and
- deposit sufficient funds with any paying agent on or before the due date
for any principal, interest or premium.
If the trusts issue trust preferred securities and Santa Fe Snyder issues
subordinated debt securities to the trust or a trust in connection with the
issuance of the trust preferred securities and (1) an event of default as
defined herein has occurred, (2) Santa Fe Snyder is in default with respect to
its payment of any obligations under the related trust guarantee or the
guarantee of the trust common securities or (3) Santa Fe Snyder has given notice
of its election to defer payments of interest on these subordinated debt
securities by extending the interest payment period as provided in the indenture
governing these subordinated debt securities, and this interest payment period,
or any extension of this interest payment period, is continuing, Santa Fe Snyder
will be subject to restrictions regarding
- the declaration of payment of dividends on, and the making of guarantee
payments with respect to, any of its capital stock; and
- the making of any payment of interest, principal or premium, if any, on
or the repayment, repurchase or redemption of debt securities including
guarantees issued by Santa Fe Snyder which rank equally with or junior to
these subordinated debt securities.
These restrictions will be described in more detail in the prospectus
supplement relating to these subordinated debt securities.
If the trusts issue trust preferred securities and Santa Fe Snyder issues
subordinated debt securities to the trust or a trustee in connection with the
issuance of the trust preferred securities, for so long as the
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trust preferred securities remain outstanding, Santa Fe Snyder will covenant in
the declaration of the trusts, the related guarantees or the indenture governing
these subordinated debt securities:
- To directly or indirectly maintain 100% ownership of the common
securities of each trust; provided, however, that any permitted successor
under the indenture governing the subordinated debt securities may
succeed to Santa Fe Snyder's ownership of the trust common securities;
and
- Not to voluntarily terminate, wind-up or liquidate either SFS Capital
Trust I or SFS Capital Trust II, except in connection with
-- the distribution of subordinated debt securities to the holders of
trust preferred securities in liquidation of either trust;
-- the redemption of all trust preferred securities of either trust; or
-- mergers, consolidations or amalgamations permitted by the declaration
of either trust.
Santa Fe Snyder will also covenant to use its commercially reasonable
efforts, consistent with the terms and provisions of the declaration of either
trust, to cause each trust to remain classified as a grantor trust and not
taxable as a corporation for U.S. federal income tax purposes.
PAYMENT AND TRANSFER
Santa Fe Snyder will pay principal, interest and any premium on fully
registered securities at designated places. Unless otherwise specified in a
prospectus supplement, we will make payment by check mailed to the persons in
whose names the debt securities are registered on days specified in the
indentures or any prospectus supplement.
We will maintain a corporate trust office of the trustee or another office
or agency for the purpose of transferring or exchanging fully registered
securities, without the payment of any service charge except for any tax or
governmental charge imposed in connection with that transfer or exchange.
GLOBAL SECURITIES
We may issue one or more series of the debt securities as permanent global
debt securities deposited with a depositary. Unless otherwise indicated in the
prospectus supplement, the following is a summary of the depository arrangements
applicable to debt securities issued in permanent global form and for which The
Depository Trust Company acts as depositary.
Each global debt security will be deposited with, or on behalf of, DTC, as
depositary, or its nominee and registered in the name of a nominee of DTC.
Except under the limited circumstances described below, global debt securities
are not exchangeable for definitive certificated debt securities.
Ownership of beneficial interests in a global debt security is limited to
participants that have accounts with DTC or its nominee, or persons that may
hold interests through those participants. In addition, ownership of beneficial
interests by participants in a global debt security will be evidenced only by,
and the transfer of that ownership interest will be effected only through,
records maintained by DTC or its nominee for a global debt security. Ownership
of beneficial interests in a global debt security by persons that hold through
participants will be evidenced only by, and the transfer of that ownership
interest within that participant will be effected only through, records
maintained by that participant. DTC has no knowledge of the actual beneficial
owners of the debt securities. Beneficial owners will not receive written
confirmation from DTC of their purchase, but beneficial owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the participants through which the
beneficial owners entered the transaction.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in a global debt
security.
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We will make payment of principal of, and interest on, debt securities
represented by a global debt security registered in the name of or held by DTC
or its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner and holder of the global debt security representing those debt
securities. DTC has advised us that upon receipt of any payment of principal of,
or interest on, a global debt security, DTC will immediately credit accounts of
participants on its book-entry registration and transfer system with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of that global debt security as shown in the records of DTC. Payments by
participants to owners of beneficial interests in a global debt security held
through those participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the sole
responsibility of those participants, subject to any statutory or regulatory
requirements that may be in effect from time to time.
Neither we, any trustee nor any of our respective agents, will be
responsible for any aspect of the records of DTC, any nominee or any participant
relating to, or payments made on account of, beneficial interests in a permanent
global debt security or for maintaining, supervising or reviewing any of the
records of DTC, any nominee or any participant relating to such beneficial
interests. Neither we or any of our agents nor the trustee or any of its agents
shall be liable for any delay by DTC or its nominee or its participants in
identifying the beneficial owners, and each such person may conclusively rely
on, and shall be protected in relying on, instructions from DTC or such nominee
or participants for all purposes.
A global debt security is exchangeable for definitive debt securities
registered in the name of, and a transfer of a global debt security may be
registered to, any person other than DTC or its nominee, only if:
- DTC notifies us that it is unwilling or unable to continue as depositary
for that global debt security or at any time DTC ceases to be registered
under the Exchange Act;
- we determine in our discretion that the global debt security shall be
exchangeable for definitive debt securities in registered form; or
- there shall have occurred and be continuing an event of default or an
event which, with notice or the lapse of time or both, would constitute
an event of default under the debt securities.
Any global debt security that is exchangeable pursuant to the preceding
sentence will be exchangeable in whole for definitive debt securities in
registered form, of like tenor and of an equal aggregate principal amount as the
global debt security, in denominations specified in the applicable prospectus
supplement, if other than $1,000 and integral multiples of $1,000. The
definitive debt securities will be registered by the registrar in the name or
names instructed by DTC. We expect that these instructions may be based upon
directions received by DTC from its participants with respect to ownership of
beneficial interests in the global debt security.
Except as provided above, owners of the beneficial interests in a global
debt security will not be entitled to receive physical delivery of debt
securities in definitive form and will not be considered the holders of debt
securities for any purpose under the indentures. No global debt security shall
be exchangeable except for another global debt security of like denomination and
tenor to be registered in the name of DTC or its nominee. Accordingly, each
person owning a beneficial interest in a global debt security must rely on the
procedures of DTC and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder under the global debt security or the indentures.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a global
debt security desires to give or take any action that a holder is entitled to
give or take under the debt securities or the indentures, DTC would authorize
the participants holding the relevant beneficial interests to give or take that
action, and those participants would authorize beneficial owners owning through
those participants to give or take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
DTC has advised us that DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York
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Uniform Commercial Code and a "clearing agency" registered under the Exchange
Act. DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
in those securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to DTC's book-entry system is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the SEC.
DISCHARGE AND DEFEASANCE
We will be discharged from our obligations on the debt securities of any
series at any time if we deposit with the trustee sufficient cash or government
securities to pay the principal, interest, any premium and any other sums due to
the stated maturity date or a redemption date of the debt securities of the
series. If this happens, the holders of the debt securities of the series will
not be entitled to the benefits of the indenture except for registration of
transfer and exchange of debt securities and replacement of lost, stolen or
mutilated debt securities. In addition, we will be released from our obligations
to comply with the covenant in the indentures to provide reports and from
restrictions in the indentures on our ability to merge, consolidate or sell all
or substantially all of our assets and on our ability to cease our existence,
and the limitations in the indentures on liens and sale and leaseback
transactions with respect to securities of any series if we irrevocably deposit
with the trustee, in trust, cash or government securities to pay the principal,
interest, premium, if any, and any other sums due to the stated maturity date or
applicable redemption date of the securities of such series and we comply with
certain other conditions. If this happens, our failure to comply with the
covenants described in the preceding sentence will not constitute a default or
event of default in respect of the securities of such series.
Under Federal income tax law as of the date of this prospectus, a discharge
described in the preceding paragraph may be treated as an exchange of the
related debt securities. Each holder might be required to recognize gain or loss
equal to the difference between the holder's cost or other tax basis for the
debt securities and the value of the holder's interest in the trust. Holders
might be required to include as income a different amount than would be
includable without the discharge. Prospective investors should seek tax advice
to determine their particular consequences of a discharge, including the
applicability and effect of tax laws other than the Federal income tax law.
In addition, we may terminate our obligations under the securities of any
series, other than our obligation to pay the principal of, premium, if any and
accrued and unpaid interest on such securities of any series and certain other
obligations, provided that (a) we either
(1) deliver all outstanding securities (other than securities for which
payment amounts have been deposited with the trustee as described in
the second preceding paragraph) to the trustee for cancellation; or
(2) all such securities not so delivered for cancellation have either
become due and payable or will become due and payable at their stated
maturity within one year or are called for redemption within one year,
and in the case of this clause (2) we have deposited with the trustee
in trust an amount of money sufficient to pay and disclose the entire
indebtedness as such securities, including interest to the stated
maturity or applicable redemption date; and
(b) in the case of either clause (a)(1) or (a)(2) above, we comply with any
additional conditions specified to be applicable with respect to the covenant
defeasance of the securities of such series.
MEETINGS
Each indenture contains provisions describing how meetings of the holders
of debt securities of a series may be convened. A meeting may be called at any
time by the trustee, and also, upon request, by us
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or the holders of at least 10% in principal amount of the outstanding debt
securities of a series. A notice of the meeting must always be given in the
manner described under "-- Notices" below. Generally speaking, except for any
consent that must be given by all holders of a series as described under
"-- Modification of Indentures" above, any resolution presented at a meeting of
the holders of a series of debt securities may be adopted by the affirmative
vote of the holders of a majority in principal amount of the outstanding debt
securities of that series, unless the indenture allows the action to be voted
upon to be taken with the approval of the holders of a different specific
percentage of principal amount of outstanding debt securities of a series. In
that case, the holders of outstanding debt securities of at least the specified
percentage must vote in favor of the action. Any resolution passed or decision
taken at any meeting of holders of debt securities of any series in accordance
with the applicable indenture will be binding on all holders of debt securities
of that series and any related coupons, unless, as discussed in "-- Modification
of Indentures" above, the action is only effective against holders that have
approved it. The quorum at any meeting called to adopt a resolution, and at any
reconvened meeting, will be holders holding or representing a majority in
principal amount of the outstanding debt securities of a series.
GOVERNING LAW
Each indenture and the debt securities will be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of laws principles.
NOTICES
Notices to holders of debt securities will be given by mail to the
addresses of such holders as they appear in the security register.
DESCRIPTION OF EQUITY SECURITIES
GENERAL
As of the date of this prospectus, Santa Fe Snyder is authorized to issue
up to 350,000,000 shares of capital stock, including up to 300,000,000 shares of
common stock, par value $.01 per share, and up to 50,000,000 shares of preferred
stock, par value $.01 per share. As of May 10, 1999, we had 170,958,620 shares
of common stock and no shares of preferred stock outstanding. The number of
shares of common stock outstanding does not give effect to adjustments for
fractional shares resulting from the conversion of shares of common stock of
Snyder Oil Corporation into Santa Fe Snyder shares in the merger of Snyder into
Santa Fe Energy Resources. As of that date, we also had approximately 14,310,633
shares of common stock reserved for issuance upon exercise of options or in
connection with other awards outstanding under various employee or director
incentive, compensation and option plans. In addition, as of that date we had
3,000,000 shares of preferred stock authorized for issuance as Series A Junior
Participating Preferred Stock under the rights agreement of Santa Fe Snyder. For
a description of the rights agreement, see "-- Stockholder Rights Agreement" on
page 14 of this prospectus.
The following is a summary of the key terms and provisions of Santa Fe
Snyder's equity securities. You should refer to the applicable provisions of our
Restated Certificate of Incorporation, Bylaws, the Delaware General Corporation
Law and the documents we have incorporated by reference for a complete statement
of the terms and rights of our capital stock.
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
Santa Fe Snyder is a Delaware corporation subject to Section 203 of the
Delaware General Corporation Law (the DGCL). Generally, Section 203 prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless (1)
prior to such date, either the business combination or such transaction which
resulted in the stockholder becoming an interested stockholder is approved by
the board of directors of the corporation, (2) upon consummation
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of the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock, or (3) on or after such date, the business combination is approved
by the board of directors of the corporation and by the affirmative vote at
least 66 2/3% of the outstanding voting stock that is not owned by the
interested stockholder. A "business combination" includes mergers, asset sales
and other transactions resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is a person who, together with
affiliates and associates, owns, or, within three years, did own, 15% or more of
the corporation's outstanding voting stock.
LIMITATION ON CHANGES IN CONTROL
Certain of the above provisions of Santa Fe Snyder's Restated Certificate
of Incorporation and By-Laws and the provisions of Section 203 of the DGCL could
have the effect of delaying, deferring or preventing a change in control of
Santa Fe Snyder or the removal of existing management or deterring potential
acquirors from making an offer to stockholders of Santa Fe Snyder. This could be
the case notwithstanding that a majority of the stockholders might benefit from
such a change in control or offer. In addition, the issuance of shares of
preferred stock, or the issuance of rights to purchase such shares, could be
used to discourage an unsolicited acquisition proposal. For instance, the
issuance of a series of preferred stock might impede a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
preferred stock could adversely affect the voting power of the holders of common
stock.
PROVISIONS OF THE RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS
Santa Fe Snyder's Restated Certificate of Incorporation provides that
stockholders may not act by written consent in lieu of a meeting. The Restated
Certificate of Incorporation further provides that the number of directors will
not be fewer than three nor more than 15. It also provides for a classified
board of directors, consisting of three classes as nearly equal in size as
practicable. Each class holds office until the third annual stockholders'
meeting for the election of directors after the annual meeting at which that
class was elected. An amendment to the Restated Certificate of Incorporation
relating to the composition and classification of the board of directors, an
amendment of the Santa Fe Snyder bylaws, the issuance of rights to purchase
Santa Fe Snyder capital stock and limitations on the liability of directors,
requires the vote of at least 80% of the stockholders entitled to vote in an
election of directors, voting together as a single class.
COMMON STOCK
The holders of common stock of Santa Fe Snyder are entitled to one vote for
each share held of record on all matters submitted to a vote of stockholders.
Cumulative voting rights are denied. Subject to preferences that may be
applicable to any outstanding preferred stock, holders of common stock are
entitled to receive ratably dividends as they may be declared by the board of
directors of Santa Fe Snyder out of funds legally available for dividends. In
the event of a liquidation or dissolution, holders of common stock are entitled
to share ratably in all assets remaining after payment of liabilities and the
liquidation preference of any outstanding preferred stock.
Holders of common stock have no preemptive rights and have no rights to
convert their common stock into any other securities. The common stock is not
redeemable or entitled to the benefits of any sinking fund. All of the
outstanding shares of common stock are, the shares of common stock issued
pursuant to the merger will be, and any additional common stock issued will be,
duly authorized, validly issued, fully paid and nonassessable. First Chicago
Trust Company of New York is the transfer agent and registrar for the common
stock.
Santa Fe Snyder's outstanding shares of common stock are listed on the New
York Stock Exchange under the symbol "SFS". Any additional common stock issued
will also be listed on the NYSE.
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PREFERRED STOCK
Santa Fe Snyder may issue shares of preferred stock in one or more series.
Santa Fe Snyder will determine the dividend, voting, conversion and other rights
of the series being offered and the terms and conditions relating to its
offering and sale at the time of the offer and sale.
Santa Fe Snyder's board is authorized to designate any series of preferred
stock and the powers, preferences and rights of the shares of such series and
the qualifications, limitations or restrictions thereof without further action
by the holders of the common stock. There are 3,000,000 shares designated as
Series A Junior Participating Preferred Stock. As of May 10, 1999, there were no
shares of Series A Junior Participating Preferred Stock outstanding.
The particular terms of any series of preferred stock being offered by us
under this shelf registration will be described in the applicable prospectus
supplement relating to that series of preferred stock. Those terms may include:
- the number of shares of the series of preferred stock being offered;
- the title and liquidation preference per share of that series of the
preferred stock;
- the purchase price of the preferred stock;
- the dividend rate or method for determining the dividend rate;
- the dates on which dividends will be paid;
- whether dividends on that series of preferred stock will be cumulative or
non-cumulative and, if cumulative, the dates from which dividends shall
commence to accumulate;
- any redemption or sinking fund provisions applicable to that series of
preferred stock;
- any conversion provisions applicable to that series of preferred stock;
or
- any additional dividend, liquidation, redemption, sinking fund and other
rights and restrictions applicable to that series of preferred stock.
You should also refer to the certificate of designations relating to the
series of the preferred stock for the complete terms of that preferred stock.
The certificate of designations for a particular series of preferred stock will
be filed with the SEC promptly after the offering of that series of preferred
stock.
The preferred stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the applicable prospectus supplement, in the event
we liquidate, dissolve or wind up our business, each series of preferred stock
will have the same rank as to dividends and distributions as each other series
of the preferred stock we may issue in the future. The preferred stock will have
no preemptive rights.
First Chicago Trust Company of New York will be the transfer agent,
registrar and dividend disbursement agent for the preferred stock.
STOCKHOLDER RIGHTS AGREEMENT
Santa Fe Snyder has entered into a stockholder rights agreement, as
amended, with First Chicago Trust Company of New York as rights agent. Pursuant
to the rights agreement, rights attach to each share of common stock outstanding
and entitle the registered holder to purchase from Santa Fe Snyder one one-
hundredth of a share of Series A Junior Participating Preferred Stock at a
purchase price of $42, which is subject to adjustment as described in the rights
agreement. Each share of common stock outstanding has one right attached to it.
The rights will separate from the common stock upon the earlier of:
- 10 business days following a public announcement that, subject to certain
exceptions, a person or group of affiliated or associated persons, also
referred to as an acquiring person, has acquired or
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obtained the right to acquire beneficial ownership of 15% or more of the
outstanding shares of common stock, with the date of this event referred
to as the stock acquisition date; or
- 10 business days or a later date as may be fixed by the board of
directors following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer that would result in a person
or group beneficially owning 15% or more of the outstanding shares of
common stock.
The date of this event is referred to as the distribution date.
Until the distribution date:
- the rights will be evidenced by common stock certificates with a copy of
a summary of the terms of the rights attached and will be transferred
with and only with common stock certificates;
- new common stock certificates will contain a notation incorporating the
rights agreement by reference; and
- the transfer of any certificates representing outstanding common stock
will also constitute the transfer of the rights associated with common
stock represented by the certificate.
The rights will not be exercisable until the distribution date and will
cease to be exercisable at the close of business on July 25, 1999, unless this
date is extended or unless the rights are earlier redeemed or exchanged by Santa
Fe Snyder, as described below.
If Santa Fe Snyder is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earnings power are sold
after a person or group has become a acquiring person, each holder of a right,
other than rights beneficially owned by a acquiring person which will be void,
will have the right to receive, upon the exercise of the right at the current
exercise price of the right, that number of shares of common stock of the
acquiring person which at the time of such transaction will have a market value
of two times the exercise price of the right. In the event that any person or
group of affiliated or associated persons becomes a acquiring person, each
holder of a right, other than rights beneficially owned by the acquiring person
which will then be void, will have the right to receive upon exercise that
number of shares of common stock having a market value of two times the exercise
price of the right.
In general, Santa Fe Snyder may redeem the rights in whole, but not in
part, at any time until 10 days following the stock acquisition date, which
period may be extended at any time while the rights are still redeemable, at a
price of $.01 per right, payable in cash, common stock or other consideration
deemed appropriate by the board. Immediately upon the action of the board
ordering redemption of the rights, the rights will terminate and the only right
of the holders of rights will be to receive the $.01 per right redemption price.
Until a right is exercised, the holder of a right will have no rights as a
stockholder of Santa Fe Snyder, including the right to vote or to receive
dividends, due to his status as a holder of a right.
Other than reducing the purchase price of the rights, any of the provisions
of the rights agreement may be amended by the board prior to the distribution
date, without the consent of the holders of the rights, to shorten or lengthen
any time period or otherwise. After the distribution date, the provisions of the
rights agreement may be amended by the board, without the consent of the holders
of the rights, except that:
- no amendment can be made to reduce the purchase price;
- no amendment may adversely affect the interests of the holders of the
rights; and
- the redemption right cannot be reinstated.
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DESCRIPTION OF TRUST PREFERRED SECURITIES
Each trust may issue in one or more offerings only one series of trust
preferred securities having terms described in its respective prospectus
supplement. The declaration of each trust authorizes the administrative trustees
to issue on behalf of that trust one series of trust preferred securities. The
declaration, as amended in connection with the sale of trust preferred
securities, will be qualified as an indenture under the Trust Indenture Act.
The trust preferred securities will have such terms, including
distributions, redemption, voting, conversion, exchange, liquidation rights and
such other preferred, deferred or other special rights or such restrictions as
are set forth in the declaration or made part of the declaration by the Trust
Indenture Act. You may refer to the prospectus supplement relating to the trust
preferred securities of the trust for specific terms, including:
- the distinctive designation of the trust preferred securities;
- the number of trust preferred securities issued by each trust;
- the annual distribution rate (or method of determining such rate) for
trust preferred securities issued by the trust and the date or dates upon
which the distributions are payable;
- the date or dates or method of determining the date or dates from which
distributions on trust preferred securities will be cumulative;
- the amount or amounts that will be paid out of the assets of the trust to
the holders of trust preferred securities upon voluntary or involuntary
dissolution, winding-up or termination of the trust;
- the obligation, if any, of the trust to purchase or redeem the trust
preferred securities and the price or prices at which, the period or
periods within which, and the terms and conditions upon which, trust
preferred securities will be purchased or redeemed, in whole or in part,
pursuant to that obligation;
- the voting rights, if any, of trust preferred securities in addition to
those required by law, including the number of votes per trust preferred
security and any requirement for the approval by the holders of trust
preferred securities, as a condition to specified action or amendments to
the declaration of the trust;
- the terms and conditions, if any, upon which the assets of the trust may
be distributed to holders of trust preferred securities;
- provisions regarding convertibility or exchangeability of the trust
preferred securities for capital stock or debt securities of Santa Fe
Snyder;
- if applicable, any securities exchange upon which the trust preferred
securities will be listed; and
- any other relevant rights, preferences, privileges, limitations or
restrictions of trust preferred securities not inconsistent with the
declaration of the trust or with applicable law.
Santa Fe Snyder will guarantee all trust preferred securities offered to
the limited extent set forth below under "Description of the Trust Preferred
Securities Guarantees."
Any U.S. federal income tax considerations applicable to any offering of
trust preferred securities will be described in the applicable prospectus
supplement.
In connection with the issuance of trust preferred securities, each trust
will issue one series of trust common securities. The declaration of each trust
authorizes the administrative trustees of the trust to issue on behalf of the
trust one series of trust common securities having such terms including
distributions, redemption, voting, liquidation rights or such restrictions as
will be set forth therein. The terms of the trust common securities issued by
each trust will be substantially identical to the terms of the trust preferred
securities issued by the trust. The trust common securities will rank equally,
and payments will be made
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on the trust common securities pro rata, with the trust preferred securities.
However, upon an event of default under the declaration, the rights of the
holders of the trust common securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the holders of the trust preferred securities. Except in certain
limited circumstances, the trust common securities will also carry the right to
vote to appoint, remove or replace any of the trustees of a trust. All of the
trust common securities of each trust will be directly or indirectly owned by
Santa Fe Snyder.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEES
A summary of information concerning the trust guarantees which will be
executed and delivered by Santa Fe Snyder from time to time for the benefit of
the holders of the trust preferred securities is set forth below. Each trust
guarantee will be qualified as an indenture under the Trust Indenture Act. The
Bank of New York will act as the trust guarantee trustee, or indenture trustee,
under each trust guarantee. The terms of each trust guarantee will be those set
forth in that trust guarantee and those made part of that trust guarantee by the
Trust Indenture Act. The following is a summary of the material terms and
provisions of the trust preferred securities guarantees. You should refer to the
provisions of the form of trust guarantee and the Trust Indenture Act. Santa Fe
Snyder has filed the form of trust guarantee as an exhibit to the registration
statement of which this prospectus is a part. Each trust guarantee will be held
by the trust guarantee trustee for the benefit of the holders of the trust
preferred securities of the applicable trust.
GENERAL
Under each trust guarantee, Santa Fe Snyder will irrevocably and
unconditionally agree, to the extent set forth in each applicable trust
guarantee, to pay the trust guarantee payments (as defined below) in full to the
holders of the trust preferred securities issued by a trust, to the extent not
paid by or on behalf of the applicable trust, as and when due, regardless of any
defense, right of set-off or counterclaim which the trust may have or assert.
The following payments with respect to trust preferred securities of any
trust to the extent not paid by the trust (the trust guarantee payments), will
be subject to the related trust guarantee on:
- any accrued and unpaid distributions required to be paid on the trust
preferred securities, to the extent that trust will have funds legally
and immediately available for payment;
- the redemption price, including all accrued and unpaid distributions to
the date of redemption, to the extent that trust has funds available
therefor, with respect to any trust preferred securities called for
redemption by that trust; and
- upon dissolution, winding-up or termination of that trust (other than in
connection with the distribution of the assets of that trust to the
holders of trust preferred securities or the redemption of all of the
trust preferred securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the trust
preferred securities to the date of payment, to the extent that trust has
funds available therefor and (b) the amount of assets of that trust
remaining available for distribution to holders of that trust preferred
securities in liquidation of the trust.
Santa Fe Snyder's obligation to make a trust guarantee payment may be
satisfied by Santa Fe Snyder's direct payment of the required amounts to the
holders of the applicable trust preferred securities or by causing the
applicable trust to pay such amounts to such holders.
Each trust guarantee will be a full and unconditional guarantee with
respect to the applicable trust preferred securities, but will not apply to any
payment of distributions when the applicable trust does not have funds legally
and immediately available for such payment. If Santa Fe Snyder does not make
interest payments on the subordinated debt securities purchased by a trust, the
applicable trust will not pay
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distributions on the trust preferred securities issued by that trust and will
not have funds available for such payment. See "Description of Debt
Securities -- Covenants" included in this prospectus.
Santa Fe Snyder has also agreed separately to irrevocably and
unconditionally guarantee the obligations of the trusts with respect to the
trust common securities (the trust common securities guarantees) to the same
extent as the trust guarantees, except that upon an event of default under the
subordinated indenture relating to the subordinated debt securities purchased by
that trust, holders of trust preferred securities will have priority over
holders of trust common securities with respect to distributions and payments on
liquidation, redemption or otherwise.
COVENANTS
In each trust guarantee, Santa Fe Snyder will covenant that, so long as any
trust preferred securities remain outstanding, if any event that would
constitute an event of default under the trust guarantee or the declaration of
the applicable trust occurs, then Santa Fe Snyder will not declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase or make
any liquidation payment with respect to, any of its capital stock with certain
exceptions. The exceptions include (1) purchases or acquisitions of shares of
Santa Fe Snyder common stock in connection with or of its obligations under any
employee benefit plans or of its obligations pursuant to any contract or
security requiring Santa Fe Snyder to purchase shares of Santa Fe Snyder common
stock or, (2) the purchase of fractional interests in shares of Santa Fe Snyder
capital stock as a result of a reclassification of Santa Fe Snyder capital stock
or the exchange or conversion of one class or series of Santa Fe Snyder capital
stock for another class or series of Santa Fe Snyder capital stock or make any
guarantee payments with respect to the foregoing. Additionally, Santa Fe Snyder
will not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities, including guarantees, issued by
Santa Fe Snyder which rank equally with or junior to the subordinated debt
securities.
MODIFICATION OF THE TRUST GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of trust preferred securities, in which case no vote will be
required, each trust guarantee may be amended only with the prior approval of
the holders of not less than a majority in liquidation amount of the outstanding
trust preferred securities of the applicable trust. The manner of obtaining any
such approval of holders of the trust preferred securities will be described in
an accompanying prospectus supplement. All guarantees and agreements contained
in a trust guarantee will bind the successors, assigns, receivers, trustees and
representatives of Santa Fe Snyder and will inure to the benefit of the holders
of the trust preferred securities of the applicable trust then outstanding.
TERMINATION
Each trust guarantee will terminate as to the trust preferred securities of
the applicable trust upon the first to occur of:
- full payment of the redemption price of all trust preferred securities of
the applicable trust;
- distribution of the assets of the trust to the holders of the trust
preferred securities of the applicable trust; and
- full payment of the amounts payable upon liquidation of the trust in
accordance with the declaration of the trust.
Each trust guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of trust preferred securities
issued by the applicable trust must restore payment of any sums paid under the
trust preferred securities or the trust guarantee.
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EVENTS OF DEFAULT
An event of default under a trust guarantee will occur upon the failure of
Santa Fe Snyder to perform any of its payment or other obligations under that
trust guarantee.
The holders of a majority in liquidation amount of the trust preferred
securities to which the trust guarantee relates have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the trust guarantee trustee in respect of the trust guarantee or to direct the
exercise of any trust or power conferred upon the trust guarantee trustee under
the trust preferred securities guarantee. If the trust guarantee trustee fails
to enforce the trust guarantee, any holder of trust preferred securities
relating to the trust guarantee may institute a legal proceeding directly
against Santa Fe Snyder to enforce the trust guarantee trustee's rights under
the trust guarantee, without first instituting a legal proceeding against the
relevant trust, the trust guarantee trustee or any other person or entity.
However, if Santa Fe Snyder has failed to make a guarantee payment, a holder of
trust preferred securities may directly institute a proceeding against Santa Fe
Snyder for enforcement of the trust guarantee for such payment. Santa Fe Snyder
waives any right or remedy to require that any action be brought first against
the trust or any other person or entity before proceeding directly against Santa
Fe Snyder.
STATUS OF THE TRUST GUARANTEES
The trust guarantees will constitute unsecured obligations of Santa Fe
Snyder and will rank
- subordinate and junior in right of payment to all other liabilities of
Santa Fe Snyder, except those obligations or liabilities made equal in
priority or subordinate by their terms;
- equally with the most senior preferred or preference stock that may be
issued by Santa Fe Snyder and with any guarantee that may be entered into
by Santa Fe Snyder in respect of any preferred or preference stock of any
affiliate of Santa Fe Snyder; and
- senior to the Santa Fe Snyder common stock.
The terms of the trust preferred securities provide that each holder of
trust preferred securities of the applicable trust, by acceptance thereof,
agrees to the subordination provisions and other terms of the trust guarantee
relating to the applicable trust preferred securities.
The trust guarantees will constitute a guarantee of payment and not of
collection. Accordingly, the guaranteed party may institute a legal proceeding
directly against the guarantor to enforce its rights under the trust guarantee
without instituting a legal proceeding against any other person or entity.
INFORMATION CONCERNING THE TRUST GUARANTEE TRUSTEE
Prior to the occurrence of a default with respect to a trust guarantee and
after the curing or waiving of all events of default with respect to that trust
guarantee, the trust guarantee trustee undertakes to perform only those duties
as are specifically set forth in that trust guarantee. In case an event of
default has occurred and has not been cured or waived, the guarantee trustee
will exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to these provisions, the trust
guarantee trustee is under no obligation to exercise any of the powers vested in
it by a trust guarantee at the request of any holder of trust preferred
securities, unless offered indemnity against the costs, expenses and liabilities
which might be incurred thereby satisfactory to the trust guarantee trustee.
Santa Fe Snyder and certain of its affiliates may, from time to time,
maintain a banking relationship with the trust guarantee trustee.
GOVERNING LAW
The trust guarantees will be governed by, and construed in accordance with,
the laws of the State of New York.
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RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE SUBORDINATED DEBT SECURITIES AND THE GUARANTEES
As long as Santa Fe Snyder makes payments of interest and other payments
when due on the subordinated debt securities, those payments will be sufficient
to cover distributions and other payments due on the trust preferred securities,
primarily because:
- the aggregate principal amount of the subordinated debt securities will
be equal to the sum of the aggregate stated liquidation preference of the
trust securities;
- the interest rate and interest and other payment dates of the
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the trust preferred securities;
- Santa Fe Snyder will pay for all and any costs, expenses and liabilities
of the trusts except the trusts' obligations to holders of the trust
preferred securities under the trust preferred securities of the trusts;
and
- the declaration of each trust further provides that the trust will not
engage in any activity that is not consistent with the limited purposes
of the trust.
Payments of distributions and other amounts due on the trust preferred
securities of a trust, to the extent the trust has funds available for the
payment of such distributions, are irrevocably guaranteed by Santa Fe Snyder as
and to the extent set forth under "Description of the Trust Preferred Securities
Guarantees." Taken together, Santa Fe Snyder's obligations under the
subordinated debt securities, the subordinated indenture, the declarations of
the trusts and the trust guarantees provide a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the trust preferred securities. No single document standing alone or operating
in conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of each of
the trust's obligations under the trust preferred securities. If and to the
extent that Santa Fe Snyder does not make payments on the subordinated debt
securities, the trusts will not pay distributions or other amounts due on the
trust preferred securities. The trust guarantees do not cover payment of
distributions when the applicable trust does not have sufficient funds to pay
such distributions. In such event, the remedies of a holder of the trust
preferred securities of the trust are described herein under "Description of the
Trust Preferred Securities Guarantees -- Events of Default." The obligations of
Santa Fe Snyder under the trust guarantees are unsecured and are subordinate and
junior in right of payment to all other liabilities of Santa Fe Snyder.
Notwithstanding anything to the contrary in the subordinated indenture and
to the extent set forth in the subordinated indenture, Santa Fe Snyder has the
right to set-off any payment it is otherwise required to make under the
subordinated indenture with and to the extent Santa Fe Snyder has theretofore
made, or is concurrently on the date of such payment making, a payment under a
trust guarantee.
A holder of trust preferred securities of a trust may institute a legal
proceeding directly against Santa Fe Snyder to enforce its rights under the
trust guarantee with respect to the trust without first instituting a legal
proceeding against the trust guarantee trustee, the trust or any other person or
entity.
The trust preferred securities of a trust evidence a beneficial interest in
the trust. The trusts exist for the sole purpose of issuing the trust securities
and investing the proceeds of such issuance in subordinated debt securities. A
principal difference between the rights of a holder of trust preferred
securities and a holder of subordinated debt securities is that a holder of
subordinated debt securities is entitled to receive from Santa Fe Snyder the
principal amount of and interest accrued on subordinated debt securities held,
while a holder of trust preferred securities is entitled to receive
distributions from a trust, or from Santa Fe Snyder under the trust guarantee,
if and to the extent the trust has funds available for the payment of such
distributions.
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Upon any voluntary or involuntary termination, winding-up or liquidation of
a trust involving the liquidation of the subordinated debt securities, the
holders of the trust preferred securities of the trust will be entitled to
receive, out of assets held by the trust and after satisfaction of liabilities
to creditors of the trust as provided by applicable law, the liquidation
distribution in cash. See "Description of Trust Preferred Securities." Upon any
voluntary or involuntary liquidation or bankruptcy of Santa Fe Snyder, the
property trustees of a trust, as holder of the subordinated debt securities of
the trust, would be a subordinated creditor of Santa Fe Snyder, subordinated in
right of payment to all senior debt of Santa Fe Snyder, but entitled to receive
payment in full of principal and interest, before any stockholders of Santa Fe
Snyder receive payments or distributions. Since Santa Fe Snyder is the guarantor
under the trust guarantees and has agreed to pay for all costs, expenses and
liabilities of the trusts other than the trusts' obligations to the holders of
the trust preferred securities, the positions of a holder of trust preferred
securities and a holder of subordinated debt securities relative to other
creditors and to shareholders of Santa Fe Snyder in the event of liquidation or
bankruptcy of Santa Fe Snyder would be substantially the same.
A default or event of default under any senior debt of Santa Fe Snyder will
not constitute a default or event of default under the subordinated indenture.
However, in the event of payment defaults under, or acceleration of, senior debt
of Santa Fe Snyder, the subordination provisions of the subordinated indenture
provide that no payments may be made in respect of the subordinated debt
securities until senior debt has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required payments on the
subordinated debt securities would constitute an event of default under the
subordinated indenture with respect thereto.
LEGAL OPINIONS
The legality of the securities will be passed upon for us by Andrews &
Kurth L.L.P., Houston, Texas. If the securities are being distributed in an
underwritten offering, certain legal matters will be passed upon for the
underwriters by counsel identified in the related prospectus supplement.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K/A of Santa Fe Energy Resources, Inc. for the year
ended December 31, 1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements incorporated in this prospectus by reference to
Snyder Oil Corporation's Annual Report on Form 10-K/A, for the year ended
December 31, 1998, have been so incorporated in reliance on the report of Arthur
Andersen LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
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$125,000,000
SANTA FE SNYDER CORPORATION
8.05% SENIOR NOTES DUE 2004
[SANTA FE LOGO]
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PROSPECTUS SUPPLEMENT
JUNE 11, 1999
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SALOMON SMITH BARNEY
DONALDSON, LUFKIN & JENRETTE
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
ABN AMRO INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
CREDIT LYONNAIS SECURITIES
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