As filed with the Securities Exchange Commission on December 31, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CROSS TIMBERS OIL COMPANY
(Exact name of co-registrant as specified in its charter)
Delaware 75-2347769
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
(817) 870-2800
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Bob R. Simpson
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
(817) 870-2800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
F. Richard Bernasek, Esq.
Kelly, Hart & Hallman, P.C.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
(817) 332-2500
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
Title of Each Class Amount Proposed Proposed Amount of
of Securities to Be To Be Maximum Maximum Registration
Registered Registered Offering Price Aggregate Fee
Per Share(1) Offering
Price(1)
- -----------------------------------------------------------------------------
Common Stock, par 1,921,850 $6.0625 $11,651,216 $3,239.04
value $.01 per share
- -----------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c), the offering price is computed on the average
of the high and low prices of the Registrant's common stock, as reported
on the New York Stock Exchange on December 28, 1998.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
PROSPECTUS
Cross Timbers Oil Company
1,921,850 Shares
Common Stock
------------------------------
This prospectus relates to 1,921,850
shares of common stock of Cross Timbers Oil
Company that may be sold from time to time by
the selling stockholders named in this
prospectus.
Cross Timbers Oil Company will not receive
any of the proceeds from the sales by the
selling stockholders.
The common stock is traded on the New York
Stock Exchange under the symbol "XTO." On
December 30, 1998 the last reported sale
price of the common stock on the NYSE was
$6.25 per share.
INVESTING IN THE COMMON STOCK INVOLVES
CERTAIN RISKS. YOU SHOULD CAREFULLY CONSIDER
THE RISK FACTORS BEGINNING ON PAGE 2.
------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------------
The date of this prospectus is __________, 1999.
<PAGE>
TABLE OF CONTENTS
Risk Factors . . . . . . . . . . . . . . . . . . . . . 3
Replacement of Reserves. . . . . . . . . . . . . . . 3
Price Fluctuations and Markets . . . . . . . . . . . 3
Substantial Indebtedness . . . . . . . . . . . . . . 3
Substantial Capital Requirements . . . . . . . . . . 3
Competition. . . . . . . . . . . . . . . . . . . . . 4
Acquisition Risks. . . . . . . . . . . . . . . . . . 4
Drilling Risks . . . . . . . . . . . . . . . . . . . 4
Operating Hazard and Uninsured Risk. . . . . . . . . 4
Uncertainty of Estimates of Reserves
and Future Net Revenue . . . . . . . . . . . . . . . 5
Dependence Upon Key Personnel. . . . . . . . . . . . 5
Governmental Regulation. . . . . . . . . . . . . . . 5
Forward-Looking Statements . . . . . . . . . . . . . . 5
Where You Can Find More Information. . . . . . . . . . 6
The Company. . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds. . . . . . . . . . . . . . . . . . . . 7
Recent Developments. . . . . . . . . . . . . . . . . . 7
Selling Stockholders . . . . . . . . . . . . . . . . . 8
Sale of Shares . . . . . . . . . . . . . . . . . . . . 8
Validity of Common Stock . . . . . . . . . . . . . . . 9
Experts. . . . . . . . . . . . . . . . . . . . . . . . 9
------------------------------
CROSS TIMBERS OIL COMPANY
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
(817) 870-2800
2
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors:
Replacement of Reserves
Our success depends upon finding, acquiring and developing oil and gas
reserves that are economically recoverable. Unless we are able to
successfully explore for, develop or acquire proved reserves, our proved
reserves will decline through depletion. To increase reserves and
production, we must:
* continue our development drilling and recompletion programs;
* pursue our exploration drilling program; and
* undertake other replacement activities.
We cannot assure, however, the success of our exploration, development and
acquisition activities.
Price Fluctuations and Markets
Our results of operations depend upon the prices received for our oil and
gas. We sell most of our oil and gas in the spot market rather than through
fixed-price contracts. The prices we receive depend upon factors beyond our
control, which include:
* weather conditions;
* governmental regulations and taxes;
* the price and availability of alternative fuels;
* the level of foreign imports of oil and gas;
* demand for and supply of oil and gas;
* the proximity of reserves to oil and gas gathering systems, pipelines or
trucking and terminal facilities;
* the capacity of oil and gas gathering systems, pipelines or trucking and
terminal facilities; and
* the overall economic environment.
Any decline in oil and gas prices affects our financial condition. If the
oil and gas industry experiences significant price declines, we may, among
other things, be unable to meet our financial obligations or make planned
capital expenditures.
Substantial Indebtedness
We have substantial debt and may incur more. This poses risks to holders
of our securities. If we are unsuccessful in increasing production from
existing reserves or developing new reserves, we may lack the funds to pay
principal and interest on our debt securities, and the value of any
outstanding preferred or common stock may decline. Our debt also affects our
ability to finance future operations and capital needs and may preclude
pursuit of other business opportunities.
Substantial Capital Requirements
We make, and will continue to make, substantial capital expenditures for
the acquisition, development, production, exploration and abandonment of our
oil and gas reserves. We intend to finance our capital expenditures primarily
through cash flow from operations and bank borrowings. Lower oil and gas
prices, however, reduce cash flow and the amount of credit available under
our bank revolving credit facility. Costs of exploration and development
decreased from $88.6 million in 1997 to between $60 million and $70 million
in 1998. We expect annual exploration and development expenditures in 1999
to be between $50 million and $70 million.
We believe that, after debt service, we will have sufficient cash from
operating activities to finance our exploration and development expenses
through 1999. If revenues decrease, however, and we are unable to obtain
additional debt or equity financing, we may lack the capital necessary to
replace our reserves or to maintain production at current levels.
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Competition
The oil and gas industry is highly competitive. We compete with major oil
companies, independent oil and gas businesses, and individual producers and
operators, many of which have greater financial and other resources than us.
In addition, the industry as a whole competes with other industries which
supply energy and fuel to industrial, commercial and other consumers.
Acquisition Risks
We constantly evaluate acquisition opportunities and frequently engage in
bidding and negotiation for acquisitions. If successful in this process, we
may alter or increase our capitalization through the issuance of additional
debt or equity securities, the sale of production payments or other measures.
Our current bank revolving credit agreement and the indentures governing
outstanding debt securities, however, contain covenants that limit our
ability to incur additional debt. Any change in capitalization affects our
risk profile.
A change in capitalization, however, is not the only way acquisitions
affect our risk profile. Acquisitions may alter the nature of our business.
This would occur when the character of acquired properties is substantially
different from our existing properties in terms of operating or geologic
characteristics.
Drilling Risks
Our drilling activities subject us to many risks, including the risk that
we will not find commercially productive reservoirs. Drilling for oil and
gas can be unprofitable, not only from dry wells, but from productive wells
that do not produce sufficient revenues to return a profit. Also, title
problems, weather conditions, governmental requirements and shortages or
delays in the delivery of equipment and services can delay our drilling
operations or result in their cancellation. The cost of drilling, completing
and operating wells is often uncertain, and we cannot assure that new wells
will be productive or that we will recover all or any portion of our
investment.
Operating Hazard and Uninsured Risks
Our operations are subject to inherent hazards and risks such as:
* fires;
* natural disasters;
* explosions;
* formations with abnormal pressures;
* blowouts;
* collapses of wellbore, casing or other tubulars;
* pipeline ruptures; and
* spills.
Any of these events could cause a loss of hydrocarbons, environmental
pollution, personal injury claims, damage to our properties, or damage to the
properties of others. As protection against operating hazards, we maintain
insurance coverage against some, but not all, potential losses. Our
coverages include:
* operator's extra expense;
* physical damage to certain assets;
* employer's liability;
* comprehensive general liability;
* automobile; and
* workers' compensation.
We believe that our insurance is adequate and customary for companies of
similar size and operation, but losses could occur for uninsured risks or in
amounts exceeding existing coverage. The occurrence of an event that is not
fully covered by insurance could affect our financial condition and results
of operations.
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Uncertainty of Estimates of Reserves and Future Net Revenues
Estimating quantities of proved reserves involves many uncertainties,
including factors beyond our control. Information we publish relating to our
oil and gas reserves represents estimates based on reports prepared by our
independent petroleum engineers, as well as internally generated reports.
Petroleum engineering is not an exact science. Estimates of economically
recoverable oil and gas reserves and of future net cash flows depend upon a
number of variable factors and assumptions, such as:
* historical production from the area compared with production from other
producing areas;
* the assumed effect of regulation by governmental agencies; and
* assumptions concerning future oil and gas prices, future operating
costs, severance and excise taxes, capital expenditures and workover and
remedial costs.
Lower oil and gas prices generally cause lower estimates of proved
reserves. Estimates of reserves and expected future cash flows prepared by
different engineers (or by the same engineers at different times) may differ
substantially because of variable factors and assumptions. Ultimately,
actual production, revenues and expenditures for our reserves will vary from
any estimates, and these variances may be material.
Dependence Upon Key Personnel
Our success depends upon our Chairman of the Board of Directors and Chief
Executive Officer, Bob R. Simpson, our Vice Chairman of the Board and
President, Steffen E. Palko, and a limited number of other senior management
personnel. Loss of the services of Mr. Simpson or Mr. Palko or any of those
other individuals may affect our operations.
Governmental Regulation
Extensive federal, state and local regulation of the oil and gas industry
significantly affects our operations. In particular, our oil and gas
exploration, development and production, and our storage and transportation
of liquid hydrocarbons, are subject to stringent environmental regulations by
governmental authorities. These regulations have increased the costs of
planning, designing, drilling, installing, operating and abandoning oil and
gas wells and other related facilities, and these regulations may become more
onerous in the future.
We may need to expend significant resources, both financial and
managerial, to comply with environmental regulations and permitting
requirements. Although we believe that our operations generally comply with
applicable laws and regulations, we may incur substantial additional costs
and liabilities in our oil and gas operations as a result of future events,
such as stricter environmental laws, regulations and enforcement policies,
and claims for damages to property, employees, other persons and the
environment.
We expect to maintain customary insurance coverage for our operations,
including coverage for sudden environmental damages, but we do not believe
that insurance coverage for all environmental damages that could occur will
be available at a reasonable cost. Accordingly, we may be subject to
uninsured liability because of the prohibitive premium costs of insuring
against some hazards.
FORWARD-LOOKING STATEMENTS
Some statements made by the Company in this prospectus and incorporated by
reference from documents filed with the SEC are "forward-looking statements."
These prospective statements include projections related to:
* production and cash flows;
* number and location of planned wells;
* completion of property acquisitions;
* completion of repurchases of the Company's common stock;
* sources of funds necessary to conduct operations and complete
acquisitions;
* acquisition and development budgets;
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* anticipated dividend payments; and
* anticipated oil and gas price changes.
In determining these projections, the Company makes numerous assumptions,
including assumptions with respect to:
* the quality of the Company's properties;
* the Company's potential for growth;
* the demand for oil and gas;
* the Company's sources of liquidity and bank credit availability;
* the impact of production imbalances on liquidity;
* the likelihood of regulatory approval;
* the impact of regulatory compliance;
* the impact of losing an oil or gas purchaser;
* the impact of new rules promulgated by the Federal Energy Regulatory
Commission; and
* the impact of new legislation in Oklahoma related to infill drilling.
Risks, uncertainties and other factors may cause actual results to differ
materially from anticipated results expressed or implied by these prospective
statements. The most significant of these risks, uncertainties and other
factors are discussed under "Risk Factors" in this prospectus and in sections
of documents we incorporate by reference, including "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and "Business
and Properties." You are urged to carefully consider these factors.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can read and
copy any document filed by us at the public reference facilities maintained
by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
request copies of these documents, upon payment of a duplicating fee, by
writing the SEC at the address in the previous sentence. Please call the SEC
at 1-800-SEC-0330 for further information on the operation of its public
reference room. Our SEC filings are also available on the SEC's Website at
"http://www.sec.gov."
The SEC allows us to "incorporate by reference" information from other
documents that we file with it, which means that we can disclose important
information by referring you to those documents. The information
incorporated by reference is an important 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 following
documents:
* the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
* the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998, June 30, 1998, and September 30, 1998, and Amendment No. 1
to Form 10-Q for the quarter ended September 30, 1998.
* the Company's Current Reports on Form 8-K dated February 12, 18 and
25, 1998, April 13, 17, 21 and 24, 1998, May 19, 1998, August 26, 1998 and
December 21, 1998, and Current Reports on 8-K/A dated December 1, 1997 and
April 24, 1998;
* the description of our common stock contained in the Company's Form
8-A dated April 8, 1993, as amended by Amendment No. 1 dated June 15,
1995;
* the description of preferred stock purchase rights contained in the
Company's Form 8-A dated September 8, 1998; and
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* all other documents filed by us pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this prospectus and prior
to termination of this offering of common stock.
You may request a copy of any of these documents, except exhibits to the
documents (unless the exhibits are specifically incorporated by reference),
at no cost, by writing or telephoning us at the following address:
Cross Timbers Oil Company
Attention: Investor Relations
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
(817) 870-2800
You should rely only on the information contained in this document or that
we have referred you to. We have not authorized anyone else to provide you
with different information.
THE COMPANY
Cross Timbers Oil Company is a leading United States independent energy
company. We acquire, develop, and explore oil and natural gas properties,
and produce, process, market and transport oil and natural gas. We have
consistently increased our proved reserves, production and cash flow since we
started our operations in 1986. Our growth has come primarily through
acquisition of reserves, followed by aggressive development activities and
the purchase of additional interests in or near our existing reserves. Our
oil and gas fields generally tend to have long remaining reserve lives and
predictable production profiles based on well-established production
histories. They are concentrated in western Oklahoma, the Permian Basin of
West Texas and New Mexico, the Hugoton Field of Oklahoma and Kansas, the
Green River Basin of Wyoming, the San Juan Basin of northwestern New Mexico,
the East Texas Basin of Texas and Louisiana, and the Middle Ground Shoal
Field in Alaska's Cook Inlet.
The Company is a Delaware corporation. Its principal executive offices
are located at 810 Houston Street, Suite 2000, Fort Worth, Texas 76102 and
its telephone number is (817) 870-2800.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
common stock offered by the Selling Stockholders.
RECENT DEVELOPMENTS
On August 26, 1998, and December 21, 1998, the Company announced plans to
transfer as much as 30% to 40% of its assets to royalty trusts and to sell or
exchange the beneficial interests in the royalty trusts to reduce the
Company's bank debt and for other corporate purposes. Currently, the Company
plans to form three royalty trusts: one for properties in the Hugoton area,
one for properties in the San Juan Basin and one for properties in the
Permian Basin.
Recently, the Company formed the first of these trusts, the Hugoton
Royalty Trust, and is transferring to it 80% net profits interests in the
Company's properties located in the Hugoton area of Kansas and Oklahoma and
the Green River Basin of Wyoming. The Company is retaining the underlying
working interests in the properties, including the remaining 20% net profits
interests. The 80% nets profits interests represent approximately 30% of the
Company's existing reserves. The Company has filed a registration statement
with the Securities and Exchange Commission and plans to sell in January 1999
approximately 40% of the trust units of the Hugoton Royalty Trust.
West Texas Intermediate posted crude oil prices dropped to $8.00 per
barrel in December 1998, the lowest level since 1978. This decline has been
caused by low demand and high crude inventories at U.S. refineries as well as
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the failure of OPEC at its November 1998 meeting to further reduce production
quotas. Heating oil demand has been particularly low because of warmer than
normal winter temperatures.
SELLING STOCKHOLDERS
The common stock offered in this prospectus is being offered by Shell
Western E & P, Inc., Shell Deepwater Development Holdings, Inc., and Shell
Offshore Inc. (collectively, the "Selling Stockholders"). On September 30,
1998, the Selling Stockholders purchased from the Company in private
placement transactions a total of 1,921,850 shares of common stock. The
Company agreed to file this registration statement for the resale of those
shares of common stock and to keep it effective until September 30, 2000
(unless all the shares are sold before then), and to bear all out-of-pocket
expenses of this offering, other than underwriting discounts and selling
commissions and the fees and expenses of the Selling Stockholders' counsel
and advisors. The Company also agreed to indemnify the Selling Stockholders
against certain liabilities under the Securities Act of 1933. The Selling
Stockholders may sell none, some or all of the common stock offered by them
as listed below. None of the Selling Stockholders has had any position,
office or other material relationship within the past three years with the
Company or any of its affiliates.
The following table shows the number of shares of common stock that each
Selling Stockholder owns prior to this offering and the number of shares
offered in this prospectus. Assuming the sale of all the shares offered in
this prospectus, none of the Selling Stockholders will own any shares of
common stock after the offering.
Number of Shares
Owned Prior Number of Shares
Selling Stockholder to Offering Offered
- ------------------- ----------------- ----------------
Shell Western E & P, Inc. 1,281,300 1,281,300
Shell Deepwater Development 265,600 265,600
Holdings, Inc.
Shell Offshore Inc. 374,950 374,950
SALE OF SHARES
The Selling Stockholders advised the Company that the distribution of the
shares of common stock offered in this prospectus by the Selling Stockholders
may be effected from time to time in one or more transactions (which may
involve block transactions) on the New York Stock Exchange or other
securities exchange or in transactions otherwise than on those exchanges or
in any combination of transactions. Sales may be effected at market prices
prevailing at the time of sale, at prices related to market prices or at
negotiated prices. The Selling Stockholders may sell shares to or through
broker-dealers in transactions involving one or more of the following: (1) a
block trade in which the broker-dealer attempts to sell the shares as agent
but, to facilitate the transaction, positions and resells a portion of the
block as principal, (2) purchases by a broker-dealer as principal and resale
by the broker-dealer for its own account, or (3) ordinary brokerage
transactions in which the broker-dealer solicits purchases. Broker-dealers
participating in the distribution of shares may be deemed to be underwriters
under the Securities Act of 1933, and any discounts or commissions received
by the broker-dealers and any profit on the resale of the shares may be
deemed to be underwriting discounts or commissions under the Securities Act
of 1933.
Upon notification by a Selling Stockholder of any material arrangement to
sell shares through a secondary distribution, or a purchase by a broker-
dealer, the Company will file a supplement to this prospectus, if required,
to disclose among other things the names of the broker-dealers, the number of
shares involved, the price at which the shares will be sold and the
commissions paid or the discounts or concessions allowed to the broker-
dealers.
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VALIDITY OF COMMON STOCK
Counsel for the Company, Kelly, Hart & Hallman, P.C., Fort Worth, Texas,
will give a legal opinion as to the validity of the shares of common stock.
Members of Kelly, Hart & Hallman, P.C. currently own 26,580 shares of the
common stock.
EXPERTS
The information incorporated by reference in this prospectus from our
Annual Report on Form 10-K for the year ended December 31, 1997 regarding the
estimated quantities of proved reserves of our oil and gas properties, the
future net cash flows from those reserves and the present values of those
cash flows is derived from reserve reports prepared or reviewed by Miller and
Lents. The information is incorporated by reference in this prospectus in
reliance upon the authority of said firm as experts in matters contained in
the reports.
Our consolidated financial statements incorporated by reference in this
prospectus have been audited by Arthur Andersen LLP independent auditors, as
stated in their report relating thereto, and are incorporated by reference in
this prospectus in reliance upon the authority of said firm and experts in
accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is an estimate of the approximate amount of the fees and
expenses expected to be incurred by the Company in connection with offerings
described in this Registration Statement.
Registration Fee. . . . . . . . . . . . . . . $ 3,239
Legal Fees and Expenses . . . . . . . . . . . 25,000
Accounting Fees and Expenses. . . . . . . . . 8,000
Printing and Duplicating Expenses . . . . . . 25,000
Miscellaneous . . . . . . . . . . . . . . . . 20,761
--------
Total . . . . . . . . . . . . . . . . . . . $ 82,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated in Delaware. Under Section 145 of the Delaware
General Corporation Law (the "DGCL"), a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers,
employees and agents in connection with actions, suits or proceedings brought
against them by a third party or in the right of the corporation, by reason
of the fact that they were or are such directors, officers, employees or
agents, against expenses and liabilities incurred in any such action, suit or
proceeding so long as they acted in good faith and in a manner that they
reasonably believed to be in, or not opposed to, the best interests of such
corporation, and with respect to any criminal action, that they had no
reasonable cause to believe their conduct was unlawful. With respect to
suits by or in the right of such corporation, however, indemnification is
generally limited to attorneys' fees and other expenses and is not available
if such person is adjudged to be liable to such corporation unless the court
determines that indemnification is appropriate. A Delaware corporation also
has the power to purchase and maintain insurance for such persons. Article
Nine of the Restated Certificate of Incorporation of the Company permits
indemnification of directors and officers to the fullest extent permitted by
Section 145 of the DGCL. Reference is made to the Restated Certificate of
Incorporation of the Company.
Additionally, the Company has acquired directors and officers insurance in
the amount of $10,000,000, which includes coverage for liability under the
federal securities laws.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director provided that such provisions may not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 (relating to liability
for unauthorized acquisitions or redemptions of, or dividends on, capital
stock) of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit. Article Ten of the Company's Restated
Certificate of Incorporation contains such a provision.
The above discussion of the Company's Restated Certificate of Incorporation
and Sections 102(b)(7) and 145 of the DGCL is not intended to be exhaustive
and is qualified in its entirety by such Restated Certificate of
Incorporation and statutes.
ITEM 16. EXHIBITS
Exhibit
Number Description
- ------- -----------
5.1 Opinion of Kelly, Hart & Hallman, P.C.
15.1 Awareness Letter of Arthur Andersen LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Miller and Lents, Ltd.
23.3 Consent of Kelly, Hart & Hallman, P.C. (set forth
in their opinion filed as Exhibit 5.1).
24.1 Powers of attorney (set forth on the signature
page hereof).
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes that, for the purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at the time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, that are incorporated by reference in the
Registration Statement;
(b) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof;
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(d) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the securities
offered therein, and offering such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Worth, State of Texas, on December 31, 1998.
CROSS TIMBERS OIL COMPANY
By /s/ Bob R. Simpson
Bob R. Simpson
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby authorizes and appoints J. Richard Seeds and Louis G. Baldwin,
and each of them, any one of whom may act without the joinder of the other,
as his attorney-in-fact to sign on his behalf individually and in the
capacity stated below all amendments and post-effective amendments to this
Registration Statement, and any related registration statement filed pursuant
to Rule 462(b) under the Securities Act of 1933 and all amendments and post-
effective amendments thereto, as such attorney-in-fact may deem necessary or
appropriate.
/s/ Bob R. Simpson Director, Chairman of the December 31, 1998
Bob R. Simpson Board and Chief Executive
Officer (Principal
Executive Officer)
/s/ Steffen E. Palko Director, Vice Chairman December 31,1998
Steffen E. Palko of the Board and President
/s/ J. Richard Seeds Director and Executive December 31, 1998
J. Richard Seeds Vice President
/s/ J. Luther King, Jr. Director December 31, 1998
J. Luther King, Jr.
/s/ Jack P. Randall Director December 31, 1998
Jack P. Randall
/s/ Scott G. Sherman Director December 31, 1998
Scott G. Sherman
/s/ Louis G. Baldwin Senior Vice President December 31, 1998
Louis G. Baldwin and Chief Financial Officer
(Principal Financial
Officer)
/s/ Bennie G. Kniffen Senior Vice President December 31, 1998
Bennie G. Kniffen and Controller (Principal
Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
5.1 Opinion of Kelly, Hart & Hallman, P.C.
15.1 Awareness Letter of Arthur Andersen LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Miller and Lents, Ltd.
EXHIBIT 5.1
KELLY, HART & HALLMAN
(a professional corporation)
201 Main Street
Fort Worth, Texas 76102
December 31, 1998
Cross Timbers Oil Company
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
Re: Cross Timbers Oil Company
Registration Statement on Form S-3
----------------------------------
Gentlemen:
This firm has acted as counsel to Cross Timbers Oil Company, a Delaware
corporation (the "Company"), in connection with the filing of a registration
statement on Form S-3 (the "Registration Statement") with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, for
the registration of the sale from time to time of 1,921,850 shares of common
stock by certain stockholders of the Company named in the Registration
Statement. The opinion set forth below is given pursuant to Item 601(b)(5)
of Regulation S-K for inclusion as Exhibit 5.1 to the Registration Statement
and pertains to the offering of such shares of common stock by the
stockholders (the"Shares").
In connection with this opinion, we have made the following assumptions:
(i) all documents submitted to or reviewed by us, including all amendments
and supplements thereto, are accurate and complete and if not originals are
true and correct copies of the originals; (ii) the signatures on each of such
documents by the parties thereto are genuine; (iii) each individual who
signed such documents had the legal capacity to do so; and (iv) all persons
who signed such documents on behalf of a corporation were duly authorized to
do so. We have assumed that there are no amendments, modifications or
supplements to such documents other than those amendments, modifications and
supplements that are known to us.
Based on the foregoing, and subject to the limitations and qualifications
set forth herein, we are of the opinion that:
1. The Company was incorporated, exists and is in good standing under the
laws of the State of Delaware.
2. The Shares have been duly authorized by the Company and are validly
issued, fully paid and non-assessable.
This opinion is further limited and qualified in all respects as follows:
A. The opinion is specifically limited to matters of the existing laws
of the United States of America and the General Corporation Law of the
State of Delaware. We express no opinion as to the applicability of the
laws of any other particular jurisdiction to the transactions described in
this opinion.
B. This opinion is limited to the specific opinions stated herein, and
no other opinion is implied or may be inferred beyond the specific
opinions expressly stated herein.
C. This opinion is based on our knowledge of the law and facts as of
the date hereof. We assume no duty to update or supplement this opinion
to reflect any facts or circumstances that may hereafter come to our
attention or to reflect any changes in any law that may hereafter occur or
become effective.
We call your attention to the fact that certain members of this law firm
have directly or indirectly invested in the Company's common stock.
This opinion is intended solely for your benefit. It is not to be quoted
in whole or in part, disclosed, made available to or relied upon by any other
person, firm or entity without our express prior written consent.
We hereby consent to the use of this opinion in the above-referenced
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Respectfully submitted,
/s/ Kelly, Hart & Hallman
KELLY, HART & HALLMAN
(a professional corporation)
EXHIBIT 15.1
AWARENESS LETTER UNAUDITED INTERIM FINANCIAL INFORMATION
Cross Timbers Oil Company
Fort Worth, Texas
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of Cross Timbers Oil Company ("the Company") for the
periods ended March 31, June 30 and September 30, 1998, as indicated in our
reports dated April 30, July 22, and October 21, 1998, respectively. Because
we did not perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 1998, are being used in this Registration
Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the
Registration Statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of Sections 7 and
11 of that Act.
/s/ Arthur Anderson LLP
ARTHUR ANDERSEN LLP
Fort Worth, Texas
December 31, 1998
EXHIBIT 23.1
INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of Cross Timbers Oil
Company (the "Company") of our report dated March 18, 1998 included in the
Company's Form 10-K for the year ended December 31, 1997, our report dated
February 11, 1998 included in the Company's Form 8-K/A Amendment No. 1 dated
December 1, 1997 and our report dated April 17, 1998 included in the
Company's Form 8-K and Form 8-K/A Amendment No. 1 dated April 24, 1998, and
to all references to our firm included in this Registration Statement.
/s/ Arthur Anderson LLP
ARTHUR ANDERSEN LLP
Fort Worth, Texas
December 31, 1998
EXHIBIT 23.2
MILLER AND LENTS, LTD.
INTERNATIONAL OIL AND GAS CONSULTANTS
TWENTY-SEVENTH FLOOR
1100 LOUISIANA
HOUSTON, TEXAS 77002-5216
December 31, 1998
Cross Timbers Oil Company
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
RE: Securities and Exchange Commission
For S-3 Registration Statement, No. 333-
Gentlemen:
The firm of Miller and Lents, Ltd., consents to the incorporation of its
estimated Proved Reserves, Future Net Revenues, and Present Values of Future
Net Revenues in the Cross Timbers Oil Company Form S-3 Registration
Statement, No. 333-_______ and to reference to our Firm in such registration
statement.
Miller and Lents, Ltd. has no interests in Cross Timbers Oil Company or
any affiliated companies or subsidiaries and is not to receive any such
interest as payment for such reports and has no director, officer, or
employee, or otherwise, connected with Cross Timbers Oil Company. We are not
employed by Cross Timbers Oil Company on a contingent basis.
Yours very truly,
MILLER AND LENTS, LTD.
By: /s/ James C. Pearson
James C. Pearson
President
