<PAGE>
As filed with the Securities and Exchange Commission on December 15, 2000
Registration No. 333-______________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
3TEC Energy Corporation
(Exact name of registrant as specified in its charter)
Delaware 63-1081013
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two Shell Plaza, Suite 2400
777 Walker Street
Houston, Texas 77002
(713) 821-7100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
---------------
Floyd C. Wilson
Two Shell Plaza, Suite 2400
777 Walker Street
Houston, Texas 77002
(713) 821-7100
(Name, address, including zip code, and telephone number,
including area code of agent for service)
With a copy to:
Dallas Parker
Thompson Knight
Brown Parker & Leahy, L.L.P.
1200 Smith Street, Suite 3600
Houston, Texas 77002
(713) 654-8111
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement, as determined
by the Registrant.
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. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================
Title of Each Class of Securities Proposed Maximum Amount of
to be Registered Aggregate Offering Registration Fee
Price (1)(2)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Debt Securities (3)(4)
Preferred Stock, $0.02 par value (5)
Common Stock, $0.02 par value (5) (6)
Warrants (7)
Total $150,000,000 $39,600.00
=====================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee, which is
calculated in accordance with Rule 457(o). In no event will the aggregate
initial offering price of all securities issued from time to time pursuant
to this Registration Statement exceed $150,000,000. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder.
(2) Not specified as to each class of securities to be registered hereunder
pursuant to General Instruction II(D) to Form S-3 under the Securities Act
of 1933.
(3) If any debt securities are issued at an original issue discount, then such
greater amount as may be sold for an aggregate initial offering price of up
to the proposed maximum aggregate offering price.
(4) In addition to any debt securities that may be issued directly under this
Registration Statement, there is being registered hereunder such
indeterminate amount of debt securities as may be issued upon conversion or
exchange of other debt securities, for which no consideration will be
received by the Registrant.
(5) Such indeterminate number of shares of preferred stock and common stock as
may be issued from time to time at indeterminate prices. In addition to any
preferred stock and common stock that may be issued directly under this
Registration Statement, there are being registered hereunder such
indeterminate number of shares of preferred stock and common stock, as may
be issued upon conversion or exchange of debt securities or preferred stock
as the case may be, for which no separate consideration will be received by
the Registrant.
(6) The aggregate amount of common stock registered hereunder is limited,
solely for purpose of any at-the-market offering, to the amount which is
permissible under Rule 415(a)(4) of the Securities Act of 1933.
(7) An indeterminate number of warrants under which the holder, upon settlement
of the warrant, will purchase an indeterminate number of shares of common
stock of the Registrant.
---------------
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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
---------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED DECEMBER 15, 2000
PROSPECTUS
[LOGO OF 3TECH ENERGY CORPORATION]
Debt Securities
Preferred Stock
Common Stock
Warrants
---------------
We may from time to time sell up to $150,000,000 aggregate offering price
of:
- our secured or unsecured debt securities, in one or more series, which
may be either senior, senior subordinated or subordinated debt
securities;
- shares of our preferred stock, par value $0.02 per share, in one or
more series;
- shares of our common stock, par value $0.02 per share;
- warrants to purchase our common stock; or
- any combination of the foregoing.
We will provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any prospectus supplement,
as well as the documents incorporated or deemed to be incorporated by reference
in this prospectus, carefully before you invest.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF MATERIAL RISKS
THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN OUR SECURITIES BEING SOLD WITH
THIS PROSPECTUS.
Our common stock is traded on the Nasdaq National Market System under the
symbol "TTEN".
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
---------------
We will sell these securities directly, through agents, dealers or
underwriters as designated from time to time, or through a combination of these
methods. We reserve the sole right to accept, and together with our agents, from
time to time, to reject in whole or in part any proposed purchase of securities
to be made directly or through agents. If our agents or any dealers or
underwriters are involved in the sale of the securities, the applicable
prospectus supplement will set forth the names of the agents, dealers or
underwriters and any applicable commissions or discounts.
This prospectus may not be used to consummate sales of securities unless
accompanied by the applicable prospectus supplement.
The date of this prospectus is ___________________, 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
About this Prospectus..................................................... i
About the Company......................................................... 1
Risk Factors.............................................................. 3
Where You Can Find More Information....................................... 9
Forward-Looking Statements................................................ 10
Use of Proceeds........................................................... 11
General Description of Securities......................................... 11
Description of Debt Securities............................................ 12
Description of Preferred Stock............................................ 18
Description of Common Stock............................................... 19
Description of Warrants................................................... 20
Plan of Distribution...................................................... 21
Legal Matters............................................................. 22
Experts................................................................... 22
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may sell different types of securities described in this prospectus in one or
more offerings up to a total offering amount of $150 million. This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities we will have to 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
under the heading "Where You Can Find More Information."
We have not authorized any person to give any information or to make any
representation in connection with this offering other than those contained in
this prospectus, and, if given or made, such information or representation must
not be relied upon as having been so authorized. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy by anyone in
any jurisdiction in which such offer to sell is not authorized, or in which the
person is not qualified to do so or to any person to whom it is unlawful to make
such offer or solicitation. Neither the delivery of this prospectus nor any sale
hereunder shall, under any circumstances, create any implication that there has
been no change in our affairs since the date hereof or that the information
contained herein is correct as of any time subsequent to its date.
As used in this prospectus, any reference to the "Company," "3TEC," "we,"
"our," "ours" or "us" refers to 3TEC Energy Corporation and its subsidiaries.
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ABOUT THE COMPANY
We are engaged in the acquisition, development, production and exploration
of oil and natural gas reserves. Our properties are concentrated in East Texas
and the Gulf Coast region, both onshore and in the shallow waters of the Gulf of
Mexico. We also own significant properties in the Permian and San Juan basins
and in the Mid-Continent region. Our management and technical staff have
substantial experience in each of these areas. As of December 31, 1999, on a pro
forma basis including our subsequent acquisitions of Magellan Exploration LLC
("Magellan") and properties in East Texas operated by C.W. Resources, Inc. (the
"CWR Properties"), we had estimated total net proved reserves of 312 Bcfe, of
which approximately 77% were natural gas and approximately 71% were classified
as proved developed, with an estimated PV-10 value at that date of $296.7
million. As of September 30, 2000, our net daily production was approximately
51.0 Mmcf of natural gas and 3.0 MBbls of oil or 69.0 Mmcfe.
In August 1999, we underwent a change of control in a transaction in which
W/E Energy Company L.L.C. ("W/E LLC") invested $21.4 million in cash and oil and
natural gas properties in exchange for common stock, warrants and subordinated
notes that, at that time, represented approximately 36% of our then outstanding
common stock.
Since our formation in 1992, we have grown principally through several
acquisitions of proved properties in the Gulf Coast and Mid-Continent regions.
Acquisitions made in 1997 and 1998 significantly increased our reserves and
production but were primarily nonoperated properties with high per Mcfe lease
operating costs. Following the change in control discussed above, during the
fourth quarter of 1999 and the first half of 2000, we closed several
transactions that changed our senior management team, capital structure and our
property base. In addition, we added several experienced professionals to our
technical staff. Because of these recent transactions, our historical results of
operations and cash flows will differ materially from, and will not be
representative of, our future results.
Recent Developments
. Acquisition of Control by W/E Energy Company L.L.C. In August 1999, W/E
LLC, which is owned by affiliates of EnCap Investments L.L.C. ("EnCap") and
Floyd C. Wilson, purchased a controlling interest in us for approximately
$20.5 million in cash and $875,000 in producing properties. As of November
30, 2000, W/E LLC owned approximately 11% of our outstanding common stock,
or approximately 23% assuming the exercise and conversion of all securities
purchased by them in August 1999. Concurrently with the investment by W/E
LLC, Mr. Wilson was named our Chairman and Chief Executive Officer.
. Acquisition of Floyd Oil Properties. In November 1999, we completed the
acquisition of properties and interests managed by Floyd Oil Company (the
"Floyd Oil Properties") for $90.2 million, consisting of $86.8 million in
cash and 503,426 shares of our common stock. The majority of these
properties are located in Texas and Louisiana and, as of December 31, 1999,
had estimated proved reserves of 165.5 Bcfe with an associated PV-10 value
at that time of $146.1 million. Additionally, 76% of the acquired reserves
are natural gas and 77% are classified as proved developed. We operate
approximately 53% of these properties on a PV-10 value basis. Floyd Oil
Company is not affiliated with Floyd C. Wilson.
. Credit Facility. Concurrently with our acquisition of the Floyd Oil
Properties, we entered into a new $250 million credit facility with Bank
One, Texas, N.A., as administrative agent and a participating lender, and
Union Bank of California, N.A., Wells Fargo Bank, CIBC, Inc. and The Bank
of Nova Scotia as participating lenders. Our borrowing base, which is
redetermined semi-annually, was initially set at $95.0 million. In
connection with the acquisition of the CWR Properties we amended our credit
facility to increase the availability under our borrowing base to enable us
to borrow all of the purchase price of the CWR Properties. In addition,
Bank of Montreal became a participant in and syndication agent for this
facility. As of September 30, 2000, our borrowings under this facility were
$55 million. After the most recent redetermination of the credit facility
in November 2000, our lenders set the borrowing base available under the
credit facility at $140 million, allowing $85.0 million in additional
borrowing capacity as of September 30, 2000.
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. Acquisition of Magellan. On February 3, 2000, we completed the acquisition
of Magellan from certain affiliates of EnCap and other third parties for
consideration of $18.7 million consisting of (a) 1,085,934 shares of common
stock, (b) four year warrants to purchase up to 333,333 shares of common
stock at $30.00 per share, (c) 617,009 shares of 5% Series D Convertible
Preferred Stock with a redemption value of $24.00 per share and are each
convertible into one share of common stock and (d) the assignment of a
performance based "back-in" working interest of 5% of Magellan's interest
in 12 exploration prospects. The acquired properties are located both
onshore and in the shallow waters of south Louisiana and consist of over
20,243 gross (11,244 net) acres in three prospective areas. As of December
31, 1999, Ryder Scott Company estimated that the net proved reserves of
these properties were 25.3 Bcfe with an associated PV-10 value at that date
of $39.8 million. These proved reserves are approximately 67% natural gas
and 69% are classified as proved undeveloped. In addition to the proved
reserves, the Magellan properties contain several exploratory drilling
locations that have been identified using 3-D seismic data. In April 2000,
we purchased additional interests in certain of these properties from an
unrelated party, bringing our total net purchase price for the Magellan
properties to approximately $21 million.
. Acquisition of CWR Properties. On May 31, 2000, we acquired the CWR
Properties for cash consideration of approximately $52 million. The
purchase of the CWR Properties was financed under our existing credit
facility, which we amended prior to closing this acquisition. The CWR
Properties are located in Upshur and Gregg Counties, Texas, in strategic
proximity to our core East Texas properties. The CWR Properties encompass
approximately 38,000 gross acres (10,100 net acres). As of December 31,
1999, Ryder Scott Company estimated that the net proved reserves of the CWR
Properties were 67.8 Bcfe with an associated PV-10 value at that date of
$58.3 million. The CWR Properties produce from the Cotton Valley formation
and the reserves are approximately 92% natural gas and 51% are classified
as proved developed.
. Completion of Public Offering. On June 30, 2000, the Company completed a
public offering of 7 million shares of the Company's common stock (priced
at $9.00 per share), plus an additional 1.05 million shares subject to an
option granted to the underwriters to cover overallotments. The net
proceeds, approximately $66.8 million, were used primarily to repay a
portion of the outstanding debt under the amended credit facility.
Our Strategy
Our business strategy is focused on the following:
. Pursuit of Strategic Acquisitions. We continually review opportunities to
acquire producing properties, leasehold acreage and drilling prospects. We
seek to acquire operational control of properties that we believe have
significant exploitation and exploration potential. We are especially
focused on increasing our holdings in fields and basins in which we already
own an interest.
. Further Development of Existing Properties. We intend to further develop
our properties that have proved reserves. We seek to add proved reserves
and increase production through the use of advanced technologies, including
detailed technical analysis of our properties, and by drilling in-fill
locations and selectively recompleting existing wells. We also plan to
drill step-out wells to expand known field limits. We intend to enhance the
efficiency and quality control of these activities by operating the
majority of our properties.
. Growth Through Exploration. We conduct an active technology-driven
exploration program that is designed to complement our property acquisition
and development drilling efforts with moderate to high risk exploration
projects that have greater reserve potential. We generate exploration
prospects through the analysis of geological and geophysical data and the
interpretation of 3-D seismic data. We intend to manage our exploration
expenditures through the optimal scheduling of our drilling program and by
selectively reducing our participation in certain exploratory prospects
through sales of interests to industry partners.
. Rationalization of Property Portfolio. We intend to actively pursue
opportunities to reduce and control operating costs of our existing
properties and properties we may acquire in the future through the
consolidation of overlapping operations, the sale of marginal properties
and by increasing the number of fields we operate as a percentage of our
total properties.
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. Maintenance of Financial Flexibility. We intend to maintain a substantial
unused borrowing capacity under our bank credit facility by periodically
refinancing our bank debt in the capital markets when conditions are
favorable. We believe our expanded base of internally generated cash flow
and other financial resources, including our existing financial partners,
provide us with the financial flexibility to pursue additional acquisitions
of producing properties and leasehold acreage and to develop our project
inventory in an optimal fashion.
Our Executive Offices
Our principal executive offices are located at Two Shell Plaza, 777 Walker
Street, Suite 2400, in Houston, Texas 77002, and our telephone number is (713)
821-7100. Our website is www.3tecenergy.com.
RISK FACTORS
You should carefully consider the following factors and other information
in this prospectus, any prospectus supplement and the documents incorporated or
deemed to be incorporated by reference in this prospectus before deciding to
invest in the securities:
Oil and natural gas prices are volatile, and low prices have in the past and
could in the future have a material adverse impact on our business.
Our revenues, profitability and future growth and the carrying value of our
properties depend substantially on prevailing oil and natural gas prices. Prices
also affect the amount of cash flow available for capital expenditures and our
ability to borrow and raise additional capital. The amount we will be able to
borrow under our credit facility will be subject to periodic redetermination
based in part on changing expectations of future prices. Lower prices may also
reduce the amount of oil and natural gas that we can economically produce.
Historically, the markets for oil and natural gas have been volatile, and
they are likely to continue to be volatile in the future. For example, oil and
natural gas prices declined significantly in late 1997 and 1998, and increased
significantly in 1999 and 2000. The declines had a significant negative impact
on our financial results for 1997, 1998 and the first two quarters of 1999,
contributing to our losses for those periods, while the increases have had a
positive impact since then. Among the factors that can cause volatility are:
. the domestic and foreign supply of oil and natural gas;
. the ability of members of the Organization of Petroleum Exporting Countries
to agree upon and maintain oil prices and production levels;
. political instability or armed conflict in oil or natural gas producing
regions;
. the use of strategic petroleum reserves held by governments;
. the level of consumer product demand;
. weather conditions;
. the price and availability of alternative fuels;
. the price of foreign imports; and
. worldwide economic conditions.
These external factors and the volatile nature of the energy markets make
it difficult to estimate future prices of oil and natural gas.
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We may not successfully integrate the operations of the properties we have
acquired or may acquire or achieve the benefits we are seeking.
Our success will partially depend upon the integration of the operations
and selected personnel relating to the Floyd Oil Properties, Magellan and the
CWR Properties. Our management team does not have long-term experience with the
combined activities of 3TEC, the Floyd Oil Properties, Magellan and the CWR
Properties. We may not be able to integrate these operations without loss of
important employees, loss of revenues, increases in operating or other costs, or
other difficulties. In addition, we may not be able to realize the operating
efficiencies and other benefits sought from our acquisitions.
We may not be able to replace production with new reserves through our drilling
or acquisition activities.
In general, the volume of production from oil and natural gas properties
declines as reserves are depleted. Our reserves will decline as they are
produced unless we acquire properties with proved reserves or conduct successful
development and exploration activities. Our future oil and natural gas
production is highly dependent upon our level of success in finding or acquiring
additional reserves. However, we cannot assure you that our future acquisition,
development and exploration activities will result in additional proved reserves
or that we will be able to drill productive wells at acceptable costs.
Our recent growth is due largely to acquisitions of producing properties.
The successful acquisition of producing properties requires an assessment of a
number of factors. These factors include recoverable reserves, future oil and
natural gas prices, operating costs and potential environmental and other
liabilities, title issues and other factors. Such assessments are inexact and
their accuracy is inherently uncertain. In connection with such assessments, we
perform a review of the subject properties that we believe is generally
consistent with industry practices. However, such a review will not reveal all
existing or potential problems. In addition, the review will not permit a buyer
to become sufficiently familiar with the properties to fully assess their
deficiencies and capabilities. Although the increased availability of properties
has caused a decrease in the prices paid for these properties, we cannot assure
you that we will be able to acquire properties at acceptable prices because the
competition for producing oil and natural gas properties is intense and many of
our competitors have financial and other resources which are substantially
greater than those available to us.
Our bank lenders can limit our borrowing capabilities, which may materially
impact our operations.
As of September 30, 2000, our long-term bank debt was $55.0 million. In
addition, our lenders set the borrowing base under our credit facility at $140
million, effective November 7, 2000, allowing us $85.0 million of additional
available borrowing capacity under our bank credit facility. The borrowing base
limitation under our credit facility is redetermined semi-annually.
Redeterminations are based upon a number of factors, including commodity prices
and reserve levels. The next redetermination date is May 1, 2001. Depending on
our debt levels in 2001, upon a redetermination, we could be forced to repay a
portion of our bank debt. We may not have sufficient funds to make such
repayments, which could result in a default under the terms of the loan
agreement and an acceleration of the loan. We intend to finance our development,
acquisition and exploration activities with cash flow from operations, bank
borrowings and other financing activities. In addition, we may significantly
alter our capitalization in order to make future acquisitions or develop our
properties. These changes in capitalization may significantly increase our level
of debt. We may also be able to incur substantial additional indebtedness in the
future. If we incur additional debt for these or other purposes, the related
risks that we now face could intensify. A higher level of debt also increases
the risk that we may default on our debt obligations. Our ability to meet our
debt obligations and to reduce our level of debt depends on our future
performance. General economic conditions and financial, business and other
factors affect our operations and our future performance. Many of these factors
are beyond our control. Our level of debt affects our operations in several
important ways, including the following:
. a portion of our cash flow from operations is used to pay interest on
borrowings;
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. the covenants contained in the agreements governing our debt limit our
ability to borrow additional funds, pay dividends, dispose of assets or
issue shares of preferred stock and otherwise may affect our flexibility in
planning for, and reacting to, changes in business conditions;
. a high level of debt may impair our ability to obtain additional financing
in the future for working capital, capital expenditures, acquisitions,
general corporate or other purposes;
. a leveraged financial position would make us more vulnerable to economic
downturns and could limit our ability to withstand competitive pressures;
and
. any debt that we incur under our credit facility will be at variable rates,
which makes us vulnerable to increases in interest rates.
We have incurred losses from operations in the past, and our failure to sustain
profitability in the future could adversely affect the market price of our
common stock.
We incurred net losses of $6.7 million in 1998 and $4.0 million in 1999. On
a pro forma basis, giving effect to the acquisition of the Floyd Oil Properties,
the CWR Properties and the completion of our public offering completed on June
30, 2000, we would have earned a profit of $5.7 million in 1999, but the pro
forma results may not be indicative of actual operating results had we acquired
the Floyd Oil Properties and the CWR Properties at January 1, 1999. For the nine
months ended September 30, 2000, we had reported earnings of $15.8 million. We
cannot assure you that we will achieve or sustain profitability in the future.
Our failure to achieve or sustain profitability in the future could adversely
affect the market price of our common stock.
Our ability to finance our business activities will require us to generate
substantial cash flow.
Our business activities require substantial capital. We have budgeted total
capital expenditures for 2000 of approximately $23 million. We intend to finance
our capital expenditures in the future through cash flow from operations, the
incurrence of additional indebtedness and/or the issuance of additional equity
securities. We cannot be sure that our business will continue to generate cash
flow at or above current levels. Future cash flows and the availability of
financing will be subject to a number of variables, such as:
. the level of production from existing wells;
. prices of oil and natural gas;
. our results in locating and producing new reserves; and
. general economic, financial, competitive, legislative, regulatory and other
factors beyond our control.
If we are unable to generate sufficient cash flow from operations to
service our debt, we may have to obtain additional financing. We cannot be sure
that any additional financing will be available to us on acceptable terms.
Issuing equity securities to satisfy our financing requirements could cause
substantial dilution to our existing stockholders. The level of our debt
financing could also materially affect our operations. See "Our bank lenders can
limit our borrowing capabilities, which may materially impact our operations."
If our revenues were to decrease due to lower oil and natural gas prices,
decreased production or other reasons, and if we could not obtain capital
through our credit facility or otherwise, our ability to execute our development
and acquisition plans, replace our reserves or maintain production levels could
be greatly limited.
Drilling wells is speculative, often involves significant costs and may not
result in additions to our production or reserves.
Developing and exploring for oil and natural gas reserves involves a high
degree of operating and financial risk. The budgeted costs of drilling,
completing and operating wells are often exceeded and can increase
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significantly when drilling costs rise due to a tightening in the supply of
various types of oilfield equipment and related services. Drilling may be
unsuccessful for many reasons, including title problems, weather, cost overruns,
equipment shortages and mechanical difficulties. Moreover, the successful
drilling of an oil or natural gas well does not ensure a profit on investment.
Exploratory wells bear a much greater risk of loss than development wells. A
variety of factors, both geological and market-related, can cause a well to
become uneconomical or only marginally economic. In addition to their cost,
unsuccessful wells can hurt our efforts to replace reserves.
We do not insure against all potential losses and could be seriously harmed by
unexpected liabilities.
Exploration for and production of oil and natural gas can be hazardous,
involving natural disasters and other unforeseen occurrences such as blowouts,
cratering, fires and loss of well control, which can damage or destroy wells or
production facilities, injure or kill people, and damage property and the
environment. Because third party drilling contractors are used to drill our
wells, we may not realize the full benefit of workmen's compensation laws in
dealing with their employees. We maintain insurance against many potential
losses and liabilities arising from our operations in accordance with customary
industry practices and in amounts that we believe to be prudent. However, our
insurance does not protect us against all operational risks.
Estimates of oil and natural gas reserves are uncertain and inherently imprecise
and any material inaccuracies in these reserve estimates will materially affect
the quantities and PV-10 value of our reserves.
Our annual report on Form 10-KSB for fiscal year 1999 contained estimates
of our proved oil and natural gas reserves and the estimated future net revenues
from such reserves, as prepared by independent petroleum engineers. Our
registration statement on Form S-2, as amended, updated these estimates to
include, on a pro forma basis, the acquisitions of Magellan and the CWR
Properties. These estimates are based upon various assumptions, including
assumptions required by the SEC relating to oil and natural gas prices, drilling
and operating expenses, capital expenditures, taxes and availability of funds.
The process of estimating oil and natural gas reserves is complex. This process
requires significant decisions and assumptions in the evaluation of available
geological, geophysical, engineering and economic data for each reservoir.
Therefore, these estimates are inherently imprecise.
Actual future production, oil and natural gas prices, revenues, taxes,
development expenditures, operating expenses and quantities of recoverable oil
and natural gas reserves will most likely vary from those estimated. Any
significant variance could materially affect the estimated quantities and PV-10
value of reserves set forth in the information incorporated by reference into
this registration statement. Our properties may also be susceptible to
hydrocarbon drainage from production by other operators on adjacent properties.
In addition, we may adjust estimates of proved reserves to reflect production
history, results of exploration and development, prevailing oil and natural gas
prices and other factors, many of which are beyond our control. Actual
production, revenues, taxes, development expenditures and operating expenses
with respect to our reserves will likely vary from the estimates used. These
variances may be material.
At December 31, 1999, on a pro forma basis for the acquisitions of Magellan
and the CWR Properties, approximately 29% of our estimated proved reserves were
undeveloped. The percentage of proved undeveloped properties were increased as a
result of the addition of Magellan and the CWR Properties. Recovery of
undeveloped reserves requires significant capital expenditures and successful
drilling operations. The reserve data assume that we will make significant
capital expenditures to develop our reserves. Although we have prepared
estimates of our oil and natural gas reserves and the costs associated with
these reserves in accordance with industry standards, we cannot assure you that
the estimated costs are accurate, that development will occur as scheduled or
that the actual results will be as estimated.
In addition, you should not construe PV-10 value as the current market
value of the estimated oil and natural gas reserves attributable to our
properties. We have based the estimated discounted future net cash flows from
proved reserves on prices and costs as of the date of the estimate, in
accordance with applicable regulations, whereas actual future prices and costs
may be materially higher or lower. Many factors will affect actual future net
cash flow, including:
. prices for oil and natural gas;
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. the amount and timing of actual production;
. supply and demand for oil and natural gas;
. curtailments or increases in consumption by oil and natural gas purchasers;
and
. changes in governmental regulations or taxation.
The timing of the production of oil and natural gas properties and of the
related expenses affect the timing of actual future net cash flow from proved
reserves and, thus, their actual PV-10 value. In addition, the 10% discount
factor, which we are required to calculate PV-10 value for reporting purposes,
is not necessarily the most appropriate discount factor given actual interest
rates and risks to which our business or the oil and natural gas industry in
general are subject.
We cannot control the activities on properties we do not operate.
Other companies operate some of the properties in which we have an
interest. As a result, we have a limited ability to exercise influence over
operations for these properties or their associated costs. The success and
timing of our drilling and development activities on properties operated by
others therefore depend upon a number of factors outside of our control,
including:
. timing and amount of capital expenditures;
. the operator's expertise and financial resources;
. approval of other participants in drilling wells; and
. use of technology.
A small number of existing stockholders control our company, which could limit
your ability to influence the outcome of stockholder votes.
W/E LLC, an affiliate of EnCap and Floyd C. Wilson, our Chairman and Chief
Executive Officer, Kaiser-Francis Oil Company, and EnCap and its affiliates
collectively owned approximately 24% of our outstanding common stock as of
September 30, 2000, and would own approximately 38% of our then outstanding
common stock as of September 30, 2000, if all convertible subordinated notes and
related warrants owned by them are converted and exercised. These stockholders
have entered into an agreement pursuant to which they have agreed to vote all
their shares to elect three members of the board of directors designated by W/E
LLC and EnCap and its affiliates and two members of the board of directors
designated by Kaiser-Francis Oil Company. As a result, these entities will have
a significant voice in the outcome of stockholder votes, including votes
concerning the election of directors, the adoption or amendment of provisions in
our charter or bylaws and the approval of mergers and other significant
corporate transactions.
Competition in our industry is intense, and we are smaller and have a more
limited operating history than many of our competitors.
We compete with major integrated oil and natural gas companies and
independent oil and natural gas companies in all areas of operation. In
particular, we compete for property acquisitions and for the equipment and labor
required to operate and develop these properties. Most of our competitors have
substantially greater financial and other resources than we have. In addition,
larger competitors may be able to absorb the burden of any changes in federal,
state and local laws and regulations more easily than we can, which would
adversely affect our competitive position. These competitors may be able to pay
more for exploratory prospects and may be able to define, evaluate, bid for and
purchase a greater number of properties and prospects than we can. Our ability
to explore for oil and natural gas prospects and to acquire additional
properties in the future will depend on our ability to conduct operations, to
evaluate and select suitable properties and to consummate transactions in this
highly competitive
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environment. In addition, most of our competitors have operated for a much
longer time than we have and have demonstrated the ability to operate through
industry cycles.
Hedging transactions may limit our potential gains.
In order to manage our exposure to price risks in the marketing of our oil
and natural gas production, we have in the past and may in the future enter into
oil and natural gas price hedging arrangements with respect to a portion of our
expected production. Our hedging arrangements may include futures contracts on
the New York Mercantile Exchange. While intended to reduce the effects of
volatile oil and natural gas prices, such transactions may limit our potential
gains if oil and natural gas prices were to rise substantially over the price
established by the hedge. In addition, such transactions may expose us to the
risk of financial loss in certain circumstances, including instances in which:
. our production is less than expected;
. there is a widening of price differentials between delivery points for our
production and the delivery point assumed in the hedge arrangement;
. the counterparties to our future contracts fail to perform the contracts;
or
. a sudden, unexpected event materially impacts oil or natural gas prices.
The loss of key personnel could adversely affect our ability to operate.
Our management changed significantly with W/E LLC's investment. We have
five new directors, a new chief executive officer and a number of other new
management and professional personnel. Our operations will be dependent upon
retaining this group of key management and technical personnel. Recognizing
their importance, we have entered into employment agreements with Floyd C.
Wilson and R. A. Walker. We cannot assure you that such individuals will remain
with us for the immediate or foreseeable future. If we cannot retain our current
personnel or attract additional experienced personnel, our ability to compete
could be adversely affected.
We are subject to complex laws and regulations, including environmental
regulations, that can adversely affect the cost, manner or feasibility of doing
business.
Our operations are subject to numerous laws and regulations governing the
operation and maintenance of our facilities and the discharge of materials into
the environment or otherwise relating to environmental protection. These laws
and regulations may:
. require that we acquire permits before commencing drilling;
. restrict the substances that can be released into the environment in
connection with drilling and production activities;
. limit or prohibit drilling activities on protected areas such as wetlands
or wilderness areas; or
. require remedial measures to mitigate pollution from former operations,
such as plugging abandoned wells.
Under these laws and regulations, we could be liable for personal injury
and clean-up costs and other environmental and property damages, as well as
administrative, civil and criminal penalties. We maintain limited insurance
coverage for some but not all of the environmental damages for which we could be
liable. Moreover, we do not believe that insurance coverage for the full
potential liability that could be caused by sudden and accidental environmental
damages is available at a reasonable cost. Accordingly, we may be subject to
liability or we may be required to cease production from properties in the event
of environmental damages.
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These laws and regulations have been changed frequently in the past. In
general, these changes have imposed more stringent requirements that increase
operating costs or require capital expenditures in order to remain in
compliance. It is also possible that unanticipated developments could cause us
to make environmental expenditures that are significantly different from those
we currently expect. Existing laws and regulations could be changed, and any
changes could have an adverse effect on our business.
Shares eligible for future sale by our current stockholders could adversely
affect the market price of our common stock.
Sales of a substantial number of shares of our common stock in the market
may have an adverse affect on the price of our stock. As of November 30, 2000,
we had 14,541,770 shares of common stock outstanding. In addition, options and
other warrants to purchase approximately 3.5 million shares are outstanding, of
which approximately 2.3 million are currently exercisable. These options and
warrants are exercisable at prices ranging from $3.00 to $30.00 per share. We
also have preferred stock outstanding which is currently convertible into
approximately 0.7 million additional shares of common stock. In addition, upon
demand, and assuming exercise of the options, warrants and convertible
securities, we are obligated under certain registration rights agreements to
file registration statements to register for resale up to approximately 6.7
million shares of common stock. Our officers and directors who are stockholders
and a number of other stockholders, including W/E LLC, Kaiser-Francis Oil
Company and certain other significant stockholders have entered into lock-up
agreements under which they have agreed not to offer or sell any shares of
common stock or similar securities until December 27, 2000 without the approval
of Bear, Stearns & Co. Inc. Sales of substantial amounts of common stock, or a
perception that such sales could occur, and the existence of options or warrants
to purchase shares of common stock at prices that may be below the then current
market price of the common stock could adversely affect the market price of our
common stock and could impair our ability to raise capital through the sale of
our equity securities.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration statement on Form S-3
that we filed with the SEC under the Securities Act of 1933, as amended. This
prospectus does not contain all the information set forth in the registration
statement. You should refer to the registration statement and its related
exhibits and schedules for further information about our company and the shares
offered in this prospectus. Statements contained in this prospectus concerning
the provisions of any document are not necessarily complete and, in each
instance, reference is made to the copy of that document filed as an exhibit to
the registration statement or otherwise filed with the SEC, and each such
statement is qualified by this reference. The registration statement and its
exhibits and schedules are on file at the offices of the SEC and may be
inspected without charge.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file, including
the registration statement, at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the Public Reference Room. Our public
filings are also available from commercial document retrieval services and at
the Internet World Wide Web site maintained by the SEC at "http://www.sec.gov."
SEC rules allow us to include some of the information required to be in the
registration statement by incorporating that information by reference to other
documents we file with the SEC. That means we can disclose important information
to you 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:
. Annual Report on Form 10-KSB for the year ended December 31, 1999, filed
with the SEC on March 30, 2000;
. Current Report on Form 8-K, filed with the SEC on February 4, 2000;
. Current Report on Form 8-K, filed with the SEC on April 3, 2000;
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. Current Report on Form 8-K, filed with the SEC on April 25, 2000;
. Definitive Proxy Statement on Schedule 14A for the Annual Meeting of the
Stockholders held on May 24, 2000, filed with the SEC on May 1, 2000;
. Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000, filed
with the SEC on May 15, 2000;
. Quarterly Report on Form 10-QSB for the quarter ended June 30, 2000, filed
with the SEC on August 14, 2000;
. Quarterly Report on Form 10-QSB for the quarter ended September 30, 2000,
filed with the SEC on November 14, 2000;
. All reports and other documents filed by us pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (File No. 1-
14745), as amended, subsequent to the date of this Prospectus and prior to
the termination of this offering.
We will provide to each person to whom a copy of this prospectus has been
delivered, upon request, a copy of the foregoing documents. Written or telephone
requests for such copies should be directed to Stephen W. Herod, Executive Vice
President-Corporate Development, 3TEC Energy Corporation, Two Shell Plaza, Suite
2400, 777 Walker Street, Houston, Texas 77002, telephone (713) 821-7100.
You should rely only on the information incorporated by reference or
contained in this prospectus. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. The selling stockholders
are not making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information appearing
in this prospectus is accurate as of the date on the front cover of this
prospectus only. Our business, financial condition, results of operations and
prospects may have changed since that date.
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference contain
statements that constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements appear in a number
of places and include statements regarding our plans, beliefs, intentions or
current expectations, including those plans, beliefs, intentions and
expectations of our officers and directors with respect to, among other things:
. budgeted capital expenditures;
. increases in oil and natural gas production;
. our outlook on oil and natural gas prices;
. estimates of our oil and natural gas reserves;
. our future financial condition or results of operations; and
. our business strategy and other plans and objectives for future
operations.
More specifically, some of the statements contained in this prospectus
under "Risk Factors" that relate to our business and the industry in which we
operate are forward-looking. Statements or assumptions related to or underlying
these forward-looking statements include, without limitation, statements
regarding:
. the quality or value of our properties with regard to, among other
things, the existence of reserves in economic quantities;
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. our ability to increase our reserves through exploration and
development activities;
. the number of locations to be drilled and the time frame within which
they will be drilled;
. future prices of oil and natural gas;
. anticipated domestic demand for oil and natural gas; and
. the adequacy of our capital resources and liquidity.
Actual results may differ materially from those suggested by the
forward-looking statements for various reasons, including those discussed under
"Risk Factors."
USE OF PROCEEDS
Except as otherwise provided in a related prospectus supplement, we will
use the net proceeds from the sale of the offered Securities for general
corporate purposes. These purposes may include:
. repayments or refinancing of debt;
. working capital;
. capital expenditures;
. acquisitions; and
. repurchases or redemption of securities.
GENERAL DESCRIPTION OF SECURITIES
We, directly or through agents, dealers or underwriters designated from
time to time, may offer, issue and sell, together or separately, up to
$150,000,000 aggregate offering price of:
. secured or unsecured debt securities, in one or more series, which may
be either senior debt securities, senior subordinated debt securities
or subordinated debt securities;
. shares of our preferred stock, par value $0.02 per share, in one or
more series; shares of our common stock, par value $0.02 per share;
warrants to purchase our common stock; or
. any combination of the foregoing, either individually or as units
consisting of one or more of the foregoing, each on terms to be
determined at the time of sale.
We may issue the debt securities as exchangeable and/or convertible debt
securities exchangeable for or convertible into shares of common stock or
preferred stock. The preferred stock may also be exchangeable for and/or
convertible into shares of common stock or another series of preferred stock.
The debt securities, the preferred stock, the common stock and the warrants are
collectively referred to as the "Securities". When a particular series of
Securities is offered, a supplement to this prospectus will be delivered with
this prospectus, which will set forth the terms of the offering and sale of the
offered Securities.
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DESCRIPTION OF DEBT SECURITIES
We may elect to issue debt securities, either separately or together with,
or upon the conversion of or in exchange for, other securities. The debt
securities are to be issued in one or more series. Each series of debt
securities will be issued pursuant to an indenture, to be entered into by us and
a trustee. The name(s) of the trustee(s) will be set forth in the applicable
prospectus supplement. We may issue all the debt securities under the same
indenture or under separate indentures, as specified in the applicable
prospectus supplements.
We expect that the indentures governing our debt securities will contain a
number of fairly standard provisions, which are summarized below. The summary is
not complete and particular terms may vary from indenture to indenture or not be
included in a specific indenture. Each indenture will be filed as an exhibit to
the registration statement of which this prospectus is a part at the time of
issuance of the applicable prospectus supplement. The indentures will be subject
to and governed by the Trust Indenture Act of 1939, as amended. You should refer
to the applicable indenture for the provisions which may be important to you.
The following description of debt securities contains general terms and
provisions of the debt securities to which any prospectus supplement may relate.
The specific terms of any particular series of debt securities will be described
in the applicable prospectus supplement. To the extent that any particular terms
of a series of debt securities described in a prospectus supplement differ from
any of the terms described in this prospectus, then the terms described in this
prospectus will be deemed to have been superseded by the prospectus supplement.
General
We may issue debt securities up to an aggregate principal amount as we may
authorize from time to time and as limited by the applicable indenture. The
applicable prospectus supplement will describe the terms of any debt securities
being offered, including:
. the designation, aggregate principal amount and authorized
denominations;
. the maturity date, the interest rate, if any, and the method for
calculating the interest rate;
. the interest payment dates and the record dates for the interest
payments;
. any mandatory or optional redemption terms or prepayment, conversion,
sinking fund or exchangeability or convertibility provisions;
. the places where the principal and interest will be payable;
. if other than denominations of $1,000 or multiples of $1,000, the
denominations the debt securities will be issued in;
. whether the debt securities will be issued in the form of global
securities, as defined below, or certificates;
. additional provisions, if any, relating to the defeasance and covenant
defeasance of the debt securities;
. whether the debt securities will be senior debt securities, senior
subordinated debt securities or subordinated debt securities and, if
senior subordinated debt securities or subordinated debt securities,
the subordination provisions and the applicable definition of "senior
indebtedness";
. any applicable material federal tax consequences;
. the dates on which premium, if any, will be payable;
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. our right, if any, to defer payment of interest and the maximum length
of the deferral period;
. any listing on a securities exchange;
. if convertible into common stock or preferred stock, the terms on
which the debt securities are convertible;
. the terms of any guarantee of the payment of principal of, and
premium, if any, and interest on debt securities of the series and any
corresponding changes to the provisions of the indenture as currently
in effect;
. the terms of the transfer, mortgage, pledge, or assignment as security
for the debt securities of the series of any properties, assets,
moneys, proceeds, securities or other collateral, including whether
certain provisions of the Trust Indenture Act are applicable, and any
corresponding changes to provisions of the indenture as currently in
effect, the initial public offering price, and other specific terms.
We will comply with Section 14(e) under the Securities Exchange Act, to the
extent applicable, and any other tender offer rules under the Exchange Act which
may then be applicable, in connection with any obligation we might have to
purchase debt securities at the option of the holders. Any obligation applicable
to a series of debt securities will be described in the applicable prospectus.
We may issue debt securities as original issue discount securities to be
sold at a substantial discount below their principal amount. Original issue
discount securities may include zero coupon securities that do not pay any cash
interest for the entire term of the securities. The amount payable to the holder
of an original issue discount security upon an acceleration will be determined
in the manner described in the applicable prospectus supplement. Conditions
pursuant to which principal payments on the debt securities may be accelerated,
as well as any material federal income tax and other considerations applicable
to original issue discount securities, will be set forth in the applicable
prospectus supplement.
Unless otherwise indicated in the applicable prospectus supplement, the
terms of any series of debt securities may differ and we may, without the
consent of the holders of any of the debt securities, reopen a previous series
of debt securities and issue additional debt securities or establish additional
terms for the series.
Covenants
Under the indentures, we will be required to:
. pay the principal, interest and any premium on the debt securities
when due;
. maintain a place of payment;
. deliver a report to the trustee(s) 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.
Any additional covenants will be described in the applicable prospectus
supplement.
Registration, transfer, payment and paying agent
Unless otherwise indicated in a prospectus supplement, each series of debt
securities will be issued in registered form only, without coupons, and will be
issued in denominations of $1,000 or any integral multiple.
Unless otherwise indicated in a prospectus supplement, the principal of the
debt securities and any applicable premium or interest will be payable, and debt
securities may be surrendered for registration of transfer or exchange,
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at an office or agency to be maintained by us in the Borough of Manhattan, The
City of New York. Payments of interest with respect to any registered security,
however, may be made at our option by check mailed to the address of the person
entitled to payment or by transfer to an account maintained by the payee with a
bank located in the United States. No service charge shall be made for any
registration of transfer or exchange of debt securities, but we may require
payment of a sum sufficient to cover any tax or other governmental charge and
any other expenses that may be imposed in connection with the exchange or
transfer.
Unless otherwise indicated in the applicable prospectus supplement, we will
not be required to:
. issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business fifteen
days before any selection of debt securities of that series of like
tenor and terms to be redeemed and ending at the close of business on
the day of that selection;
. register the transfer of or exchange any registered security called
for redemption, except the unredeemed portion of any registered
security being redeemed in part; or
. issue, register the transfer of or exchange any debt security which
has been surrendered for repayment at the option of the holder, except
the portion, if any, of the debt security not to be repaid.
Ranking
We will issue debt securities as either senior debt securities, senior
subordinated debt securities, or subordinated debt securities. The senior debt
securities will be our senior unsubordinated obligations and will rank equally
in right of payment with all other unsubordinated indebtedness of ours. The
senior subordinated debt securities and subordinated debt securities will be our
general obligations and will be subordinated in right of payment to all existing
and future senior indebtedness. The prospectus supplement will describe the
subordination provisions and set forth the definition of senior indebtedness
applicable to the senior subordinated debt securities or subordinated debt
securities, as the case may be, and the approximate amount of the senior
indebtedness outstanding as of a recent date.
Global debt securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depositary identified in the applicable prospectus supplement. Global debt
securities may be issued in either registered or bearer form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for individual certificates evidencing debt securities, a global debt
security may not be transferred except as a whole:
. by the depositary to a nominee of the depositary;
. by a nominee of the depositary to the depositary or another nominee of
the depositary; or
. by the depositary or any nominee to a successor of the depositary or a
nominee of the successor.
The specific terms of the depositary arrangement with respect to a series
of global debt securities will be described in the prospectus supplement.
Outstanding debt securities
In determining whether the holders of the requisite principal amount of
outstanding debt securities have given any request, demand, authorization,
direction, notice, consent or waiver under the relevant indenture, the amount of
outstanding debt securities will be calculated based on the following:
. the portion of the principal amount of an original issue discount
security that shall be deemed to be outstanding shall be the portion
of the principal amount that could be declared to be due and payable
upon a
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declaration of acceleration pursuant to the terms of the original
issue discount security as of the date of the determination;
. the principal amount of a debt security denominated in a currency
other than U.S. dollars shall be the U.S. dollar equivalent of the
debt security's principal amount, determined on the date of its
original issue; and
. any debt security owned by us, an affiliate of ours or any obligor
shall be deemed not to be outstanding.
Redemption and repurchase
The debt securities may be redeemable at our option, may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, or may be subject
to repurchase by us at the option of the holders. In each case, the redemption
or repurchase will be upon the terms, at the times and at the prices set forth
in the applicable prospectus supplement.
Conversion and exchange
The terms, if any, on which any series of debt securities is convertible
into or exchangeable for common stock, preferred stock or other debt securities
will be set forth in the applicable prospectus supplement. These terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holders or at our option.
Events of default
Unless otherwise specified in the applicable prospectus supplement, each of
the following would constitute an event of default, as defined in the
indentures, with respect to the debt securities of any series:
. failure to pay the principal of or premium, if any, on any debt
security of that series when due upon maturity, redemption, repurchase
at the option of the holder or otherwise;
. failure to pay interest on any debt security of that series when due
and the default continues for a period of time to be specified in the
applicable prospectus supplement;
. failure to make a deposit of any sinking fund payment in respect of
the debt securities of that series when due;
. the breach of, or our failure to perform, any other covenant or
warranty in the indenture, other than a covenant or warranty included
solely for the benefit of other series of debt securities. This will
only constitute an event of default, however, if the default has not
been cured for a period to be specified in the applicable prospectus
supplement after notice to us by the applicable trustee or the holders
of not less than a fixed percentage in aggregate principal amount of
the debt securities of the applicable series;
. certain events of bankruptcy, insolvency or reorganization; or
. any other event of default that may be set forth in the applicable
prospectus supplement, including, but not limited to, an event of
default based on other debt being accelerated.
An event of default with respect to one series of debt securities does not
necessarily constitute an event of default with respect to any other series of
debt securities. Each indenture will provide that the trustee may withhold
notice of the occurrence of a default, other than a default in payment of
principal or of any applicable premium, interest, or of sinking fund payments,
if the trustee considers it in the interest of the holders to do so.
Each indenture will provide that if an event of default with respect to any
series of debt securities shall have occurred and is continuing, either the
relevant trustee or the holders of at least a fixed percentage in principal
amount of the debt securities of that series then outstanding may declare the
principal amount, or in the case of original issue discount securities, such
lesser amount as may be specified in the applicable prospectus supplement,
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of all the debt securities of such series to be due and payable immediately.
Under certain conditions, such a declaration and its consequences may be
rescinded and annulled by the holders of a majority in principal amount of the
debt securities of that series outstanding under the applicable indenture.
No holder of any debt securities of a series has a right to institute a
proceeding with respect to the indenture or any of its remedies unless:
. the holders of at least a fixed percentage in principal amount of the
outstanding debt securities of the series have made written request,
and offered reasonable indemnity, to the trustee to institute the
proceeding as trustee;
. the trustee has failed to institute the proceeding within 60 days
after receipt of the notice; and
. the trustee has not within the 60-day period received directions
inconsistent with the holders' written request.
Such limitations do not apply, however, to a suit instituted by a holder of
a debt security for the enforcement of the payment of the principal, interest or
premium on the debt security on or after the respective due dates expressed in
the debt security.
During the existence of an event of default under an indenture, the trustee
is required to exercise the rights and powers vested in it under the indenture
and use the same degree of care and skill in its exercise as a prudent person
would exercise under the circumstances in the conduct of such person's own
affairs. Subject to the provisions of the indenture relating to the duties of
the trustee, if an event of default shall occur and be continuing, the trustee
is not under any obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders unless the holders
have offered to the trustee reasonable security or indemnity. Subject to certain
provisions concerning the rights of the trustee, the holders of a majority in
principal amount of the outstanding debt securities of any series have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust, or power conferred on the
trustee.
Each indenture will provide that the trustee will, within five business
days after the occurrence of any default, give notice of the default to the
holders of the defaulted debt securities, unless the default shall have been
cured or waived. The trustee will be protected, however, in withholding notice
if it determines in good faith that withholding the notice was in the interest
of the holders, with the exception of defaults in payment of principal or of any
applicable interest or premium.
We are required to provide the trustee(s) with annual statements as to our
compliance with all conditions and covenants under the indentures.
Modification and waivers
When authorized by resolutions of our board of directors, and the
trustee(s), we may amend, waive or supplement the indentures and the relevant
debt securities without the consent of the holders for certain specified
purposes, including, among other things:
. to cure ambiguities, defects or inconsistencies;
. to provide for the assumption of our obligations in the case of a
merger or consolidation;
. to add to our events of default or our covenants or to make any change
that would provide any additional rights or benefits to the holders of
the debt securities;
. to establish the form or terms of debt securities of any series and
any related coupons;
. to add guarantors;
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. to secure the debt securities;
. to maintain the qualification of the indenture under the Trust
Indenture Act; or
. to make any change that does not adversely affect the rights of any
holder.
Other amendments and modifications of the indentures or the relevant debt
securities may be made by us and the applicable trustee with the consent of the
holders of not less than a majority of the aggregate principal amount of the
outstanding debt securities of each series that is affected, with each series
voting as a separate class. We cannot modify or amend the indentures or the
relevant debt securities to do any of the following without the consent of the
holder of each outstanding debt security that is affected:
. reduce the principal amount of, or extend the fixed maturity of the
debt securities, or alter or waive any redemption, repurchase or
sinking fund provisions of the debt securities;
. reduce the amount of principal of any original issue discount
securities that would be due and payable upon an acceleration of its
maturity;
. change the currency in which any debt securities or any premium or
accrued interest is payable;
. reduce the percentage in principal amount outstanding of debt
securities of any series which must consent to an amendment,
supplement or waiver or consent to take any action under the indenture
or the debt securities;
. impair the right to institute suit for the enforcement of any payment
on or with respect to the debt securities;
. waive a default in payment with respect to the debt securities or any
guarantee;
. reduce the rate or extend the time for payment of interest on the debt
securities;
. adversely affect the ranking of the debt securities of any series;
. release any guarantor from any of its obligations under its guarantee
or the indenture, except in compliance with the terms of the
indenture; or
. solely in the case of a series of senior subordinated debt securities
or subordinated debt securities, modify any of the applicable
subordination provisions or the applicable definition of senior
indebtedness in a manner adverse to any holders.
The holders of a majority in aggregate principal amount of the outstanding
debt securities of any series may waive compliance by us with certain
restrictive provisions of the applicable indenture to the extent set forth in
the applicable prospectus supplement. The holders of a majority in aggregate
principal amount of the outstanding debt securities of any series may, on behalf
of all holders of debt securities of that series, waive any past default under
the applicable indenture with respect to debt securities of that series and its
consequences, except a default in the payment of the principal of or of any
applicable premium or interest on any debt securities of the series or in
respect of a covenant or provision which cannot be modified or amended without
the consent of a larger fixed percentage or of each holder.
Discharge, defeasance and covenant defeasance
When we establish a series of debt securities, we may provide that the
series is subject to the defeasance and discharge provisions of the applicable
indenture. If those provisions are made applicable, we may elect to either:
17
<PAGE>
. defease and be discharged from, subject to some exceptions, all of our
obligations with respect to those debt securities; or
. be released from our obligations to comply with specified covenants
relating to those debt securities as described in the applicable
prospectus supplement.
To effect a defeasance or covenant defeasance, we must irrevocably deposit
in trust with the relevant trustee an amount in any combination of funds or
government obligations, which, through the payment of principal and interest in
accordance with their terms, will provide money sufficient to make payments on
those debt securities and any mandatory sinking fund or analogous payments on
those debt securities. We will not be released from any obligations that are
specified in the applicable prospectus supplement.
To establish this trust, we must, among other things, deliver to the
relevant trustee an opinion of counsel to the effect that the holders of those
debt securities:
. will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the defeasance or covenant defeasance; and
. will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if the
defeasance or covenant defeasance had not occurred. In the case of
defeasance, the opinion of counsel must be based upon a ruling of the
IRS or a change in applicable U.S. federal income tax law occurring
after the date of the applicable indenture.
If we effect a covenant defeasance with respect to any debt securities, and
the debt securities are declared due and payable because of the occurrence of an
event of default or with respect to some other breach, the amount of deposit
with the relevant trustee may not be sufficient to pay amounts due on the debt
securities at the time of any acceleration. However, we would remain liable to
make payment of the amounts due at the time of acceleration.
The applicable prospectus supplement may further describe the provisions,
if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above.
Governing law
The indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York.
Regarding the trustees
The Trust Indenture Act contains limitations on the rights of a trustee,
should it become a creditor of ours, to obtain payment of claims or to realize
on certain property received by it in respect of any claims, as security or
otherwise. Each trustee is permitted to engage in other transactions with us and
our subsidiaries from time to time, provided that if the trustee acquires any
conflicting interest, it must either eliminate the conflict upon the occurrence
of an event of default under the relevant indenture or resign as trustee.
DESCRIPTION OF PREFERRED STOCK
We may elect to issue preferred stock in one or more series. Our charter
and Delaware General Corporation Law give our board of directors the authority,
without further shareholder action, to issue a maximum of 20,000,000 shares of
preferred stock.
Our board of directors has the authority to create one or more series of
preferred stock, to issue shares of preferred stock up to the maximum number of
shares of preferred stock authorized, and to determine the preferences, rights,
privileges and restrictions of any series, including the dividend rights, voting
rights, rights and terms of redemption, liquidation preferences, the number of
shares constituting any such series and the designation of such series. Pursuant
to charter, designations have been filed with the Secretary of State of the
State of Delaware
18
<PAGE>
creating 266,667 shares of our Series B Preferred Stock, 2,300,000 shares of
Series C Preferred Stock and 725,167 shares of our Series D Preferred Stock.
Effective as of September 30, 2000, all the outstanding shares of our Series C
Preferred Stock were redeemed for cash or converted by the holders into shares
of Common Stock. Thus as of September 30, 2000, 266,667 shares of Series B
Preferred Stock, no shares of Series C Preferred Stock and 621,930 shares of
Series D Preferred Stock were outstanding.
The applicable prospectus supplement will describe the terms of any series
of preferred stock being offered, including:
. the number of shares and designation or title of the shares;
. any liquidation preference per share;
. any date of maturity;
. any redemption, repayment or sinking fund provisions;
. any dividend rate or rates with respect to the shares;
. any voting rights;
. the terms and conditions upon which the preferred stock is convertible
or exchangeable, if it is convertible or exchangeable;
. any conditions or restrictions on the creation of indebtedness by us
or upon the issuance of any additional stock; and
. any additional voting, dividend, liquidation, redemption and other
rights, preferences, privileges, limitations and restrictions.
All shares of preferred stock offered will, when issued, be fully paid and
non-assessable. Any shares of preferred stock that are issued will have priority
over the common stock with respect to dividend or liquidation rights or both.
DESCRIPTION OF COMMON STOCK
We have authority to issue 60,000,000 shares of common stock. As of
November 30, 2000, 14,541,770 shares of our common stock were outstanding.
Subject to the preferential rights of any outstanding series of preferred
stock, the holders of our common stock are entitled to one vote per share on all
matters voted on by stockholders, including in the election of directors. Our
charter does not provide for cumulative voting in the election of directors or
grant preemptive rights with respect to future issuances of our common stock. We
may in the future, however, enter into contracts with stockholders to grant
holders preemptive rights.
Subject to any preferential rights of any series of preferred stock
outstanding, the holders of our common stock are entitled to dividends, if any,
as may be declared from time to time by our board from funds legally available
to pay dividends and, upon liquidation, are entitled to receive a pro rata share
of all of our assets that are available for distribution to stockholders. All
our common stock is fully paid and nonassessable.
Transfer Agent
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company. The phone number for American Stock Transfer & Trust
Company is (718) 921-8200.
19
<PAGE>
The summaries of selected provisions of our common stock and preferred
stock appearing in this prospectus are not complete. Those summaries are subject
to, and are qualified entirely by, the provisions of our charter and bylaws,
both of which are included or incorporated by reference as exhibits to the
registration statement of which this prospectus is a part. You should read our
charter and bylaws. The applicable prospectus supplement may also contain a
summary of selected provisions of our preferred stock and common stock. To the
extent that any particular provision described in a prospectus supplement
differs from any of the provisions described in this prospectus, then the
provisions described in this prospectus will be deemed to have been superseded
by that prospectus supplement.
DESCRIPTION OF WARRANTS
We summarize below some of the provisions that will apply to the warrants
unless the applicable prospectus supplement provides otherwise. This summary may
not contain all information that is important to you. The complete terms of the
warrants will be contained in the applicable warrant certificate and warrant
agreement. These documents have been or will be included or incorporated by
reference as exhibits to the registration statement of which this prospectus is
a part. You should read the warrant certificate and the warrant agreement. You
should also read the prospectus supplement, which will contain additional
information and which may update or change some of the information below.
General
We may issue warrants to purchase common stock independently or together
with other securities. The warrants may be attached to or separate from the
other securities. We may issue warrants in one or more series. Each series of
warrants will be issued under a separate warrant agreement to be entered into
between a warrant agent and us. The warrant agent will be our agent and will not
assume any obligations to any holder or beneficial owner of the warrants.
The prospectus supplement and the warrant agreement relating to any series
of warrants will include specific terms of the warrants. These terms include the
following:
. the title and aggregate number of warrants;
. the price or prices at which the warrants will be issued;
. the amount of common stock for which the warrant can be exercised and
the price or the manner of determining the price or other
consideration to purchase the common stock;
. the date on which the right to exercise the warrant begins and the
date on which the right expires;
. if applicable, the minimum or maximum amount of warrants that may be
exercised at any one time;
. if applicable, the designation and terms of the securities with which
the warrants are issued; and the number of warrants issued with each
other security;
. any provision dealing with the date on which the warrants and related
securities will be separately transferable;
. any mandatory or optional redemption provision;
. the identity of the warrant agent; and
. any other terms of the warrants.
The warrants will be represented by certificates. The warrants may be
exchanged under the terms outlined in the warrant agreement. We will not charge
any service charges for any transfer or exchange of warrant certificates,
20
<PAGE>
but we may require payment for tax or other governmental charges in connection
with the exchange or transfer. Unless the prospectus supplement states
otherwise, until a warrant is exercised, a holder will not be entitled to any
payments on or have any rights with respect to the common stock.
Exercise of Warrants
To exercise the warrants, the holder must provide the warrant agent with
the following:
. payment of the exercise price;
. any required information described on the warrant certificates;
. the number of warrants to be exercised;
. an executed and completed warrant certificate; and
. any other items required by the warrant agreement.
If a warrant holder exercises only part of the warrants represented by a
single certificate, the warrant agent will issue a new warrant certificate for
any warrants not exercised. Unless the prospectus supplement states otherwise,
no fractional shares will be issued upon exercise of warrants, but we will pay
the cash value of any fractional shares otherwise issuable.
The exercise price and the number of shares of common stock for which each
warrant can be exercised will be adjusted upon the occurrence of events
described in the warrant agreement, including the issuance of a common stock
dividend or a combination, subdivision or reclassification of common stock.
Unless the prospectus supplement states otherwise, no adjustment will be
required until cumulative adjustments require an adjustment of at least 1%. From
time to time, we may reduce the exercise price as may be provided in the warrant
agreement.
Unless the prospectus supplement states otherwise, if we enter into any
consolidation, merger, or sale or conveyance of our property as an entirety, the
holder of each outstanding warrant will have the right to acquire the kind and
amount of shares of stock, other securities, property or cash receivable by a
holder of the number of shares of common stock into which the warrants were
exercisable immediately prior to the occurrence of the event.
Modification of the Warrant Agreement
The common stock warrant agreement will permit us and the warrant agent,
without the consent of the warrant holders, to supplement or amend the agreement
in the following circumstances:
. to cure any ambiguity;
. to correct or supplement any provision which may be defective or
inconsistent with any other provisions; or
. to add new provisions regarding matters or questions that we and the
warrant agent may deem necessary or desirable and which do not
adversely affect the interests of the warrant holders.
PLAN OF DISTRIBUTION
We may sell the Securities to one or more underwriters for public offering
and sale by them and may also sell the Securities to investors directly or
through agents. Any underwriter or agent involved in the offer and sale of
Securities will be named in the applicable prospectus supplement. We have
reserved the right to sell Securities directly to investors on our own behalf in
those jurisdictions where and in such manner as we are authorized to do so.
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<PAGE>
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to prevailing
market prices, or at negotiated prices. Sales of common stock may be effected
from time to time in one or more transactions on the Nasdaq National Market or
in negotiated transactions or a combination of those methods. We may also, from
time to time, authorize dealers, acting as our agents, to offer and sell
Securities upon the terms and conditions as are set forth in the applicable
prospectus supplement. In connection with the sale of Securities, underwriters
may receive compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of the Securities
for whom they may act as agent. Underwriters may sell Securities to or through
dealers, and those dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agent. Any underwriter, dealer or agent will
be identified, and any compensation received from us will be described, in the
prospectus supplement. Unless otherwise indicated in a prospectus supplement, an
agent will be acting on a best efforts basis and a dealer will purchase
Securities as a principal, and may then resell such Securities at varying prices
to be determined by the dealer.
Any underwriting compensation paid by us to underwriters or agents in
connection with the offering of Securities, and any discounts, concessions or
commissions allowed by underwriters to participating dealers, will be set forth
in the applicable prospectus supplement. Dealers and agents participating in the
distribution of Securities may be deemed to be underwriters, and any discounts
and commissions received by them and any profit realized by them on resale of
the Securities may be deemed to be underwriting discounts and commissions.
Underwriters, dealers and agents may be entitled, under agreements entered into
with us, to indemnification against and contribution toward civil liabilities,
including liabilities under the Securities Act, and to reimbursement by us for
expenses.
To facilitate an offering of a series of Securities, persons participating
in the offering may engage in transactions that stabilize, maintain, or
otherwise affect the price of the Securities. This may include over-allotments
or short sales of the Securities, which involves the sale by persons
participating in the offering of more Securities than have been sold to them by
us. In those circumstances, those persons would cover such overallotments or
short positions by purchasing in the open market or by exercising any over-
allotment option granted to those persons. In addition, those persons may
stabilize or maintain the price of the Securities by bidding for or purchasing
Securities in the open market or by imposing penalty bids, whereby selling
concessions allowed to underwriters or dealers participating in an offering may
be reclaimed if Securities sold by them are repurchased in connection with
stabilization transactions. The effect of these transactions may be to stabilize
or maintain the market price of the Securities at a level above that which might
otherwise prevail in the open market. Such transactions, if commenced, may be
discontinued at any time.
LEGAL MATTERS
Certain legal matters with respect to the Securities offered hereby will be
passed upon for us by Thompson Knight Brown Parker & Leahy, LLP, Houston, Texas.
Certain legal matters will be passed upon for any agents or underwriters by
counsel for such agents or underwriters identified in the applicable prospectus
supplement.
EXPERTS
Our consolidated financial statements as of December 31, 1999 and 1998, and
for the years ended December 31, 1999 and 1998, have been incorporated by
reference herein in reliance upon the report of KPMG LLP, independent certified
public accountants, also incorporated by reference herein, and upon authority of
said firm as experts in accounting and auditing. To the extent that KPMG LLP
audits and reports on our financial statements issued in the future, and KPMG
consents to the use of their report thereon, such financial statements will also
be incorporated by reference in the registration statement in reliance upon
their report and said authority.
Some of the information incorporated by reference in this registration
statement regarding estimates of the estimated quantities of reserves of the
underlying properties we own, the future net revenues from those reserves and
their present value is based on estimates of the reserves and present values
prepared by or derived from estimates prepared by Ryder Scott Company,
independent petroleum engineers.
22
<PAGE>
$150,000,000
Debt Securities
Preferred Stock
Common Stock
Warrants
[LOGO OF 3TEC ENERGY CORPORATION]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses to be paid by us in connection with the distribution of
the securities being registered are as set forth in the following table:
<TABLE>
<S> <C>
Securities and Exchange Commission Fee $ 39,600
*Legal Fees and Expenses $ 25,000
*Accounting Fees and Expenses $ 25,000
*Blue Sky fees and expenses $ 0
*Rating agency fees $ 0
*Trustees' fees and expenses $ 0
*Printing and engraving $ 25,000
*Miscellaneous $ 25,000
--------
*Total $139,600
========
</TABLE>
----------------
* Estimated.
Item 15. Indemnification of Officers And Directors
Delaware law authorizes corporations to limit or eliminate the
personal liability of their officers and directors to them and their
stockholders for monetary damages for breach of officers' and directors'
fiduciary duty of care. The duty of care requires that, when acting on behalf of
the corporation, officers and directors must exercise an informed business
judgment based on all material information reasonably available to them. Absent
the limitations authorized by Delaware law, officers and directors are
accountable to corporations and their stockholders for monetary damages for
conduct constituting gross negligence in the exercise of their duty of care.
Delaware law enables corporations to limit available relief to equitable
remedies such as injunction or rescission.
Our certificate of incorporation limits the liability of our directors
to us or our stockholders to the fullest extent permitted by Delaware law.
Specifically, our directors will not be personally liable for monetary damages
for breach of a director's fiduciary duty in their capacity as directors, except
for liability:
. for any breach of the director's duty of loyalty to us or our stockholders;
. for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation
Law;
. or for any transaction from which the director derived an improper personal
benefit.
Delaware law also authorizes corporations to indemnify its officers,
directors, employees and agents for liabilities, other than liabilities to the
corporation, arising because that individual was an officer, director, employee
or agent of the corporation so long as the individual acted in good faith and in
a manner he or she reasonably believed to be in the best interests of the
corporation and not unlawful.
Our bylaws provide that our officers and directors will be indemnified
by us for liabilities arising because that individual was one of our officers or
directors to the fullest extent permitted by Delaware law. Our bylaws also
provide that we may, by action of our board of directors, provide similar
indemnification to our employees and agents.
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<PAGE>
These provisions in our certificate of incorporation and our bylaws
may reduce the likelihood of derivative litigation against our officers and
directors and may discourage or deter our stockholders or management from
bringing a lawsuit against our officers and directors for breach of their duty
of care, even though the action, if successful, might otherwise have benefited
us and our stockholders.
These provisions in our certificate of incorporation and bylaws do not
alter the liability of our officers and directors under federal securities laws
and do not affect the right to sue under federal securities laws for violations
thereof.
Item 16. Exhibits
1.1 Form of Underwriting Agreement (1)
2.1 Agreement and Plan of Merger, dated December 21, 1999, by and between
3TEC Energy Corporation 3TM Acquisition L.L.C., Magellan Exploration,
LLC and ECIC Corporation, EnCap Energy Capital Fund III, L.P., EnCap
Energy Acquisition III-B, Inc., BOCP Energy Partners, L.P., and Pel-
Tex Partners, L.L.C. (Incorporated by reference to Exhibit C to Form
DEF14A, filed January 11, 2000)
2.2 Agreement and Plan of Merger, dated November 24, 1999, by and between
3TEC Energy Corporation, a Delaware corporation, and Middle Bay Oil
Company, Inc., an Alabama corporation (Incorporated by reference to
Exhibit A to Form DEF14A, filed October 25, 1999)
2.3 Form of Purchase Agreement between and among Middle Bay Oil Company,
Inc. and private sellers of the properties managed by Floyd Oil
Company (Incorporated by reference to Exhibit 2.1 to Form 8-K filed
December 7, 1999)
2.4 Real Estate Exchange Agreement by and between Middle Bay Oil Company,
Inc. and Floyd Oil Company (Incorporated by reference to Exhibit 2.1
to Form 8-K/A filed December 17, 1999)
2.5 First Amendment to Agreement and Plan of Merger, effective as of
January 14, 2000, by and among 3TEC Energy Corporation, 3TM
Acquisition L.L.C., Magellan Exploration, LLC, ECIC Corporation, EnCap
Energy Capital Fund III, L.P., EnCap Energy Acquisition III-B, Inc.,
BOCP Energy Partners, L.P., and Pel-Tex Partners, L.L.C. (Incorporated
by reference to Exhibit 2.1 to Form 8-K filed February 4, 2000)
2.6 Second Amendment to Agreement and Plan of Merger, effective as of
February 2, 2000, by and among 3TEC Energy Corporation, 3TM
Acquisition L.L.C., Magellan Exploration, LLC, ECIC Corporation, EnCap
Energy Capital Fund III, L.P., EnCap Energy Acquisition III-B, Inc.,
BOCP Energy Partners, L.P., and Pel-Tex Partners, L.L.C. (Incorporated
by reference to Exhibit 2.2 to Form 8-K filed February 4, 2000)
2.7 Form of Agreement of Sale and Purchase by and between C.W. Resources,
Inc., Westerman Royalty, Inc., and Carl A. Westerman and 3TEC Energy
Corporation (Incorporated by Reference to Exhibit 10.32 to Form S-2
filed April 28, 2000)
4.1 Certificate of Incorporation of 3TEC Energy Corporation (Incorporated
by reference to Exhibit 3.1 of Form 8-K/A filed December 16, 1999)
4.2 Bylaws of the Company (Incorporated by reference to Exhibit C of the
Company's definitive proxy statement filed October 25, 1999)
4.3 Form of Indenture (2)
4.4 Form of Warrant Agreement (3)
*5.1 Legal opinion of Thompson Knight Brown Parker & Leahy, L.L.P. as to
the legality of the securities being offered
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*23.1 Consent of KPMG LLP, independent certified public accountants
*23.2 Consent of Ryder Scott Company, independent petroleum engineers
24.1 Powers of Attorney (included on signature page hereto)
25.1 Statement of Eligibility of Trustee on Form T-1 with respect to Debt
Securities (3)
________________________________________________________________________________
*Filed herewith
(1) To be incorporated by reference herein, if applicable, in connection
with each offering of Securities.
(2) To be filed by amendment.
(3) To be filed in accordance with Section 305(b)(2) of the Trust
Indenture Act of 1939.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) 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-effect 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 value 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.
(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.
(2) 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.
(3) 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising out of the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, we have been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by one of our directors, officers or
controlling by persons 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, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent,
II-3
<PAGE>
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act, and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas on the 15th day of December,
2000.
3TEC ENERGY CORPORATION
By: /s/ Floyd C. Wilson
-------------------------------------
Floyd C. Wilson,
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Floyd C. Wilson and Stephen W. Herod, or
any of them his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and ratifying
and confirming all that said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
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.
Signature Title Date
--------- ----- ----
/s/ Floyd C. Wilson Chairman of the Board and December 15, 2000
--------------------------
Floyd C. Wilson Chief Executive Officer
/s/ R.A. Walker President, Chief Financial December 15, 2000
--------------------------
R.A. Walker Officer and Director
/s/ Stephen W. Herod Executive Vice President December 15, 2000
--------------------------
Stephen W. Herod and Director
/s/ Shane M. Bayless Vice President and December 15, 2000
--------------------------
Shane M. Bayless Controller
/s/ David B. Miller Director December 15, 2000
--------------------------
David B. Miller
/s/ D. Martin Phillips Director December 15, 2000
--------------------------
D. Martin Phillips
/s/ Gary R. Christopher Director December 15, 2000
--------------------------
Gary R. Christopher
/s/ Larry L. Helm Director December 15, 2000
--------------------------
Larry L. Helm
II-5
<PAGE>
EXHIBIT INDEX
1.1 Form of Underwriting Agreement (1)
2.1 Agreement and Plan of Merger, dated December 21, 1999, by and between
3TEC Energy Corporation 3TM Acquisition L.L.C., Magellan Exploration, LLC
and ECIC Corporation, EnCap Energy Capital Fund III, L.P., EnCap Energy
Acquisition III-B, Inc., BOCP Energy Partners, L.P., and Pel-Tex
Partners, L.L.C. (Incorporated by reference to Exhibit C to Form DEF14A,
filed January 11, 2000)
2.2 Agreement and Plan of Merger, dated November 24, 1999, by and between
3TEC Energy Corporation, a Delaware corporation, and Middle Bay Oil
Company, Inc., an Alabama corporation (Incorporated by reference to
Exhibit A to Form DEF14A, filed October 25, 1999)
2.3 Form of Purchase Agreement between and among Middle Bay Oil Company, Inc.
and private sellers of the properties managed by Floyd Oil Company
(Incorporated by reference to Exhibit 2.1 to Form 8-K filed December 7,
1999)
2.4 Real Estate Exchange Agreement by and between Middle Bay Oil Company,
Inc. and Floyd Oil Company (Incorporated by reference to Exhibit 2.1 to
Form 8-K/A filed December 17, 1999)
2.5 First Amendment to Agreement and Plan of Merger, effective as of January
14, 2000, by and among 3TEC Energy Corporation, 3TM Acquisition L.L.C.,
Magellan Exploration, LLC, ECIC Corporation, EnCap Energy Capital Fund
III, L.P., EnCap Energy Acquisition III-B, Inc., BOCP Energy Partners,
L.P., and Pel-Tex Partners, L.L.C. (Incorporated by reference to Exhibit
2.1 to Form 8-K filed February 4, 2000)
2.6 Second Amendment to Agreement and Plan of Merger, effective as of
February 2, 2000, by and among 3TEC Energy Corporation, 3TM Acquisition
L.L.C., Magellan Exploration, LLC, ECIC Corporation, EnCap Energy Capital
Fund III, L.P., EnCap Energy Acquisition III-B, Inc., BOCP Energy
Partners, L.P., and Pel-Tex Partners, L.L.C. (Incorporated by reference
to Exhibit 2.2 to Form 8-K filed February 4, 2000)
2.7 Form of Agreement of Sale and Purchase by and between C.W. Resources,
Inc., Westerman Royalty, Inc., and Carl A. Westerman and 3TEC Energy
Corporation (Incorporated by Reference to Exhibit 10.32 to Form S-2 filed
April 28, 2000)
4.1 Certificate of Incorporation of 3TEC Energy Corporation (Incorporated by
reference to Exhibit 3.1 of Form 8-K/A filed December 16, 1999)
4.2 Bylaws of the Company (Incorporated by reference to Exhibit C of the
Company's definitive proxy statement filed October 25, 1999)
4.3 Form of Indenture (2)
4.4 Form of Warrant Agreement (3)
*5.1 Legal opinion of Thompson Knight Brown Parker & Leahy, L.L.P. as to the
legality of the securities being offered
*23.1 Consent of KPMG LLP, independent certified public accountants
*23.2 Consent of Ryder Scott Company, independent petroleum engineers
24.1 Powers of Attorney (included on signature page hereto)
25.1 Statement of Eligibility of Trustee on Form T-1 with respect to Debt
Securities (3)
________________________________________________________________________________
*Filed herewith
(1) To be incorporated by reference herein, if applicable, in connection
with each offering of Securities.
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<PAGE>
(2) To be filed by amendment.
(3) To be filed in accordance with Section 305(b)(2) of the Trust Indenture
Act of 1939.
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