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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 4, 2001
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-8
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)
-------------------
3TEC ENERGY CORPORATION 2000 STOCK OPTION PLAN
MIDDLE BAY OIL COMPANY, INC. AMENDED AND RESTATED 1995 STOCK OPTION
AND STOCK APPRECIATION RIGHTS PLAN
(Full Title of the Plans)
-------------------
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)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
PROPOSED MAXIMUM
AGGREGATE PROPOSED MAXIMUM
OFFERING AGGREGATE
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE PRICE PER SHARE OFFERING PRICE AMOUNT OF
TO BE REGISTERED REGISTERED (1) (1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common stock,
par value $.02 per share................... 58,691 $15.03125 $882,199.09 $220.55
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</TABLE>
(1) Calculated pursuant to Rule 457(c), under the Securities Act of 1933, as
amended, the proposed maximum offering price per share and the proposed
maximum aggregate offering price are estimated solely for the purpose of
calculating the registration fee required under Section 6(b) of the
Securities Act and are based upon the average of the high and low prices for
a share of common stock of 3TEC Energy Corporation on the Nasdaq National
Market on December 27, 2000.
<PAGE>
PART I
REOFFER PROSPECTUS STATEMENT
The materials that follow, up to but not including the page beginning Part II of
this Registration Statement, constitute a Reoffer Prospectus prepared in
accordance with the requirements of Part I of S-3 pursuant to General
Instruction C to Form S-8. The Reoffer Prospectus may be utilized for
reofferings and resales of up to 58,691 shares of our common stock acquired by
certain employees and former employees under the 3TEC Energy Corporation 2000
Stock Option Plan and the Middle Bay Oil Company, Inc. Amended and Restated 1995
Stock Option and Stock Appreciation Rights Plan.
<PAGE>
REOFFER PROSPECTUS
58,691 Shares
[3TEC LOGO]
Common Stock
-------------------
This reoffer prospectus relates to 58,691 shares of our common stock, which may
be offered for sale from time to time by certain of our employees and former
employees. We issued these shares to our employees and former employees pursuant
to the 3TEC Energy Corporation 2000 Stock Option Plan and the Middle Bay Oil
Company, Inc. Amended and Restated 1995 Stock Option and Stock Appreciation
Rights Plan.
We are not offering any shares of our common stock for sale under this
prospectus, and we will not receive any of the proceeds from the sale of shares
by the selling stockholders under this prospectus.
Our common stock is traded on the Nasdaq National Market System under the symbol
"TTEN." The last reported sale price for our common stock on the Nasdaq National
Market System on January 2, 2001 was $16.625 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 5 TO READ ABOUT SOME OF THE RISKS THAT YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY REGULATORY BODY HAS
APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Reoffer Prospectus is January 4, 2001.
<PAGE>
TABLE OF CONTENTS
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PAGE
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Available Information................................................. 2
Incorporation of Certain Information by Reference..................... 2
About the Company..................................................... 3
Risk Factors.......................................................... 5
Forward Looking Statements............................................ 11
Use of Proceeds....................................................... 12
Selling Stockholders.................................................. 13
Plan of Distribution.................................................. 13
Legal Matters......................................................... 14
Experts............................................................... 14
</TABLE>
----------------
You should rely only on the information contained in this reoffer
prospectus. We have not authorized anyone to provide you with information
different from that contained in this prospectus. The selling stockholders are
offering to sell, and seeking offers to buy, shares of our common stock only in
jurisdictions where offers and sales are permitted. The information contained
in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or of any sale of our
common stock hereunder. In this prospectus, references to "3TEC," "the
Company," "we," "our," and "us" refer to 3TEC Energy Corporation.
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AVAILABLE INFORMATION
This prospectus constitutes a part of a registration statement on Form S-8
that we filed with the Securities and Exchange Commission (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 l-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 (http://www.sec.gov).
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
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/A, filed with the SEC on January 13, 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;
. 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.
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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.
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 acquisitions after December 31, 1999 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.
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. 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.
. 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 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.
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. 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.
. 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;
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. 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.
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
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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;
. 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.
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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 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.
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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;
. 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
9
<PAGE>
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 certificate of incorporation 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
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.
10
<PAGE>
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.
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.
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
11
<PAGE>
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;
. 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
We will not receive any proceeds from the sale of our common stock by the
selling stockholders under this reoffer prospectus. See "Selling Stockholders"
and "Plan of Distribution Below."
12
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information concerning each of the
selling stockholders. Assuming that the selling stockholders offer all of their
shares of our common stock being registered hereunder, the selling stockholders
will not have any beneficial ownership except as otherwise provided in the
table. The shares are being registered to permit the selling stockholders to
offer the shares for resale from time to time. See "Plan of Distribution."
<TABLE>
<CAPTION>
COMMON
SHARES OWNED COMMON SHARES COMMON SHARES OWNED
POSITION OR PRIOR TO THE REGISTERED BY THIS AFTER
NAME OF SELLING STOCKHOLDER OFFICE OFFERING PROSPECTUS THE SALE (1)
--------------------------- ----------- ------------ ------------------ -------------------
<S> <C> <C> <C> <C>
John R. Elixon.................................. Former Employee 1,000 1,000 0
Patti B. Bolling................................ Former Director 1,667 1,667 0
Alvin V. Shoemaker.............................. Former Director 100,804(2) 1,666 99,138(2)
Frank C. Turner, II............................. Former Officer 32,416 31,666 750
Edward P. Turner, Jr............................ Former Director 6,110 4,444 1,666
Ronald P. Jacoby................................ Former Employee 1,000 1,000 0
Robert W. Hammons............................... Former Officer 13,332 13,332 0
Deborah G. Brown................................ Employee 1,250 1,250 0
Larry Morris.................................... Former Employee 666 666 0
Joy Goodyear.................................... Former Employee 2,000 2,000 0
------- ------ -------
Total.................................... 160,245 58,691 101,554
</TABLE>
-------
(1) The information set forth in these columns assumes the selling stockholders
will sell all of the shares being offered hereby. None of the selling
stockholders owned prior to this offering, or will own following the
completion of this offering, more than 1% of our outstanding common stock.
(2) This figure includes 117,466 shares of Series B Preferred Stock immediately
convertible into not less than 39,156 shares of our common stock. This
figure also includes 22,222 shares of common stock, subordinated notes
convertible into 16,667 shares of common stock, and warrants immediately
excisable for 10,093 shares of common stock, all of which Mr. Shoemaker may
be deemed to share the power to vote or direct the vote and dispose or
direct the disposition of with Shoemaker Family Partners, L.P. and
Shoeinvest II, L.P.
PLAN OF DISTRIBUTION
Each selling stockholder will act independently of us in making decisions
with respect to the timing, manner and size of each sale and will pay or assume
brokerage commissions or other charges and expenses incurred in the sale of the
shares. Such sales may be made on one or more exchanges or in the over-the-
counter market or otherwise, at prices and at terms then prevailing or at prices
related to the then current market price, or in negotiated transactions. The
selling stockholders, for their own accounts, may effect such transactions by
selling the shares to or through broker-dealers. The shares may be sold by one
or more of the following: (a) a block trade in which the broker dealer so
engaged will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction; (b) purchases
by a broker-dealer as principal and resale by such broker-dealer for its account
pursuant to this prospectus; (c) an exchange distribution in accordance with the
rules of such exchange; (d) ordinary brokerage transactions and transactions in
which the broker solicits purchasers and (e) in privately negotiated
transactions.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders and/or the
purchasers of the shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions) in amounts to be
negotiated in connection with the sale. Such broker-dealers or agents and any
other participating broker-dealers or the selling stockholders may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act in
connection with such sales and any such commission, discount or
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<PAGE>
concession may be deemed to be underwriting discounts or commissions under the
Securities Act. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this prospectus.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to the common stock of the Company for a
period of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, each selling stockholder will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of our common
stock by the selling stockholders. We will make copies of this prospectus
available to the selling stockholders and have informed them of the need for
delivery of copies of this prospectus to purchasers at or prior to the time of
any sale of the shares offered hereby. We assume no obligation to so deliver
copies of this prospectus or any related prospectus supplement.
LEGAL MATTERS
No legal counsel is issuing a legal opinion in connection with the
registration of these securities.
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
LLP 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.
14
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Registrant with the Commission are
incorporated by reference in this Registration Statement:
. Annual Report on Form 10-KSB for the year ended December 31, 1999, filed with
the SEC on March 30, 2000;
. Prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933, as
amended (File No. 333-35914), filed with the SEC on June 28, 2000;
. Current Report on Form 8-K/A, filed with the SEC on January 13, 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;
. 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; and
. The description of our capital stock contained in our registration statement
on Form 10-SB, filed on April 30, 1993 (File No. 1-14745), including any
amendment or report filed for the purpose of updating the description.
All reports and other documents subsequently filed with the Commission 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, prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents. Any statement contained in this
Registration Statement or in a document incorporated or deemed incorporated by
reference in this Registration Statement shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
II-1
<PAGE>
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors, officers, employees or agents against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement in connection with specified actions, suits or proceedings, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation in a derivative action), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action, had
no reasonable cause to believe their conduct was unlawful. A similar standard
is applicable in the case of derivative actions, and the statute requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. The statute provides
that it is not exclusive of other indemnification that may be granted by a
corporation's charter, bylaws, disinterested director vote, stockholder vote,
agreement or otherwise.
Article EIGHTH of the our certificate of incorporation provides for
indemnification of our directors, officers, employees or agents to the full
extent permitted under the Delaware General Corporation Law.
Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock repurchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit.
Article NINTH of our certificate of incorporation provides for the limitation
or elimination of personal liability of our directors to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director to
the fullest extent permitted by the Delaware General Corporation Law.
These provisions in our certificate of incorporation 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 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and persons controlling the Company
pursuant to the foregoing provisions, the Company has 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.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The Registrant issued an aggregate of 58,691 shares of common stock to the
Selling Stockholders pursuant to the exercise of employee stock options granted
under the 3TEC Energy Corporation 2000 Stock Option Plan and the Middle Bay Oil
Company, Inc. Amended and Restated 1995 Stock Option and Stock Appreciation
Rights Plan. These issuances were exempt from registration under Section 4(2)
of the Securities Act.
ITEM 8. EXHIBITS.
Exhibits: The following documents are filed as exhibits to this report:
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)
II-2
<PAGE>
4.2 Bylaws of the Company (Incorporated by reference to Exhibit C of the
Company's definitive proxy statement filed October 25, 1999)
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)
----------
** Filed herewith.
ITEM 9. 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
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 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 4th day of January,
2001.
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ------- ------
<S> <C> <C>
/s/ Floyd C. Wilson Chairman of the Board and January 4, 2001
------------------------------------- Chief Executive Officer
Floyd C. Wilson
/s/ R. A. Walker President, Chief Financial January 4, 2001
------------------------------------- Officer and Director
R.A. Walker
/s/ Stephen W. Herod Executive Vice President - January 4, 2001
------------------------------------- Corporate Development
Stephen W. Herod and Director
/s/ Shane M. Bayless Vice President and January 4, 2001
------------------------------------- Controller
Shane M. Bayless
/s/ David B. Miller Director January 4, 2001
-------------------------------------
David B. Miller
/s/ D. Martin Phillips Director January 4, 2001
-------------------------------------
D. Martin Phillips
/s/ Gary R. Christopher Director January 4, 2001
-------------------------------------
Gary R. Christopher
/s/ Larry L. Helm Director January 4, 2001
-------------------------------------
Larry L. Helm
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
The following documents are filed as exhibits to this report:
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)
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)
------
** Filed herewith.
