<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1997.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
MCMORAN OIL & GAS CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1615 POYDRAS STREET 72-1266477
(STATE OF OTHER NEW ORLEANS, LA 70170 (I.R.S. EMPLOYER
JURISDICTION (504) 582-4000 IDENTIFICATION NO.)
OF INCORPORATION OR (ADDRESS, INCLUDING ZIP
ORGANIZATION) CODE, AND TELEPHONE
NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S
PRINCIPAL EXECUTIVE
OFFICES)
JOHN G. AMATO, ESQ.
GENERAL COUNSEL
MCMORAN OIL & GAS CO.
1615 POYDRAS STREET
NEW ORLEANS, LOUISIANA 70112
(504) 582-4000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
WILLIAM B. MASTERS, ESQ.
JONES, WALKER, WAECHTER, POITEVENT,
CARRERE & DENEGRE, L.L.P.
201 ST. CHARLES AVENUE
NEW ORLEANS, LOUISIANA 70170
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
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>
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PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE
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<S> <C> <C> <C> <C>
Rights.................. 28,611,429 rights -- -- --(3)
Common Stock, par value
$.01 per share......... 28,611,429 shares $3.50 $100,140,002 $30,346
Preferred Stock Purchase
Rights(4).............. -- -- -- --(5)
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</TABLE>
(1) Includes approximately 40,000 additional shares that may be issued as a
result of rounding the number of Rights (as defined) to be distributed to
holders of Common Stock as described herein.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(3) Pursuant to Rule 457, no registration fee is payable with respect to the
Rights.
(4) Rights to purchase one-one hundredth of a share of the Registrant's Series
A Participating Cumulative Preferred Stock are attached to and, until the
occurrence of specific events, trade with the Common Stock.
(5) Pursuant to Rule 457, no additional fee is required in respect of the
Preferred Stock Purchase Rights.
---------------
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.
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<PAGE>
EXPLANATORY NOTE:
THE RIGHTS OFFERING CONTEMPLATED BY THIS REGISTRATION STATEMENT IS SUBJECT
TO THE PRIOR APPROVAL OF THE STANDBY PURCHASE AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE RIGHTS OFFERING, BY THE HOLDERS OF THE
REGISTRANT'S COMMON STOCK. A PROXY STATEMENT HAS BEEN PREPARED AND FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION TO SOLICIT PROXIES FROM THE HOLDERS OF
THE REGISTRANT'S COMMON STOCK FOR USE AT A SPECIAL MEETING OF STOCKHOLDERS OF
THE REGISTRANT TO CONSIDER AND VOTE UPON THE MATTERS DESCRIBED THEREIN.
THIS REGISTRATION STATEMENT HAS BEEN PREPARED ASSUMING THAT THE HOLDERS OF
COMMON STOCK OF THE REGISTRANT APPROVE THE STANDBY PURCHASE AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE RIGHTS OFFERING. ACCORDINGLY,
IF THE STANDBY PURCHASE AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE RIGHTS OFFERING, ARE NOT APPROVED BY THE HOLDERS OF THE
REGISTRANT'S COMMON STOCK, THE RIGHTS OFFERING WILL NOT BE COMMENCED AND THIS
REGISTRATION STATEMENT WILL BE WITHDRAWN.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 15, 1997
PROSPECTUS
28,571,429 SHARES
[LOGO OF MCMORAN OIL & MCMORAN OIL & GAS CO.
GAS APPEARS HERE]
COMMON STOCK
-----------
McMoRan Oil & Gas Co., a Delaware corporation ("MOXY" or the "Company"), is
distributing to holders of record of shares of its common stock, par value $.01
per share (the "Common Stock"), transferable subscription rights (the "Rights")
to subscribe for and purchase additional shares of Common Stock for a price of
$3.50 per share (the "Subscription Price"). Each holder of Common Stock of
record as of the close of business on , 1997 (the "Record Date"),
is entitled to receive [approximately 2.0] Rights for each share of Common
Stock held as of such time. The number of Rights distributed by the Company to
each record holder of Common Stock will be rounded up to the nearest whole
number and no fractional Rights or cash in lieu thereof will be distributed or
paid by the Company. Rights holders ( the "Holders") may purchase one share of
Common Stock for each Right held. Each Right also carries the right to
subscribe (the "Oversubscription Privilege") at the Subscription Price for a
pro rata portion (based on the number of Rights so exercised) of the shares of
Common Stock, if any, that are not subscribed for through the exercise of the
Rights. The offering by the Company of the shares of Common Stock purchasable
upon exercise of the Rights, including the Oversubscription Privilege, is
referred to herein as the "Rights Offering." See "The Rights Offering."
On July 14, 1997, the Company entered into an agreement with Freeport-McMoRan
Resource Partners, Limited Partnership ("FRP"), a publicly traded limited
partnership of which Freeport-McMoRan Inc. ("FTX") is the administrative
managing general partner, pursuant to which, subject to completion of the
Rights Offering, MOXY will acquire the two producing oil and gas properties
(the "MCN Producing Properties") developed as part of MOXY's exploratory
drilling program with affiliates of MCN Energy Group Inc. (the "MOXY/MCN
Program") for $26 million, subject to adjustment, and repay all of the
indebtedness incurred by MOXY under the MOXY/MCN Program. The MOXY/MCN Program
will then be terminated and MOXY and FRP will enter into an aggregate $200
million multi-year exploration program (the "MOXY/FRP Exploration Program").
The Company also has entered into a standby purchase agreement (the "Standby
Purchase Agreement") with FRP pursuant to which, subject to certain conditions,
FRP has provided a standby commitment (the "Standby Commitment") to purchase
for the Subscription Price all of the shares of Common Stock that are not
purchased by Holders in the Rights Offering. FRP will receive a $6 million fee
(the "Standby Fee") for the Standby Commitment, acquiring and holding the MCN
Producing Properties for resale to MOXY and entering into the MOXY/FRP
Exploration Program. FRP also has the option to purchase additional shares of
Common Stock so that if following the Rights Offering it has not acquired 30%
of the outstanding Common Stock pursuant to the Standby Commitment, it may
acquire at the Subscription Price such additional shares of Common Stock as are
necessary to provide it with up to a 30% ownership position in MOXY (the "FRP
Purchase Option").
The Rights Offering, together with the Standby Commitment and FRP Purchase
Option, is part of a comprehensive plan to recapitalize the Company to enable
it to enter into the MOXY/FRP Exploration Program, purchase the MCN Producing
Properties and repay indebtedness incurred under the MOXY/MCN Program. There
can be no assurance that the Company will receive significant proceeds, if any,
from the Rights Offering. However, the Standby Purchase Agreement requires FRP
to purchase all of the shares of Common Stock that are not purchased by Holders
in the Rights Offering. If Holders do not exercise a significant number of
Rights and FRP purchases a significant number of shares of Common Stock
pursuant to the Standby Commitment or FRP Purchase Option, FRP may acquire the
power to control or significantly influence the management of the Company. See
"Risk Factors--Potential Change of Control of the Company," "Use of Proceeds"
and "Certain Relationships and Related Transactions."
The Rights Offering and the Rights will expire at 5:00 p.m., New York City
time, on , 1997 [30 days] unless extended by the Company (subject to
FRP's consent) from time to time (such date, as it may be extended, is referred
to herein as the "Expiration Date"), provided that the Expiration Date shall in
no event be later than , 1997 [60 days]. Holders who exercise their
Rights will not be entitled to revoke their subscriptions. Holders who do not
exercise or sell their rights will relinquish any value inherent in the Rights.
Accordingly, Holders are strongly urged to exercise or sell their rights. See
"Risk Factors--Dilution."
The Common Stock is traded on the Nasdaq National Market ("Nasdaq") under the
symbol "MOXY." On July 14, 1997 (the last day on which trading prices were
reported prior to the public announcement of the Rights Offering), the last
reported sales price of the Common Stock was $3 5/8 per share. It is
anticipated that the Rights will trade on Nasdaq under the symbol "MOXYR."
Certain registered broker-dealers have indicated to the Company that they
intend to make a market in the Rights. There can be no assurance, however, that
a market for the Rights will develop. Rights may also be sold in over-the-
counter and private sales transactions. Orders to sell Rights must be received
by the Subscription Agent not later than 11:00 a.m. on the third Nasdaq trading
day prior to the Expiration Date if a Holder wishes to sell Rights through the
Subscription Agent.
CURRENT STOCKHOLDERS OF THE COMPANY WHO DO NOT PARTICIPATE IN THE RIGHTS
OFFERING WILL SUFFER A SUBSTANTIAL DILUTION IN THEIR RELATIVE PERCENTAGE
OWNERSHIP IN THE COMPANY UPON ISSUANCE OF COMMON STOCK TO HOLDERS EXERCISING
RIGHTS AND TO FRP.
SEE "RISK FACTORS," BEGINNING ON PAGE 10, FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS IN CONNECTION WITH AN
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
UNDERWRITING
SUBSCRIPTION DISCOUNTS AND PROCEEDS TO
PRICE COMMISSIONS COMPANY(1)
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<S> <C> <C> <C>
Per share.......................... $3.50 -- $3.50
Total.............................. $100,000,000 -- $100,000,000
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</TABLE>
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(1)Before deducting estimated expenses of $7.0 million payable by the Company,
including the Standby Fee payable to FRP.
The date of this Prospectus is , 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C., 20549, and at the regional offices of the Commission located at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois, 60661 and at
Seven World Trade Center, 13th Floor, New York, New York, 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C., 20549, at prescribed rates. The
Commission maintains a Website that contains reports, proxy and information
statements and other information regarding issuers that file electronically with
the Commission (http://www.sec.gov). The Common Stock is traded on Nasdaq and
reports, proxy statements and other information may also be inspected at the
offices of the National Association of Securities Dealers, Inc., at 1735 K
Street, N.W., Washington, DC 20006.
The Company has filed a registration statement on Form S-3 (together with all
amendments and exhibits thereto, the "Registration Statement") with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the shares of Common Stock issuable upon exercise of the Rights.
This Prospectus, which is filed as a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission, and to which reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document filed
as an exhibit to the Registration Statement are summaries of the terms of such
contracts, agreements or documents. Reference is made to each such exhibit for
a more complete description of the matters involved, and such statements are
qualified in their entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's (i) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 (File No. 0-23870), (ii) Quarterly Report on Form 10-Q for
the quarter ended March 31, 1997 (iii) Form 10, as amended, initially filed on
April 19, 1994, (iv) Current Reports on Form 8-K dated January 7, 1997, May 9,
1997, July 1, 1997 and July 15, 1997 and (v) Proxy Statement dated _______, 1997
which have been filed by the Company with the Commission pursuant to the
Exchange Act, are by this reference incorporated in and made a part of this
Prospectus.
All reports and other documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the Rights Offering shall be deemed
to be incorporated by reference herein and to be part of this Prospectus from
their respective dates of filing. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon a written or oral request, a copy of any
or all of the documents that are incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to either (a)
McMoRan Oil & Gas Co., Attention: Secretary, 1615 Poydras Street, New Orleans,
Louisiana, 70112 (Telephone: (504) 582-4000) or (b) Georgeson & Company Inc., 88
Pine Street, 30th Floor, Wall Street Plaza, New York, New York 10005 (Telephone:
(212) 440-9800).
-2-
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements contained elsewhere in this Prospectus or
incorporated by reference herein and does not purport to be complete. Reference
is made to, and this Prospectus Summary is qualified in its entirety by and
should be read in conjunction with, the more detailed information contained
elsewhere in this Prospectus or incorporated by reference herein. Prospective
investors should carefully consider the information set forth under "Risk
Factors."
THE COMPANY
MOXY is an independent oil and gas company engaged in the exploration,
development and production of oil and natural gas. The Company's operations are
conducted offshore in the Gulf of Mexico (the "Gulf") and onshore in the Gulf
Coast area. The Company commenced operations in May 1994 following the
distribution of all of the Company's Common Stock to the stockholders of FTX in
order to carry on substantially all of the oil and natural gas exploration
activities previously conducted by FTX. The Company and its predecessors have
conducted exploration, development and production operations offshore in the
Gulf and onshore in the Gulf Coast and other areas for more than 25 years, which
have provided the Company an extensive geological and geophysical database, and
extensive technical and operational expertise.
The Rights Offering is part of a comprehensive plan to recapitalize the
Company to enable MOXY to implement an aggregate $200 million, multi-year
exploration program with FRP, to purchase the MCN Producing Properties and to
repay the indebtedness incurred by MOXY under the MOXY/MCN Program. At a
special meeting of MOXY's stockholders on _________, 1997, MOXY's stockholders
approved the Rights Offering, the Standby Commitment, the FRP Purchase Option,
purchase of the MCN Producing Properties and the MOXY/FRP Exploration Program.
See "Business and Properties - MOXY/FRP Exploration Program" and "The Rights
Offering."
In July 1997, FRP agreed to acquire from affiliates of MCN Energy Group Inc.
("MCN") their interests in the MOXY/MCN Program, the MCN Producing Properties
and other exploratory properties acquired under the MOXY/MCN Program for $31.0
million, as adjusted for the net revenues and development and operating costs
attributable to such properties from April 1, 1997 until their acquisition by
FRP, and an additional amount equal to the amount loaned by MCN to MOXY under
the MOXY/MCN Program. On __________, 1997, FRP paid MCN, after adjustments,
$___ million for such assets together with $___ for the outstanding
indebtedness.
MOXY and FRP have amended the MOXY/MCN Program to extend the program term,
include their interests in the seven offshore leases acquired by MOXY and FRP at
the Central Gulf of Mexico lease sale held in March 1997 and provide for the
conduct of mutually agreed exploration projects until the earlier of December
31, 1997 or the date of completion of the Rights Offering. The amendment also
provides that FRP will reimburse MOXY for approximately $290,000 of overhead per
month and will continue to advance funds to MOXY under the MOXY/MCN Program
during the remaining program term.
Upon completion of the Rights Offering, MOXY will acquire the MCN Producing
Properties for $26.0 million, subject to the adjustments described above for
revenues and costs attributable to the MCN Producing Properties from April 1,
1997 until their acquisition by MOXY plus interest, calculated on the daily
outstanding balance of the $26.0 million purchase price, as adjusted, from
____________, 1997 until MOXY's acquisition of the properties at an annual rate
publicly announced by The Chase Manhattan Bank from time to time plus 2%. At
the same time, MOXY will repay to FRP all amounts advanced by it to MOXY under
the MOXY/MCN Program. Thereafter, MOXY will retain a 100% interest in the MCN
Producing Properties, and MOXY and FRP will dedicate to the MOXY/FRP Exploration
Program all other oil and gas properties subject to the MOXY/MCN Program. See
"Business and Properties - MOXY/MCN Program" and "- MOXY/FRP Exploration
Program."
-3-
<PAGE>
The Company's business strategy is to create value for its stockholders
through the discovery of oil and gas reserves in its exploration and development
activities. MOXY expects to continue to concentrate its efforts in selected
geographic areas where the Company's management team has significant exploration
experience. The Company evaluates substantially all of its exploratory
prospects with 3-D seismic surveys prior to drilling. MOXY intends to continue
to generate exploratory prospects and evaluate selected opportunities to acquire
producing oil and gas properties and to maximize its geological and geophysical
experience and expertise by using 3-D seismic data and other state-of-the-art
technology.
The principal executive offices of the Company are located at 1615 Poydras
Street, New Orleans, Louisiana 70112, and its telephone number at such offices
is (504) 582-4000.
THE RIGHTS OFFERING
RIGHTS....................... Each holder of Common Stock will receive
[approximately 2.0] transferable Rights for every
share of Common Stock held of record as of the
close of business on ___________, 1997 (the
"Record Date"). The number of Rights distributed
by the Company to each Common Stock holder will be
rounded up to the nearest whole number. An
aggregate of approximately 28.6 million Rights
will be distributed. Each Right will be
exercisable for one share of Common Stock. If all
the Rights are exercised, an aggregate of
approximately 28.6 million shares of Common Stock
(the "Underlying Shares") will be sold upon
exercise of the Rights. See "The Rights Offering-
The Rights."
SUBSCRIPTION PRICE........... $3.50 in cash per share of Common Stock.
BASIC SUBSCRIPTION PRIVILEGE. Holders are entitled to purchase for the
Subscription Price one share of Common Stock for
each Right held (the "Basic Subscription
Privilege"). See "The Rights Offering -
Subscription Privileges - Basic Subscription
Privilege."
OVERSUBSCRIPTION PRIVILEGE... Each Holder who elects to exercise in full his or
her Basic Subscription Privilege may also
subscribe at the Subscription Price for additional
Underlying Shares available as a result of
unexercised Rights, if any, (the "Oversubscription
Privilege"). If an insufficient number of
Underlying Shares are available to satisfy fully
all exercises of the Oversubscription Privilege,
the available Underlying Shares will be prorated
among Holders who exercise their Oversubscription
Privilege based on the respective numbers of
Rights exercised by such Holders pursuant to the
Basic Subscription Privilege. See "The Rights
Offering - Subscription Privileges -
Oversubscription Privilege."
RECORD DATE.................. _________, 1997.
EXPIRATION DATE.............. _____________, 1997, at 5:00 p.m., New York City
time, unless extended. The Company may extend the
Expiration Date with FRP's consent and will
announce any extension by not later than 9:00
a.m., New York time, on the business day following
the previously scheduled Expiration Date.
-4-
<PAGE>
Any extension of the Expiration Date will be for a
period of at least three Nasdaq trading days,
provided that the Expiration Date shall in no
event be later than _______, 1997. See "The Rights
Offering - Expiration Date."
STANDBY PURCHASE COMMITMENT.. FRP has agreed, subject to the terms and
conditions of the Standby Purchase Agreement, to
purchase at the Subscription Price all of the
shares of Common Stock offered hereby that are not
purchased by the Holders. Pursuant to the Standby
Purchase Agreement, FRP also has the option to
purchase (the "FRP Purchase Option") additional
shares of Common Stock so that if following the
Rights Offering it has not acquired 30% of the
outstanding Common Stock pursuant to the Standby
Commitment, it may acquire at the Subscription
Price such additional shares of Common Stock as
are necessary to provide it with up to a 30%
ownership position in MOXY. MOXY has agreed to
pay FRP a fee (the "Standby Fee") of $6 million,
payable upon closing of the Rights Offering, for
providing the Standby Commitment, acquiring and
holding the MCN Producing Properties for resale to
MOXY and entering the MOXY/MCN Exploration
Program. See "The Rights Offering - Standby
Purchase Agreement" and "Risk Factors - Potential
Change of Control of the Company."
SHARES OF COMMON STOCK
OUTSTANDING AFTER RIGHTS
OFFERING..................... Based on the number of shares outstanding on the
date of this Prospectus, approximately _____
million shares will be outstanding following the
Rights Offering (before giving effect to any
exercise of the FRP Purchase Option). If all
Rights are exercised and the FRP Purchase Option
is exercised in full, approximately _____ million
shares of Common Stock will be outstanding.
TRANSFERABILITY OF RIGHTS.... The Rights are transferable and will be evidenced
by transferable subscription certificates (a
"Subscription Certificate"). It is anticipated
that they will trade on Nasdaq under the symbol
"MOXYR" until the close of business on the last
Nasdaq trading day prior to the Expiration Date.
Certain registered broker-dealers have indicated
that they intend to make a market in the Rights
during the period the Rights are outstanding. No
assurance can be given, however, that a market for
the Rights will develop or, if such a market
develops, how long it will continue.
The Subscription Agent will attempt to sell Rights
for Holders who deliver a Subscription Certificate
with the instruction for sale contained on the
reverse side thereof properly executed to the
Subscription Agent no later than 11:00 a.m., New
York City time, on the third Nasdaq trading day
preceding the Expiration Date. There can be no
assurance that the Subscription Agent will be
able to sell any Rights or as to the price that
the Subscription Agent will be able to obtain if
it is able to effect any such
-5-
<PAGE>
sale. See "The Rights Offering - Method of
Transferring Rights."
HOW TO EXERCISE RIGHTS....... The Basic Subscription Privilege and
Oversubscription Privilege may be exercised by
properly completing and signing the Subscription
Certificate and forwarding it (or following the
Guaranteed Delivery Procedures described below),
with payment of the Subscription Price for each
Underlying Share subscribed for pursuant to the
Basic Subscription Privilege and the
Oversubscription Privilege, to the Subscription
Agent on or prior to the Expiration Date. If the
mail is used to forward Subscription Certificates,
it is recommended that insured, registered mail be
used. No interest will be paid on funds delivered
upon exercise of the Basic Subscription Privilege
or the Oversubscription Privilege. See "The
Rights Offering - Exercise of Rights."
Once a holder of Rights has exercised the Basic
Subscription Privilege or the Oversubscription
Privilege, such exercise may not be revoked. See
"The Rights Offering - No Revocation."
HOW FOREIGN AND CERTAIN
OTHER STOCKHOLDERS CAN
EXERCISE RIGHTS.............. Subscription Certificates will not be mailed to
Holders whose addresses are outside the United
States or who have an APO or FPO address, but will
be held by the Subscription Agent for their
account. To exercise such Rights, such Holders
must notify the Subscription Agent on or prior to
11:00 a.m., New York City time, on the third
Nasdaq trading day preceding the Expiration Date,
and must establish to the satisfaction of the
Subscription Agent that such exercise is permitted
under applicable law. If such a Holder does not
notify the Subscription Agent and provide
acceptable instructions to the Subscription Agent
by such time, such Rights will be sold, if
feasible, and the net proceeds, if any, remitted
to such Holder. See "The Rights Offering -
Foreign and Certain Other Stockholders."
PERSONS HOLDING SHARES, OR
WISHING TO EXERCISE RIGHTS,
THROUGH OTHERS............... Persons holding shares of Common Stock and
receiving the Rights distributed with respect
thereto through a broker, dealer, commercial bank,
trust company or other nominee, as well as persons
holding certificates of Common Stock personally
who would prefer to have such institutions effect
transactions relating to the Rights on their
behalf, should contact the appropriate institution
or nominee and request it to effect the
transaction for them. See "The Rights Offering -
Exercise of Rights."
ISSUANCE OF COMMON STOCK..... Certificates representing shares of Common Stock
purchased in the Rights Offering will be delivered
as soon as practicable after the Expiration Date.
See "The Rights Offering - Subscription
Privileges."
-6-
<PAGE>
USE OF PROCEEDS.............. The net proceeds received by the Company from the
sale of the shares of Common Stock offered hereby,
after payment of fees and expenses, including the
Standby Fee, will be approximately $93 million.
The net proceeds from the Rights Offering,
together with any proceeds from the exercise of
the FRP Purchase Option, will be used to purchase
the MCN Producing Properties, to repay the debt
incurred by MOXY under the MOXY/MCN Program, to
fund a portion of the Company's estimated capital
requirements under the MOXY/FRP Exploration
Program and for additional working capital and
general corporate purposes. See "Use of Proceeds"
and "Certain Relationships and Related
Transactions."
CERTAIN FEDERAL INCOME
TAX CONSIDERATIONS........... For United States federal income tax purposes,
Holders generally will not recognize taxable
income in connection with the issuance to them or
exercise by them of Rights. Holders may incur a
gain or loss upon the sale of the Rights or the
shares of Common Stock acquired upon exercise of
the Rights. See "Certain Federal Income Tax
Considerations."
SUBSCRIPTION AGENT........... ChaseMellon Shareholder Services, L.L.C. See "The
Rights Offering - Subscription Agent."
INFORMATION AGENT............ Georgeson & Co. Inc. See "The Rights Offering -
Information Agent."
RISK FACTORS................. There are substantial risks in connection with
this offering that should be considered by
prospective purchasers. See "Risk Factors."
-7-
<PAGE>
SUMMARY FINANCIAL DATA
The following table sets forth a summary of selected historical financial
data for the Company for the three months ended March 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1996. The table also
sets forth unaudited pro forma financial information as of and for the three
months ended March 31, 1997 and for the year ended December 31, 1996 that gives
effect to consummation of the Rights Offering (assuming exercise of all the
Rights), the application of a portion of the net proceeds to purchase the MCN
Producing Properties, to repay the Company's debt under the MOXY/MCN Program and
to enter into the MOXY/FRP Exploration Program. The annual historical
information is derived from the audited financial statements of the Company and
the historical information for the three-month periods ended March 31, 1997 and
1996 is unaudited. The historical and pro forma results of operations are not
necessarily indicative of future results. The following data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results Of Operations" and the Company's historical and pro forma financial
statements and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Three months ended March 31, Years ended December 31,
--------------------------------------- ---------------------------------------------------
Pro Forma(1) Pro Forma(1)
1997 1997 1996 1996 1996 1995 1994(2)
-------- ------- ------- ------- ------- -------- --------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Oil and gas sales......... $ 5,910 $ 2,364 $ 664 $ 6,010 $ 2,434 $ 2,722 $ 174
Management fees........... 409 409 409 1,636 1,636 545 --
-------- ------- ------- ------- ------- -------- --------
Total revenues............. 6,319 2,773 1,073 7,646 4,070 3,267 174
-------- ------- ------- ------- ------- -------- --------
Costs and expenses:
Production and delivery,
including depreciation
and amortization......... 4,918 1,960 398 4,510 1,500 2,623 --
Exploration expenses...... 2,362 2,362 4,475 9,818 9,818 11,756 15,518
General and administrative
expenses................. 711 711 653 2,635 2,635 3,687 2,338
-------- ------- ------- ------- ------- -------- --------
Total costs and expenses... 7,991 5,033 5,526 16,963 13,953 18,066 17,856
-------- ------- ------- ------- ------- -------- --------
Operating loss............. (1,672) (2,260) (4,453) (9,317) (9,883) (14,799) (17,682)
Interest expense........... -- (360) -- -- (403) -- --
Other income, net.......... 131 131 123 424 424 164 2,482
-------- ------- ------- ------- ------- -------- --------
Net loss................... $ (1,541) $(2,489) $(4,330) $(8,893) $(9,862) $(14,635) $(15,200)
======== ======= ======= ======= ======= ======== ========
Net loss per share......... $( 0.04) $(0.18) $( 0.31) $(0.21) $( 0.71) $( 1.06) $( 1.10)
Average shares outstanding. 42,678 14,107 13,826 42,469 13,898 13,772 13,770
BALANCE SHEET DATA (at end of period):
Working capital............ $ 57,745 $ (421) $ 3,722 $ 2,972 $ 8,257 $ 15,063
Oil and gas properties, net 44,184 18,492 9,683 18,231 9,878 17,094
Production loan, less
current portion.......... -- 11,718 3 12,391 530 --
Total assets............... 112,544 30,990 19,522 30,980 21,633 34,425
Stockholders' equity....... 101,181 5,892 13,402 8,246 17,605 32,157
</TABLE>
- --------------
(1) Adjusted to reflect consummation of the Rights Offering (assuming exercise
of all the Rights), the application of a portion of the net proceeds to
purchase of the MCN Producing Properties and repay the Company's debt under
the MOXY/MCN Program and the formation of the MOXY/FRP Exploration Program,
as if each had occurred as of January 1, 1996 in the statement of operations
data, and as of March 31, 1997 for the balance sheet data. No effect is
given to any exercise of the FRP Purchase Option. This information should be
read in conjunction with the unaudited pro forma financial statements of the
Company and the notes thereto included elsewhere in this Prospectus.
(2) Reflects the period since inception (May 1994).
-8-
<PAGE>
SUMMARY RESERVE DATA
The following table sets forth summary information with respect to the proved
oil and gas reserves owned by the Company and those attributable to the MCN
Producing Properties (Vermilion Block 160 Field Area and Vermilion Block 410
Field) at May 31, 1997, as estimated by Ryder Scott Company, Petroleum
Engineers. For additional information relating to the oil and gas reserves of
the Company and attributable to the MCN Producing Properties, see "Business and
Properties - Oil and Gas Reserves," and note 7 of the notes to the Company's
audited financial statements included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Present Value of
Oil Gas Future Net Cash Flows
---------------------------------- ------------------------------- ------------------------------
MCN MCN MCN
Producing Producing Producing
MOXY Properties MOXY Properties MOXY Properties
-------------- ----------------- ------------ ---------------- --------------- ------------
(Bbls) (Mmcf) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
RESERVE DATA AS OF MAY 31, 1997:
Proved Developed........... 70,442 102,921 6,790 9,640 $10,431 $15,153
Proved Undeveloped......... 55,933 77,442 2,928 3,099 2,814 4,345
------- ------- ----- ------ ------- -------
Total..................... 126,375 180,363 9,718 12,739 $13,245 $19,498
======= ======= ===== ====== ======= =======
</TABLE>
SUMMARY OPERATING DATA
The following table sets forth summary information with respect to the
production of oil and gas and average sales price received by the Company for
the three months ended March 31, 1997 and 1996 and the years ended December 31,
1996 and 1995. The table also sets forth unaudited pro forma information for
the three months ended March 31, 1997 and the year ended December 31, 1996 that
gives effect to the acquisition of the MCN Producing Properties. See "Business
and Properties."
<TABLE>
<CAPTION>
Three months ended March 31, Years ended December 31,
------------------------------- ---------------------------------
Pro Forma Pro Forma
PRODUCTION DATA: 1997(1) 1997 1996 1996(1) 1996 1995
----------- -------- -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Production:
Oil (Bbls).................... 14,000 5,600 8,400 72,500 29,000 45,000
Gas (Mcf)..................... 1,980,000 792,000 156,000 1,577,500 631,000 1,093,000
Average sales price per unit:
Oil ($/Bbl)................... $ 23.43 $ 23.43 $ 20.17 $ 22.22 $ 22.22 $ 18.83
Gas ($/Mcf)................... $ 2.78 $ 2.78 $ 3.09 $ 2.72 $ 2.72 $ 1.63
</TABLE>
- -------------------------
(1) Gives effect to the acquisition of the MCN Producing Properties as if
consummated at the beginning of the periods presented and should be read in
conjunction with the unaudited pro forma financial statements of the
Company and notes thereto included elsewhere in this Prospectus.
-9-
<PAGE>
RISK FACTORS
Holders of the Company's Common Stock should consider carefully the
following risk factors relating to the business of MOXY and the Rights Offering,
together with the information and financial data set forth elsewhere in this
Prospectus in connection with an investment in the Common Stock offered hereby.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact included in this Prospectus
are forward-looking statements. Such statements include without limitation the
statements under "Prospectus Summary," "Price Range of Common Stock and Dividend
Policy," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business and Properties" regarding MOXY's financial
position and liquidity, payment of dividends, its strategic alternatives, future
capital needs, exploration, development and capital expenditures (including the
amount and nature thereof), the drilling of wells, reserve estimates and future
net revenues attributable thereto, business strategies, and other plans and
objectives of management of the Company for future operations and activities.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and its perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate under the circumstances. Such statements are subject to risks
and uncertainties, including the risk factors discussed below, general economic
and business conditions, the business opportunities that may be presented to and
pursued by the Company, changes in laws or regulations and other factors, many
of which are beyond the control of the Company. Although MOXY believes that the
expectations reflected in such forward-looking statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Prospective investors are therefore cautioned that any such statements are not
guarantees of future performance and the actual results or developments may
differ materially from those projected in the forward-looking statements.
Certain important factors that could cause actual results to differ materially
from MOXY's expectations are disclosed in this Prospectus.
LIMITED OPERATING HISTORY AND SIGNIFICANT HISTORICAL OPERATING LOSSES
The Company commenced operations in 1994. The Company has only two
producing fields, which have been in production for only a short period of time,
making proved reserves and levels of future production attributable to these
fields less susceptible to estimation than fields with longer production
histories. As a result of the Company's exploratory drilling, the Company has
incurred significant operating losses to date. The Company's future viability
must be considered in light of the risks and difficulties frequently encountered
by companies engaged in the early stages of oil and gas exploration, development
and production activities.
The development of the Company's business will continue to require
substantial expenditures. The Company's future financial results will depend
primarily on its ability to locate hydrocarbons in commercial quantities and on
the market prices for oil and gas. There can be no assurance that the Company
will achieve or sustain profitability or positive cash flows from future
operating activities.
DETERMINATION OF SUBSCRIPTION PRICE AND MARKET CONSIDERATIONS
The Subscription Price was determined by negotiation between the Company
and FRP. The Subscription Price does not necessarily bear any relationship to
the book value of the Company's assets, past operations, cash flow, earnings,
financial condition or any other established criteria for value and should not
be considered an indication of the underlying values of the Company. The market
price of the Common Stock could be subject to significant fluctuations in
response to MOXY's operating results and other factors, including the size of
the public float of the Common Stock (which will depend, in part, on the
percentage of the Rights that are exercised by Holders) after the Rights
Offering. See "The Rights Offering - Determination of Subscription Price."
-10-
<PAGE>
There is currently no public market for the Rights. Although MOXY has been
advised by certain broker-dealers that they intend to make a market in the
Rights, they are under no obligation to do so, and any market making activity
may be discontinued at any time. Although the Rights will be transferable and
listed on Nasdaq, there can be no assurance that the Rights will have any
economic value or that a public market for the Rights will develop or be
sustained. There also can be no assurance that, following the issuance of the
Rights and of the Underlying Shares upon exercise of Rights, a subscribing
Holder will be able to sell shares of Common Stock purchased in the Rights
Offering at a price equal to or greater than the Subscription Price.
POTENTIAL CHANGE OF CONTROL OF THE COMPANY
If FRP acquires a significant number of shares of Common Stock pursuant to
the Standby Commitment or the FRP Purchase Option, it will have the power to
control or significantly influence the election of directors and all other
matters submitted to the Company's stockholders and otherwise to direct the
business and affairs of the Company. If less than approximately 25% of the
Rights are exercised by the Holders, then pursuant to the Standby Commitment FRP
will acquire a majority of the outstanding Common Stock and will have the power
to control MOXY. If, as a result of the Standby Commitment or the FRP Purchase
Option, FRP acquires or holds more than 10% but less than a majority of the
outstanding Common Stock it will be entitled to designate a number of directors
proportionate to its stock ownership in MOXY and may have the power to
significantly influence the Company's business and affairs. If FRP acquires a
majority of the outstanding shares of Common Stock as a result of the Standby
Commitment, it will be in a position to control the election of all of the
Company's directors and to otherwise direct the business and affairs of the
Company. MOXY and FRP have agreed to adhere to the policies described under the
heading "Description of Capital Stock - Stockholder Agreement and Registration
Rights" at any time that FRP owns more than 10% of the outstanding Common Stock.
See "The Rights Offering - Standby Purchase Agreement" and "Certain
Relationships and Related Transactions - MCN Properties; Standby Purchase
Agreement."
IRREVOCABILITY OF SUBSCRIPTIONS
The election to exercise Rights is irrevocable. Until certificates
representing shares of Common Stock are delivered, subscribing Holders may not
be able to sell such shares. Certificates representing shares of Common Stock
purchased in the Rights Offering will be delivered by mail as soon as
practicable following the Expiration Date. No interest will be paid to Holders
on funds delivered to the Subscription Agent pursuant to the exercise of Rights
pending delivery of such certificates. See "The Rights Offering - Subscription
Privileges," "- Exercise of Rights" and "- No Revocation."
DILUTION
Stockholders who do not exercise their Rights will experience a significant
decrease in their proportionate interest in the equity ownership and voting
power of the Company. The sale of the Rights may not compensate a stockholder
for all or any part of any reduction in the market value of such stockholder's
Common Stock resulting from the Rights Offering. Stockholders who do not
exercise or sell their rights will relinquish any value inherent in the Rights.
After giving effect to the exercise of the Rights and the Standby
Commitment (and assuming no exercise of the FRP Purchase Option or other
issuances of Common Stock), the Company will have approximately _____ million
shares of Common Stock issued and outstanding, as compared with approximately
14.1 million shares of Common Stock issued and outstanding as of the date of
this Prospectus. If all Rights are exercised and the FRP Purchase Option is
exercised in full, approximately _____ million shares of Common Stock will be
outstanding.
Purchasers of Common Stock in the Rights Offering will experience immediate
and substantial dilution in the net tangible book value per share attributable
to such shares of Common Stock. See "Dilution."
-11-
<PAGE>
DEPENDENCE ON MANAGEMENT AND ADMINISTRATIVE SERVICES
The Company depends upon certain management and administrative services
provided by FM Services Company ("FMS"), a corporation 50% owned by each of FTX
and Freeport-McMoRan Copper & Gold Inc. ("FCX"), pursuant to a Services
Agreement (the "Services Agreement") to manage and support certain of its
operations. The Services Agreement does not assure the Company unlimited access
to all of the executive officers listed under "Management," and there will be
competition between the Company, FTX, FRP, FCX and their respective affiliates
for the time and effort of the employees of FMS who provide services to the
Company. If the Company were deprived of adequate access to certain key members
of its management team or other personnel, or lost access to such services
altogether, the Company's results of operations could be materially and
adversely affected. See "Certain Relationships and Related Transactions -
Services Agreement."
CONFLICTS OF INTEREST
FRP, through its subsidiaries and joint venture operations, is one of the
world's leading integrated phosphate fertilizer producers. FRP also produces
oil and gas in connection with the sulphur mining operations at its Main Pass
complex offshore Louisiana. FTX is the administrative managing general partner
of FRP. In addition to the Services Agreement, the Company is a party to other
material contracts with FTX, FRP and their affiliates. See "Certain
Relationships and Related Transactions." The Company may also enter into
additional material transactions and agreements with FTX and FRP and their
affiliates after the date of this Prospectus. It is the Company's policy to
enter into any transaction with a related party on terms that, on the whole, are
no less favorable than those that would be available from unaffiliated parties.
Based on the Company's experience in the industry and the terms of its
transactions with unaffiliated parties, it is the Company's belief that all of
its transactions with related parties met that standard at the time such
transactions were effected. However, because the Company has not and does not
intend to seek competitive bids for such services, it is possible that the terms
of certain transactions with affiliates may be more or less favorable to MOXY
than they would be if the transactions were among unrelated parties. In
addition, certain officers and directors of the Company are also officers,
directors and/or stockholders of FTX, FRP and FCX, and it is possible that
conflicts of interest could arise as a result thereof. See "Management."
Conflicts of interest could arise, for example, if either the Company or FRP
were presented with the opportunity to engage in a business competing with the
other or if the Company and FRP were to enter into a business relationship
together. See "Description of Capital Stock - Stockholder Agreement and
Registration Rights" for a description of the policies to be followed by the
Company following the consummation of the Rights Offering for transactions with
FRP and its affiliates. It is possible that conflicts of interest arising from
any such transactions may be resolved in a manner that is not favorable to the
Company.
VOLATILITY OF OIL AND GAS PRICES
The Company's revenues depend substantially on the prevailing prices for
natural gas and, to a lesser extent, oil. In recent years, natural gas and oil
prices and, therefore, the level of drilling, exploration, development and
production, have been extremely volatile. Prices are affected by supply and
demand as well as actions of state and local agencies, U.S. and foreign
governments and international cartels. All of these factors are beyond the
control of the Company. Any significant or extended decline in natural gas and
oil prices will have a material adverse effect on the Company's financial
condition and operations and could impair its access to capital.
EXPLORATION AND DEVELOPMENT RISKS
Exploration and development of natural gas and oil involves a high degree
of risk that no commercial production will be obtained or that the production
will be insufficient to recover drilling and completion costs. The cost of
drilling, completing and operating wells is often uncertain, and cost overruns
in exploration and development operations can adversely affect the economics of
a project. The Company's drilling operations may be curtailed, delayed or
canceled as a result of numerous factors, including title problems, equipment
failures, weather conditions, marine accidents, fires and explosions, compliance
with governmental
-12-
<PAGE>
requirements and shortages or delays in the delivery of equipment. Furthermore,
completion of a well does not ensure a profit on the investment or a recovery of
drilling, completion and operating costs.
SUBSTANTIAL CAPITAL REQUIREMENTS
The Company makes, and will continue to make, substantial capital
expenditures for the exploration, development, and production of oil and natural
gas reserves and related projects. If the Company fails to discover significant
reserves, experiences operating difficulties or if oil and gas prices decline
and reduce cash generated from operations, the Company may be required to obtain
additional financing to fund its operations. No assurance can be given that
such financing will be available, and if it is not available, the Company may be
required to curtail its operations.
REPLACEMENT OF RESERVES
MOXY's future performance depends in part upon its ability to acquire
mineral leases and to find and develop oil and gas reserves that are
economically recoverable. Without successful exploration or development
activities, MOXY's reserves will decline. No assurance can be given that MOXY
will be able to find and develop additional reserves on an economic basis.
MOXY's business is capital intensive, and significant operating cash flow
must be reinvested in development and exploration activities in order for MOXY
to maintain and increase its asset base of proved oil and gas reserves. To the
extent that cash flow from operations is reduced and external sources of capital
become limited or unavailable, MOXY's ability to make the necessary capital
investments to maintain or expand its asset base would be impaired. See "-
Substantial Capital Requirements." Without such investment, MOXY's oil and gas
reserves would decline. For a discussion of MOXY's reserves, see "Business and
Properties - Oil and Gas Reserves."
PURCHASE OF RESERVES
Although the Company currently emphasizes reserve growth through
exploratory drilling, it may make acquisitions from time to time of producing
properties and properties with proved undeveloped reserves. Evaluation of
recoverable reserves of natural gas and oil, which is an integral part of the
property selection process, depends on evaluation of geological, engineering and
production data, some or all of which may prove to be unreliable or not
indicative of future performance. See "-- Reserves and Future Net Cash Flow."
RESERVES AND FUTURE NET CASH FLOW
Information relating to proved oil and gas reserves owned by MOXY and those
attributable to the MCN Producing Properties is based upon engineering
estimates. Reserve engineering is a subjective process of estimating the
recovery from underground accumulations of oil and natural gas that cannot be
measured in an exact manner, and the accuracy of any reserve estimate is a
function of the quality of available data and of engineering and geological
interpretation and judgment. Estimates of economically recoverable oil and gas
reserves and of future net cash flows necessarily depend upon a number of
variable factors and assumptions, such as historical production from the area
compared with production from other producing areas, the assumed effects of
governmental regulations and assumptions concerning future oil and gas prices,
future operating costs, severance and excise taxes, development costs and
workover and remedial costs, all of which may vary considerably from actual
results. Because all reserve estimates are to some degree speculative, the
quantities of oil and natural gas that are ultimately recovered, production and
operating costs, the amount and timing of future development expenditures and
future oil and natural gas sales prices may all vary from those assumed in these
estimates and such variances may be material. In addition, different reserve
engineers may make different estimates of reserve quantities and cash flows
based on the same data. See "Business and Properties - Oil and Gas Reserves."
The present values of estimated future net cash flows referred to in this
Prospectus should not be construed as the current market value of the estimated
proved oil and gas reserves attributable to MOXY's
-13-
<PAGE>
properties or of the MCN Producing Properties. In accordance with applicable
requirements of the Commission, the estimated discounted future net cash flows
from proved reserves are generally based on prices and costs as of the date of
the estimate, while actual future prices and costs may be materially higher or
lower. Actual net cash flows also will be affected by factors such as the amount
and timing of production, supply and demand for oil and gas, curtailments or
increases in consumption by gas purchasers and changes in governmental
regulations and taxation. The timing of future net cash flows from proved
reserves, and thus their actual present value, will be affected by the timing of
production and the incurrence of expenses incurred in the development and
production of oil and gas properties. In addition, the 10% discount factor,
which is required by the Commission to be used to calculate discounted future
net cash flows for reporting purposes, is not necessarily the most appropriate
discount factor based on interest rates in effect from time to time and risks
associated with the oil and gas properties owned by MOXY, the MCN Producing
Properties or the oil and gas industry in general.
OPERATING HAZARDS; LIMITED INSURANCE COVERAGE
MOXY's operations are subject to hazards and risks inherent in drilling
for, producing and transporting natural gas and oil, such as fires, explosions,
natural disasters, encountering formations with abnormal pressures, mechanical
problems, blowouts, cratering, pipeline ruptures and spills, any of which can
result in environmental pollution, personal injuries, property damage and
substantial losses to MOXY. Moreover, MOXY's offshore operations in the Gulf
are subject to a variety of operating risks peculiar to the marine environment,
such as hurricanes and other adverse weather conditions, more extensive
governmental regulation (including regulations that may, in certain
circumstances, impose strict liability for pollution damage) and interruption or
termination of operations by governmental authorities based on environmental or
other considerations.
MOXY maintains insurance coverage against some, but not all, potential
losses. MOXY's coverages include, but are not limited to, operator's extra
expense, physical damage on certain assets, employer's liability, comprehensive
general liability, automobile, workers' compensation and loss of production
income insurance, and limited coverage for sudden environmental damages. MOXY
does not believe that insurance coverage is available at a reasonable cost for
environmental damages that occur over time or the full potential liability that
could be caused by sudden environmental damages. Accordingly, MOXY may be
subject to material uninsured liabilities or may lose substantial portions of
its properties in the event of environmental damages. The occurrence of an
event that is not fully covered by insurance could have a material adverse
effect on MOXY's financial condition and results of operations. See "Business
and Properties - Operating Hazards and Insurance."
GOVERNMENTAL REGULATION
General. MOXY's operations are affected by political developments and
federal and state laws and regulations. In particular, oil and natural gas
production, operations and economics are or have been affected by price
controls, taxes and other laws relating to the oil and natural gas industry, by
changes in such laws and by changes in administrative regulations. MOXY cannot
predict how existing laws and regulations may be interpreted by enforcement
agencies or court rulings, whether additional laws and regulations will be
adopted, or the effect such changes may have on its business or financial
condition. See "Business and Properties - Regulation."
Environmental. MOXY's operations are subject to numerous laws and
regulations governing the discharge of materials into the environment or
otherwise relating to environmental protection. These laws and regulations
require the acquisition of a permit before drilling commences, restrict the
types, quantities and concentration of various substances that can be released
into the environment in connection with drilling and production, limit or
prohibit drilling on certain lands lying within wilderness, wetland and other
protected areas, and impose substantial liabilities for pollution that could
result from MOXY's operations. Moreover, the recent trend toward stricter
standards in environmental legislation and regulation is likely to continue.
For instance, legislation has been proposed in Congress from time to time that
would reclassify certain crude oil and natural gas exploration and production
wastes as "hazardous wastes" which would make the wastes subject to much
-14-
<PAGE>
more stringent handling, disposal and clean-up requirements. If such legislation
were to be enacted, it could have a significant impact on MOXY's operating
costs, as well as the oil and gas industry in general. Initiatives to further
regulate the disposal of crude oil and natural gas wastes are also pending in
certain states and could have a similar impact. MOXY could incur substantial
costs to comply with environmental laws and regulations. In addition to
compliance costs, government entities and other third parties may assert
substantial liabilities against owners and operators of oil and gas properties
for oil spills, discharges of hazardous materials, remediation and clean-up
costs and other environmental damages, including damages caused by previous
property owners. The imposition of any such liabilities on MOXY could have a
material adverse effect on MOXY's financial condition and results of operations.
The Oil Pollution Act of 1990 imposes a variety of regulations on
"responsible parties" related to the prevention of oil spills. The
implementation of new, or the modification of existing, environmental laws or
regulations, including regulations promulgated pursuant to the Oil Pollution Act
of 1990, could have a material adverse impact on MOXY. See "Business and
Properties - Regulation - Environmental."
SHORTAGES OF SUPPLIES AND EQUIPMENT
The Company's ability to conduct its operations in a timely and cost
effective manner is subject to the availability of oil and gas field supplies,
equipment and service crews. The industry is currently experiencing a shortage
of certain types of drilling rigs and work boats in the Gulf of Mexico. This
shortage could result in delays in the Company's operations as well as higher
operating and capital costs. Shortages of other drilling equipment, tubular
goods, drilling service crews and seismic crews may occur from time to time,
further hindering the Company's ability to conduct its operations as planned.
COMPETITION
MOXY operates in the highly competitive areas of oil and natural gas
production, development and exploration with many other companies, many of which
have significantly greater financial and other resources than MOXY. Factors
affecting MOXY's ability to compete effectively include the availability of
capital, access to information relating to a property, the standards established
by MOXY for the minimum projected return on investment and the intermediate
transportation of gas. MOXY's competitors include major integrated oil
companies and a substantial number of independent energy companies, many of
which may have substantially larger financial resources, staffs and facilities
than MOXY. See "Business and Properties - Competition."
USE OF PROCEEDS
The net proceeds from the Rights Offering are estimated to be approximately
$93 million after payment of fees and expenses, including the Standby Fee. The
net proceeds, together with any proceeds from the exercise of the FRP Purchase
Option, will be used to purchase the MCN Producing Properties, to repay the
indebtedness incurred by MOXY under the MOXY/MCN Program (which bears interest
at the annual base rate announced from time to time by The Chase Manhattan Bank
plus 2%), to fund a portion of MOXY's estimated capital requirements under the
MOXY/FRP Exploration Program and for additional working capital and general
corporate purposes. See "Business and Properties - MOXY/MCN Program" and "--
MOXY/FRP Exploration Program."
THE RIGHTS OFFERING
THE RIGHTS
MOXY is distributing transferable Rights at no cost to the record holders
of shares of its outstanding Common Stock as of the close of business on the
Record Date. MOXY will distribute [approximately 2.0] Rights for each share of
Common Stock held on the Record Date. An aggregate of approximately 28.6
million
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<PAGE>
Rights exercisable to purchase an aggregate of approximately 28.6 million shares
of Common Stock are being distributed in connection with the Rights Offering.
The Rights will be evidenced by transferable Subscription Certificates. Each
Right will entitle the Holder to purchase one share of Common Stock upon the
payment of the Subscription Price ($3.50 in cash). There can be no assurance
that the Common Stock will trade at prices above the Subscription Price. See
"Risk Factors - Determination of Subscription Price and Market Considerations."
No fractional Rights or cash in lieu thereof will be issued or paid. The
number of Rights distributed to each stockholder will be rounded up to the
nearest whole number of Rights. No Subscription Certificate may be divided in
such a way as to permit the Holder of such Subscription Certificate to receive a
greater number of Rights than the number to which such Subscription Certificate
entitles its Holder, except that a depository, bank, trust company or securities
broker or dealer holding shares of Common Stock on the Record Date for more than
one beneficial owner may, upon proper showing to the Subscription Agent,
exchange its Subscription Certificate to obtain a Subscription Certificate for
the number of Rights to which all such beneficial owners in the aggregate would
have been entitled had each been a record holder of Common Stock on the Record
Date. MOXY reserves the right to refuse to issue any such Subscription
Certificate if such issuance would be inconsistent with the principle that each
beneficial owner's holdings will be rounded up to the nearest whole Right.
Because the number of Rights distributed to each record holder will be
rounded up to the nearest whole number, beneficial owners of Common Stock who
are also the record holders of such shares will receive more Rights under
certain circumstances than beneficial owners of Common Stock who are not the
record holders of their shares and who do not obtain (or cause the record holder
of their shares to obtain) a separate Subscription Certificate with respect to
the shares of Common Stock beneficially owned by them, including shares held in
an investment advisory or similar account. To the extent that record holders or
beneficial owners of Common Stock who obtain a separate Subscription Certificate
receive more Rights, they will be able to subscribe for more shares of Common
Stock pursuant to the Basic Subscription Privilege.
The issuance by MOXY of shares of Common Stock pursuant to the Rights
Offering is not conditioned upon the subscription of any minimum number of
shares of Common Stock by holders of the Rights. See "The Rights Offering -
Subscription Privileges -- Oversubscription Privilege."
BEFORE EXERCISING OR SELLING ANY RIGHTS, POTENTIAL INVESTORS ARE URGED TO
READ CAREFULLY THE INFORMATION SET FORTH UNDER "RISK FACTORS."
EXPIRATION DATE
The Rights Offering and the Rights will expire on the Expiration Date
(_______, 1997) at 5:00 p.m., New York City time, unless extended. The Company
may, with FRP's consent, extend the Expiration Date and will announce any
extensions thereof by not later than 9:00 a.m., New York City time, on the
business day following the previously scheduled Expiration Date; provided that
the Expiration Date in no event shall be later than ______________, 1997. An
extension of the Expiration Date will be for a period of at least three Nasdaq
trading days. After the Expiration Date, unexercised Rights will be null and
void. MOXY will not be obligated to honor any purported exercise of Rights
received by the Subscription Agent after the Expiration Date, regardless of when
the documents relating to such exercise were sent, except pursuant to the
guaranteed delivery procedures described below.
SUBSCRIPTION PRIVILEGES
BASIC SUBSCRIPTION PRIVILEGE. Each Right will entitle the holder thereof
to receive, upon payment of the Subscription Price, one share of Common Stock.
To exercise the Basic Subscription Privilege, Rights holders must pay the
Subscription Price in full and fully comply with the instructions set forth
below under the heading "-- Exercise of Rights." Certificates representing
shares of Common Stock purchased pursuant to the Basic Subscription Privilege
will be delivered to subscribers as soon as practicable after the Expiration
Date.
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<PAGE>
OVERSUBSCRIPTION PRIVILEGE. Subject to the allocation procedure described
below, each Right also carries an Oversubscription Privilege right to subscribe
at the Subscription Price for additional shares of Common Stock not subscribed
for by other Holders through the exercise of the Basic Subscription Privilege
(the "Excess Shares"). Only Holders who exercise the Basic Subscription
Privilege in full will be entitled to exercise the Oversubscription Privilege.
The Oversubscription Privilege must be exercised at the same time as the Basic
Subscription Privilege is exercised by paying the Subscription Price of the
Excess Shares in full and by properly complying with the instructions set forth
below under the heading "-- Exercise of Rights." Holders who intend to
subscribe for additional shares of Common Stock through the Oversubscription
Privilege so that after the Rights Offering they may own 15% or more of the
outstanding shares of Common Stock should be aware of the terms of the Company's
Preferred Rights Agreement. See "Description of Capital Stock - Preferred Stock
Purchase Rights." Certificates representing Excess Shares purchased pursuant to
the Oversubscription Privilege will be delivered to subscribers as soon as
practicable after the Expiration Date and after all prorations and adjustments
contemplated by the terms of the Rights Offering have been effected.
Only Excess Shares not subscribed for through the Basic Subscription
Privilege will be available for purchase pursuant to the Oversubscription
Privilege. If the Excess Shares are not sufficient to satisfy all subscriptions
pursuant to the Oversubscription Privilege, the Excess Shares will be allocated
pro rata (subject to the elimination of fractional shares) among those Holders
exercising the Oversubscription Privilege in proportion to the number of shares
each Holder subscribed for pursuant to the Basic Subscription Privilege;
provided, however, that if such pro rata allocation results in any Holder being
allocated a greater number of Excess Shares than such Holder subscribed for
pursuant to the exercise of such Holder's Oversubscription Privilege, then such
Holder will be allocated only such number of Excess Shares as such Holder
subscribed for, and the remaining Excess Shares will be allocated among all
other Holders exercising the Oversubscription Privilege.
STANDBY PURCHASE AGREEMENT
MOXY and FRP have entered into a Standby Purchase Agreement, pursuant to
which, subject to certain limited exceptions, FRP has agreed to provide a
Standby Commitment to purchase at the Subscription Price a number of shares of
Common Stock equal to the number of shares of Common Stock not purchased
pursuant to the exercise of Rights. Pursuant to the Standby Purchase Agreement,
FRP also has the option to purchase additional shares of Common Stock so that if
following the Rights Offering it has not acquired 30% of the outstanding Common
Stock pursuant to the Standby Commitment, it may acquire at the Subscription
Price such additional shares of Common Stock as are necessary to provide it with
up to a 30% ownership position in MOXY. MOXY has also agreed to pay the Standby
Fee to FRP upon the closing of the Standby Commitment. The rights and
obligations of the Company and FRP under the Standby Purchase Agreement are
subject to certain customary conditions, including the absence of any pending or
threatened action, suit or proceeding relating to the Rights Offering or the
Standby Purchase Agreement. See "Certain Relationships and Related Transactions
- - MCN Properties; Standby Purchase Agreement."
MOXY and FRP also will enter into a Stockholder Agreement (the "Stockholder
Agreement") that provides for (i) the implementation of certain corporate
governance measures designed to protect the stockholders of MOXY other than FRP
(ii) the ability of FRP to elect a certain number of directors if it owns more
than 10% but less than a majority of the outstanding Common Stock and (iii)
certain registration rights with respect to the shares of Common Stock that FRP
may acquire pursuant to the Standby Purchase Agreement. If FRP acquires a
majority of the outstanding shares of Common Stock as a result of the Standby
Commitment, it will be in a position to control the election of all of the
Company's directors and to otherwise direct the business and affairs of the
Company. If FRP acquires less than a majority of the outstanding shares of
Common Stock, but acquires a significant number of shares through the Standby
Commitment or the FRP Purchase Option, it will have the ability to significantly
influence the management and control of the Company. See "Risk Factors -
Potential Change of Control of the Company." The Stockholder Agreement provides
that the Company will not, without the approval of a committee composed of
independent members of the Board of Directors, take certain actions, including,
among other things, purchases of Common Stock and certain transactions with FRP
involving aggregate payments in excess of $5 million. Moreover, the Company
intends
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<PAGE>
to conduct all such transactions on an arms'-length basis. However, there can be
no assurance that the actions taken by the Company will always be in the best
interests of public stockholders. See "Certain Relationships and Related
Transactions - MCN Properties; Standby Purchase Agreement" and "Description of
Capital Stock - Stockholder Agreement and Registration Rights."
DETERMINATION OF SUBSCRIPTION PRICE
The Subscription Price was determined by negotiations between the Company
and FRP. The Company's objective in establishing the Subscription Price was to
approximate recent trading prices, raise the targeted proceeds and provide all
of MOXY's stockholders with a reasonable opportunity to make an additional
investment in the Company and avoid an involuntary dilution of their ownership
and voting percentage in the Company. In approving the Subscription Price, the
Board of Directors considered such factors as the alternatives available to MOXY
for raising capital, the market price of the Common Stock, the pro rata nature
of the offering, pricing of similar transactions, the business prospects for
MOXY and the general condition of the securities markets. There can be no
assurance, however, that the market price of the Common Stock will not decline
during the subscription period or that, following the issuance of the Rights and
of the Underlying Shares upon exercise of Rights, a subscribing Holder will be
able to sell the Rights or sell the Underlying Shares purchased in the Rights
Offering at a price equal to or greater than the Subscription Price.
EXERCISE OF RIGHTS
Rights may be exercised by delivery to the Subscription Agent, on or prior
to the Expiration Date, of the properly completed and duly executed Subscription
Certificate evidencing such Rights (together with any required signature
guarantees), accompanied by payment in full of the Subscription Price for each
Underlying Share subscribed for pursuant to the Basic Subscription Privilege and
the Oversubscription Privilege. All payments must be made by (i) check or bank
draft drawn upon a United States bank or postal, telegraphic or express money
order payable to "ChaseMellon Shareholder Services, L.L.C., as Subscription
Agent," or (ii) wire transfer of same-day funds to the account maintained by the
Subscription Agent for such purpose at Mellon Bank, Pittsburgh, PA, Account No.
Reorg Acct 100-2331 (MOXY subscription), ABA No. 043 000 261 Attn: ChaseMellon
Shareholder Services, Evelyn O'Connor (201) 296-4515. Payment of the
Subscription Price will be deemed to have been received by the Subscription
Agent only upon (a) clearance of any uncertified check, (b) receipt by the
Subscription Agent of any certified check or bank draft drawn upon a U.S. bank
or of any postal, telegraphic or express money order, or (c) receipt of good
funds in the Subscription Agent's account designated above. PLEASE NOTE THAT
FUNDS PAID BY UNCERTIFIED PERSONAL CHECK MAY TAKE AT LEAST FIVE BUSINESS DAYS TO
CLEAR. ACCORDINGLY, HOLDERS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF
UNCERTIFIED PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF
THE EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARED BY SUCH
DATE, AND ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S
CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
Subscription Certificates and payment of the Subscription Price should be
delivered to one of the following addresses:
By Mail: Reorganization Department
PO Box 3301
South Hackensack, NJ 07606
By Hand: Reorganization Department
120 Broadway
13th Floor
New York, NY 10271
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<PAGE>
By Overnight Delivery Service: Reorganization Department
85 Challenger Road, Mail Drop-Reorg
Ridgefield Park, NJ 07660
Facsimile: (201) 329-8936
Confirm facsimile by
by telephone only: (201) 296-4860
If a Holder wishes to exercise Rights, but time will not permit such Holder
to cause the Subscription Certificate(s) evidencing such Rights to reach the
Subscription Agent on or prior to the Expiration Date, such Rights may
nevertheless be exercised if all of the following conditions (the "Guaranteed
Delivery Procedures") are met:
(i) such Holder has caused payment in full of the Subscription Price
for each Underlying Share being subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege to be received
(in the manner set forth above) by the Subscription Agent on or prior to
the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the Expiration
Date, a notice of guaranteed delivery (a "Notice of Guaranteed Delivery"),
substantially in the form provided with the Instructions as to Use of
Subscription Certificates (the "Instructions") distributed with the
Subscription Certificates, from a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or a member in good standing of a
recognized signature guarantee medallion program, pursuant to Rule 17Ad-15
of the Exchange Act (each, an "Eligible Institution"), stating the name of
the exercising Holder, the number of Rights represented by the Subscription
Certificate(s) held by such exercising Holder, the number of Underlying
Shares being subscribed for pursuant to the Basic Subscription Privilege
and the number of Underlying Shares, if any, being subscribed for pursuant
to the Oversubscription Privilege, and guaranteeing the delivery to the
Subscription Agent of any Subscription Certificate(s) evidencing such
Rights within three Nasdaq trading days following the date of the Notice of
Guaranteed Delivery; and
(iii) the properly completed and duly executed Subscription
Certificate(s), including any required signature guarantees, evidencing the
Rights being exercised is received by the Subscription Agent within three
Nasdaq trading days following the date of the Notice of Guaranteed Delivery
relating thereto. The Notice of Guaranteed Delivery may be delivered to
the Subscription Agent in the same manner as Subscription Certificates at
the addresses set forth above, or may be transmitted to the Subscription
Agent by facsimile transmission (facsimile no. (201) 329-8926).
Additional copies of the form of Notice of Guaranteed Delivery are
available upon request from the Information Agent whose address and
telephone numbers are set forth under "-- Information Agent."
Unless a Subscription Certificate (i) provides that the shares of Common
Stock to be issued pursuant to the exercise of Rights represented thereby are to
be delivered to the record holder of such Rights or (ii) is submitted for the
account of an Eligible Institution, signatures on such Subscription Certificate
must be guaranteed by an Eligible Institution subject to the standards and
procedures adopted by the Subscription Agent.
Funds received in payment of the Subscription Price for Excess Shares
subscribed for pursuant to the Oversubscription Privilege will be held in a
segregated account pending issuance of such Excess Shares. If a Rights holder
exercising the Oversubscription Privilege is allocated less than all of the
Excess Shares that such holder wished to subscribe for pursuant to the
Oversubscription Privilege, the excess funds paid by such holder in respect of
the Subscription Price for shares not issued will be returned by mail without
interest or
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<PAGE>
deduction as soon as practicable after the Expiration Date and after all
prorations and adjustments contemplated by the terms of the Rights Offering have
been effected.
A Holder who holds shares of Common Stock for the account of others, such
as a broker, a trustee or a depositary for securities, should notify the
respective beneficial owners of such shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
the Rights beneficially owned by them. Beneficial owners of Common Stock or
Rights held through such a holder of record should contact the holder and
request the holder to effect transactions in accordance with the beneficial
owner's instructions. If a beneficial owner wishes to obtain a separate
Subscription Certificate, he should contact the nominee as soon as possible and
request that a separate Subscription Certificate be issued. A nominee may
request that any Subscription Certificate held by it be split into such smaller
denominations as it wishes, provided that the Subscription Certificate is
received by the Subscription Agent, properly endorsed, no later than 5:00 p.m.,
New York City time, on __________, 1997.
If either the number of Rights being exercised is not specified on a
Subscription Certificate, or the payment delivered is not sufficient to pay the
full aggregate Subscription Price for all Underlying Shares stated to be
subscribed for, the Holder will be deemed to have exercised the maximum number
of Rights that could be exercised for the amount of the payment delivered by
such Holder. If the payment delivered by the Holder exceeds the aggregate
Subscription Price for the number of Rights evidenced by the Subscription
Certificate(s) delivered by such Holder, the payment will be applied, until
depleted, to subscribe for Underlying Shares in the following order: (i) to
subscribe for the number of Underlying Shares indicated on the Subscription
Certificate(s) pursuant to the Basic Subscription Privilege; (ii) to subscribe
for Underlying Shares until the Basic Subscription Privilege has been fully
exercised with respect to all of the Rights represented by the Subscription
Certificate; and (iii) to subscribe for additional Underlying Shares pursuant to
the Oversubscription Privilege (subject to any applicable proration). Any
excess payment remaining after the foregoing allocation will be returned to the
Holder as soon as practicable by mail, without interest or deduction.
The Instructions accompanying the Subscription Certificates should be read
carefully and followed in detail. PLEASE DO NOT SEND SUBSCRIPTION CERTIFICATES
TO MOXY.
THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK OF
THE HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES AND
PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO
THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO THE EXPIRATION DATE.
BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO
CLEAR, HOLDERS ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF
CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by MOXY, whose determinations will be
final and binding. MOXY, in its sole discretion, may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any Right by
reason of any defect or irregularity in such exercise. Subscriptions will not
be deemed to have been received or accepted until all irregularities have been
waived or cured within such time as MOXY determines in its sole discretion.
Neither MOXY nor the Subscription Agent will be under any duty to give
notification of any defect or irregularity in connection with the submission of
Subscription Certificates or incur any liability for failure to give such
notification.
Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus, the
Instructions or the Notice of Guaranteed Delivery should be directed to the
Information Agent whose address and telephone numbers are set forth under "--
Information Agent."
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<PAGE>
NO REVOCATION
ONCE A HOLDER HAS EXERCISED THE BASIC SUBSCRIPTION PRIVILEGE OR THE
OVERSUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE REVOKED BY SUCH HOLDER.
METHOD OF TRANSFERRING RIGHTS
Rights may be purchased or sold through usual investment channels,
including banks and brokers. It is anticipated that the Rights will trade on
Nasdaq under the symbol "MOXYR." Rights also may be sold in over-the-counter
and private sales transactions. Certain registered broker-dealers have
indicated that they intend to make a market in the Rights during the period the
Rights are outstanding. However, there can be no assurance that a trading
market for the Rights will develop or, if such a market develops, as to how long
it will continue.
The Rights evidenced by a single Subscription Certificate may be
transferred in whole by endorsing the Subscription Certificate for transfer in
accordance with the instructions included thereon. A portion of the Rights
evidenced by a single Subscription Certificate (but not fractional Rights) may
be transferred by delivering to the Subscription Agent a Subscription
Certificate properly endorsed for transfer, with instructions to register such
portion of the Rights evidenced thereby in the name of the transferee (and to
issue a new Subscription Certificate to the transferee evidencing such
transferred Rights). In such event, a new Subscription Certificate evidencing
the balance of the Rights will be issued to the Holder or, if the Holder so
instructs, to an additional transferee. A signature guarantee must be provided
by an Eligible Institution.
The Rights evidenced by a Subscription Certificate also may be sold, in
whole or in part, through the Subscription Agent by delivering to the
Subscription Agent such Subscription Certificate properly executed for sale by
the Subscription Agent. If only a portion of the Rights evidenced by a single
Subscription Certificate is to be sold by the Subscription Agent, such
Subscription Certificate must be accompanied by instructions setting forth the
action to be taken with respect to the Rights that are not to be sold. If the
Rights can be sold, sales of such Rights will be deemed to have been effected at
the weighted average price received by the Subscription Agent for all Rights
sold by it on the day such Rights are sold, less any applicable brokerage
commissions, taxes and other direct expenses of sale. Promptly following the
settlement of any such sale, the Subscription Agent will send the Holder a check
for the net proceeds (after deduction of any applicable brokerage commissions,
taxes and other direct expenses of the sale) from the sale of any Rights sold.
MOXY will pay the fees charged by the Subscription Agent for effecting such
sale. Orders to sell Rights must be received by the Subscription Agent prior to
11:00 a.m., New York City time, on the third Nasdaq trading day preceding the
Expiration Date. If less than all sales orders received by the Subscription
Agent can be filled, sales proceeds will be prorated among the Holders based
upon the number of Rights each Holder has instructed the Subscription Agent to
sell during such period, irrespective of when during such period the
instructions are received by the Subscription Agent. The Subscription Agent's
obligation to execute orders for the sale of Rights is subject to its ability to
find buyers. Any Rights that cannot be sold by the Subscription Agent by 5:00
p.m., New York City time the third Nasdaq trading day preceding the Expiration
Date, will be returned promptly by mail to the Holder.
Holders wishing to transfer all or a portion of their Rights (but not
fractional Rights) should allow a sufficient amount of time prior to the
Expiration Date for (i) the transfer instructions to be received and processed
by the Subscription Agent, (ii) a new Subscription Certificate to be issued and
transmitted to the transferee or transferees with respect to transferred Rights,
and to the transferor with respect to retained Rights, if any, and (iii) the
Rights evidenced by such new Subscription Certificates to be exercised or sold
by the recipients thereof. Neither MOXY nor the Subscription Agent shall have
any liability to a transferee or transferor of Rights if Subscription
Certificates are not received in time for exercise or sale prior to the
Expiration Date.
Except for the fees charged by the Subscription Agent (which will be paid
by MOXY as described below), all commissions, fees and other expenses (including
brokerage commissions and transfer taxes) incurred in connection with the
purchase, sale or exercise of Rights will be for the account of the transferor
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<PAGE>
of the Rights, and none of such commissions, fees or expenses will be paid by
MOXY or the Subscription Agent.
FOREIGN AND CERTAIN OTHER STOCKHOLDERS
Subscription Certificates will not be mailed to Holders or to any
subsequent transferees of any Subscription Certificates whose addresses are
outside the United States or who have APO or FPO addresses, but will be held by
the Subscription Agent for such Holders' accounts. To exercise or sell their
Rights, such Holders must notify the Subscription Agent prior to 11:00 a.m., New
York City time, three Nasdaq trading days prior to the Expiration Date, at which
time (if no contrary instructions have been received) the Rights represented
thereby will be sold, subject to the Subscription Agent's ability to find a
purchaser. Any such sales will be at prevailing market prices. See "--Method
of Transferring Rights." If the Rights can be sold, a check for the proceeds
from the sale of any Rights, less any applicable brokerage commissions, taxes
and other expenses, will be remitted to such Holders by mail. The proceeds, if
any, resulting from sales of Rights of Holders whose addresses are not known by
the Subscription Agent or to whom delivery cannot be made will be held by the
Subscription Agent in a noninterest bearing account. Any amount remaining
unclaimed on the second anniversary of the Expiration Date will be turned over
by the Subscription Agent to MOXY and, after such date, any person claiming such
proceeds will, as an unsecured general creditor of MOXY, be entitled to look
only to MOXY for payment thereof.
SUBSCRIPTION AGENT
MOXY has appointed ChaseMellon Shareholder Services, L.L.C. as Subscription
Agent for the Rights Offering. The Subscription Agent's address, which is the
address to which the Subscription Certificates and payment of the Subscription
Price must be delivered, as well as the address to which Notice of Guaranteed
Delivery must be delivered, is:
By Mail: Reorganization Department
PO Box 3301
South Hackensack, NJ 07606
By Hand: Reorganization Department
120 Broadway
13th Floor
New York, NY 10271
By Overnight Delivery Service: Reorganization Department
85 Challenger Road, Mail Drop-Reorg
Ridgefield Park, NJ 07660
Facsimile: (201) 329-8936
Confirm facsimile by
by telephone only: (201) 296-4860
MOXY will pay the fees and expenses of the Subscription Agent, and has also
agreed to indemnify the Subscription Agent against any liability that it may
incur in connection with the Rights Offering.
INFORMATION AGENT
MOXY has appointed Georgeson & Company Inc. as Information Agent for the
Rights Offering. Any questions or requests for additional copies of this
Prospectus may be directed to the Information Agent at the following address and
telephone number:
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<PAGE>
Georgeson & Company Inc.
88 Pine Street, 30th Floor
Wall Street Plaza
New York, New York 10005
Banks and brokers call collect: (212) 440-9800
All others call toll-free (800) 223-2064`
MOXY will pay the fees and expenses of the Information Agent and has also
agreed to indemnify the Information Agent from certain liabilities that it may
incur in connection with the Rights Offering.
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<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is listed on Nasdaq under the symbol "MOXY." The
following table sets forth, for the periods indicated, the range of high and low
closing bid prices, as reported by Nasdaq. The quotes represent "inter-dealer"
prices without adjustment or mark-ups, mark-downs or commissions and may not
represent actual transactions.
High Low
-------- --------
1995
--------
First Quarter $ 3 1/8 $ 2 1/2
Second Quarter 4 1/8 2 3/8
Third Quarter 3 5/8 2 5/16
Fourth Quarter 3 7/16 2 9/16
1996
--------
First Quarter $ 3 3/4 $ 2 13/16
Second Quarter 3 7/8 2 1/2
Third Quarter 2 15/16 1 3/4
Fourth Quarter 3 1/16 1 1/2
1997
--------
First Quarter $ 3 15/16 $ 2 1/16
Second Quarter 3 13/16 2 5/16
Third Quarter
(through July 14, 1997) 3 5/8 3 3/8
On July 14, 1997 the last reported sales price of the Common Stock was $3
5/8. As of July 14, 1997, there were 11,554 record holders of the Company's
Common Stock.
The Company has not in the past paid cash dividends on its Common Stock and
does not expect to do so in the foreseeable future. The Company currently
intends to reinvest its available cash in the identification, exploration and
development of additional oil and gas properties. The decision whether or not
to pay dividends and in what amounts is solely within the discretion of the
Company's board of directors.
DILUTION
The unaudited net tangible book value of the Common Stock as of March 31,
1997, was approximately $5.9 million, or $0.42 per share. See "Capitalization."
"Net tangible book value per share" represents the amount of total tangible
assets less total liabilities divided by the number of shares of Common Stock
outstanding. After giving effect to the consummation of the Rights Offering
(assuming full exercise of the Rights) and after deducting the estimated
offering expenses, including the Standby Fee, the unaudited net tangible book
value of the Company as of March 31, 1997, would have been approximately $101.2
million, or $2.37 per share. This represents an immediate increase in unaudited
net tangible book value of $1.95 per share to persons holding shares of Common
Stock prior to the exercise of the Rights and an immediate dilution of $1.13 per
share to Holders exercising Rights. The following table illustrates this per
share dilution at March 31, 1997.
<TABLE>
<CAPTION>
<S> <C>
Subscription Price $3.50
Unaudited net tangible book value
per share at March 31, 1997.......................................... $0.42
Increase per share attributable to Holders exercising Rights............ 1.95
-----
Unaudited net tangible book value per share after the Rights Offering(1)....... 2.37
-----
Dilution per share to Holders exercising Rights(2)............................. $1.13
</TABLE>
- ------------
(1) Gives no effect to any possible exercise of the FRP Purchase Option.
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<PAGE>
(2) Dilution is determined by subtracting the unaudited pro forma net tangible
book value per share from the Subscription Price paid by a Holder for an
Underlying Share in the Rights Offering. This calculation does not give
effect to any possible exercise of the FRP Purchase Option.
_______________
The foregoing assumes no exercise of the options issued to employees of the
Company under MOXY's Stock Option Plan. At June 30, 1997, options to purchase
approximately 2,304,000 shares of Common Stock were outstanding with a weighted
average exercise price of $3.77 per share.
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<PAGE>
CAPITALIZATION
The following table sets forth the unaudited capitalization of the Company
at March 31, 1997 and as adjusted to give effect to the Rights Offering
(assuming full exercise of all the Rights and no exercise of the FRP Purchase
Option), the application of the net proceeds therefrom as described in "Use of
Proceeds" and the sale of the MOXY/MCN Program's West Cameron Block 503 field in
April 1997. This table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations," the
Company's pro forma condensed financial statements and notes thereto and the
Company's historical financial statements and notes thereto included elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
As of March 31, 1997
--------------------------------
Actual As adjusted
---------------- --------------
(unaudited, in thousands)
<S> <C> <C>
Production loan, including current portion...................................... $ 14,022 $ --
Stockholders' equity:
Common Stock, $.01 par value per share; 150,000,000
shares authorized; 14,036,519 shares and 42,608,000
shares issued and outstanding, respectively................................... 140 426
Additional paid-in capital..................................................... 47,938 140,652
Accumulated deficit............................................................ (42,186) (39,897)
-------- --------
Total stockholders' equity............................................. 5,892 101,181
-------- --------
Total capitalization............................................................. $ 19,914 $101,181
======== ========
</TABLE>
-26-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
MOXY is an independent oil and gas company engaged in the exploration,
development and production of oil and natural gas. MOXY commenced operations in
May 1994 following the distribution of its common stock to the stockholders of
FTX in order to carry on substantially all of the oil and gas exploration
activities previously conducted by FTX. MOXY and its predecessors have
conducted exploration, development and production operations offshore in the
Gulf and onshore in the Gulf Coast and other areas for more than 25 years, which
have provided MOXY with an extensive geological and geophysical database, and
significant technical and operational expertise. MOXY expects to continue to
concentrate its efforts in this selected geographic area where its management
team has significant exploration experience.
MOXY's business strategy is to create value for its stockholders through
the discovery of oil and gas reserves in its exploration and development
activities. Management believes that MOXY has significant opportunities to
discover meaningful oil and gas reserves and that these opportunities can best
be achieved through the use of advanced 3-D seismic technology, applied in
conjunction with an expanded, multi-year exploration program. Moreover, MOXY
believes that its recent and continuing acquisitions of 3-D seismic data will
continue to improve its ability to interpret subsurface geology and allow it to
develop a larger inventory of high-quality prospects that it can pursue at
offshore lease sales and through farm-in opportunities in areas where it has a
substantial geologic database and a long history of operational experience.
CAPITAL RESOURCES AND LIQUIDITY
During 1995, MOXY established the MCN and Phillips joint ventures which
provided MOXY with an inflow of funds. However, in mid-1996, with the upcoming
completion of the exploration portion of the MOXY/MCN Program, management began
evaluating options to obtain additional long-term funding for its planned
exploration and development activities, including entering into one or more new
long-term exploration joint ventures (MCN later indicated that it did not wish
to enter into the type of multi-year program that MOXY desired), issuing
additional equity or undertaking a business combination with another entity.
MOXY ultimately decided to undertake the Rights Offering (discussed below),
which would allow it to recapitalize, to restructure its current exploration and
development operations, and to engage in a significantly expanded and more
diversified, multi-year exploratory drilling program.
On __________ 1997, MOXY's shareholders approved the Rights Offering and
related transactions allowing for the issuance of approximately 28.6 million
shares of MOXY common stock, estimated to generate gross proceeds of
approximately $100 million. These proceeds will enable MOXY to acquire the MCN
Producing Properties and to retire all MOXY debt. Furthermore, the remaining
cash proceeds will provide MOXY with the funding necessary to participate in the
aggregate $200 million multi-year MOXY/FRP Exploration Program (discussed
below). MOXY will retain a 100% interest in the MCN Producing Properties, and
MOXY and FRP will dedicate all other properties which were subject to the
MOXY/MCN Program to the MOXY/FRP Exploration Program.
MOXY and FRP will establish the MOXY/FRP Exploration Program to explore
and develop exploratory prospects primarily in the Gulf and onshore in the Gulf
Coast area where MOXY has significant exploration experience and a substantial
geological database. MOXY will manage the program, selecting all prospects and
drilling opportunities, and will serve as operator of all wells drilled by the
MOXY/FRP Exploration Program. MOXY and FRP will commit $200 million for
exploration expenses to be incurred under the program, with exploration expenses
being shared 40% by MOXY and 60% by FRP. All revenues and other costs will be
shared equally.
-27-
<PAGE>
MOXY was high bidder on seven tracts at the Central Gulf of Mexico lease
sale held in March 1997 with bids totaling $5.5 million. MOXY and FRP have
dedicated these leases to the MOXY/MCN Program. Upon completion of the Rights
Offering, these leases will be dedicated to the MOXY/FRP Exploration Program.
MOXY incurred $5.0 million of cash exploration and development
expenditures during the first three months of 1997, principally consisting of
$1.6 million for development at Vermilion Blocks 160 and 410, $0.4 million for
lease acquisition costs, $0.9 million in drilling and leasehold costs charged to
expense and $1.5 million of geological and geophysical costs. Exploration
expenditures are expected to increase following the completion of the Rights
Offering and the initiation of the MOXY/FRP Exploration Program.
OPERATIONAL ACTIVITIES
MOXY's past exploration activities in the Gulf of Mexico have been
conducted primarily through the MOXY/MCN Program in which MOXY currently holds a
40% interest. In July 1997, FRP acquired MCN's interest in the program, and
upon completion of the Rights Offering, MOXY will purchase the MCN Producing
Properties (Vermilion Block 160 and 410 Fields), and MOXY and FRP will dedicate
all other oil and gas properties subject to the MOXY/MCN Program to the MOXY/FRP
Exploration Program.
Recent activities within the MOXY/MCN Program follow:
. During the fourth quarter of 1996, a development well at the Vermilion
Block 160 field discovered new reserves from eight gas sands with
approximately 215 feet of net pay. Drilling on this well was completed
in the first quarter of 1997, discovering an additional 47 feet of net
pay. During the second quarter of 1997, a second development well to
develop the newly discovered reserves encountered 244 feet of net gas
pay from six sands. A third development well is currently drilling. The
MOXY/MCN Program has a 28% interest in this field unit which is subject
to re-determination subsequent to final development drilling. In
addition, the interest in two of the four blocks within the Vermilion
Block 160 field unit is subject to a 30% net profits interest. Daily
gross production at the Vermilion Block 160 field currently averages
approximately 10 million cubic feet (Mmcf) of natural gas and 400
barrels of condensate. Production from the new development wells is
expected to commence during the second half of 1997.
. In late December 1996, installation of the production platforms and
related facilities at the Vermilion Block 410 field was completed and
production began from one of the two platforms. Production began from
the second platform in February 1997. The MOXY/MCN Program has a 28%
revenue interest in this field. Daily gross production currently totals
approximately 73 Mmcf of gas.
. In April 1997, the MOXY/MCN Program sold its interest in West Cameron
Block 503 for $7.2 million ($2.9 million net to MOXY) with MOXY
recognizing a $2.3 million gain. The proceeds were used to repay
borrowings from MCN.
. During 1996, gas was also discovered on West Cameron Block 616 and
Grand Isle Block 65. During 1997, new 3-D seismic data was received and
mapping began on West Cameron Blocks 616 and 617, as well as on Grand
Isle Block 65. Based on the results of this new data, exploratory
drilling is scheduled for July 1997 at Grand Isle Block 65 and is being
contemplated at West Cameron Block 616 during the fourth quarter of
1997.
. During the second quarter of 1997, the MOXY/MCN Program acquired a 50%
working interest in Eugene Island Block 18/19 from Shell Offshore Inc.
(SOI) in exchange for a 50% interest
-28-
<PAGE>
in the MOXY/MCN Program's West Cameron Block 492. SOI, as operator, is
currently drilling an exploratory well on Eugene Island Block 19.
MOXY's drilling activities in the onshore Gulf Coast region have taken
place through its 25% owned joint venture with Phillips, which covers a project
area in south Louisiana, as follows:
. In April 1997, MOXY completed drilling of an exploratory well on the
North Bay Junop prospect, the second of two high-risk, high-potential
prospects which have been drilled within the project area. The well
reached total depth but did not encounter commercial hydrocarbons in
the primary objective zones. MOXY completed the well in a shallower
zone with approximately 25 feet of net gas pay. The well was flow
tested at a rate of 5.3 Mmcf of gas and 93 barrels of condensate per
day. Because of the complexity of salt dome geology and potentially
limited reservoir size, production performance will be required to
determine the reserve volumes associated with this completion. Plans to
initiate production are currently in progress with production expected
in the fourth quarter of 1997. MOXY continues to evaluate other leads
within the project area which have been identified by 3-D seismic
survey.
. MOXY completed its first exploratory well at the East Fiddler's Lake
prospect in late 1996. Although the well was unsuccessful in
discovering commercial hydrocarbons, the geological data from this well
assisted further drilling activity in the project area.
<TABLE>
<CAPTION>
RESULTS OF OPERATIONS
First Quarter
-------------
1994(1) 1995 1996 1996 1997
------- ------ ----- ----- -----
Revenues: (In millions, except per share amounts)
<S> <C> <C> <C> <C> <C>
Oil and gas sales $ .2 $ 2.7 $ 2.4 $ .7 $ 2.4
Management fees - .6 1.7 .4 .4
------- ------ ----- ----- -----
$ .2 $ 3.3 $ 4.1 $ 1.1 $ 2.8
======= ====== ===== ===== =====
Exploration Expenses:
Geological and geophysical $ 6.0 $ 9.8 $ 6.3 $ 1.2 $ 1.5
Exploratory drilling and
leasehold costs 9.5 2.0 5.6 3.3 .9
Reimbursement of - - (2.1) - -
previously expensed costs ------- ------ ----- ----- -----
$ 15.5 $ 11.8 $ 9.8 $ 4.5 $ 2.4
======= ====== ===== ===== =====
Operating loss (17.7) (14.8) (9.9) (4.5) (2.3)
Net loss (15.2) (14.6) (9.9) (4.3) (2.5)
Net loss per share (1.10) (1.06) (.71) (.31) (.18)
</TABLE>
/(1)/ Inception (May 1994) through December 31, 1994.
MOXY's oil and gas sales began in late 1994 with the commencement of
production at the Vermilion Block 160 field. In mid-1995, the MOXY/MCN Program
was formed, resulting in a reduction to MOXY's ownership in this field (and the
start of the management fees from the MOXY/MCN Program). In December 1996,
production began from the first of two production platforms at the MOXY/MCN
Program's Vermilion Block 410 field, with production from the second platform
commencing in February 1997. As noted above, upon completion of the Rights
Offering, MOXY intends to purchase the MCN interest in the Vermilion Block 160
and 410 Fields from FRP. See the unaudited Pro Forma Results of Operations
contained in this Prospectus.
-29-
<PAGE>
General and administrative expenses totaled $0.7 million for the three-
month 1997 and 1996 periods, compared with $2.6 million in 1996, $3.7 million
in 1995 and $2.3 million in the 1994 period. The decline from 1995 resulted
from steps taken in the third quarter of 1995 to reduce costs. These actions
included a reduction in the number of employees and in the costs of consulting
arrangements and administrative and managerial services.
As a result of anticipated future exploration expenditures, MOXY expects to
continue to report operating losses for at least the near future.
ENVIRONMENTAL
Although MOXY has no known environmental liabilities, increasing emphasis
on environmental matters could result in additional costs, which would be
charged against MOXY's operations in future periods. Present and future
environmental laws and regulations applicable to MOXY's operations could require
substantial capital expenditures or could adversely affect its operations in
other ways that cannot be accurately predicted at this time.
CAUTIONARY STATEMENT
Management's discussion and analysis contains certain forward-looking
statements. Important factors that might cause future results to differ from
these projections are described in more detail under the heading "Cautionary
Statement" in MOXY's Form 10-K for the year ended December 31, 1996.
-------------------------
The results of operations reported and summarized above are not necessarily
indicative of future operating results.
-30-
<PAGE>
BUSINESS AND PROPERTIES
The Company is an independent oil and gas company engaged in the
exploration, development and production of oil and natural gas. The Company
currently conducts operations offshore in the Gulf and onshore in the Gulf Coast
area. The Company and its predecessors have conducted exploration, development
and production operations offshore in the Gulf and onshore in the Gulf Coast and
other areas for more than 25 years, which have provided the Company an extensive
geological and geophysical database, and extensive technical and operational
expertise.
The Company's business strategy is to create value for its stockholders
through the discovery of oil and gas reserves by concentrating its efforts in
selected geographic areas where the Company's management team has significant
exploration experience. The Company evaluates substantially all of its
exploratory prospects with 3-D seismic surveys prior to drilling. MOXY intends
to continue to generate prospects, evaluate farm-in opportunities and other
opportunities to acquire oil and gas properties and to maximize its geological
and geophysical expertise by using 3-D seismic data and state of the art
technology.
In order to increase both the size and number of prospects that the Company
has been able to pursue, the Company has followed a strategy of forming
exploration joint ventures in which the venturers participate in the Company's
exploration activities through direct working interests.
MOXY/MCN PROGRAM
In September 1995, the Company and affiliates of MCN established the
MOXY/MCN Program to explore and develop prospects in the Gulf. The Company
manages the MOXY/MCN Program and selects all prospects and drilling
opportunities. The Company and MCN committed $65 million to the MOXY/MCN
Program, with revenues and costs being shared 40% by MOXY and 60% by MCN. MCN
has funded its 60% share of expenditures and is committed to lend funds to MOXY
for its 40% share. The Company's 40% share of future revenues from the MOXY/MCN
Program is dedicated to repaying the loan amounts which bear interest at the
annual base rate quoted from time to time by The Chase Manhattan Bank plus 2%.
The Company's obligation to repay loans under the MOXY/MCN Program is non-
recourse, except to the properties contributed to and developed under the
MOXY/MCN Program.
In July 1997, FRP agreed to acquire from MCN its interests in the MOXY/MCN
Program, the MCN Producing Properties and other exploratory properties acquired
under the MOXY/MCN Program for $31.0 million, as adjusted for the net revenues
and development and operating costs attributable to such properties from April
1, 1997 until their acquisition by FRP, and an additional amount equal to the
amount loaned by MCN to MOXY under the MOXY/MCN Program. On __________, 1997,
FRP paid MCN, after adjustments, $____ for such assets together with $____ for
the outstanding indebtedness.
MOXY and FRP have amended the MOXY/MCN Program to extend the program term,
include their interests in the seven offshore leases acquired by MOXY and FRP at
the Central Gulf of Mexico Lease Sale held in March 1997 and provide for the
conduct of mutually agreed exploration projects until the earlier of December
31, 1997 or the date of completion of the Rights Offering. The amendment also
provides that FRP will reimburse MOXY for approximately $290,000 of overhead per
month and will continue to advance funds to MOXY under the MOXY/MCN Program
during the remaining program term.
Upon completion of the Rights Offering, MOXY will acquire the MCN Producing
Properties from FRP for $26.0 million, subject to the adjustments described
above for the revenues and costs attributable to the MCN Producing Properties
from April 1, 1997 until their acquisition by MOXY plus interest, calculated on
the daily outstanding balance of the $26.0 million purchase price, as adjusted,
from _____________, 1997 until MOXY's acquisition of the properties at an annual
rate publicly
-31-
<PAGE>
announced by The Chase Manhattan Bank from time to time plus 2%. See "Business
and Properties - Oil and Gas Properties - Proved Properties." At the same time,
MOXY will repay to FRP all amounts that have been advanced to MOXY under the
MOXY/MCN Program. Thereafter, MOXY will retain a 100% interest in the MCN
Producing Properties and will dedicate all other oil and gas properties then
subject to the MOXY/MCN Program to the MOXY/FRP Exploration Program. See "Use of
Proceeds" and "- MOXY/FRP Exploration Program."
MOXY/FRP EXPLORATION PROGRAM
Concurrently with the closing of the Standby Commitment, MOXY and FRP will
establish the MOXY/FRP Exploration Program to explore and develop exploratory
prospects primarily in the Gulf and onshore in the Gulf Coast area. MOXY will
manage the MOXY/FRP Exploration Program, selecting all prospects and drilling
opportunities, and will serve as operator of all wells drilled by the MOXY/FRP
Exploration Program. MOXY and FRP have committed $200 million for exploration
expenses to be incurred under the MOXY/FRP Exploration Program, with exploration
expenses being shared 40% by MOXY and 60% by FRP. Exploration costs consist of
all costs associated with leasehold acquisition and maintenance, geological and
geophysical studies, seismic surveys, drilling exploratory wells, overhead
reimbursements, and all other aspects of identifying prospects and drilling
exploratory wells. All revenues and other costs will be shared 50% by MOXY and
50% by FRP.
MOXY and FRP will receive credits against the $200 million program
commitment for an aggregate of $8.3 million for certain exploratory costs
incurred under the MOXY/MCN Program prior to the establishment of the MOXY/MCN
Exploration Program. All exploratory prospects in the MOXY/MCN Program will be
transferred to the MOXY/FRP Exploration Program and MOXY will acquire an
additional interest in each such property to reflect the sharing of revenues and
costs under the MOXY/FRP Exploration Program. The MOXY/FRP Exploration Program
will terminate after initial exploration program expenditures of $200 million
have been committed or on June 30, 2002, whichever is earlier.
MOXY/PHILLIPS/FRP PROGRAM
In June 1995, the Company and Phillips entered into a joint venture
agreement to explore a project area in Terrebonne Parish, Louisiana containing
the North Bay Junop and East Fiddler's Lake prospects. Pursuant to the
agreement, the Company conveyed one-half of its interest in the area, with
Phillips reimbursing the Company $3.8 million for previously incurred costs
related to the project. In June 1996, the Company sold one-half of its
remaining 50% interest in the area to FRP for $2.1 million. This amount
represented the reimbursement for certain costs previously incurred by the
Company in connection with this project area. MOXY sold the interest to FRP on
the same proportionate basis as the sale of the interest to Phillips. The
project area, with the exception of the North Bay Junop and East Fiddler's Lake
prospects, is subject to a possible 25% participation by a mineral rights owner.
OIL AND GAS PROPERTIES
As of May 31, 1997, the Company owned interests in 39 oil and gas leases in
the Gulf and onshore Louisiana covering approximately 131,300 gross acres
(approximately 41,900 net acres to the Company).
PROVED PROPERTIES
After the completion of the Rights Offering and the purchase of the MCN
Producing Properties, MOXY will own all of the interest in the following
properties presently held subject to the MOXY/MCN Program.
-32-
<PAGE>
VERMILION BLOCK 160 FIELD AREA. Gross production from the field unit
averaged 14.9 Mmcf of natural gas and 687 Bbls of condensate per day during 1996
and currently is averaging 10 Mmcf and 400 Bbls of condensate per day. The
MOXY/MCN Program has a 40% working interest and an approximate 28% net revenue
interest in the Vermilion Block 160 field unit, which is located offshore
Louisiana in approximately 90 feet of water. In March 1997, MOXY, as operator,
completed drilling a development well that encountered 262 feet of net gas pay
from eight sands. During the second quarter of 1997, a second development well
to develop the newly discovered reserves encountered 244 feet of net gas pay
from six sands. A third development well is currently drilling. Production
from the new development wells is expected to commence during the second half of
1997. The current working and net revenue interests within the Vermilion Block
160 field unit are subject to re-determination subsequent to final development
drilling. In Vermilion Block 160, outside the field unit area, the MOXY/MCN
Program has a 53.3% working interest and an approximate 42.5% net revenue
interest. Also, in Vermilion Block 143, outside the field unit area, the
MOXY/MCN Program has a 26.67% working interest and an approximate 19% net
revenue interest. The MOXY/MCN Program's interest in Vermilion Blocks 143 and
160, including the portion of its interest in the field unit resulting from
these two blocks, is subject to a 30% net profits interest. The Vermilion Block
160 field unit is comprised of portions of four leases (Vermilion Blocks 143,
144, 159, and 160) totaling 5,625 acres. In addition, the MOXY/MCN Program owns
interests in, or exploration rights to, an additional 9,375 acres in the four
block area, including the farm-in of 3,125 acres in Vermilion Block 159. See "-
- - Exploration Properties -- Vermilion Block 159."
VERMILION BLOCK 410 FIELD AREA. The MOXY/MCN Program has a 37.5% working
interest and 28% net revenue interest in the Vermilion Block 410 field which is
located in 360 feet of water offshore Louisiana. Blazer Energy Corp., as
operator, initiated production from four wells at one platform in late December
1996. Production from four wells at the second platform began in February 1997
and gross daily production from both platforms combined currently is
approximately 73 Mmcf of gas. The lease blocks cover a total of 11,015 acres.
EXPLORATION PROPERTIES
After completion of the Rights Offering, the following properties will be
dedicated to the MOXY/FRP Exploration Program.
GRAND ISLE BLOCK 65. The MOXY/MCN Program has a 37.5% working interest and
30.2% net revenue interest in Grand Isle Block 65, where Nippon Oil Exploration,
the operator, has drilled and saved the #1 sidetrack discovery well. The well
encountered two gas bearing zones with a total of 29 feet of net pay. Nippon
Oil has obtained a suspension of production for the initial well. The MOXY/MCN
Program acquired the adjacent Grand Isle Blocks 58 and 59 in the Central Gulf of
Mexico lease sale in 1996. MOXY has received a new 3-D survey over a portion of
the three blocks and exploratory drilling is expected to commence during July
1997. The prospect is located 23 miles offshore Louisiana in a water depth of
135 feet and the blocks cover a total of 15,000 acres.
VERMILION BLOCK 159. In 1996 MOXY completed a farm-in of a portion of
Vermilion Block 159, which is adjacent to its producing property at Vermilion
Block 160. A well is drilling at a location remote from the existing platform
in Block 160 in July 1997. The MOXY/MCN Program has a 60% working interest and
a 43% net revenue interest in the Vermilion Block 159 farm-in.
WEST CAMERON BLOCK 616. The MOXY/MCN Program has a 50% working interest and
34.4% net revenue interest in West Cameron Block 616, where MOXY, as operator,
drilled the #2 exploration well in June 1996 and discovered 190 feet of net gas
pay in multiple sands. The well was saved for future development. A second
exploratory well, the #3 well, is planned for the third quarter of 1997. The
MOXY/MCN Program also owns an interest in the adjacent West Cameron Block 617
lease where exploratory drilling is contemplated in the fourth quarter of 1997.
The blocks cover a total of 10,000 acres and are located approximately 130 miles
offshore Louisiana in 300 feet of water.
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<PAGE>
WEST CAMERON BLOCK 492. The MOXY/MCN Program acquired a 100% working
interest and 80% net revenue interest in West Cameron Block 492 in the Central
Gulf of Mexico lease sale in 1996. The block covers 5,000 acres and is located
90 miles offshore in 150 feet of water. In June 1997, the MOXY/MCN Program
exchanged 50% of its interest in West Cameron Block 492 for a 50% working
interest in Eugene Island Blocks 18 and 19.
EUGENE ISLAND BLOCKS 18/19. The MOXY/MCN Program acquired in June 1997 a
50% working interest in Eugene Island Blocks 18 and 19 in exchange for a 50%
working interest in West Cameron Block 492. Shell Offshore Inc., as operator,
immediately thereafter commenced drilling an exploratory well. The blocks cover
a total of 2,436 acres and are located 3 miles offshore of Louisiana in
approximately 10 feet of water.
VERMILION BLOCKS 391/392/408. The MOXY/MCN Program has a 30% working
interest and 24.1% net revenue interest in Vermilion Blocks 392/408 and a 31.9%
working interest and 25.7% net revenue interest in Vermilion Block 391. Blazer
Energy Corp., as operator, drilled an unsuccessful exploratory well in the third
quarter of 1996 on Vermilion Block 391. The MOXY/MCN Program acquired the
Vermilion Block 392 lease in the Central Gulf of Mexico lease sale in 1996 and
acquired the shallow rights on Vermilion Block 408 by trading the deep rights at
Vermilion Block 392. Vermilion Blocks 391/392/408 cover a total of 15,000 acres
and are located four miles from the Vermilion Block 410 field, which is
approximately 115 miles offshore Louisiana, in approximately 360 feet of water.
EAST FIDDLER'S LAKE/NORTH BAY JUNOP. MOXY has a 25% working interest and
18% net revenue interest in approximately 8,925 acres in the East Fiddler's
Lake/North Bay Junop prospects and adjacent areas in Terrebonne Parish,
Louisiana, and owns a proprietary 3-D seismic data survey covering approximately
35,000 acres. Operations are being undertaken by a joint venture owned 50% by
Phillips (operator), 25% by FRP and 25% by MOXY. See "- Business and Properties
- -- MOXY/Phillips/FRP Program." The first exploratory well at East Fiddler's
Lake was drilled in the third quarter of 1996. Although the well was
unsuccessful in discovering commercial hydrocarbons, the geological data from
this well will assist additional drilling activity in the prospect area. In
April 1997, the North Bay Junop well completed drilling. The well did not
encounter commercial hydrocarbons in the primary objective zones. Subsequently,
the well was completed in a shallower zone, which consists of two sands with
approximately 25 feet of net gas pay. The well was flow-tested at a rate of
approximately 5.3 Mmcf of natural gas and 93 barrels of condensate per day on a
20/64th inch choke with approximately 2,900 pounds per square inch flowing
tubing pressure. Because of the complexities of salt dome geology, production
performance will be required to determine the reserve volumes associated with
this completion. Plans to initiate production are currently in progress with
production estimated to commence in the fourth quarter. Additional leads are
being studied in the project area.
LEASE SALE. MOXY was high bidder on seven tracts at the Central Gulf of
Mexico lease sale held in March 1997 with bids totaling $5.5 million. MOXY and
FRP have dedicated these leases to the MOXY/MCN Program. Upon completion of the
Rights Offering, these leases will be dedicated to the MOXY/FRP Exploration
Program.
OIL AND GAS RESERVES
The total proved developed and proved undeveloped reserves of oil and gas
owned by the Company and the proved reserves attributable to the MCN Producing
Properties as of May 31, 1997, estimated by Ryder Scott Company, Petroleum
Engineers ("Ryder Scott"), an independent petroleum engineering firm, were as
follows:
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<PAGE>
Gas /(Mmcf)/ Oil /(Bbls)/
----------------------- -----------------------
Proved Proved Proved Proved
Developed Undeveloped Developed Undeveloped
---------- ----------- ---------- -----------
MOXY...................... 6,790 2,928 70,442 55,933
MCN Producing Properties.. 9,640 3,099 102,921 77,442
------ ----- ------- -------
Total..................... 16,430 6,027 173,363 133,375
====== ===== ======= =======
The wells at the Vermilion Block 160 field unit and Vermilion Block 410
field have limited production history. Estimates of proved undeveloped reserves
that may be developed and produced in the future are based upon volumetric
calculations and upon analogy to similar types of reserves rather than upon
actual production history. Estimates based on these methods are generally less
reliable than those based on actual production history. Subsequent evaluation
of the same reserves based upon production history will result in variations,
which may be substantial, in the estimated reserves. Further, the proved
undeveloped reserves will require additional capital to develop and produce.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The following table sets forth as of May 31, 1997, the estimated future net
cash flows before income taxes and the present value thereof, discounted at 10%
per annum, from the production and sale of the proved reserves attributable to
the gas and oil properties owned by the Company as of such date and the proved
reserves attributable to the MCN Producing Properties, as determined by Ryder
Scott.
Proved Proved Total
Developed Undeveloped Proved
-------------- ----------- --------
(In thousands)
Estimated future net cash flows before
income taxes (1)
MOXY................................... $12,030 $3,856 $15,886
MCN Producing Properties............... $17,518 $5,827 $23,345
Present value of estimated future net
cash flows before income taxes (1)
MOXY................................... $10,431 $2,814 $13,245
MCN Producing Properties............... $15,153 $4,345 $19,498
- --------------
(1) In preparing such estimates, Ryder Scott used prices of $20.15 per barrel
of oil and $2.21 per Mcf of gas as of May 31, 1997, the weighted average
prices that the Company estimates it would have been received, assuming
production from all of the properties with proved reserves.
_____________
In accordance with applicable requirements of the Commission, the estimated
discounted future net revenues from estimated proved reserves are based on
prices and costs at the time of the reserve calculation. Actual future prices
and costs may be materially higher or lower. See "Risk Factors - Reserves and
Future Net Cash Flow."
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In accordance with methodology approved by the Commission, specific
assumptions were applied in the computation of the reserve estimates. Under
this methodology, future net cash flows are determined by reducing estimated
future gross cash flows from oil and gas sales by the estimated costs to develop
and produce the underlying reserves, including future capital expenditures,
operating costs, transportation costs, net profits interests, and royalty and
overriding royalty burdens. Future net cash flows were discounted at 10% per
annum to arrive at discounted future net cash flows. The present value of
future net cash flows shown above should not be construed as the current market
value as of May 31, 1997, or any other date, of the estimated oil and gas
reserves attributable to these properties. See "Risk Factors - Reserves and
Future Net Cash Flow."
The Company is periodically required to file estimates of its oil and gas
reserves with various governmental regulatory authorities and agencies. In some
cases the basis for reporting estimates of reserves to these agencies is not
comparable to that furnished above because of the nature of the reports
required. The major variations include differences in when such estimates are
made, in the definition of reserves, in the requirements to report in some
instances on a gross, net or total operator basis and in the requirements to
report in terms of smaller geographical units.
PRODUCTION, UNIT PRICES AND COSTS
The following table sets forth information regarding production volumes,
average sales, prices received and average production costs applicable to the
Company's oil and gas sales for the year ended December 31, 1996 and the three
months ended March 31, 1997:
<TABLE>
<CAPTION>
Three
Year ended months ended
December 31, 1996 March 31, 1997
----------------- --------------
<S> <C> <C>
Production:
Net gas production (Mcf)............................ 631,000 792,000
Net crude oil and condensate production (Bbls)...... 29,000 5,600
Sales prices:
Natural gas (per Mcf)............................... $ 2.72 $ 2.78
Crude oil and condensate (per Bbl).................. $ 22.22 $ 23.43
Production (lifting) costs (per Mcf equivalent)(1).. $ 0.94 $ 0.37
</TABLE>
- ------------
(1) Production costs were converted to an Mcf equivalent on the basis of one
barrel of oil being equivalent to six Mcf of natural gas. Production
costs exclude all depreciation and amortization associated with property
and equipment. The components of production costs may vary substantially
among wells depending on the production characteristics of the particular
producing formation, the method of recovery employed and other factors,
but include in all cases transportation charges and lease operating
expenses.
The relationship between the Company's sales prices and its production
(lifting) costs depicted by the table above is not necessarily indicative of
future results expected by the Company. See "Risk Factors - Volatility of Oil
and Gas Prices" and "- Exploration and Development Risks."
ACREAGE
The following table sets forth the oil and gas acreage in which the Company
held an interest as of May 31, 1997:
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Developed(1) Undeveloped
------------------- ----------------------
Gross/(2)/ Net/(3)/ Gross/(2)/ Net/(3)/
Acres Acres Acres Acres
--------- --------- -------- ------------
Offshore (federal waters).. 32,891 8,152 89,506 31,560
Onshore Louisiana.......... - - 8,925 2,231
------ ----- ------ ------
Total.................... 32,891 8,152 98,431 33,791
====== ===== ====== ======
- -------------
(1) "Developed" acreage includes acreage by lease, unit or offshore block in
which there are one or more producing wells or shut-in wells capable of
commercial production and/or acreage with proved reserves in quantities
deemed sufficient to develop.
(2) The term "gross" refers to acres in which the Company owns a working
interest and/or operating rights.
(3) The term "net" refers to gross acres multiplied by the percentage of the
working interest and/or operating rights owned therein.
OIL AND GAS DRILLING ACTIVITY
The following table sets forth the gross and net number of productive, dry
and total exploratory wells and development wells that the Company drilled in
each of the years ended December 31, 1995 and 1996 and the five months ended May
31, 1997:
Years ended December 31, Five months
------------------------------ ended May 31,
1995 1996 1997
------------- --------------- --------------
Gross Net Gross Net Gross Net
----- ----- ------- ------ ------- -----
EXPLORATORY
Productive.. 1.0 0.375 4.0 0.910 1.0 0.2
Dry......... - - 4.0 0.948 - -
--- ----- ------- ------ ---- ---
Total...... 1.0 0.375 8.0 1.858 1.0 0.2
=== ===== ======= ====== ==== ===
DEVELOPMENT
Productive.. 5.0 1.875 - - 1.0 0.4
Dry......... - - - - - -
--- ----- ------- ------ ---- ---
Total...... 5.0 1.875 - - 1.0 0.4
=== ===== ======= ====== ==== ===
OPERATING HAZARDS AND INSURANCE
The Company's operations are subject to the usual hazards incident to
drilling for and producing natural gas and crude oil, such as blowouts,
cratering, explosions, uncontrollable flows of oil, gas or well fluids, fires,
pollution, releases of toxic gas and other environmental hazards and risks.
Offshore oil and gas operations are subject to the additional hazards of marine
operations, such as capsizing, collision and adverse weather and sea conditions.
These hazards can cause personal injury and loss of life, severe damage to and
destruction of property and equipment, environmental damages and suspension of
operations.
Drilling activities are subject to numerous risks, including the risk that
no commercially productive hydrocarbon reserves will be encountered. The cost
of drilling, completing and operating wells and installing production facilities
and pipelines is often uncertain. The Company's drilling operations may be
curtailed, delayed or canceled as a result of numerous factors, including,
weather
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conditions, compliance with governmental requirements and shortages or delays in
the delivery of equipment.
The Company maintains insurance of various types that it considers to be
reasonably adequate to cover its operations, although certain risks faced by the
Company are either uninsurable or not fully insured. Such insurance is subject
to deductibles that the Company considers reasonable. Consistent with insurance
coverage generally available to the industry, the Company's insurance policies
do not provide coverage for losses or liabilities relating to pollution, except
for sudden and accidental occurrences.
COMPETITION
Competition in the oil and gas industry is intense. In seeking to obtain
new leases and exploration prospects, the Company faces competition from both
major and independent oil and gas companies. Because many of these competitors
have financial and other resources substantially in excess of those available to
the Company, they may be better positioned to acquire and exploit prospects,
hire personnel and market production. In addition, many of the Company's larger
competitors may be better able to withstand the effect of changes in such
factors as worldwide oil and natural gas prices and levels of production, the
cost and availability of alternative fuels and the application of government
regulations.
MARKETING
The Company's gas sales are currently made in the "spot market" at
prevailing prices. Crude oil and condensate production is generally sold one
month at a time at prevailing prices.
REGULATION
GENERAL
The oil and gas industry is extensively regulated by federal and state
authorities in the United States. Legislation affecting the oil and gas
industry is under constant review, and relevant statutes are constantly being
adopted, expanded or amended. Further, numerous departments and agencies, both
federal and state, have issued rules and regulations binding on the oil and gas
industry and its individual members, some of which carry substantial penalties
for the failure to comply. The regulatory burden on the oil and gas industry
increases its cost of doing business and, consequently, affects its
profitability.
EXPLORATION, PRODUCTION AND DEVELOPMENT
The exploration, production and development operations of the Company are
subject to regulation at both the federal and state levels. Such regulations
require operators to obtain permits to drill wells and to meet certain bonding
and insurance requirements in order to drill or operate wells. Such regulation
also controls the location of wells, the method of drilling and casing wells,
the surface use and restoration of properties upon which wells are drilled and
the plugging and abandoning of wells. The Company's exploration, production and
development operations are also subject to various conservation laws and
regulations. These include the regulation of the size of drilling and spacing
units or proration units, the density of wells that may be drilled, the levels
of production and the unitization or pooling of oil and gas properties.
The Company presently has interests in or rights to 30 offshore leases
located in federal waters on the outer continental shelf ("OCS"). Federal leases
are administered by the Minerals Management Service ("MMS"). Individuals and
entities must qualify with the MMS prior to owning and operating any leasehold
or right-of-way interest in federal waters. Such qualification generally
involves filing certain documents with the MMS and obtaining performance bonds.
For offshore
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operations, lessees must obtain MMS approval for exploration plans and
development and production plans prior to the commencement of such operations.
In addition to permits required from other agencies (such as the Coast Guard,
the Army Corp of Engineers and the Environmental Protection Agency), lessees
must obtain a permit from the MMS prior to the commencement of drilling. The MMS
has promulgated regulations requiring offshore production facilities located on
the OCS to meet stringent engineering and construction specifications, and has
recently proposed and promulgated additional safety-related regulations
concerning the design and operating procedures of OCS production platforms and
pipelines. The MMS also has regulations restricting the flaring or venting of
natural gas, and has proposed amendments to such regulations that would prohibit
the flaring of liquid hydrocarbons and oil without prior authorization. The MMS
has also promulgated regulations governing the plugging and abandonment of
offshore wells and the removal of production facilities. To cover the various
obligations of an OCS lease, the MMS generally requires that lessees post
substantial bonds or other acceptable assurances that such obligations will be
met. The cost of such bonds or other security can be substantial and there is no
assurance that bonds or other surety can be obtained in all cases. Under certain
circumstances, the MMS may require all Company operations on federal leases to
be suspended or terminated. Any such suspension or termination would materially
and adversely affect the Company's financial condition and operations.
Certain producing states, including Louisiana, have recently adopted or
considered adopting measures that alter the methods used to prorate gas
production from wells located in these states, including those located in their
territorial waters. These measures may limit the rate at which gas may be
produced from the wells in which the Company might acquire an interest.
Congress considered, but rejected, legislation that would have limited the
rights of states to prorate production. The Company cannot predict whether such
legislation will be reintroduced or what effect the new state rules may have on
gas production in such states. At the present time there are no regulatory
measures that would limit the production of oil or gas leases in which the
Company owns an interest.
ENVIRONMENTAL
GENERAL. The Company's operations are subject to extensive federal, state
and local regulatory requirements relating to environmental affairs, health,
safety, waste management and chemical products. These laws and regulations
require the acquisition of permits before construction or drilling commences,
limit or prohibit construction and drilling activities on certain lands lying
within wilderness, wetland and other protected areas and impose substantial
liabilities for pollution resulting from the Company's operations.
Moreover, the recent trend toward stricter standards in environmental
legislation and regulations is likely to continue. For instance, legislation
has been proposed in Congress from time to time to reclassify oil and gas
production wastes as "hazardous waste." If such legislation were enacted, it
could have a significant impact on the operating costs of the Company, as well
as the oil and gas industry in general. State initiatives to further regulate
the disposal of oil and gas wastes are also pending in certain states and could
have a similar impact on the Company. Management believes that compliance with
current applicable environmental laws and regulations will not have a material
adverse effect on the Company. The Company believes that its operations are and
will continue to be in substantial compliance with applicable environmental
laws, regulations and ordinances.
It is possible, however, that future developments, such as stricter
environmental laws or regulations could adversely affect the Company's
operations. Moreover, some risk of environmental costs and liabilities is
inherent in the Company's operations as it is with other companies engaged in
similar or related businesses, and there can be no assurance that material costs
and liabilities, including substantial fines or criminal sanctions for violation
of environmental laws and regulations, will not be incurred by the Company.
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<PAGE>
SOLID WASTE. The Company's operations may generate or involve the transport
of both hazardous and nonhazardous solid wastes that are subject to the
requirements of the Federal Resource Conservation and Recovery Act and
comparable state statutes. In addition, the Environmental Protection Agency
("EPA") is presently in the process of developing stricter disposal standards
for nonhazardous waste. Changes in these regulations may require additional
capital expenditures or operating expenses by the Company.
HAZARDOUS SUBSTANCES. The Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") and comparable state statutes, also
known as "Superfund" laws, impose liability on certain classes of persons that
contribute to the release of a "hazardous substance" into the environment.
These persons include the owner or operator of a site, and companies that
transport, dispose of or arrange for the disposal of, the hazardous substances
found at the site. CERCLA also authorizes the EPA, and in some cases third
parties, to take actions in response to threats to the public health or the
environment and to recover their costs from the responsible classes of persons.
Despite the "petroleum exclusion" of Section 101(14) of CERCLA that encompasses
wastes directly associated with oil and gas production, the Company may generate
or transport "hazardous substances" within the meaning of CERCLA or comparable
state statutes in the course of its ordinary operations. Thus, the Company may
be responsible under CERCLA or the state equivalents for all or part of the
costs required to clean up sites where a release has occurred.
AIR. The Company's operations may also be subject to the Clean Air Act
("CAA") and comparable state statutes. Amendments to the CAA were adopted in
1990 and contain provisions that may result in the gradual imposition of certain
pollution control requirements with respect to air emissions from operations.
The EPA has been developing regulations to implement these requirements. The
Company may be required to incur certain capital expenditures in the next
several years for air pollution control equipment in connection with obtaining
or maintaining operating permits and approvals addressing other air emission-
related issues.
WATER. The Federal Water Pollution Control Act ("FWPCA") strictly regulates
the unauthorized discharge of produced waters and other oil and gas wastes into
navigable waters. The FWPCA provides for civil and criminal penalties for any
unauthorized discharges of oil and other hazardous substances in reportable
quantities and imposes substantial potential liability for the costs of removal,
remediation and damages. Similarly, the Oil Pollution Act of 1990 (the "OPA")
imposes liability for the discharge of oil into or upon navigable waters or
adjoining shorelines. Among other things, the OPA raises liability limits,
narrows defenses to liability and provides more instances in which a responsible
party is subject to unlimited liability. State laws for the control of water
pollution also provide varying civil and criminal penalties and liabilities in
the case of an unauthorized discharge of petroleum or its derivatives into state
waters. Further, the Coastal Zone Management Act authorizes state
implementation and development of programs or management measures for nonpoint
source pollution to restore and protect coastal waters.
ENDANGERED SPECIES. Several federal laws impose regulations designed to
ensure that endangered or threatened plant and animal species are not
jeopardized and their critical habitats are neither destroyed nor modified.
These laws may restrict the Company's exploration, development and production
operations and impose civil or criminal penalties for non-compliance.
SAFETY AND HEALTH REGULATIONS
The Company is also subject to laws and regulations concerning occupational
safety and health. It is not anticipated that the Company will be required in
the near future to expend amounts that are material in the aggregate to the
Company's overall operations by reason of occupational safety and health laws
and regulations, but inasmuch as such laws and regulations are frequently
changed, the Company is unable to predict the ultimate cost of compliance.
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<PAGE>
EMPLOYEES
At June 30, 1997, the Company had 15 employees. All of the Company's
employees are devoted primarily to managerial, land, geological and
administrative functions. The Company intends to continue its policy of
limiting its number of permanent employees and, to that end, generally utilizes
the services of independent consultants and contractors to perform various
professional services, particularly in the areas of construction, design, well
site surveillance and environmental assessment. Field and on-site production
operation services such as pumping, maintenance, dispatching, inspection and
testing are also generally provided by independent contractors. Currently, a
major portion of the Company's geological and geophysical services are performed
by CLK Company, L.L.C. ("CLK"). Under the Company's agreement with CLK, the
Company pays CLK an annual fee of $2.4 million, with $0.5 million of this fee
paid in Company common stock, and reimburses CLK's direct expenses incidental to
its work for the Company and for its office space. In addition, CLK receives a
3% overriding royalty interest on all new domestic prospects accepted by the
Company. For the year ended December 31, 1996, the Company incurred $3.1
million of expenses under its agreement with CLK.
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<PAGE>
MANAGEMENT
The following table provides certain information regarding the executive
officers and directors of the Company as of the date of this Prospectus.
Officers are elected by the Board of Directors and serve at its discretion.
NAME AGE POSITION
------ --- ------------
James R. Moffett 58 Co-Chairman of the Board and Director
Richard C. Adkerson 50 Co-Chairman of the Board, Chief Executive
Officer and Director
C. Howard Murrish 56 President and Chief Operating Officer
Glenn A. Kleinert 54 Senior Vice President
James H. Lee 40 Senior Vice President
John G. Amato 53 General Counsel
Robert W. Bruce III 53 Director
Robert A. Day 53 Director
William B. Harrison, Jr. 53 Director
Bobby Lee Lackey 59 Director
Gabrielle K. McDonald 55 Director
George Putnam 70 Director
B.M. Rankin, Jr. 67 Director
J. Taylor Wharton 59 Director
James R. Moffett has served as Co-Chairman of the Board and as a director
of the Company since April 1994. Mr. Moffett serves as Chairman of the Board
and Chief Executive Officer of FCX and as Chairman of the Board of FTX.
Richard C. Adkerson has served as Co-Chairman of the Board, Chief Executive
Officer and a director of the Company since May 1994. Mr. Adkerson serves as
Vice Chairman of the Board of FTX. He served as Senior Vice President and Chief
Financial Officer of FTX until 1995 and as Vice President of FTX until 1992. He
is the President and Chief Operating Officer of FCX. He served as Executive
Vice President of FCX until April 1997. He also serves as Chairman of the Board
and Chief Executive Officer of FM Properties Inc., real estate development
("FMPO"). Mr. Adkerson is a director of Hi-Lo Automotive, Inc.
C. Howard Murrish has been President and Chief Operating Officer of the
Company since September 1994. He was a partner in CLK until September 1994. He
was a Senior Executive Vice President of the oil and gas division of FTX from
1986 until February 1992. Prior thereto, since July 1987 Mr. Murrish served as
an officer of various FTX affiliates.
Glenn A. Kleinert has been Senior Vice President of the Company since May
1994. Mr. Kleinert is a Senior Vice President of the oil and gas division of
FTX and has held that position since December 1990.
James H. Lee has been Senior Vice President of the Company since November
1996. Mr. Lee has been a Director of Finance and Business for FTX since August
1993 and a Vice President of the oil and gas division of FTX since 1994.
John G. Amato has been General Counsel of the Company since April 1994.
Mr. Amato is General Counsel of FMPO. Prior to August 1995, Mr. Amato served as
General Counsel of FTX and FCX.
Robert W. Bruce has served as a director of the Company since May 1994.
Mr. Bruce is President of The Robert Bruce Management Co., Inc., an investment
management company. He was Managing Partner of the Steamboat Group until 1992.
He is a director of FTX and FCX.
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Robert A. Day has served as a director of the Company since May 1994. Mr.
Day is Chairman of the Board of Trust Company of the West, an investment
management company. He also serves as Chairman and President of W. M. Keck
Foundation, a charitable foundation. He is currently a director of Fisher
Scientific International Inc., FTX and FCX.
William B. Harrison, Jr. has served as a director of the Company since May
1994. Mr. Harrison serves as Vice Chairman of The Chase Manhattan Corporation
and its subsidiary, The Chase Manhattan Bank. He is a director of Dillard's
Inc., FTX and FCX.
Bobby Lee Lackey has served as a director of the Company since May 1994.
Mr. Lackey is currently President and Chief Executive Officer of J.S. McManus
Produce Company, Inc., grower of vegetables and shipper of fruits and
vegetables. He is a director of FTX and FCX.
Gabrielle K. McDonald has served as a director of the Company since May
1994. Ms. McDonald currently serves as a Judge for the International Criminal
Tribunal for the Former Yugoslavia. She served as a Distinguished Visiting
Professor of Law at Texas Southern University, Thurgood Marshall School of Law
until 1995. She was a Visiting Professor of Law at St. Mary's University School
of Law, and of counsel at Walker & Satterthwaite, a law firm, until 1993. Ms.
McDonald currently serves as a director of FTX and FCX.
George Putnam has served as a director of the Company since May 1994. Mr.
Putnam is Chairman of The Putnam Investment Management Company, Inc. and of each
of the members of the Putnam group of mutual funds. He is a director of The
Boston Company, Inc., Boston Safe Deposit and Trust Company, Houghton Mifflin
Company, Marsh & McLennan Companies Inc., Rockefeller Group, Inc., FTX and FCX.
B. M. Rankin, Jr. has served as a director of the Company since May 1994.
Mr. Rankin is a private investor. He is also a director of FTX and FCX.
J. Taylor Wharton has served as a director of the Company since May 1994.
Mr. Wharton is the Chairman of the Department of Gynecology at the University of
Texas M.D. Anderson Cancer Center. He also serves as director of FTX and FCX.
The directors of the Company who also serve as directors of FTX and FCX
constitute a majority of the directors of FTX and FCX, respectively.
The Company's Amended and Restated Certificate of Incorporation
("Certificate" or "Certificate of Incorporation") provides that the directors
shall be classified, with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as possible, and that one
class shall be elected each year and serve a three-year term. Mr. Harrison and
Dr. Wharton were elected in April 1997 to serve a term that expires at the 2000
annual meeting of stockholders. Messrs. Moffett, Putnam and Rankin and Ms.
McDonald serve a term expiring at the 1998 annual meeting of stockholders, and
Messrs. Adkerson, Bruce, Day and Lackey serve a term that expires at the 1999
annual meeting of stockholders. The Certificate also provides that all
vacancies on the Company's Board of Directors, including any vacancies resulting
from an increase in the number of directors, may be filled by a majority of the
remaining directors even if that number is less than a quorum.
On or before January 14, 1998, the Company's Board of Directors will take
such actions as are necessary to create at least two vacancies on the Board of
Directors either by (i) an increase in the number of directors in accordance
with its Certificate of Incorporation and By-Laws, (ii) director resignations or
(iii) a combination thereof. MOXY will also designate and elect at least two
directors each of whom (a) would qualify as an independent director within the
meaning given to such term under the rules of the New York Stock Exchange and
(b) is not an affiliate or associate (each as defined under the Securities Act)
of FRP, other than solely as a result of being a director of MOXY
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(each an "Independent Director"). MOXY will maintain at all times a committee of
the Board of Directors comprised of all such Independent Directors then on the
Board (the "Independent Committee"). See "Description of Capital Stock -
Stockholder Agreement and Registration Rights."
Pursuant to the Stockholder Agreement, as long as FRP owns more than 10%
and less than a majority of the outstanding Common Stock, FRP will be entitled
to nominate that number of directors equal to the nearest whole number obtained
by multiplying FRP's percentage interest in the outstanding Common Stock by the
number of directors that are to serve on the Board of Directors after giving
effect to the FRP designees. MOXY has agreed to create such number of vacancies
on the Board of Directors either by (i) an increase in the Board of Directors in
accordance with the terms of MOXY's Certificate of Incorporation and Bylaws,
(ii) director resignations or (iii) a combination thereof. If FRP acquires more
than a majority of the outstanding shares of Common Stock, it will be able to
elect all of the directors of MOXY. See "Risk Factors - Potential Change of
Control of the Company" and "Description of Capital Stock - Stockholder
Agreement and Registration Rights."
In connection with each meeting of stockholders of MOXY at which the term
of any of FRP's designees expires, the Board of Directors will nominate for
election as a director of MOXY the designee of FRP to stand for election for a
succeeding term and will vote all management proxies in favor of such designee,
except for such proxies that specifically indicate to the contrary. FRP will
have the right to designate replacements for directors designated by FRP
pursuant to the Stockholder Agreement, if such director declines or is unable to
serve for any reason, at termination of such directors term, or upon such
directors resignation or removal.
At the present time, all of the MOXY directors are also directors of FTX.
Accordingly, FRP does not intend to use this provision to make any changes to
the current composition of the Board, subject to the appointment of the
Independent Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SERVICES AGREEMENT
Other than those functions performed by the Company's employees or provided
under third party contracts, since January 1, 1996 substantially all of the
services necessary for the business and operations of the Company, including
certain executive, technical, administrative, accounting, financial, tax and
other services have been performed by FMS, a corporation 50% owned by each of
FTX and FCX, pursuant to the Services Agreement. Prior to 1996, substantially
the same services were provided by FTX. Since September 1995 these services
have been provided for a fixed annual fee of $1.0 million, subject to annual
cost of living increases beginning in the first quarter of 1997. Prior to
September 1995, the cost of such services was provided by FTX as determined and
allocated by FTX. For the year ended December 31, 1996, the Company incurred
$1.0 million of expenses under its agreement with FMS. The Services Agreement
is terminable by the Company at any time upon 90 days notice.
OIL AND GAS PROPERTIES
In June 1996, FRP acquired a 25% leasehold in interest in an oil and gas
venture to explore a project area in Terrebonne Parish, Louisiana. In
connection with the acquisition of this interest, FRP reimbursed the Company
$2.1 million for certain costs previously incurred in the project area. FRP
acquired its interest on the same proportionate basis as Phillips, which owns a
50% interest and is the operator of the joint venture.
In February 1997, FRP agreed to acquire an interest in leases acquired by
the Company at the federal offshore lease sale held in March 1997. At the lease
sale, the Company was high bidder on seven offshore Gulf of Mexico tracts, with
bids totaling $5.5 million. MOXY and FRP have
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dedicated these leases to the MOXY/MCN Program. Upon completion of the Rights
Offering, these leases will be dedicated to the MOXY/FRP Exploration Program.
Upon completion of the Rights Offering, MOXY and FRP will enter into an
agreement pursuant to which MOXY will market all of FRP's oil and gas
production, including production from properties included in the MOXY/FRP
Exploration Program and production from FRP's other properties, including its
interest in the Main Pass development.
During 1996, Mr. Day participated directly or indirectly through various
entities, on substantially the same basis as other parties, in exploration and
development operations on certain properties owned or operated by the Company.
Mr. Day and such entities have ownership interests in such properties ranging
generally from 12.5% to 25%. Mr. Day's and such entities' share of expenditures
for exploration and development operations during 1996 amounted to approximately
$200,000.
MCN PROPERTIES; STANDBY PURCHASE AGREEMENT
On July 14, 1997, MOXY entered into an agreement to acquire the MCN
Producing Properties from FRP concurrently with the closing of the Standby
Commitment for $26.0 million, as adjusted for net revenues and development and
operating costs attributable to the MCN Producing Properties from April 1, 1997
until MOXY's acquisition of these properties, plus interest calculated on the
daily outstanding balance of the $26.0 million purchase price, as adjusted, from
_______________, 1997 until MOXY's acquisition of the properties at an annual
rate publicly announced by The Chase Manhattan Bank from time to time plus 2%.
At the same time MOXY will also repay to FRP all amounts loaned to MOXY under
the MOXY/MCN Program. See "Use of Proceeds."
Pursuant to the Standby Purchase Agreement, MOXY has agreed to pay a
Standby Fee of $6.0 million to FRP upon the closing of the Standby Commitment.
In addition, MOXY has granted to FRP the FRP Purchase Option, pursuant to which
FRP may acquire additional shares of Common Stock at the Subscription Price to
increase its ownership position in MOXY up to 30%, if it does not acquire at
least 30% of the outstanding Common Stock pursuant to the Standby Commitment.
Following the consummation of the Rights Offering and the transactions
contemplated by the Standby Purchase Agreement, FRP may acquire a controlling
interest in MOXY or upon exercise of the FRP Purchase Option, may acquire a
sufficient ownership interest to be able to significantly influence the business
policies and affairs of the Company. If FRP acquires a majority of the
outstanding Common Stock, it will be in a position to control the election of
the Company's directors and to otherwise direct the business policies and
affairs of the Company. See "Risk Factors - Potential Change of Control of the
Company." FRP and the Company will enter into a Stockholder Agreement providing
that the Company will not, without the approval of the Independent Committee
take certain actions, including (i) repurchase any Common Stock, (ii) certain
transactions with FRP involving aggregate payments in excess of $5 million,
(iii) enter into any "Rule 13e-3 transaction" within the meaning of Rule 13e-3
under the Exchange Act, (iv) amend the term of the MOXY/FRP Exploration Program,
(v) amend, modify or grant a waiver under MOXY's Preferred Rights Agreement, the
Participation Agreement or the Stockholder Agreement and (vi) in connection with
any merger or business in combination involving MOXY and a third party, treat
FRP and the other holders of Common stock on other than equivalent terms.
Moreover, the Company intends to conduct all such transactions on an arm's
length basis. See "Description of Capital Stock - Stockholder Agreement and
Registration Rights."
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PRINCIPAL STOCKHOLDERS
The following table sets forth information regarding the ownership of the
Company's Common Stock by (i) each director of the Company, (ii) each executive
officer, (iii) all directors and executive officers of the Company as a group,
and (iv) the persons known by the Company to be beneficial owners of more than
five percent of the Company's outstanding Common Stock determined in accordance
with Rule 13d-3 under the Exchange Act based on information furnished by such
persons. Unless otherwise indicated, all information is presented as of June 30,
1997 and all shares shown are held with sole voting and investment power.
NUMBER OF
SHARES BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1)(2)
------------------------ ----------------------
Richard C. Adkerson 123,554
John G. Amato 225,763 (3)
Robert W. Bruce III 371,388 (4)
Robert A. Day 23,403 (5)
William B. Harrison, Jr. 5,798 (6)
Glenn A. Kleinert 19,054
Bobby Lee Lackey 18,493 (7)
James H. Lee 15,000
Gabrielle K. McDonald 3,723
James R. Moffett 500,971 (8)
C. Howard Murrish 150,351 (9)
George Putnam 15,401 (10)
B.M. Rankin, Jr. 253,784 (11)
J. Taylor Wharton 8,575 (12)
All directors and executive officers
as a group (14 persons) 1,735,258 (13)
Robertson, Stephens & Company 1,892,420 (14)
Incorporated ("Robertson Stephens")
___________
(1) With the exception of Messrs. Amato, Bruce, Moffett, Murrish and
Rankin, and Robertson Stephens, who beneficially own approximately
1.6%, 2.6%, 3.6%, 1.1%, 1.8% and 13.5% of the outstanding shares of
Common Stock, respectively, each of the persons referred to holds
less than 1% of the outstanding shares of Common Stock.
(2) Includes shares that could be acquired within sixty days after June
15, 1997, upon the exercise of options granted pursuant to the
Company's stock option plans, as follows: Mr. Adkerson, 98,554
shares; Mr. Amato, 70,264 shares; Mr. Bruce, 10,388 shares; Mr. Day,
12,893 shares; Mr. Harrison, 5,378 shares; Mr. Kleinert, 19,054
shares; Mr. Lackey, 13,728 shares; Mr. Lee, 5,000 shares; Ms.
McDonald, 3,723 shares; Mr. Moffett, 365,543 shares; Mr. Murrish,
81,250 shares; Mr. Putnam, 13,728 shares; Mr. Rankin, 13,728 shares;
Dr. Wharton, 5,378 shares; all directors and executive officers as a
group, 718,609 shares.
(3) Includes (a) 13,651 shares held in a retirement trust for the
benefit of Mr. Amato, (b) 9 shares held in a retirement trust for
the benefit of Mr. Amato's wife but as to which he disclaims
beneficial ownership, (c) 7,390 shares held by Mr. Amato as
custodian but as to which he disclaims beneficial ownership and (d)
38,777 shares held for the
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benefit of trusts with respect to which Mr. Amato, as a co-trustee,
shares voting and investment power but as to which he disclaims
beneficial ownership.
(4) Includes 310,000 shares held by a limited partnership with respect
to which Mr. Bruce shares voting and investment power.
(5) Includes 10,000 shares held by accounts and funds managed by
affiliates of a corporation in which Mr. Day is the chief executive
officer and a stockholder with respect to which he shares voting and
investment power but as to which he disclaims beneficial ownership.
(6) Includes 120 shares owned by Mr. Harrison's wife.
(7) Includes 3,643 shares held in a retirement trust for the benefit of
Mr. Lackey.
(8) Includes 21,464 shares held for the benefit of a trust with respect
to which Mr. Moffett and Mr. Amato, as co-trustees, have sole voting
and investment power but as to which each disclaims beneficial
ownership.
(9) Includes 1,810 shares held in a retirement trust for the benefit of
Mr. Murrish, 1,110 shares held in a retirement trust for the benefit
of Mr. Murrish's wife, 1,212 shares held by Mr. Murrish as custodian
for one of his sons and 1,112 shares owned by an adult son who
shares the same home as Mr. Murrish as to which he disclaims
beneficial ownership.
(10) Includes 323 shares held by a charitable trust with respect to which
Mr. Putnam, as co-trustee, shares voting and investment power but as
to which he disclaims beneficial ownership.
(11) Includes 34,836 shares with respect to which Mr. Rankin has sole
voting and investment power under a power of attorney but as to
which he disclaims beneficial ownership.
(12) Includes 1,252 shares held by Mr. Wharton's wife and 677 shares held
by Mr. Wharton as custodian for his daughters.
(13) Total represents approximately 12.4% of the outstanding shares of
Common Stock.
(14) Robertson Stephens, through its affiliates, shares voting and
investment power with respect to all shares shown, based on copies
of SEC filings provided to the Company.
DESCRIPTION OF CAPITAL STOCK
The Company's Certificate of Incorporation authorizes the issuance of
50,000,000 shares of preferred stock, $.01 par value per share (the "Preferred
Stock"), and 150,000,000 shares of Common Stock. As of the date of this
Prospectus, there were ____________ shares of Common Stock issued and
outstanding. The following summary is qualified by reference to the Certificate
of Incorporation.
COMMON STOCK
Subject to the rights of the holders of any Preferred Stock which may be
outstanding, each holder of Common Stock on the applicable record date will be
entitled to receive such dividends as may be declared by the Board of Directors
out of funds legally available therefor, and, in the event
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of liquidation, to share pro rata in any distribution of the Company's assets
after payment or providing for the payment of liabilities.
Each holder of Common Stock is entitled to one vote for each share held of
record on the applicable record date on all matters presented to a vote of
stockholders, including the election of directors. Holders of Common Stock have
no cumulative voting rights or preemptive rights to purchase or subscribe for
any stock or other securities and there are no conversion rights with respect
to such stock. Additional shares of authorized Common Stock may be issued
without stockholder approval.
PREFERRED STOCK
The Company's Board of Directors has the authority to issue shares of
Preferred Stock in one or more series and to fix, by resolution, the voting
powers, which may be full or limited or no voting powers, designations,
preferences and relative, participating, optional or other special rights and
the qualifications, limitations or restrictions thereof, without any further
vote or action by the stockholders. Any shares of Preferred Stock so authorized
and issued would have priority over the Common Stock with respect to dividend or
liquidation rights.
CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK
The authorized but unissued shares of Common Stock and Preferred Stock will
be available for future issuance without shareholder approval. These additional
shares may be utilized for a variety of proper corporate purposes, including
raising additional capital.
One of the effects of the existence of unissued and unreserved Common Stock
and Preferred Stock may be to enable the Board of Directors to issue shares to
persons friendly to current management, which could render more difficult or
discourage an attempt to obtain control of the Company by means of a merger,
tender offer, proxy contest or otherwise, and thereby protect the continuity of
the Company's management. Issuance of such stock might, under certain
circumstances, deter the acquisition of the Company or its securities by a
person concerned about the terms or effect of such stock.
CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE AND BYLAWS AND DELAWARE LAW
Classification of Directors; Removal. The Certificate provides that
subject to the rights to elect additional directors that may be granted to
holders of any class or series of Preferred Stock, the number of directors shall
be fixed from time to time as provided in the Bylaws, but may not consist of
less than three persons. The Certificate further provides that the directors,
other than those who may be elected by the holders of any class or series of
Preferred Stock, shall be classified, with respect to the time for which they
severally hold office, into three classes, designated Class I, Class II and
Class III, as nearly equal in number as possible, and that one class shall be
elected each year and serve for a three-year term.
Board Vacancies. The Certificate also provides that all vacancies on the
Company's Board of Directors, including any vacancies resulting from an increase
in the number of directors, may be filled by a majority of the remaining
directors even if that number is less than a quorum. The affirmative vote of
85% or more of the Company's voting stock is required to amend, alter, change or
repeal the foregoing provisions. The Bylaws require notice to the Company not
less than 60 days nor more than 90 days prior to any stockholder meeting to
elect directors or make any nomination for the Board of Directors.
Stockholder Meetings. The Certificate provides that any action required or
permitted to be taken by stockholders must be effected at a duly called annual
or special meeting and may not be
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effected by written consent. Under the Certificate, except as described below,
stockholders are not permitted to call special meetings of stockholders or to
require the Board to call a special meeting of stockholders and a special
meeting of stockholders may be called only by a majority of the entire Board,
the Chairman of the Board or the President. The Bylaws further require that the
Board must receive notice of stockholder proposals at least 60 days but not more
than 90 days prior to any meeting of stockholders at which such proposal is
intended to be presented. The Board may reject any such proposals that are not
made in accordance with certain procedures set forth in the Bylaws or that are
not a proper subject for stockholder action in accordance with the provisions of
applicable law.
Stockholder Approval of Combinations; Fair Price Provision. The
Certificate of Incorporation provides that the approval of the holders of 85% of
the Common Stock is required to approve (a) any merger or consolidation of the
Company or any of its subsidiaries with or into any person or entity, or any
affiliate thereof, other than FTX or any of its affiliates or associates,
including FRP (an "Interested Party"), who was within the two years prior to the
relevant transaction a beneficial owner of 20% or more of the Common Stock, (b)
any merger or consolidation of an Interested Party with or into the Company or
any of its Subsidiaries, (c) any sale, lease, pledge, transfer or other
disposition of more than 10% of the fair market value of the assets of the
Company or any of its subsidiaries in one or more transactions involving an
Interested Party, (d) the adoption of any plan or proposal for liquidation or
dissolution of the Company proposed by or on behalf of any Interested Party, (e)
the issuance or transfer by the Company or any of its subsidiaries of securities
having a fair market value of $1,000,000 or more to any Interested Party or (f)
any recapitalization, reclassification, merger or consolidation of the Company
or any of its subsidiaries which would increase an Interested Party's voting
power in the Company or such subsidiary; provided that the 85% voting
requirement shall not be applicable if (i) a majority of a vote of the Company's
Continuing Directors (defined as a director, and any successor thereof, who is
not an affiliate of an Interested Party and who was a member of the Board prior
to the time the Interested Party involved in any of the foregoing transactions
became an Interested Party) has approved the transaction, (ii) the transaction
is between the Company and any of its subsidiaries or between any of its
subsidiaries or (iii) the transaction is a merger or consolidation and the
consideration to be received by the Company's stockholders is at least as high
as the highest price per share paid by the Interested Party for the Common Stock
during the prior two years.
Delaware Law. The Company is incorporated under the laws of Delaware.
Section 203 of the Delaware General Corporation Law prevents an "interested
stockholder" (defined as a stockholder owning 15% or more of a corporation's
voting stock) from engaging in a business combination with such corporation for
a period of three years from the date such stockholder became an interested
stockholder unless (a) the corporation's board of directors had earlier approved
either the business combination or the transaction by which the stockholder
became an interested stockholder, or (b) upon attaining that status, the
interested stockholder had acquired at least 85% of the corporation's voting
stock (not counting shares owned by persons who are directors and also
officers), or (c) the business combination is later approved by the board of
directors and authorized by a vote of two-thirds of the stockholders (not
including the shares held by the interested stockholder). Under Section 203,
the restrictions described above do not apply to certain business combinations
proposed by an interested stockholder following the announcement or notification
of one of certain extraordinary transactions involving the corporation and a
person who had not been an interested stockholder during the previous three
years or who become an interested stockholder with the approval of a majority of
the corporation's directors, if such extraordinary transaction is approved or
not opposed by a majority of the directors who were directors prior to any
person becoming an interested stockholder during the previous three years or
were recommended for election or elected to succeed such directors by a majority
of such directors. Prior to entering the Standby Purchase Agreement, MOXY's
board of directors approved the proposed transaction with FRP and thereby
excluded FRP from the operation of Section 203 of the Delaware General
Corporation Law.
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PREFERRED STOCK PURCHASE RIGHTS
In May 1994, the Company's Board of Directors declared and paid a dividend
of one preferred stock purchase right (a "Preferred Right") for each outstanding
share of Common Stock. Each Preferred Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series A Participating
Cumulative Preferred Stock, par value $0.01 per share (the "Series A Preferred
Stock"), at an initial purchase price of $10.00 (the "Purchase Price"), subject
to adjustment. The terms of the Preferred Rights are set forth in the Preferred
Rights Agreement between the Company and Mellon Securities Trust Company, as
Preferred Rights Agent (the "Preferred Rights Agreement").
As soon as practicable after the earlier of (i) the tenth day (or such
later date as may be designated by a majority of the Continuing Directors (as
hereinafter defined)) after the date (the "Stock Acquisition Date") of the first
public announcement that a person or group of affiliated or associated persons
other than the Company, any of its subsidiaries or any employee benefit plan of
the Company or any of its subsidiaries has acquired beneficial ownership (as
defined in the Preferred Rights Agreement) of 15% or more of the outstanding
shares of Common Stock (an "Acquiring Person") and (ii) the tenth business day
(or such later date as may be designated by a majority of the Continuing
Directors) after the date of the commencement of a tender or exchange offer by
any person if, upon consummation thereof, such person would be an Acquiring
Person (the earlier of (i) and (ii) being referred to as the "Preferred Rights
Distribution Date"), the Preferred Rights Agent will send to each record holder
of Common Stock as of the close of business on the Preferred Rights Distribution
Date, one or more Preferred Right Certificates evidencing one Preferred Right
(subject to adjustment as provided in the Preferred Rights Agreement) for each
share of Common Stock. The Preferred Rights are not exercisable until the
Preferred Rights Distribution Date and will expire at the close of business on
May 20, 2004, unless previously redeemed or exchanged by the Company as
described below.
If a person becomes an Acquiring Person, each holder of a Preferred Right
(other than Preferred Rights that are, or under certain circumstances specified
in the Preferred Rights Agreement were, beneficially owned by an Acquiring
Person (which will thereafter be void)) will thereafter have the right to
receive upon exercise thereof at the then current Purchase Price, Common Stock
having a market value equal to two times the Purchase Price.
If at any time after any person has become an Acquiring Person (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or the Common Stock is
changed or converted or (ii) 50% or more of the Company's assets or earning
power is sold, each holder of a Preferred Right will thereafter have the right
to receive, upon exercise thereof at the then current Purchase Price, common
stock of the acquiring company having a market value equal to two times the
Purchase Price.
At any time after any person has become an Acquiring Person (but before
such person becomes the beneficial owner of 50% or more of the outstanding
shares of Common Stock), the Board of Directors of the Company may, at its
option, exchange all or part of the Preferred Rights (other than Preferred
Rights that are, or under certain circumstances were, beneficially owned by an
Acquiring Person) for shares of Common Stock at an exchange ratio of one share
of Common Stock per Preferred Right. The Preferred Rights may, at the option of
the Board of Directors, be redeemed in whole, but not in part, at a price of
$.01 per Preferred Right at any time no later than the tenth day after the Stock
Acquisition Date (or such later date as a majority of the Continuing Directors
may designate). Under certain circumstances set forth in the Preferred Rights
Agreement, the decision to redeem shall require the concurrence of a majority of
the Continuing Directors. Immediately upon the requisite action of the Board of
Directors ordering exchange or redemption of the Preferred Rights, the Preferred
Rights will terminate, and thereafter the only right of the holders of Preferred
Rights will be to receive shares of Common Stock or the redemption price, as the
case may be.
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"Continuing Director" means any member of the Board of Directors who was a
member of the Board prior to the time an Acquiring Person becomes such, or any
person who is subsequently elected to the Board if such person is recommended or
approved by a majority of the Continuing Directors. Continuing Directors do not
include an Acquiring Person, or an affiliate or associate of an Acquiring
Person, or any representative of the foregoing.
The Purchase Price payable, and the number of shares of Series A Preferred
Stock or other securities or property issuable, upon exercise of the Preferred
Rights are subject to adjustment in certain circumstances. Until a Preferred
Right is exercised, the holder will, as a result thereof, have no rights as a
stockholder of the Company, including the right to vote or to receive dividends.
Stockholders may, depending upon the circumstances, recognize taxable income in
the event that the Preferred Rights become exercisable for Series A Preferred
Stock or other consideration as set forth above. The federal income tax
consequences of any event or transaction involving the Preferred Rights other
than the payment of the Preferred Rights dividend in May, 1994, is uncertain and
tax counsel expresses no opinion of the federal income tax consequences of such
events or transactions.
Prior to the Preferred Rights Distribution Date, the Preferred Rights
Agreement may, if the Company so directs, be amended by the Company and the
Preferred Rights Agent in any manner that the Company may deem necessary or
desirable without the approval of any holders of Common Stock. After the
Preferred Rights Distribution Date, the Preferred Rights Agreement may be
amended in any respect that does not adversely affect Preferred Rights holders;
provided that after a person becomes an Acquiring Person, any amendment requires
the concurrence of a majority of the Continuing Directors.
The Preferred Rights have certain anti-takeover effects. The Preferred
Rights may cause substantial dilution to a person or group that attempts to
acquire the Company without a condition to such an offer that a substantial
number of Preferred Rights be acquired or the Preferred Rights be redeemed or
otherwise not apply. The Company's ability to amend the Preferred Rights
Agreement may, depending upon the circumstances, increase or decrease the anti-
takeover effects of the Preferred Rights. The Preferred Rights do not prevent
the Board of Directors of the Company from approving any merger or other
business combination (under some circumstances, with the concurrence of the
Continuing Directors) since the Preferred Rights may be redeemed by the Board of
Directors as described above.
Prior to entering into the Standby Purchase Agreement, MOXY amended the
Preferred Rights Agreement to exclude FRP and its affiliates and associates from
the operation of the Preferred Rights Agreement.
STOCKHOLDER AGREEMENT AND REGISTRATION RIGHTS
Upon completion of the Rights Offering and the transactions contemplated by
the Standby Purchase Agreement, MOXY and FRP will enter into a Stockholder
Agreement pursuant to which MOXY (i) will implement certain corporate governance
provisions designed to protect the other stockholders of MOXY, (ii) will grant
to FRP the right to elect a certain number of directors if it owns more than 10%
but less than a majority of the outstanding Common Stock and (iii) will grant
certain registration rights with respect to the shares of Common Stock that are
purchased by FRP pursuant to the Standby Purchase Agreement.
Pursuant to the Stockholder Agreement MOXY will agree at all times to have
at least two Independent Directors and maintain the Independent Committee.
Until the date on which FRP ceases to beneficially own at least 10% of the
outstanding Common Stock, MOXY shall not take any of the following actions
without the approval of the Independent Committee: (a) repurchase any
outstanding shares of Common Stock; (b) enter into (i) any sale, lease, transfer
or other disposition by MOXY of any of its properties or assets to, (ii) any
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purchase of property or assets by MOXY from, (iii) any investment by MOXY in,
(iv) any agreement by MOXY with or for the benefit of, or (v) any other
transaction with one or more of its affiliates, that involves aggregate payments
in excess of $5 million; (c) enter into any "Rule 13e-3 transaction" within the
meaning of Rule 13e-3 under the Exchange Act; (d) amend, modify or grant any
waiver under the Preferred Rights Agreement, the Participation Agreement or the
Stockholder Agreement; or (e) in connection with any merger or business
combination involving MOXY and a third party, treat FRP and the other
stockholders on other than equivalent terms.
Until the date on which FRP ceases to own, directly or indirectly, at least
10% of the outstanding voting stock of MOXY, FRP shall not take either of the
following actions without the approval of the Independent Committee: (i)
purchase, acquire, agree to acquire or offer to acquire beneficial ownership of
any additional shares of Common Stock (other than through open-market purchases
that do not constitute a Rule 13e-3 transaction within the meaning of Rule 13e-3
under the Exchange Act), or (ii) enter into, propose to enter into, solicit or
support any merger or business combination or similar transaction involving FRP
and MOXY.
Pursuant to the Stockholder Agreement, FRP will be entitled to demand
registration rights with respect to any shares of Common Stock that it owns;
provided that FRP registers no less than 10% of the outstanding Common Stock
pursuant to each such registration and that MOXY not be required to effect more
than one such registration in any 12-month period nor more than three such
registrations in the aggregate. In addition, if the Company proposes to
register any Common Stock under the Securities Act in connection with a public
offering, FRP may require MOXY to include all or a portion of the shares owned
by FRP at that time. MOXY has agreed to pay all the expenses of any
registration under the Stockholder Agreement, other than underwriters' discounts
and commissions, and to indemnify FRP for certain liabilities in connection with
any such registration.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States federal income
tax considerations applicable to holders of Common Stock upon the issuance,
exercise, disposition and lapse of the Rights. In the opinion of Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., special counsel to the Company,
the following summarizes the federal income tax consequences of the Rights
Offering that are likely to be material to the Holders (other than the Holders
described below) upon the issuance, exercise, disposition and lapse of the
Rights. This summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations (including Proposed Regulations and
Temporary Regulations) promulgated thereunder, Internal Revenue Service ("IRS")
rulings, official pronouncements and judicial decisions, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect, or different interpretations. This summary is applicable only to
Holders who are United States persons for federal income tax purposes and who
hold Common Stock as capital assets and who will hold any Common Stock received
on exercise of the Rights as capital assets. This summary does not discuss all
aspects of federal income taxation that may be relevant to a particular investor
or to certain types of investors subject to special treatment under the Code
(for example, banks, dealers in securities, life insurance companies, tax exempt
organizations and foreign taxpayers), nor does it discuss any aspect of state,
local or foreign tax laws.
HOLDERS OF RIGHTS AND COMMON STOCK ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF THE
ISSUANCE, EXERCISE, DISPOSITION AND LAPSE OF THE RIGHTS IN LIGHT OF THEIR OWN
PARTICULAR CIRCUMSTANCES.
ISSUANCE OF THE RIGHTS
The holders of Common Stock will not recognize taxable income for federal
income tax purposes in connection with the receipt of the Rights.
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BASIS AND HOLDING PERIOD OF THE RIGHTS
If, either (i) the fair market value of the Rights on the date of issuance
is equal to 15% or more of the fair market value (on the date of issuance) of
the Common Stock with respect to which they are received or (ii) the stockholder
elects, in his or her federal income tax return of the taxable year in which the
Rights are received, to allocate part of the basis of such Common Stock to the
Rights, then upon exercise or transfer of the Rights, the stockholder's basis in
such Common Stock will be allocated between the Common Stock and the Rights in
proportion to the fair market values of each on the date of the issuance.
Except as provided in the preceding sentence, the basis of the Rights received
by a stockholder as a distribution with respect to such stockholder's Common
Stock will be zero.
The holding period of a stockholder with respect to the Rights received as
a distribution on such stockholder's Common Stock will include the stockholder's
holding period for the Common Stock with respect to which the Rights were
issued.
In the case of a purchaser of Rights, the tax basis of such Rights will be
the purchase price of the Rights and the holding period of such Rights will
commence on the day following the date of the purchase.
TRANSFER OF RIGHTS
A stockholder who sells the Rights received in the issuance prior to
exercise will recognize gain or loss equal to the difference between the sale
proceeds and such stockholder's basis (if any) in the Rights sold. Such gain or
loss will be capital gain or loss if gain or loss from a sale of Common Stock
held by such stockholder would be characterized as capital gain or loss at the
time of such sale. Any gain or loss recognized on a sale of Rights acquired by
purchase will be capital gain or loss if the Underlying Shares would be a
capital asset in the hands of the seller (if acquired by him).
LAPSE OF THE RIGHTS
Stockholders who allow the Rights received by them to lapse will not
recognize any gain or loss, and no adjustment will be made to the basis of the
Common Stock, if any, owned by such holders of the Rights.
Purchasers of the Rights will be entitled to a loss equal to their tax
basis in the Rights, if such Rights expire unexercised. Any loss recognized on
the expiration of the Rights acquired by purchase will be a capital loss if the
underlying shares would be a capital asset in the hands of the seller (if
acquired by him).
EXERCISE OF THE RIGHTS; BASIS AND HOLDING PERIOD OF COMMON STOCK
Holders of Rights will not recognize any gain or loss upon the exercise of
such Rights. The basis of the Common Stock (including any fractional share
interests) acquired through exercise of the Rights will be equal to the sum of
the Exercise Price therefor and the Holder's basis in such Rights (if any). The
holding period for the Common Stock acquired through exercise of the Rights will
begin on the date the Rights are considered exercised.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
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EXPERTS
The financial statements and schedules of the Company included and
incorporated by reference in this Prospectus and elsewhere in the registration
statement to the extent and for the periods indicated have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The information included in this Prospectus regarding the gross quantities
of reserves of the oil and gas properties described in this Prospectus and the
future cash flows and the present values thereof from such reserves is based on
estimates of such reserves and present values prepared by Ryder Scott Company,
Petroleum Engineers in reliance upon the authority of such firm as experts in
petroleum engineering.
The information incorporated by reference in this Prospectus regarding the
gross quantities of reserves of the oil and gas properties of the Company and
the future cash flows and the present values thereof from such reserves is based
on estimates of such reserves and present values prepared by Crescent
Technology, Inc. in reliance upon the authority of such firm as experts in
petroleum engineering.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
HISTORICAL FINANCIAL STATEMENTS OF MCMORAN OIL & GAS CO.
Report of Independent Public Accountants.............................................. F-1
Balance Sheets as of March 31, 1997 (unaudited)
and December 31, 1996 and 1995.................................................... F-2
Statements of Operations three months ended March 31, 1997
and 1996 (unaudited) and the years ended December 31, 1996, 1995 and 1994......... F-3
Statements of Cash Flow for the three months ended
March 31, 1997 and 1996 (unaudited) and the years
ended December 31, 1996, 1995 and 1994............................................ F-4
Notes to Financial Statements....................................................... F-5
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) OF MCMORAN OIL & GAS CO.
Pro Forma Balance Sheet as of March 31, 1997........................................ F-10
Pro Forma Statement of Operations
for the three months ended March 31, 1997......................................... F-11
Pro Forma Statement of Operations
for the year ended December 31, 1996.............................................. F-12
Notes to Pro Forma Financial Statements............................................. F-13
MCN PRODUCING PROPERTIES
Report of Independent Public Accountants.............................................. F-14
Statements of Gross Oil and Gas Revenues and Direct Operating Expenses for the three
months ended March 31, 1997 (unaudited) and for the years ended December 31, 1996
and 1995............................................................................. F-15
</TABLE>
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE STOCKHOLDERS AND BOARD OF DIRECTORS OF McMoRan OIL & GAS CO.:
We have audited the accompanying balance sheets of McMoRan Oil & Gas Co. (a
Delaware Corporation) as of December 31, 1996 and 1995 and the related
statements of operations and cash flow for the years ended December 31, 1996 and
1995 and for the period from inception through December 31, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of McMoRan Oil & Gas Co. as of
December 31, 1996 and 1995 and the results of its operations and its cash flow
for the years ended December 31, 1996 and 1995 and for the period from inception
through December 31, 1994 in conformity with generally accepted accounting
principles.
New Orleans, Louisiana, Arthur Andersen LLP
January 21, 1997
F-1
<PAGE>
MCMORAN OIL & GAS CO.
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
March 31, ----------------------
1997 1996 1995
---------- ----------------------
(Unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,073 $ 10,500 $ 10,323
Accounts receivable and other 4,425 2,249 1,432
---------- ---------- ----------
Total current assets 12,498 12,749 11,755
---------- ---------- ----------
Oil and gas properties - successful
efforts method:
Unevaluated 2,683 2,173 1,869
Proved 18,868 17,341 8,661
---------- ---------- ----------
21,551 19,514 10,530
Less accumulated depreciation and
amortization 3,059 1,283 652
---------- ---------- ----------
Net oil and gas properties 18,492 18,231 9,878
---------- ---------- ----------
Total assets $ 30,990 $ 30,980 $ 21,633
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 10,615 $ 9,411 $ 3,405
Current portion of production loan 2,304 366 93
---------- ---------- ----------
Total current liabilities 12,919 9,777 3,498
Production loan, less current portion 11,718 12,391 530
Other liabilities 461 566 -
Stockholders' equity:
Preferred stock, par value $0.01,
50,000,000 shares authorized and
unissued - - -
Common stock, par value $0.01,
150,000,000 shares authorized,
14,036,519 shares, 13,989,317 shares 140 140 138
and 13,798,784 shares issued and
outstanding
Capital in excess of par value of
common stock 47,938 47,803 47,302
Accumulated deficit (42,186) (39,697) (29,835)
---------- ---------- ----------
5,892 8,246 17,605
---------- ---------- ----------
Total liabilities and stockholders'
equity $ 30,990 $ 30,980 $ 21,633
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
MCMORAN OIL & GAS CO.
STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Years Ended
Ended March 31, December 31, Inception through
------------------ ------------------- December 31,
1997 1996 1996 1995 1994
-------- -------- -------- -------- -----------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 2,364 $ 664 $ 2,434 $ 2,722 $ 174
Management fees 409 409 1,636 545 -
------- ------- -------- -------- ---------
Total revenues 2,773 1,073 4,070 3,267 174
------- ------- -------- -------- ---------
Costs and expenses:
Production and delivery, including
depreciation and amortization 1,960 398 1,500 2,623 -
Exploration expenses 2,362 4,475 9,818 11,756 15,518
General and administrative expenses 711 653 2,635 3,687 2,338
------- ------- -------- -------- ---------
Total costs and expenses 5,033 5,526 13,953 18,066 17,856
------- ------- -------- -------- ---------
Operating loss (2,260) (4,453) (9,883) (14,799) (17,682)
Interest expense (360) - (403) - -
Other income, net 131 123 424 164 2,482
------- ------- -------- -------- ---------
Net loss $(2,489) $(4,330) $ (9,862) $(14,635) $ (15,200)
======= ======= ======== ======== =========
Net loss per share $(0.18 ) $ (0.31) $ (0.71) $ (1.06) $ (1.10)
======= ======= ======== ======== =========
Average shares outstanding 14,107 13,826 13,898 13,772 13,770
======= ======= ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
MCMORAN OIL & GAS CO.
STATEMENTS OF CASH FLOW
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Years Ended Inception
March 31, December 31, through
------------------------ ----------------------- December 31,
1997 1996 1996 1995 1994
------------------------ ----------------------- ------------
<S> <C> <C> <C> <C> <C>
(Unaudited)
Cash flow from operating activities:
Net loss $ (2,489) $ (4,330) $ (9,862) $ (14,635) $ (15,200)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 1,857 177 741 1,525 -
Exploration expenses 2,362 4,475 9,818 11,756 15,518
Gain on sale of Canadian oil and gas
interests - - - - (1,691)
(Increase) decrease in working capital:
Accounts receivable and other (2,353) 416 (988) (1,347) -
Accounts payable and accrued
liabilities 1,926 2,095 6,954 1,555 340
--------- --------- ---------- ---------- ------------
Net cash provided by (used in)
operating activities 1,303 2,833 6,663 (1,146) (1,033)
--------- --------- ---------- ---------- ------------
Cash flow from investing activities:
Exploration and development expenditures (4,995) (4,002) (20,678) (20,957) (18,768)
Proceeds from joint venture arrangements - - 2,059 14,472 -
Proceeds from sale of Canadian oil and
gas interests - - - - 1,691
--------- --------- ---------- ---------- ------------
Net cash used in investing activities (4,995) (4,002) (18,619) (6,485) (17,077)
--------- --------- ---------- ---------- ------------
Cash flow from financing activities:
Proceeds from production loan 1,511 - 12,927 750 -
Payments on production loan (246) (399) (794) (127) -
Cash transferred from FTX - - - - 35,441
--------- --------- ---------- ---------- ------------
Net cash provided by (used in)
financing activities 1,265 (399) 12,133 623 35,441
--------- --------- ---------- ---------- ------------
Net increase (decrease) in cash and
cash equivalents (2,427) (1,568) 177 (7,008) 17,331
Cash and cash equivalents at beginning
of year 10,500 10,323 10,323 17,331 -
--------- --------- ---------- ---------- ------------
Cash and cash equivalents at end of
period $ 8,073 $ 8,755 $ 10,500 $ 10,323 $ 17,331
========= ========= ========== ========== ============
Interest paid $ 332 $ - $ 304 $ - $ -
========= ========= ========== ========== ============
</TABLE>
The accompanying notes, which include information in Notes 1, 3, 4 and 5
regarding noncash transactions, are an integral part of these financial
statements.
F-4
<PAGE>
1. ORGANIZATION
McMoRan Oil & Gas Co. (MOXY) was formed in 1994 as a wholly owned subsidiary of
Freeport-McMoRan Inc. (FTX). In May 1994, FTX distributed one MOXY common share
for each ten FTX common shares. The net assets transferred, at FTX's historical
cost, follow (in thousands):
<TABLE>
<S> <C><C>
Cash and cash equivalents $ 35,441
Property, plant and equipment 13,052
Current liabilities (1,138)
---------
$ 47,355
=========
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS. Highly liquid investments purchased with a maturity
of three months or less are considered cash equivalents.
EXPLORATION AND DEVELOPMENT COSTS. MOXY follows the successful efforts method
of accounting for its oil and gas operations. Costs of exploratory wells are
capitalized pending determination of whether the wells find proved reserves.
Costs of leases, productive exploratory wells and development activities are
also capitalized. Other exploration costs are expensed. Depreciation and
amortization is determined on a field-by-field basis using the unit-of-
production method. Gains or losses are included in earnings when properties are
sold.
In 1995, the Financial Accounting Standards Board issued Statement No. 121
(FAS 121) which requires a reduction of the carrying amount of long-lived assets
to fair value when events indicate that the carrying amount may not be
recoverable. Measurement of the impairment loss is based on the fair value of
the asset. Generally, MOXY determines fair value using valuation techniques
such as expected future cash flows. MOXY adopted FAS 121 effective January 1,
1995, and since that time has not incurred any impairment losses.
FINANCIAL INSTRUMENTS. The carrying amounts of receivables, other current
assets and accounts payable reported in the balance sheet approximate fair
value. The production loans interest rate is variable (Note 3) and thus
approximates fair value.
EARNINGS PER SHARE. In February 1997, the Financial Accounting Standards Board
issued Statement No. 128 (FAS 128), "Earnings Per Share", which simplifies the
computation of earnings per share. FAS 128 is effective for financial
statements issued for periods ending after December 15, 1997 and requires
restatement for all prior period earnings per share data presented. Earnings
per share calculated in accordance with FAS 128 would have been unchanged for
the periods presented.
3. EXPLORATION AGREEMENTS
In September 1995, MOXY entered into an agreement with MCN establishing a $65
million oil and gas exploration and development program in the offshore Gulf of
Mexico area. Revenues and costs are shared 40 percent by MOXY and 60 percent by
MCN. MCN is funding its 60 percent share of the expenditures and is loaning
funds for MOXY's 40 percent share at prime plus two percent. MOXY's share of
future net revenues from program properties is dedicated to repay borrowings.
MOXY is not otherwise obligated to repay these borrowings. As of December 31,
1996, MOXY had $12.8 million of borrowings outstanding from MCN, with an
additional $6.6 million of borrowings available for past expenditures.
In June 1995, MOXY and Phillips Petroleum Company (Phillips) entered into an
exploration agreement covering a project area in south Louisiana. MOXY conveyed
one-half of its interest in the area to Phillips for $3.8 million. In June
1996, MOXY sold one-half of its remaining 50 percent leasehold interest to
Freeport-McMoRan Resource Partners, Limited Partnership (FRP), an affiliate of
MOXY, for
F-5
<PAGE>
$2.1 million. This amount represented the reimbursement for certain costs
previously incurred by MOXY in connection with this project area and was
recorded as a reduction to exploration expenses. MOXY sold the interest to FRP
on the same proportionate basis as the prior Phillips sale. The project area,
with the exception of the North Bay Junop and the East Fiddlers Lake prospects
(discussed earlier), is subject to a possible 25 percent participation by a
mineral rights owner.
4. TRANSACTIONS WITH FTX AND EMPLOYEE BENEFITS
MANAGEMENT SERVICES. FTX provides certain management and administrative
services for MOXY. During 1995, MOXY restructured its management services
agreement with FTX to provide specified services for an annual fee of $1.0
million. Costs of services provided by FTX, included in general and
administrative expenses, totaled $1.0 million in 1996, $1.3 million in 1995 and
$1.2 million in the 1994 period.
MOXY's contract for geological and geophysical services with CLK Company (CLK)
was amended during 1997 to provide for an annual retainer fee of $2.4 million
($0.5 million of the annual fee paid in MOXY common stock), plus certain
expenses and an overriding royalty interest in prospects accepted by MOXY.
Costs of services provided by CLK, included in exploration expenses, totaled
$3.1 million in 1996, $3.5 million in 1995 and $3.9 million in 1994.
STOCK OPTIONS. MOXY's Stock Option Plan and Stock Option Plan for Non-Employee
Directors (the Plans) authorize MOXY to grant stock options to purchase up to
1.25 million shares of MOXY stock at no less than market value at time of grant.
Generally, stock options are exercisable in 25 percent annual increments
beginning one year from the date of grant and expire 10 years after the date of
grant. Also, in connection with the FTX distribution of MOXY shares, stock
options were granted to employees and directors of FTX. A summary of stock
options outstanding follows:
<TABLE>
<CAPTION>
1996 1995
-------------------------- ---------------------------
Number of Average Number of Average
Options Option Price Options Option Price
----------- ------------ --------- --------------
<S> <C> <C> <C> <C>
Beginning of year 2,257,828 $3.92 1,829,867 $4.26
Granted 24,904 2.54 529,028 2.85
Exercised (581) 3.03 - -
Expired/forfeited (142,457) 4.33 (101,067) 4.39
---------
End of year 2,139,694 3.88 2,257,828 3.92
========= =========
</TABLE>
At December 31, 1996, options for approximately 550,000 shares were available
for new grants under the Plans. Summary information of fixed stock options
outstanding at December 31, 1996 follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------- --------------------
Weighted Weighted Weighted
Average Average Average
Number Remaining Option Number Option
Range of Exercise Prices of Options Life Price of Options Price
- ------------------------- ----------- --------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
$1.94 to $2.81 515,000 9 years $2.80 126,250 $2.81
$2.94 to $3.88 214,394 8 years 3.58 98,718 3.66
$4.66 to $5.50 1,410,300 7 years 4.32 1,300,305 4.67
------------ ----------
2,139,694 1,525,273
============ ==========
</TABLE>
MOXY has adopted the disclosure-only provisions of FAS 123 and continues to
apply APB Opinion No. 25 and related interpretations in accounting for its
stock-based compensation plans. Accordingly, no compensation cost has been
recognized for MOXY's fixed stock option grants. Had compensation cost for
MOXYs' fixed stock option grants been determined based on the fair value at the
grant dates for awards under those plans consistent with FAS 123, MOXY's pro
forma net loss would have been $10.1 million ($0.73 per share) in 1996 and $14.7
million ($1.06 per share) in 1995. For the pro forma computations, the fair
values of the fixed option grants were estimated on the dates of grant using the
F-6
<PAGE>
Black-Scholes option pricing model. The weighted average fair value for fixed
stock option grants was $1.69 per option in 1996 and $2.15 per option in 1995.
The weighted average assumptions used include a risk-free interest rate of 6.6
percent in 1996 and 6.4 percent in 1995, expected volatility of 45 percent in
1996 and 60 percent in 1995 and expected lives of 10 years. The pro forma
effects on net income for 1996 and 1995 are not representative of future years
because they do not take into consideration grants made prior to 1995. No other
discounts or restrictions related to vesting or the likelihood of vesting of
fixed stock options were applied.
5. INCOME TAXES
MOXY has $26.5 million of net deferred tax assets as of December 31, 1996
resulting from temporary differences related to MOXY's and its predecessor
entities' exploration activities. MOXY has provided a valuation allowance equal
to these tax assets because of the expectation of incurring tax losses for at
least the near future.
6. COMMITMENTS AND CONTINGENCIES
COMMITMENTS. MOXY has expenditure commitments of approximately $8.7 million in
1997.
ENVIRONMENTAL. Although MOXY has no known environmental liabilities, increasing
emphasis on environmental matters could result in additional costs, which would
be charged against MOXY's operations in future periods. Present and future
environmental laws and regulations applicable to MOXY's operations could require
substantial capital expenditures or could adversely affect its operations in
other ways that cannot be accurately predicted at this time.
7. SUPPLEMENTARY OIL AND GAS INFORMATION (UNAUDITED)
The supplementary information presented below is prepared in accordance with
requirements prescribed by the Financial Accounting Standards Board.
PROVED OIL AND GAS RESERVES. Proved oil and gas reserves at December 31, 1996,
have been estimated by independent petroleum engineers in accordance with
guidelines established by the Securities and Exchange Commission (SEC). Thus,
the following reserve estimates are based upon existing economic and operating
conditions; they are only estimates and should not be construed as being exact.
MOXY's 1996 proved reserves are located in offshore United States waters. Oil,
including condensate and plant products, is stated in thousands of barrels and
natural gas is in millions of cubic feet.
<TABLE>
<CAPTION>
Oil Gas
------------- ---------------
1996 1995 1996 1995
------ ---- ------ ------
<S> <C> <C> <C> <C>
Proved reserves:
Beginning of year 94 262 8,521 9,714
Revisions of previous estimates 31 54 1,155 88
Discoveries and extensions 72 - 7,009 4,999
Production (29) (45) (631) (1,093)
Transfer to MCN - (177) - (5,187)
------ ---- ------ ------
End of year 168 94 16,054 8,521
====== ==== ====== ======
Proved developed reserves:
End of year 58 20 7,530 779
====== ==== ====== ======
</TABLE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS FROM PROVED OIL AND GAS
RESERVES.
MOXYs standardized measure of discounted future net cash flows and changes
therein relating to proved oil and gas reserves were computed using reserve
valuations based on regulations prescribed by the SEC. These regulations
provide for the use of current oil and gas prices (escalated only when known and
determinable price changes are provided by contract and law) in the projection
of future net cash flows.
F-7
<PAGE>
<TABLE>
<CAPTION>
December 31,
----------------------
1996 1995
--------- --------
(In Thousands)
<S> <C> <C>
Future cash flows $ 66,260 $ 22,397
Future costs applicable to future cash
flows:
Production costs (7,805) (3,834)
Development and abandonment costs (12,874) (7,155)
---------- ---------
Future net cash flows before income 45,581 11,408
taxes
Future income taxes - -
---------- ---------
Future net cash flows 45,581 11,408
Discount for estimated timing of net
cash flows (10% discount rate) (10,240) (3,078)
---------- ---------
$ 35,341 $ 8,330
========== =========
</TABLE>
Oil and natural gas prices have declined subsequent to December 31, 1996.
The future cash flows from proved reserves presented above do not reflect this
decline.
The reserve and cash flow information above includes amounts attributable to
MOXY's interest in West Cameron Block 503, which in March 1997 MOXY agreed to
sell for $2.9 million. Proved undeveloped reserves applicable to MOXY's interest
in this field totaled approximately 16 thousand barrels of oil and 3,300 million
cubic feet of gas with estimated discounted net cash flows of $3.4 million. MOXY
would recognize a gain of approximately $2.3 million upon completion of this
sale.
CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS FROM PROVED
OIL AND GAS RESERVES.
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------
1996 1995
-------------------------
(In Thousands)
<S> <C> <C>
Beginning of year $ 8,330 $ 6,413
Discoveries and extensions, less 10,837 3,368
related costs
Development costs incurred during the 6,985 1,750
year
Revisions:
Changes in prices 12,894 7,815
Accretion of discount 833 641
Other changes, including revised
estimates of development costs and (2,863) (3,083)
rates of production
Revenues, less production costs (1,675) (1,589)
Transfer to MCN - (6,985)
----------- ---------
End of year $ 35,341 $ 8,330
=========== =========
</TABLE>
F-8
<PAGE>
<TABLE>
<CAPTION>
8. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Operating Net Net Income
Income Income (Loss)
Revenues (Loss) (Loss) Per Share
---------- ----------- -------- -----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
1996
1st Quarter $ 1,073 $ (4,453) $ (4,330) $(0.31)
2nd Quarter 949 418 a 525 a 0.04 a
3rd Quarter 919 (2,087) (2,148) (0.15)
4th Quarter 1,129 (3,761) (3,909) (0.28)
---------- ----------- ----------
$ 4,070 $ (9,883)b $ (9,862) (0.71)
========== =========== ==========
1995
1st Quarter $ 55 $ (4,051) $ (3,764) $(0.27)
2nd Quarter 1,351 (6,134) (6,251) (0.45)
3rd Quarter 1,029 (2,439)c (2,621)c (0.19)c
4th Quarter 832 (2,175) (1,999) (0.15)
---------- ----------- ----------
$ 3,267 $ (14,799)b $ (14,635) (1.06)
========== =========== ==========
</TABLE>
a. Includes a reduction to exploration expense of $2.1 million ($0.15 per share)
resulting from the reimbursement of previously expensed costs.
b. Foreign exploration costs totaled $0.4 million in 1996 and $0.5 million in
1995.
c. Includes $0.4 million ($0.03 per share) for personnel severance and other
costs.
9. SUBSEQUENT EVENT (UNAUDITED)
In July 1997, MOXY commenced a plan of recapitalization, subject to stockholder
approval. The plan provides for, among other things, a stock rights offering to
existing stockholders, a standby purchase commitment from FRP to purchase all
shares of common stock offered to, but not purchased by, the existing
stockholders, MOXY's purchase of MCN's interest in the MOXY/MCN Program's
producing properties and the formation of an aggregate $200 million multi-year
exploration program with FRP.
F-9
<PAGE>
MCMORAN OIL & GAS CO.
UNAUDITED PRO FORMA BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------
MCN
Producing
Properties Other
Historical (Note 1) (Note 2) Pro Forma
------------------------------------- ------------
(In Thousands)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,073 $ (37,138) $ 93,000 a $ 63,935
Accounts receivable and other 4,425 - - 4,425
---------- ---------- --------- ----------
Total current assets 12,498 (37,138) 93,000 68,360
---------- ---------- --------- ----------
Oil and gas properties - successful
efforts method:
Unevaluated 2,683 - - 2,683
Proved 18,868 26,287 (595)b 44,560
---------- ---------- --------- ----------
21,551 26,287 (595) 47,243
Less accumulated depreciation and
amortization 3,059 - - 3,059
Net oil and gas properties 18,492 26,287 (595) 44,184
---------- ---------- --------- ----------
Total assets $ 30,990 $ (10,851) $ 92,405 $ 112,544
========== ========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 10,615 $ - $ - $ 10,615
Current portion of production loan 2,304 - (2,304)b -
---------- ---------- --------- ----------
Total current liabilities 12,919 - (2,304) 10,615
Production loan, less current portion 11,718 (11,138) (580)b -
Other liabilities 461 287 - 748
Stockholders' equity:
Preferred stock, par value $0.01,
50,000,000 shares authorized and
unissued - - - -
Common stock, par value $0.01,
150,000,000 shares authorized,
14,036,519 shares (42,608,000 shares
pro forma) issued and outstanding 140 - 286 a 426
Capital in excess of par value of 47,938 - 92,714 a 140,652
common stock
Accumulated deficit (42,186) - 2,289 b (39,897)
---------- ---------- --------- ----------
5,892 - 95,289 101,181
---------- ---------- --------- ----------
Total liabilities and stockholders'
equity $ 30,990 $ (10,851) $ 92,405 $ 112,544
========== ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
F-10
<PAGE>
MCMORAN OIL & GAS CO.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------
MCN
Producing
Properties Other
Historical (Note 1) (Note 2) Pro Forma
---------------------------------- -----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 2,364 $ 3,546 $ - $ 5,910
Management fees 409 - - c 409
---------- ---------- --------- ---------
Total revenues 2,773 3,546 - 6,319
---------- ---------- --------- ---------
Costs and expenses:
Production and delivery, including
depreciation and amortization 1,960 297 2,661 d 4,918
Exploration expenses 2,362 - - 2,362
General and administrative expenses 711 - - 711
---------- ---------- --------- ---------
Total costs and expenses 5,033 297 2,661 7,991
---------- ---------- --------- ---------
Operating loss (2,260) 3,249 (2,661) (1,672)
Interest expense (360) - 360 e -
Other income, net 131 - - f 131
---------- ---------- --------- ---------
Net loss $ (2,489) $ 3,249 $ (2,301) $ (1,541)
========== ========== ========= =========
Average shares outstanding 14,107 - 28,571 a 42,678
========== ========== ========= =========
Net loss per share $ (0.18) $ (0.04)
========== =========
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
F-11
<PAGE>
MCMORAN OIL & GAS CO.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------
MCN
Producing
Properties Other
Historical (Note 1) (Note 2) Pro Forma
------------------------------------ -----------
(In Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Revenues:
Oil and gas sales $ 2,434 $ 3,576 $ - $ 6,010
Management fees 1,636 - - c 1,636
---------- -------- -------- --------
Total revenues 4,070 3,576 - 7,646
---------- -------- -------- --------
Costs and expenses:
Production and delivery, including
depreciation and amortization 1,500 413 2,597 d 4,510
Exploration expenses 9,818 - - 9,818
General and administrative expenses 2,635 - - 2,635
---------- -------- -------- --------
Total costs and expenses 13,953 413 2,597 16,963
---------- -------- -------- --------
Operating loss (9,883) 3,163 (2,597) (9,317)
Interest expense (403) - 403 e -
Other income, net 424 - - f 424
---------- -------- -------- --------
Net loss $ (9,862) $ 3,163 $ (2,194) $ (8,893)
========== ======== ======== ========
Average shares outstanding 13,898 - 28,571 a 42,469
========== ======== ======== ========
Net loss per share $ (0.71) $ (0.21)
========== ========
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
F-12
<PAGE>
MCMORAN OIL & GAS CO.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The accompanying Pro Forma Statements of Operations have been prepared
assuming the transactions discussed below occurred on January 1, 1996, whereas
the Pro Forma Balance Sheet assumes the transactions occurred on March 31, 1997.
The pro forma financial statements are not necessarily indicative of the actual
results that would have been achieved nor are they indicative of future results.
1. ACQUISITION OF THE MCN PRODUCING PROPERTIES
In July 1997, FRP acquired MCNs interest in the MOXY/MCN Program. In
July 1997, MOXY entered into an agreement with FRP pursuant to which MOXY will
acquire the producing oil and gas properties (the MCN Producing Properties)
developed as part of the MOXY/MCN Program for $26.0 million, subject to
adjustment, and repay all indebtedness incurred by MOXY under the MOXY/MCN
Program.
The income statement information represents the historical revenues
and direct operating expenses of the MCN Producing Properties for the periods
presented.
The balance sheet information represents the acquisition of the MCN
Producing Properties at FRPs purchase price and the repayment of MOXYs debt
under the MOXY/MCN Program.
2. OTHER ADJUSTMENTS
a. MOXY intends to consummate the Rights Offering (as discussed earlier in
this document) whereby additional MOXY common stock would be issued
sufficient to raise $100 million ($93 million after offering expenses and
the FRP Standby Fee).
b. Represents the sale of MOXYs interest in the West Cameron Block 503 field
in April 1997 for $2.9 million, with a gain of $2.3 million to retained
earnings and a reduction to oil and gas properties. Proceeds from the sale
were used to reduce the amount of indebtedness to MCN.
c. Upon the initiation of the MOXY/FRP Exploration Program, MOXYs level of
general and administrative expense will change, with MOXY allocating
certain exploration and administrative expenses to FRP. Because the level
of expense and allocation is not known at this time, no pro forma
adjustment has been reflected.
d. Represents the depreciation and amortization expense calculated using the
acquisition price of the MCN Producing Properties (Note 1).
e. Represents the elimination of the historical interest expense (Note 1).
f. Upon completion of the Rights Offering and the acquisition of the MCN
Producing Properties, MOXY will have significant additional cash resources.
In accordance with SEC regulations concerning pro forma financial
statements, MOXY has not reflected any additional investment income.
However, if MOXY had invested this excess cash and earned income at MOXYs
historical rate for short-term investments, pro forma net loss would have
been $6.1 million ($0.14 per share) for 1996 and $0.8 million ($ 0.02 per
share) for the 1997 period.
F-13
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
McMoRan Oil & Gas Co.:
We have audited the accompanying statements of gross oil and gas revenues
and direct operating expenses of the MCN Producing Properties (the Producing
Properties) to be acquired by McMoRan Oil & Gas Co. (see Note 1) for the year
ended December 31, 1996 and for the period from the inception of the MOXY/MCN
Program (September 19, 1995) through December 31, 1995. These statements are
the responsibility of management. Our responsibility is to express an opinion
on the statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the statements.
We believe our audits provide a reasonable basis for our opinion.
The accompanying statements present only the gross oil and gas revenues and
direct operating expenses (see Note 1) and are not intended to be a complete
presentation of the revenues and expenses of the Producing Properties.
In our opinion, the statements referred to above present fairly, in all
material respects, the gross oil and gas revenues and direct operating expenses
of the Producing Properties for the year ended December 31, 1996 and for the
period from the inception of the MOXY/MCN Program through December 31, 1995, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
New Orleans, Louisiana
July 14, 1997
F-14
<PAGE>
The following statements of gross oil and gas revenues and direct operating
expenses of the MCN Producing Properties (the Producing Properties) to be
purchased by MOXY for the year ended December 31, 1996 and for the period from
the inception of the MOXY/MCN Program through December 31, 1995 have been
audited by Arthur Andersen LLP, independent public accountants, as set forth in
their accompanying report. The statements are presented to provide historical
data about the Producing Properties to be acquired and may not be indicative of
future results of operations of the Producing Properties.
Separate financial statements for the Producing Properties have never been
prepared. Depreciation, depletion and amortization has not been included
because the historical expenses incurred by the predecessor owner may not be
comparable to amounts to be incurred by MOXY in future periods. Further, it is
not possible to make a practicable or objective determination of the portion of
general or administrative expenses or other indirect expenses which were
attributable to the Producing Properties and any such allocation would not be
indicative of the level of such expense to be incurred in the future. In
addition, a provision for income taxes has not been included because the tax
position of the predecessor owner will not affect MOXY's future tax provisions.
MCN PRODUCING PROPERTIES
STATEMENTS OF GROSS OIL AND GAS REVENUES AND DIRECT OPERATING EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three
Months Inception
Ended Year Ended through
March 31, December 31, December 31,
1997 1996 1995
--------- ------------ ------------
<S> <C> <C> <C>
(Unaudited)
Oil and gas sales $3,546 $3,576 $1,458
Production and delivery 297 413 199
Revenues over direct operating expenses $3,249 $3,163 $1,259
====== ====== ======
</TABLE>
See accompanying notes to financial statements.
F-15
<PAGE>
NOTES TO STATEMENTS OF GROSS OIL AND GAS REVENUES
AND DIRECT OPERATING EXPENSES OF THE MCN PRODUCING PROPERTIES
1. BASIS OF PRESENTATION
In September 1995, MOXY established an exploratory drilling program with MCN
owned 40% by MOXY and 60% by MCN. On July 14, 1997, MOXY entered into an
agreement with FRP pursuant to which MOXY will acquire MCN's interest in the
producing oil and gas properties (the Producing Properties) developed as part of
MOXY's exploratory drilling program with MCN for $26.0 million.
The accompanying statements of gross oil and gas revenues and direct
expenses, which are prepared on the successful efforts basis of accounting,
relate to the interests in producing oil and gas properties described above and
may not be representative of future operations. The statements do not include
Federal and state income taxes, interest, depreciation, depletion and
amortization or general and administrative expenses because such amounts have
historically not been allocated to the Producing Properties or such amounts
would not be indicative of those expenses which would be incurred by MOXY. The
statements include gross oil and gas revenue and direct operating and production
expenses, including production and ad valorem taxes, for the entire periods
presented.
The unaudited statement of gross oil and gas revenues and direct operating
expenses for the three-month period ended March 31, 1997, in the opinion of
management, was prepared on a basis consistent with the audited statements of
gross oil and gas revenues and direct operating expenses and includes all
adjustments (which includes normal recurring adjustments) necessary to present
fairly the gross oil and gas revenues and direct operating and production
expenses for this interim period and may not be indicative of future revenues
and expenses.
2. SUPPLEMENTAL INFORMATION ON OIL AND GAS RESERVES (UNAUDITED)
There are numerous uncertainties inherent in estimating quantities of proved
reserves and in projecting the future rates of production and timing of
development expenditures. The following reserve data represent estimates only
and should not be construed as the current market value of the properties or the
cost that would be incurred to obtain equivalent reserves.
An analysis of the estimated changes in quantities of proved oil and natural
gas reserves of the Producing Properties for the year ended December 31, 1996
and for the period from the inception of the MOXY/MCN Program through December
31, 1995 is shown below. Oil, including condensate and plant products, is
stated in thousands of barrels and natural gas is in millions of cubic feet.
<TABLE>
<CAPTION>
Oil Gas
------------ --------------
1996 1995 1996 1995
------ ---- ------ ------
<S> <C> <C> <C> <C>
Proved reserves:
Beginning of period 141 - 12,781 -
Revisions of previous estimates 46 (16) 1,732 575
Discoveries and extensions 108 - 10,513 7,498
Production (43
Transfers - 177 - 5,187
------ ---- ------ ------
End of period 252 141 24,080 12,781
====== ==== ====== ======
Proved developed reserves:
End of period 87 30 11,295 1,168
====== ==== ====== ======
</TABLE>
F-16
<PAGE>
The estimated standardized measure of discounted future net cash flows
relating to proved reserves of the Producing Properties is shown below.
<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
----------- -----------
<S> <C> <C>
(In Thousands)
Future cash flows $ 99,390 $ 33,596
Future costs applicable to future cash
flows:
Production costs (11,707) (5,751)
Development and abandonment costs (19,311) (10,732)
---------- ----------
Future net cash flows before income 68,372 17,113
taxes
Future income taxes - -
---------- ----------
Future net cash flows 68,372 17,113
Discount for estimated timing of net (15,360) (4,617)
cash flows (10% discount rate) ---------- ----------
$ 53,012 $ 12,496
========== ==========
</TABLE>
Oil and natural gas prices have declined subsequent to December 31, 1996.
The future cash flows from proved reserves presented above do not reflect the
decline.
An analysis of the sources of changes in the standardized measure of
discounted future net cash flows relating to proved reserves of the Producing
Properties is shown below.
<TABLE>
<CAPTION>
Inception
Year Ended through
December 31, December 31,
1996 1995
------------ -------------
<S> <C> <C>
(In Thousands)
Beginning of period $12,496 $ -
Transfers - 6,985
Discoveries and extensions, less 16,256 5,052
related costs
Development costs incurred during the 10,477 -
period
Revisions:
Changes in prices 19,341 5,364
Accretion of discount 1,249 -
Other changes, including revised
estimates of development costs and (3,644) (3,646)
rates of production
Revenues, less production costs (3,163) (1,259)
------- -------
End of period $53,012 $12,496
======= =======
</TABLE>
F-17
<PAGE>
______________________________
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE RIGHTS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS SHALL NOT,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AT ANY TIME SUBSEQUENT TO ITS DATE.
______________________________
TABLE OF CONTENTS
Page
----
Available Information..........................................
Incorporation of Certain Documents
by Reference..................................................
Prospectus Summary.............................................
Risk Factors...................................................
Use of Proceeds................................................
The Rights Offering............................................
Price Range of Common Stock and
Dividend Policy..............................................
Dilution.......................................................
Capitalization.................................................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations..................................................
Business and Properties........................................
Management.....................................................
Certain Relationships and Related
Transactions................................................
Principal Stockholders.........................................
Description of Capital Stock...................................
Certain Federal Income Tax Considerations......................
Legal Matters..................................................
Experts........................................................
Index to Financial Statements..................................
______________________________
________________
______________________________
28,571,429 SHARES
MCMORAN OIL & GAS CO.
COMMON STOCK
________________
PROSPECTUS
________________
, 1997
______________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by the Registrant in connection with the
securities being registered are as follows:
SEC registration fee.............................. $ 30,346
Financial Advisory fee............................ 500,000
Nasdaq listing fees............................... *
Legal fees and expenses........................... *
Subscription/Information Agent fees and expenses.. *
Accounting fees and expenses...................... *
Printing expenses................................. *
Miscellaneous..................................... *
----------
Total......................... 1,000,000
==========
*To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indemnification. The Company is incorporated under the laws of the State of
Delaware. Section 145 of the General Corporation Law of Delaware empowers the
Company to indemnify, subject to the standards therein prescribed, any person in
connection with any action, suit or proceeding brought or threatened by reason
of the fact that such person is or was a director, officer, employee or agent of
the Company. Article Eighth of the Company's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") and Article XXIV of the
Company's By-Laws (the "By-Laws") provide that each person who was or is made a
party to (or is threatened to be made a party to) or is otherwise involved in
any action, suit or proceeding by reason of the fact that such person is or was
a director, officer, employee or agent of the Company shall be indemnified and
held harmless by the Company to the fullest extent authorized by the General
Corporation Law of Delaware against all expenses, liability and loss (including,
without limitation, attorneys' fees, judgments, fines and amounts paid in
settlement) reasonably incurred by such person in connection therewith. The
rights conferred by Article Eighth of the Certificate of Incorporation and
Article XXIV of the By-Laws, as the case may be, are contractual rights and
include the right to be paid by the Company the expenses incurred in defending
such action, suit or proceeding in advance of the final disposition thereof.
Director Liability. Article Eighth of the Certificate of Incorporation
provides that the Company's directors will not be personally liable to the
Company or its stockholders for monetary damages resulting from breaches of
their fiduciary duty as directors except (a) for any breach of the duty of
loyalty to the Company or its stockholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the General Corporation Law of Delaware, which
makes directors liable for unlawful dividend or unlawful stock repurchases or
redemptions or (d) transactions from which directors derive improper personal
benefit.
Insurance. The Company may purchase and maintain insurance to protect itself
and any person eligible to be indemnified hereunder against any liability or
expense asserted or incurred by such person in connection with any action,
whether or not the Company would have the power to indemnify such person against
such liability or expense by law or under the provisions of the Certificate of
Incorporation. [The Company has an insurance policy insuring the Company's
directors and officers against certain liabilities, including liabilities under
the Securities Act of 1933.
II-1
<PAGE>
ITEM 16. EXHIBITS.
5 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.,
as to the legality of the Common Stock.*
8 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.,
as to certain tax matters.*
23.1 Consent of Arthur Andersen LLP.*
23.2 Consent of Ryder Scott Company.*
23.3 Consent of Crescent Technology, Inc.*
23.4 Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
included as part of Exhibits 5 and 8.*
24 Powers of Attorney.*
_____________________
* Filed herewith
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act 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.
(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<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-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in New Orleans, Louisiana, on the 14th day of July, 1997.
McMoRan OIL & GAS CO.
(Registrant)
By: /s/ RICHARD C. ADKERSON
------------------------
Richard C. Adkerson
Co-Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment thereto has been signed below by the
following persons in the capacities indicated on the 14th day of July, 1997.
Signature Title
- ----------------------------- -------------------------------------------------
* Co-Chairman of the Board and Director
- -----------------------------
James R. Moffett
/s/ RICHARD C. ADKERSON Co-Chairman of the Board, Chief Executive Officer
- ----------------------------- and Director
Richard C. Adkerson (Principal Executive Officer)
(Principal Financial Officer)
* Controller
- ----------------------------- (Principal Accounting Officer)
William J. Blackwell
* Director
- -----------------------------
Robert W. Bruce III
* Director
- -----------------------------
Robert A. Day
* Director
- -----------------------------
William B. Harrison, Jr.
* Director
- -----------------------------
Bobby Lee Lackey
* Director
- -----------------------------
Gabrielle K. McDonald
* Director
- -----------------------------
George Putnam
* Director
- -----------------------------
R. M. Rankin, Jr.
S-1
<PAGE>
* Director
- -----------------------------
J. Taylor Wharton
*By: /s/ RICHARD C. ADKERSON
-------------------------
Richard C. Adkerson
S-2
<PAGE>
EXHIBIT INDEX
Exhibit
Number Document Description
- ------ --------------------
5 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.,
as to the legality of the Common Stock.*
8 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.,
as to certain federal income tax matters.
23.1 Consent of Arthur Andersen LLP.*
23.2 Consent of Ryder Scott Company.*
23.3 Consent of Crescent Technology, Inc.*
23.4 Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
included as part of Exhibits 5 and 8.*
24 Powers of Attorney.*
_____________________
* Filed herewith
S-3
<PAGE>
EXHIBIT 5
Jones, Walker
Waechter, Poitevent
Carrere & Denegre, L.L.P.
July 15, 1997
McMoRan Oil & Gas Co.
1615 Poydras Street
New Orleans, Louisiana 70112
Dear Sirs:
We have acted as your counsel in connection with the preparation of the
registration statement on Form S-3 (the "Registration Statement") filed by you
with the Securities and Exchange Commission on the date hereof, with respect to
the registration of up to 28,611,429 shares of Common Stock, par value $.01 per
share (the "Shares"), and up to 28,611,429 transferable subscription rights to
purchase shares of Common Stock (the "Rights"). The Registration Statement
relates to a proposed rights offering (the "Rights Offering"), pursuant to which
McMoRan Oil & Gas Co. (the "Company") will distribute to holders of record of
Common Stock approximately 2.0 transferable subscription rights for each share
of Common Stock held of record at the close of business on the record date for
the Rights Offering (plus such additional Rights as are necessary to round up to
whole Rights any fractional Rights to which beneficial owners of Common Stock
may be entitled) and the shares of Common Stock to be issued or delivered upon
exercise of the Rights. In so acting, we have examined originals, or photostatic
or certified copies, of such records of the Company, certificates of officers of
the Company and of public officials, and such other documents as we have deemed
relevant. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such documents.
Based upon the foregoing, we are of the opinion that (i) the Rights have
been duly authorized and when issued in accordance with such authorization, will
constitute valid and binding obligations of the Company enforceable against the
Company in accordance with their terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and equitable principles of general applicability,
and (ii) the Shares issuable or deliverable upon the exercise of the Rights,
when issued and sold upon the terms described in the Registration Statement,
will be duly authorized, validly issued, fully paid and non-assessable.
[LETTERHEAD APPEARS HERE]
<PAGE>
McMoRan Oil & Gas Co.
July 15, 1997
Page 2
We consent to the filing of this opinion as an exhibit to the Registration
Statement and the reference to us under the caption "Legal Matters" as counsel
for the Company. In giving this consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the general rules and regulations of the Commission.
Very truly yours,
JONES, WALKER, WAECHTER,
POITEVENT, CARRERE & DENEGRE, L.L.P.
<PAGE>
EXHIBIT 8
Jones, Walker
Waechter, Poitevent
Carrere & Denegre, L.L.P.
July 15, 1997
McMoRan Oil & Gas Co.
1615 Poydras Street
New Orleans, LA 70170
Re: Subscription Rights to Subscribe for and
Purchase Additional Shares of Common Stock of
McMoRan Oil & Gas Co.
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences applicable to the issuance, exercise, disposition and lapse of the
transferable subscription rights (the "Rights") to subscribe for and purchase
additional shares of common stock, $0.01 par value per share (the "Common
Stock"), of McMoRan Oil & Gas Co. (the "Company").
In formulating our opinion, we have examined such documents as we have
deemed appropriate, including the Registration Statement of the Company on Form
S-3 filed with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), to which this opinion is filed
as an exhibit. In addition, we have obtained such additional information as we
have deemed relevant and necessary through consultation with various officers
and representatives of the Company.
Based upon the terms of the Rights as set forth in the Registration
Statement, it is our opinion that the discussion set forth under the caption
"Certain Federal Income Tax Considerations" in the Registration Statement
accurately summarizes the material federal income tax consequences generally
applicable to recipients of the Rights.
The foregoing opinion is based on the Internal Revenue Code of 1986, as
amended, Treasury Regulations promulgated thereunder, Internal Revenue Service
rulings and pronouncements and judicial decisions now in effect, any of which
may be changed at any time with retroactive effect. No opinion is expressed on
any matters other than those specifically referred to herein.
We hereby consent to the filing of this opinion as Exhibit 8 to the
Registration Statement and all references to our firm included in or made a part
of the Registration Statement. In giving such consent, we do not thereby admit
that we come within the category of persons whose consent
[LETTERHEAD APPEARS HERE]
<PAGE>
McMoRan Oil & Gas Co.
July 15, 1997
Page 2
is required under Section 7 of the Securities Act or the rules and regulations
of the Securities Act or the rules and regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
JONES, WALKER, WAECHTER, POITEVENT,
CARRERE & DENEGRE, L.L.P.
ml
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As Independent Public Accountants we hereby consent to the use of our
reports (and to the reference to our Firm) included or incorporated by reference
in this registration statement.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
July 15, 1997
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PETROLEUM ENGINEER
As independent petroleum engineers, we hereby consent to the use of our
name in this Form S-3 by McMoRan Oil & Gas Co. We further consent to the
incorporation by reference of our estimates of reserves and present value of
future net reserves as of May 31, 1997 in the Form S-3.
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
July 11, 1997
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT RESERVE ENGINEER
We consent to the incorporation by reference in this Form S-3 by McMoRan
Oil & Gas Co. (the "Company") of our reserve report as of December 31, 1996 in
the Company's Form 10-K for the fiscal year ended December 31, 1996.
CRESCENT TECHNOLOGY, INC.
/s/ WAYNE FORMAN
By: _______________________________
July 14, 1997
New Orleans, Louisiana
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
RICHARD C. ADKERSON his true and lawful attorney-in-fact with power to act with
full power of substitution and resubstitution, to execute a Registration
Statement of the Company and any of the Company's wholly-owned subsidiaries on
Form S-3 (or on such other form as may be determined to be applicable) providing
for the registration under the Securities Act of 1933, as amended, of rights,
common stock underlying such rights and preferred stock purchase rights and any
amendment or amendments to such Registration Statement, and to file same with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting to such attorney full power and
authority to do and perform each and every act and thing whatsoever that such
attorney may deem necessary or advisable to carry out fully the intent of the
foregoing as the undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts and things
that such attorney may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ James R. Moffett
------------------------------------------
James R. Moffett
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT his true and lawful attorney-in-fact with power to act with
full power of substitution and resubstitution, to execute a Registration
Statement of the Company and any of the Company's wholly-owned subsidiaries on
Form S-3 (or on such other form as may be determined to be applicable) providing
for the registration under the Securities Act of 1933, as amended, of rights,
common stock underlying such rights and preferred stock purchase rights and any
amendment or amendments to such Registration Statement, and to file same with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting to such attorney full power and
authority to do and perform each and every act and thing whatsoever that such
attorney may deem necessary or advisable to carry out fully the intent of the
foregoing as the undersigned might or could do personally or in the capacity or
capacities as aforesaid, hereby ratifying and confirming all acts and things
that such attorney may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ Richard C. Adkerson
------------------------------------------
Richard C. Adkerson
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ William J. Blackwell
----------------------------------------
William J. Blackwell
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ Robert W. Bruce III
---------------------------------------
Robert W. Bruce III
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ Robert A. Day
--------------------------------------
Robert A. Day
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ William B. Harrison, Jr.
----------------------------------------
William B. Harrison, Jr.
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ Bobby Lee Lackey
-------------------------------------
Bobby Lee Lackey
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ Gabrielle K. McDonald
----------------------------------------
Gabrielle K. McDonald
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ George Putnam
--------------------------------------
George Putnam
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ B. M. Rankin, Jr.
--------------------------------------
B. M. Rankin, Jr.
<PAGE>
POWER OF ATTORNEY
-----------------
BE IT KNOWN, that the undersigned, in his capacity or capacities as an
officer or a member of the Board of Directors of McMoRan Oil & Gas Co., a
Delaware corporation (the "Company"), does hereby make, constitute and appoint
JAMES R. MOFFETT and RICHARD C. ADKERSON, and either of them acting
individually, his true and lawful attorney-in-fact with power to act without the
others and with full power of substitution and resubstitution, to execute a
Registration Statement of the Company and any of the Company's wholly-owned
subsidiaries on Form S-3 (or on such other form as may be determined to be
applicable) providing for the registration under the Securities Act of 1933, as
amended, of rights, common stock underlying such rights and preferred stock
purchase rights and any amendment or amendments to such Registration Statement,
and to file same with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting to such
attorneys, and each of them, full power and authority to do and perform each and
every act and thing whatsoever that such attorney or attorneys may deem
necessary or advisable to carry out fully the intent of the foregoing as the
undersigned might or could do personally or in the capacity or capacities as
aforesaid, hereby ratifying and confirming all acts and things that such
attorney or attorneys may do or cause to be done by virtue of this Power of
Attorney.
EXECUTED this 14th day of July, 1997.
/s/ J. Taylor Wharton
----------------------------------------
J. Taylor Wharton
