<PAGE>
As filed with the Securities and Exchange Commission on September 2, 1998
Registration No. 333-58407
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
AMENDMENT NO. 1
UNDER
THE SECURITIES ACT OF 1933
ENERGY SEARCH, INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
TENNESSEE 280 FORT SANDERS WEST BLVD., SUITE 200 62-1423071
(State or Other KNOXVILLE, TN 37922 (I.R.S. Employer
Jurisdiction of (423) 531-6562 Identification Number)
Incorporation or
Organization)
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
RICHARD S. COOPER Copies of PATRICK R. SUGHROUE, ESQ.
ENERGY SEARCH, INCORPORATED Communications to: PATRICK R. SUGHROUE, P.C.
280 FORT SANDERS WEST BLVD., SUITE 200 3777 SPARKS DRIVE, SUITE 130
KNOXVILLE, TENNESSEE 37922 GRAND RAPIDS, MICHIGAN 49546
(423) 531-6562 (616) 940-3399
(Name, Address, Including Zip Code, and Telephone Number, Including Area
Code, of Agent For Service)
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
<PAGE>
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. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
TITLE OF PROPOSED PROPOSED
SHARES AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE TO BE AGGREGATE PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED PER UNIT<F1> OFFERING PRICE<F1> FEE<F1>
<S> <C> <C> <C> <C>
Common Stock, 1,834,235 $9.00 $16,508,115 $4,869.89
no par value
<FN>
<F1> Pursuant to Rule 457(c), the price is estimated solely for the purpose
of calculating the registration fee and is based on the average of
high and low reported sales prices of the Common Stock of the
Registrant on The Nasdaq SmallCap Market on June 30, 1998.
</FN>
</TABLE>
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 AN AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a)
OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION
8(a), MAY DETERMINE.
==============================================================================
<PAGE>
PROSPECTUS
[ENERGY SEARCH INCORPORATED LOGO]
1,834,235 Shares
ENERGY SEARCH, INCORPORATED
COMMON STOCK (NO PAR VALUE)
OFFERED BY CERTAIN SELLING SHAREHOLDERS
This Prospectus covers the offering for resale of 1,834,235
shares (the "Shares") of common stock, no par value (the "Common
Stock"), of Energy Search, Incorporated, a Tennessee corporation (the
"Company"), that are to be offered from time to time for the account
of certain shareholders of the Company named in this Prospectus under
"Selling Shareholders." These shares consist of shares of Common Stock
previously issued in certain private placement transactions, shares of
Common Stock issuable, if at all, upon the exercise of common stock
purchase warrants (the "Private Placement Warrants") issued by the
Company to placement and selling agents in connection with the private
placements, shares of Common Stock which were converted at the
Company's initial public offering from formerly outstanding Class A
and Class B preferred stock (the "Preferred Stock") of the Company and
shares of Common Stock granted to certain employees and agents of the
Company in consideration for services provided to the Company.
As of the date of this Prospectus, the Selling Shareholders own
approximately 1,834,235 shares of Common Stock or warrants to purchase
Common Stock, which represents approximately 49% of the shares of
Common Stock of the Company outstanding on the date of this
Prospectus. All of the 1,834,235 shares are registered for sale under
this Prospectus. The Company will receive no part of the proceeds of
sales of Shares made under this Prospectus. All expenses of
registration incurred in connection with an offering of the Shares are
being borne by the Company, except for any brokerage commission or
discounts and fees, expenses and disbursements of a Selling
Shareholder's counsel.
The Common Stock is quoted on The Nasdaq SmallCap Market under
the symbol "EGAS" and is listed on the Boston Stock Exchange under the
symbol "EYS." On June 30, 1998, the closing sale price of the Common
Stock on The Nasdaq SmallCap Market was $9.00 per share.
The Shares may be offered by the Selling Shareholders for sale
through underwriters or dealers or from time to time on The Nasdaq
<PAGE>
SmallCap Market, Boston Stock Exchange or otherwise, at prices then
obtainable. The Selling Shareholders and any broker executing selling
orders on behalf of the Selling Shareholders may be deemed to be
underwriters within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). Commissions received by underwriters
or by any such broker may be deemed to be underwriting commissions
under the Securities Act. See "Plan of Distribution."
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE MATTERS
DISCUSSED UNDER "RISK FACTORS" BEGINNING ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September 2, 1998
<PAGE>
AVAILABLE INFORMATION
Energy Search, Incorporated (the "Company") filed a Registration
Statement on Form S-3 to register with the Securities and Exchange
Commission (the "SEC") the Common Stock to be sold under this
Prospectus. This Prospectus is a part of that Registration Statement.
As allowed by SEC rules, this Prospectus does not contain all the
information you can find in the Registration Statement or the exhibits
to the Registration Statement.
In addition, the Company files annual, quarterly and special
reports, proxy statements, and other information with the SEC. You
may read and copy any reports, statements or other information the
Company files at the SEC's public reference rooms located at Judiciary
Plaza, 450 Fifth Street N.W., Room 1024, Washington, D.C.; Seven World
Trade Center, Suite 1300, New York, New York, and 500 W. Madison
Street, Suite 1400, Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms.
The Company's SEC filings also are available to the public from
commercial document retrieval services and at the web site maintained
by the SEC at "http://www.sec.gov." The Company's proxy statements
and other information also can be inspected at the offices of Nasdaq,
1735 K. Street, Washington, D.C. 20006.
The Company's Common Stock is reported on The Nasdaq SmallCap
Market under the symbol "EGAS."
INCORPORATION BY REFERENCE
The SEC allows the Company to incorporate by reference certain
information into this Prospectus. This means that the Company can
disclose important information by referring to another document filed
separately with the SEC. The information incorporated by reference is
deemed to be part of this Prospectus, except for any information
superseded by information in this Prospectus. This Prospectus
incorporates by reference the documents set forth below that the
Company previously has filed with the SEC. These documents contain
important information about the Company and its finances.
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<PAGE>
<TABLE>
<CAPTION>
THE COMPANY'S SEC FILINGS (FILE NO. 001-12679) PERIOD
--- --------- --- ------- ----- --- ---------- ------
<S> <C> <C>
Annual Report on Form 10-KSB Year ended December 31, 1997
Registration Statement on Form 8-A Filed on January 22, 1997
Definitive Proxy Statement on Schedule 14A Filed on April 28, 1998
Quarterly Report on Form 10-QSB Quarter ended March 31, 1998
Current Report on Form 8-K Filed on June 30, 1998
Current Report on Form 8-K Filed on July 10, 1998
Quarterly Report on Form 10-QSB Quarter ended June 30, 1998
</TABLE>
The Company also incorporates by reference the additional
documents that it files with the SEC under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") between the date of this
Prospectus and the date that this offering terminates.
Documents incorporated by reference are available from the
Company without charge, excluding exhibits, unless the Company
specifically has incorporated by reference an exhibit in this
Prospectus. You may obtain documents incorporated by reference in this
Prospectus by requesting them in writing or by telephone at the
following address: Energy Search, Incorporated, Attention:
Secretary, 280 Fort Sanders West Boulevard, Suite 200, Knoxville,
Tennessee 37922; (800) 551-5810. To ensure timely delivery, any
request should be made five business days in advance.
THE COMPANY
Energy Search, Incorporated (the "Company") is an independent oil
and gas company engaged in the exploration, development, production,
and acquisition of oil and natural gas properties primarily in the
Appalachian basin area, including southeastern Ohio and southern West
Virginia. The Company's revenue is derived primarily from (i) the
drilling of oil and gas wells on a contract basis, (ii) the sale of
natural gas and crude oil from wells in which it has a working
interest, (iii) the transmission of natural gas through a pipeline and
gathering system owned by an affiliated partnership in which the
Company has an ownership interest, (iv) the management and operation
of oil and gas wells, and (v) the formation and management of oil and
gas partnerships ("Affiliated Drilling Partnerships").
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<PAGE>
In 1997, the Company shifted its focus from drilling primarily
for Affiliated Drilling Partnerships to developing reserves for its
own account. The Company financed the shift in its primary
operational focus with funds raised through its initial public
offering in January 1997 and private placements.
The Company's wholly owned subsidiary, Equity Financial
Corporation, provides investment advice and brokers and deals in
stocks, bonds and other securities in the East Tennessee Region. From
time to time, Equity Financial Corporation serves as placement agent
or participating selling agent with respect to the private placement
of the Company's securities.
The Company was organized as a Tennessee corporation in 1990.
Its principal executive offices are located at 280 Fort Sanders West
Boulevard, Suite 200, Knoxville, Tennessee 37922. The Company's
telephone number is (800) 551-5810.
COMPUTER MODIFICATIONS FOR YEAR 2000
The Company has assessed and will continue to assess the impact of
the Year 2000 issue on the Company's reporting systems and operations.
The Year 2000 issue exists because many computer systems and applications
abbreviate dates by eliminating the first two digits of the year,
assuming that these two digits would always be "19." Unless corrected,
this shortcut may cause problems with some computers. To date no
material expenditures had been made by the Company directly with respect
to the Year 2000 issue. The Company estimates that approximately $10,000
will be incurred in 1998 and 1999 on Year 2000 issues. These costs have
consisted and are expected to consist primarily of personnel expense for
staff dedicated to the effort and professional fees paid to third party
providers of remedial services.
The Company has a plan to address the Year 2000 issue and will
continue to assess the impact of the Year 2000 issue on the remainder
of its computer-based systems and applications throughout 1998.
If the Company's plans are not successful, there could be a
significant disruption of the Company's ability to bill customers and pay
suppliers, as well as a possible slowdown of certain computer-dependent
processes. Based on currently available information, management does not
presently anticipate that the costs to address the Year 2000 issues or
potential operating disruptions will have an adverse impact on the
Company's financial conditions, results of operations or liquidity.
In addition to reviewing its own computer operating systems and
applications, the Company plans to initiate formal communications with
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<PAGE>
its significant suppliers and large customers to determine the extent to
which the Company's interface systems are vulnerable to those third
parties' failure to resolve their own Year 2000 issues. There is no
assurance that the systems of other companies on which the Company's
systems rely will be converted in a timely manner. If such modifications
and conversions are not made, or are not completed in a timely manner, the
Year 2000 issue could have an adverse impact on the operations of the
Company.
The costs of the project are based on management's best estimates.
There can be no guarantee that these estimates will be achieved and actual
results could differ from those anticipated. Specific factors that might
cause differences include, but are not limited to, the ability of other
companies on which the Company's systems rely to modify or convert their
systems to be Year 2000 compliant, the ability to locate and correct all
relevant computer codes and similar uncertainties.
RISK FACTORS
AN INVESTMENT IN SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CONSIDER THE
FOLLOWING FACTORS IN ADDITION TO THE OTHER INFORMATION SET FORTH IN
THIS PROSPECTUS BEFORE MAKING A DECISION CONCERNING THE PURCHASE OF
THE SHARES.
RISKS ASSOCIATED WITH THE COMPANY
DEVELOPMENT OF ADDITIONAL RESERVES. The Company's future success
depends upon its ability to find or acquire additional natural gas and
oil reserves that are economically recoverable. Except to the extent
that the Company conducts successful exploration or development
activities or acquires properties containing proved reserves, the
proved reserves of the Company will generally decline as reserves are
produced. There can be no assurance that the Company will be able to
discover and exploit additional commercial quantities of oil and gas,
or that the Company will have success drilling productive wells or
acquiring underdeveloped properties at low finding costs.
NEED FOR ADDITIONAL CAPITAL OR FINANCING. The Company's present
funds may not be sufficient to develop fully the Company's oil and gas
properties or otherwise carry out the Company's business plan.
Development of the Company's oil and gas properties and execution of
the Company's business plan may require capital resources greater than
the resources currently available to the Company. The Company's
current arrangement for additional sources of capital is limited to
its working capital revolving line of credit and any extensions
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<PAGE>
thereof with Bank One, Texas, N.A. (the "Bank One Credit Facility").
There can be no assurance that this, or any other, sources of capital
will be available to the Company on acceptable terms, or at all, in
the future. The inability to obtain additional financing could have a
material adverse effect on the Company.
The capital needs of the Company have increased materially since
its inception. Before the Company's initial public offering on
January 24, 1997, substantially all of the Company's drilling capital
was raised through the offering of investment interests in affiliated
drilling partnerships to private investors (the "Affiliated Drilling
Partnerships"). These Affiliated Drilling Partnerships have been
sponsored by principals of the Company, as well as by the Company, and
have been marketed by Equity Financial Corporation ("EFC"), an NASD-
member broker-dealer and wholly owned subsidiary of the Company. It
is anticipated that a small portion of the Company's drilling capital
may in the future continue to be raised by the offering of investment
interests, on a private placement basis, in future Affiliated Drilling
Partnerships. To the extent the Company may depend on capitalization
through syndication of future Affiliated Drilling Partnerships, there
can be no assurance that future offerings will be successful or will
raise adequate capital for desired Company activities. Also, there is
no assurance that any other sources of capital will be available to
the Company.
DEPENDENCE ON KEY PERSONNEL. The Company depends to a large
extent on the abilities and continued participation of certain key
employees, including Charles P. Torrey, Jr., its chief executive
officer, Richard S. Cooper, its president, Robert L. Remine, its chief
financial officer, John M. Johnston, its vice president - exploration
and production and Mike W. Mooney, its chief operating officer. The
loss of any of these officers or other key employees could have a
material adverse effect on the Company's business. The Company has
arranged for $500,000 of "key man" term life insurance policies on the
lives of each of Messrs. Torrey, Remine and Cooper, and a $300,000
policy on the life of Mr. Johnston and has entered into written
employment contracts with Messrs. Torrey, Remine, Cooper, Johnston and
Mooney.
UNDEVELOPED ACREAGE MAY BE LOST. The Company's oil and gas
leases typically require the drilling of wells, payment of minimum
royalties or delay rentals or the continued production of oil or gas
in commercial quantities for the leases to remain valid and not lapse.
Typically, once a well is drilled and becomes commercially productive,
as long as commercial production from such lease continues, the lease
will not lapse and is deemed to be "held by production." The
termination of leases could have a material adverse effect on the
Company and its future prospects.
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<PAGE>
GEOLOGIST'S ESTIMATES OF RESERVES AND FUTURE NET REVENUE. There
are numerous uncertainties inherent in estimating quantities of proved
reserves and in projecting rates of production and timing of
development expenditures, including many factors beyond the control of
the producer. In addition, the estimates of future net revenues from
proved reserves of the Company and the present value thereof are based
on certain assumptions about future production levels, prices, and
costs that may not prove to be correct over time. The rate of
production from oil and gas properties declines as reserves are
depleted. Except to the extent the Company acquires additional
properties containing proved reserves, conducts successful exploration
and development activities or, through engineering studies, identifies
additional behind-pipe zones or secondary recovery reserves, the
proved reserves of the Company will decline as reserves are produced.
Future oil and gas production is therefore highly dependent upon the
Company's level of success in acquiring or finding additional
reserves. Actual future revenues, development expenditures, operating
expenses and quantities of recoverable natural gas and oil reserves
may vary substantially from the estimates. In addition, the Company's
reserves may be subject to downward or upward revision, based on
production history, results of future exploration and development,
prevailing oil and gas prices and other factors.
CONFLICTS OF INTEREST. The nature of the Company's activities in
the oil and gas business results in many situations in which conflicts
of interest may arise. In general, conflicts of interest are inherent
in oil and gas drilling programs involving non-industry participants
because transactions are entered into without arms-length negotiation.
The interests of the investors, on one hand, and those of the Company,
as managing general partner and driller-operator, on the other hand,
may be inconsistent in some respects or in certain instances. Failure
to adequately resolve such conflicts of interest appropriately could
result in liability or other adverse consequences to the Company.
The Company presently has no formal procedure to deal with conflicts
of interest but instead handles the evaluation and resolution of them
on a case-by-case basis taking into account all relevant facts and
circumstances. The Company owes a standard fiduciary duty to each
Affiliated Drilling Partnership, Energy Search Natural Gas Pipeline
Income L.P. (the "Pipeline Income Partnership"), the ESI Pipeline
Operating LP (the "Pipeline Operating Partnership"), and any future
partnership for which the Company is the managing general partner, or
serves in a similar capacity. Accordingly, the Company has been, and
will continue to be, obligated to exercise good faith, reasonable
business judgment and integrity in handling each such Partnership's
business and funds. If the Company were to violate its above-
described duties, the Company could be subject to legal redress
that could result in liability.
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<PAGE>
POSSIBLE ADVERSE EFFECT ON MARKET PRICE DUE TO SHARES REGISTERED
HEREBY. If all, or a significant number of the shares registered hereby
are sold at once or over a short period of time, there could be an
adverse effect on the market price of the Common Stock, since the shares
registered hereby represent approximately 48% of the shares of Common
Stock that are outstanding as of the date of this prospectus.
RISKS ASSOCIATED WITH THE OIL AND GAS INDUSTRY
RISKS OF OIL AND GAS ACTIVITIES. Significant risks are inherent
in the natural gas and oil business, including the drilling of dry and
unsuccessful wells, operating hazards and uninsured risks, intense
competition for attractive properties, governmental regulations,
volatile prices and other uncontrollable factors. Furthermore, oil
and gas drilling is speculative. The possibility always exists that
wells drilled will be non-productive. Even wells that are completed
may not produce enough natural gas or oil to pay out. Natural gas and
oil operations present risks of environmental contamination from
drilling operations and leakage from oil field storage or
transportation facilities. Spills of oil and other liquids could
occur that could create material liability to the Company for clean-up
expenses.
CURRENT OIL AND GAS MARKETS. There is substantial uncertainty as
to the prices at which natural gas and oil produced by the Company may
be sold, and it is possible that under some market conditions the
production and sale of oil and gas from some or all of the Company's
wells may not be economical. The availability of a ready market for
oil and gas and the prices obtained for oil and gas depend upon
numerous factors beyond the control of the Company, including
competition from other natural gas and oil suppliers and national and
international economic and political developments. The Company is not
subject to any gas price controls.
EXPLORATION AND DEVELOPMENT RISKS. Exploration and development
drilling activities are subject to greater risks of failure than those
associated with the ownership of producing properties. The drilling of
exploratory wells involves the greatest risks, since such wells are
located in unproved areas. The drilling of development wells, although
generally consisting of drilling in proven areas, may result in dry
holes or the failure to produce natural gas and oil in commercial
quantities. The drilling of development wells and exploratory wells
also involves the risk that unusual or unexpected formations and
pressures will be encountered, and other conditions will exist, that
could result in the Company incurring substantial losses as well as
liabilities to third parties or governmental entities.
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<PAGE>
PRICE VOLATILITY. Natural gas and oil prices may be quite
volatile, depending on numerous factors, including steps taken by the
Organization of Petroleum Exporting Countries, tensions in the Middle
East and weather conditions. The average gas prices received by the
Company were $2.34, $2.97 and $3.08 per Mcf in 1995, 1996 and 1997,
respectively, prior to reduction for royalties, severance taxes and
gathering and transportation charges. The average oil prices received
by the Company were $16.48, $19.26 and $18.06 per Bbl in 1995, 1996
and 1997, respectively.
OPERATING HAZARDS AND UNINSURED RISKS. Drilling activities are
subject to many risks, including the risk that no commercially
productive reservoirs will be encountered. There can be no assurance
that new wells drilled by the Company will be productive or that the
Company will recover all or any portion of its investment. Drilling
for oil and natural gas may involve unprofitable efforts, not only
from dry wells, but from wells that are productive but do not produce
sufficient net revenues to return a profit after drilling, operating
and other costs. The cost of drilling, completing and operating wells
is often uncertain. The Company's drilling operations may be
curtailed, delayed or canceled as a result of numerous factors, many
of which are beyond the Company's control, including title problems,
weather conditions, compliance with governmental requirements and
shortages or delays in the delivery of equipment and services. The
Company's future drilling activities may not be successful and, if
unsuccessful, may have a material adverse effect on the Company's
future results of operations and financial condition.
The Company's operations are subject to hazards and risks
inherent in drilling for and producing and transporting oil and
natural gas, such as fires, natural disasters, explosions,
encountering formations with abnormal pressures, blowouts, craterings,
pipeline ruptures and spills, uncontrollable flows of oil, natural gas
or well fluids, any of which can result in the loss of hydrocarbons,
environmental pollution, personal injury claims and other damage to
properties of the Company and others. The Company maintains insurance
against some but not necessarily all of the risks described above. In
particular, the insurance maintained by the Company does not cover
claims relating to failure of title to oil and natural gas leases,
trespass during survey acquisition or surface change attributable to
seismic operations and, except in limited circumstances, losses due to
business interruption. The Company may elect to self-insure if
management believes that the cost of insurance, although available, is
excessive relative to the risks presented. In addition, pollution and
environmental risks generally are not fully insurable. The occurrence
of an event that is not covered, or not fully covered, by insurance
could have a material adverse effect on the Company's business,
financial condition and results of operations.
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<PAGE>
COMPETITION AND MARKETS. The oil and natural gas industry is
highly competitive in all of its phases. The Company competes with
many other companies in the search for and acquisition of oil and
natural gas properties and leases for exploration and development, and
also competes with other companies in its activities as drilling
contractor and natural gas marketers. The Company's competitors
include numerous independent oil and natural gas companies, major
integrated oil and natural gas companies, individuals and drilling and
income programs. Many of these companies have substantially greater
financial, technical and other resources than the Company and have
been engaged in the exploration and production business for a much
longer time than the Company. Such companies may be able to pay more
for leases on oil and natural gas properties and exploratory
prospects, as well as to define, evaluate, bid for or purchase a
greater number of properties and prospects than the Company's
financial or human resources would permit. The Company will be
required to maintain and enhance its ability to conduct its
operations, to evaluate and select suitable properties and to
consummate transactions in a highly competitive environment.
Competition among oil and gas companies for favorable oil and natural
gas prospects can be expected to continue. It is anticipated that the
cost of acquiring oil and natural gas properties may increase
appreciably.
The Company competes with a number of other companies which offer
interests in drilling partnerships with a wide range of investment
objectives and program structures. Competition for investment capital
for both public and private drilling programs is intense.
COMPETITION FROM ALTERNATIVE ENERGY SOURCES. Substantially all
of the Company's reserves are natural gas reserves. Natural gas
competes with coal, oil, propane, butane, nuclear power and other
fuels in the heating and energy generation markets. Numerous factors,
all difficult to predict, affect the relative desirability or demand
at any point in time for any given fuel. The extent to which public
or legislative initiatives to develop and use alternative fuels will,
in the future, affect the demand for oil or natural gas cannot be
predicted at this time.
INDUSTRY CONDITIONS. In recent decades, there have been periods
of worldwide overproduction and underproduction of hydrocarbons as
well as periods of increased and relaxed energy conservation efforts.
Such conditions have resulted in periods of excess supply of, and
reduced demand for, crude oil on a worldwide basis and natural gas on
a domestic basis. These periods have been followed by periods of short
supply of, and increased demand for, crude oil and, to a lesser
extent, natural gas. The excess or short supply of crude oil and
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natural gas has placed pressures on prices and has resulted in
dramatic price fluctuations.
SHUT-IN WELLS AND CURTAILED PRODUCTION. In the past, production
from oil and natural gas wells (particularly gas wells) in many
geographic areas of the United States had been curtailed due to lack
of market demand, and it is possible that such curtailments may resume
in the future. Therefore, it is possible that the Company's wells may
have to be shut-in or that oil or gas produced from the wells may have
to be sold at less than favorable prices. Production also may be
delayed or wells shut-in in the event there is difficulty in securing
markets for production, logistical problems develop in the
transportation of natural gas from the wells or there are title
problems associated with the drillsites. Although it is anticipated
that a substantial amount of natural gas from the Company's Ohio wells
will be sold to the Pipeline Operating Partnership, an affiliate of
the Company, the agreement regarding the gathering and marketing of
natural gas between the Company, for itself and on behalf of
Affiliated Drilling Partnerships, and the Pipeline Operating
Partnership governing such arrangement will not protect the Company
from market or price risks.
REGULATION AND ENVIRONMENTAL MATTERS
GENERAL REGULATION. Oil and natural gas exploration, production
and related operations are subject to extensive rules and regulations
promulgated by federal, state and local agencies. Failure to comply
with such rules and regulations can result in substantial penalties.
The regulatory burden on the oil and gas industry increases the
Company's cost of doing business and affects its profitability.
Although the Company believes it is in substantial compliance with all
applicable laws and regulations, because such rules and regulations
frequently are amended or interpreted, the Company is unable to
predict the future cost or impact of complying with such laws.
Environmental enforcement efforts with respect to natural gas and
oil operations recently have increased and it can be anticipated that
such regulation will expand and have a greater impact on future
natural gas and oil operations. There is no assurance that laws and
regulations enacted in the future will not adversely affect the
Company's exploration for, and production and transmission of, oil and
natural gas. Such legislation and/or actions of local, state and
federal governments may have a material effect on the Company in the
future. To the best knowledge of management, the Company has complied
in all material respects with applicable regulatory requirements of
the states in which it operates. To date, the Company has received no
material notice of violation or complaint concerning its compliance
with federal, state or local laws respecting the environment. There
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can be no assurance, however, that the Company's business operations
will not result in violations of environmental laws or related
liabilities in the future.
STATE REGULATION. Natural gas and oil operations are regulated
by an agency of state government in every state of the United States.
Many state authorities require permits for drilling operations,
drilling bonds and reports concerning operation and impose other
requirements relating to the exploration and production of oil and
gas. Some states also have statutes or regulations addressing
conservation matters, including provisions for the pooling of oil and
gas properties, the establishment of maximum rates of production from
oil and gas wells and the regulation of spacing, plugging and
abandonment of such wells. The statutes and regulations also may
limit the rate at which oil and gas can be produced from certain
properties. In Ohio and West Virginia, where most of the Company's
natural gas and oil properties are located, such regulation is by the
Ohio Department of Natural Resources and the West Virginia Division of
Environmental Protection Office of Oil and Gas, respectively. Each of
these agencies has been granted broad regulatory and enforcement
powers which are likely to create additional financial and operational
burdens on natural gas and oil operations like those of the Company.
Ohio and West Virginia also have in place other pollution and
environmental control laws which have become increasingly burdensome
in recent years.
FEDERAL REGULATION. The Company's sales of natural gas are
affected by the availability, terms and cost of transportation. The
price and terms for access to pipeline transportation are subject to
extensive regulation. The Federal Energy Regulatory Commission
("FERC") regulates the transportation and sale for resale of natural
gas in interstate commerce pursuant to the Natural Gas Act of 1938 and
the Natural Gas Policy Act of 1978. In the past, the federal
government has regulated the prices at which oil and natural gas can
be sold. While sales by producers of natural gas, and all sales of
oil and natural gas liquids currently can be made at uncontrolled
market prices, Congress could reenact price controls in the future.
In recent years, FERC has undertaken various initiatives to
increase competition within the natural gas industry. As a result of
initiatives like FERC Order 636, issued in April 1992 and its progeny,
the interstate natural gas transportation and marketing system has
been substantially restructured to remove various barriers and
practices that historically limited non-pipeline natural gas sellers,
including producers, from effectively competing with interstate
pipelines for sales to local distribution companies and large
industrial and commercial customers. The most significant provisions
of Order No. 636 require that interstate pipelines provide
-12-
<PAGE>
transportation separate or "unbundled" from their sales service, and
require that pipelines provide firm and interruptible transportation
service on an open access basis that is equal for all natural gas
supplies. In many instances, the result of Order No. 636 and related
initiatives has been to substantially reduce or eliminate the
interstate pipelines' traditional role as wholesalers of natural gas
in favor of providing only storage and transportation services.
Although Order No. 636 has largely been upheld on appeal, several
appeals remain pending in related restructuring proceedings. It is
difficult to predict when these remaining appeals will be completed or
their impact on the Company.
FERC has announced several important transportation-related
policy statements and proposed rule changes, including a statement of
policy and a request for comments concerning alternatives to its
traditional cost-of-service ratemaking methodology to establish the
rates interstate pipelines may charge for their services. A number of
pipelines have obtained FERC authorization to charge negotiated rates
as one such alternative. In February 1997, FERC announced a broad
inquiry into issues facing the natural gas industry to assist FERC in
establishing regulatory goals and priorities in the post-Order No. 636
environment. While the changes being considered by federal and state
regulators would affect the Company only indirectly, they are intended
to further enhance competition in natural gas markets. Additional
proposals and proceedings that might affect the natural gas industry
are pending before Congress, FERC, state commissions and the courts.
The natural gas industry historically has been very heavily regulated;
therefore, there is no assurance that the less stringent regulatory
approach recently pursued by FERC and Congress will continue.
The price the Company receives from the sale of oil and natural
gas liquids is affected by the cost of transporting products to
markets. Effective January 1, 1995, FERC implemented regulations
establishing an indexing system for transportation rates for oil
pipelines, which, generally, would index such rates to inflation,
subject to certain conditions and limitations. The Company is not
able to predict with certainty the effect, if any, of these
regulations on its operations. However, the regulations may increase
transportation costs or reduce well head prices for oil and natural
gas liquids.
ENVIRONMENTAL REGULATION. The Company's operations and
properties are subject to extensive and changing federal, state and
local laws and regulations relating to environmental protection,
including the generation, storage, handling, emission, transportation
and discharge of materials into the environment, and relating to
safety and health. The recent trend in environmental legislation and
-13-
<PAGE>
regulation generally is toward stricter standards, and this trend
likely will continue. These laws and regulations may require the
acquisition of a permit or other authorization before construction or
drilling commences; restrict the types, quantities and concentration
of various substances that can be released into the environment in
connection with drilling and production activities; limit or prohibit
construction, drilling and other activities on certain lands lying
within wilderness, wetlands and other protected areas; require
remedial measures to mitigate pollution from former operations such as
plugging abandoned wells; and impose substantial liabilities for
pollution resulting from the Company's operations. The permits
required for various of the Company's operations are subject to
revocation, modification and renewal by issuing authorities.
Governmental authorities have the power to enforce compliance with
their regulations, and violators are subject to civil and criminal
penalties or injunction. Management believes that the Company is in
substantial compliance with current applicable environmental laws and
regulations, and that the Company has no material commitments for
capital expenditures to comply with existing environmental
requirements. Nevertheless, changes in existing environmental laws
and regulations or in interpretations thereof could have a significant
impact on the Company, as well as the oil and gas industry in general
and thus the Company is unable to predict the ultimate cost and
effects of such continued compliance in the future.
The Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") and comparable state statutes impose strict,
joint and several liability on certain classes of persons who are
considered to have contributed to the release of a "hazardous
substance" into the environment. These persons include the owner or
operator of a disposal site or sites where a release occurred and
companies that disposed or arranged for the disposal of the hazardous
substances released at the site. Under CERCLA such persons or
companies may be liable for the costs of cleaning up the hazardous
substances that have been released into the environment and for
damages to natural resources, and it is not uncommon for the
neighboring land owners and other third parties to file claims for
personal injury, property damage and recovery of response costs
allegedly caused by the hazardous substances released into the
environment. The Resource Conservation and Recovery Act ("RCRA") and
comparable state statutes govern the disposal of "solid waste" and
"hazardous waste" and authorize imposition of substantial civil and
criminal penalties for noncompliance. Although CERCLA currently
excludes petroleum from its definition of "hazardous substance," state
laws affecting the Company's operations impose clean-up liability
relating to petroleum and petroleum-related products. In addition,
although RCRA classifies certain oil field wastes as "non-hazardous,"
-14-
<PAGE>
such exploration and production wastes could be reclassified as
hazardous wastes thereby making such wastes subject to more stringent
handling and disposal requirements.
The Company has acquired leasehold interests in numerous
properties that for many years have produced oil and natural gas.
Although the Company believes that the previous owners of these
interests used operating and disposal practices that were standard in
the industry at the time, hydrocarbons or other wastes may have been
disposed of or released on or under the properties. In addition, most
of the Company's properties are operated by third parties whose
treatment and disposal or release of hydrocarbons or other wastes is
not under the Company's control. These properties and the wastes
disposed thereon may be subject to CERCLA, RCRA and analogous state
laws. Notwithstanding the Company's lack of control over properties
operated by others, the failure of the operator to comply with
applicable environmental regulations may, in certain circumstances,
adversely impact the Company.
The Federal Clean Water Act and analogous state laws require
permits to be obtained to authorize discharge into surface waters or
to construct facilities in wetland areas. With respect to certain of
its operations, the Company is required to maintain such permits or
meet general permit requirements. The Environmental Protection Agency
("EPA") has adopted regulations concerning discharges of storm water
runoff. This program requires covered facilities to obtain individual
permits, participate in a group or seek coverage under an EPA general
permit. The Company believes that it will be able to obtain, or be
included under, such permits, where necessary, and to make minor
modifications to existing facilities and operations that would not
have a material effect on the Company.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of (i) 25,000,000
shares of Common Stock, no par value; and (ii) 5,000,000 shares of
Preferred Stock, no par value, with such relative rights and
preferences as may be established by resolution of the board of
directors. As of August 14, 1998, 3,783,355 shares of Common Stock were
issued and outstanding and no shares of Preferred Stock were issued
and outstanding. For further information about the Company's
authorized capital stock, you should refer to the Company's reports
incorporated in this Prospectus by reference, as described above under
the caption"Incorporation by Reference."
-15-
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
the Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
The table sets forth certain information provided to the Company
by the following "Selling Shareholders" as of April 24, 1998, none of
whom is an executive officer or director of the Company, nor a
beneficial owner of 5% or more of the Company's Common Stock. The
Company cannot determine the number of shares of Common Stock offered
by this Prospectus nor the post-sale percentage ownership of Common
Stock for each Selling Shareholder because sales, if any, will be
conducted based on a number of factors, including the price of the
Company's Common Stock.
<TABLE>
<CAPTION>
COMMON STOCK SHARES POST-SALE
NAME OF SELLING BENEFICIALLY OWNED OFFERED BY THIS % OWNERSHIP
SHAREHOLDER AS OF APRIL 24, 1998<F1> PROSPECTUS<F2> OF COMMON STOCK<F3>
- ------------------------- ------------------------ --------------- -------------------
<S> <C> <C> <C>
Wheat First Securities
CSDN Ben S. Adams IRA
A/C #1024-4987 6,000 6,000 --
Constance M. Adams 24,000 24,000 --
Allergy & Asthma Affiliates
P/S/P Donald Ellenburg
TTEE U/A DTD 1-1-94
A/C #1101-1722 5,000 5,000 --
Robert B. Alley, DDS, TTEE
Robert B. Alley, DDS,
PA Employees Pension & P/S Trust 10,000 10,000 --
Robert B. Alley DDS, TTEE 10,000 10,000 --
Robert B. Alley DDS PA Pension
Plan & Profit Sharing & Trust,
Robert B. Alley Trustee 3,000 3,000 --
Robert C. Alley 2,000 2,000 --
-16-
<PAGE>
Apel Steel Corp. 55,000 55,000 --
Hank R. Apel 2,000 2,000 --
Ronald H. Apel 30,000 30,000 --
Ronald H. Apel FBO Kurt Apel 10,000 10,000 --
R. Bruce Avery, MD, PC, P/S
Plan Trust St. Company of
Knoxville, TTEE FBO R.
Very, MD, PC, P/S
Plan A/C #5023-3066 10,000 10,000 --
Shirley B. Avery, MD, PC P/S
Plan Trust UST Company
of Knoxville, TTEE FBO S.H.
Very, MD, PC, P/S
Plan A/C #5023-3014 10,000 10,000 --
Tracy S. Ayala 500 500 --
Paul A. Back 3,000 3,000 --
John Robert Baker 5,000 5,000 --
Howe Barnes Investments Inc.
CSDN H. Arthur Woaler
IRA #888859791 3,000 3,000 --
Stephen T. Barron & Karen A.
Eberle Jt Ten 4,000 4,000 --
David A. Barry Jr. & Gayle L.
Barry Jt Ten 2,000 2,000 --
Delaware Charter Trust FBO
Steven M. Bathgate Keogh 10,000 10,000 --
Steven M. Bathgate & Margaret M.
Bathgate Jt Ten 10,000 10,000 --
Marjorie K. Bayer TTEE FBO
Marjorie K. Bayer Trust
DTD 12/31/91 3,000 3,000 --
Beauchamp Family Trust 1,500 1,500 --
-17-
<PAGE>
Roger E. Becker 3,000 3,000 --
Donald J. Bench Trust, Donald J.
Bench Trustee 5,000 5,000 --
John T. Bible 112,000 112,000 --
Robert J. Bible 5,000 5,000 --
Tim Bible & Patricia Bible Jt Ten 6,000 6,000 --
Frank M. Boberek & Shirley A.
Boberek Jt Ten 2,000 2,000 --
Timothy A. Boggess 600 600 --
Carl J. Brakebill, III 6,000 6,000 --
David G. Brown 3,000 3,000 --
Charles C. Bruner 11,000 11,000 --
Don Bunch 15,000 15,000 --
Daniel P. Cafazzo 5,000 5,000 --
Cambridge Holdings Ltd. 7,000 7,000 --
Carl E. Campbell & Ethel B.
Campbell Jt Ten 4,000 4,000 --
J. Ed Campbell III 4,000 4,000 --
J. Ed Campbell, Jr. 6,000 6,000 --
Philip D. Campbell 3,000 3,000 --
Caribou Bridge Fund LLC 14,286 14,286 --
Michael K. Carney 9,000 9,000 --
Judy Lee Carpenter 1,500 1,500 --
John E. Carrier, Jr. 1,500 1,500 --
Donald W. Carter 1,000 1,000 --
C & G Properties 3,000 3,000 --
-18-
<PAGE>
A.R. Cantinella 26,000 26,000 --
A.R. & Marjorie Chandler TTEES
FBO Chandler Revocable Trust 3,000 3,000 --
Chucks Contract Labor Service 7,000 7,000 --
Jeffrey A. Collart TTEE FBO MPPP 1,500 1,500 --
Jeffrey A. Collart TTEE FBO Profit
Sharing & Trust 1,500 1,500 --
Jeffrey A. Collart, DDS 16,000 16,000 --
Andrew S. Combs 5,000 5,000 --
Kathy B. Combs 10,000 10,000 --
Consult & Assist Ltd. Georg
Lingenbrink 30,000 30,000 --
Wheat First Securities CSDN FBO
Henry H. Cooper
IRA A/C #2428-0875 3,000 3,000 --
Daniel W. Cotton, MD 3,000 3,000 --
Charles H. Coward 2,000 2,000 --
Maynard D. Crowell & Viola S.
Crowell Jt Ten 3,000 3,000 --
D & V Lousberg Co. 10,000 10,000 --
Arthur L. Davis & Shirley J.
Davis Jt Ten 3,000 3,000 --
Jon C. Davis & Julie A.
Caltrider Jt Ten 2,000 2,000 --
Randy C. Davis 5,000 5,000 --
John E. Depersio, MD 29,000 29,000 --
Roy Downing TTEE FBO Downing
Family Trust 3,000 3,000 --
Dale Michael Drury 11,000 11,000 --
-19-
<PAGE>
James J. Dudley 10,000 10,000 --
Robert T. Durnell 3,000 3,000 --
Daniel S. Edmunds 9,482 9,482 --
Wheat First Securities CSDN FBO
Carolyn S. Ellenburg
IRA A/C #3025-7215 1,800 1,800 --
Wheat First Securities CSDN FBO
Donald T. Ellenburg IRA
A/C #3025-7218 9,400 9,400 --
Donald T. Ellenburg, MD 11,400 11,400 --
Henry T. Ellenburg and Faye
Ellenburg 3,000 3,000 --
Henry T. Ellenburg & Faye
Ellenburg Jt Ten 5,000 5,000 --
Blaine Enderson, Trustee University
General & Trauma Surgery P/S Plan 15,000 15,000 --
Karl Fillauer CSDN FBO David T.
Fillauer 1,000 1,000 --
Karl D. Fillauer 11,000 11,000 --
Karl Michael Fillauer 1,000 1,000 --
William J. Finn 3,000 3,000 --
Alma L. Fluetsch 1,200 1,200 --
Louise Frankland & Anthony Shawn
Frankland Jt Ten 3,000 3,000 --
Alphonse J. Furino 4,300 4,300 --
Robert G. Gass 5,000 5,000 --
Laverne H. Giger 10,000 10,000 --
Lois L. Gipson TTEE UA 6/21/79
Lois L. Gipson Trust #4170 3,000 3,000 --
-20-
<PAGE>
Elizabeth G. Goodrich TTEE FBO
Elizabeth G. Goodrich Trust
DTD 8/23/89 6,000 6,000 --
Tim Gowder, TTEE OBGYN
Associates P/S 10,000 10,000 --
Thomas C. Graber 3,000 3,000 --
Raymond L. Gray 2,000 2,000 --
Wheat First Securities CSDN FBO
Bruce Green IRA
A/C #3680-3304 10,000 10,000 --
Bruce Q. Green & Betti H.
Green Jt Ten 10,000 10,000 --
Betty M. Greene 2,000 2,000 --
James G. Grier & Patricia P.
Grier Jt Ten 10,000 10,000 --
James Eldon Hall & Brenda L.
Hall Jt Ten 3,000 3,000 --
Lincoln Trust Company CSDN FBO
Charles Harbaugh
IRA A/C #60317985 4,600 4,600 --
Charles Harbaugh 5,000 5,000 --
Virgil L. Harville 6,000 6,000 --
James R. Harry 800 800 --
Elden Heinz, Jr. 3,000 3,000 --
Charles Herington TTEE FBO
Zenith Lighting Money Purchase
Pension Plan 3,000 3,000 --
Charles E. Herington 1,500 1,500 --
Wheat First Securities CSDN FBO
Hubert Hill IRA A/C #4130-6175 2,500 2,500 --
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<PAGE>
Jerry C. Hill 20,000 20,000 --
Rick Hines 20,000 20,000 --
Gregory P. Holeman 3,000 3,000 --
Charles W. Holland & Shirley T.
Holland Jt Ten 2,000 2,000 --
William S. Holmes 2,000 2,000 --
G. Scott Howard 1,500 1,500 --
Ameritrade Inc. FBO George J.
Hubsmith IRA Rollover #288 018336 3,000 3,000 --
David Hultquist 26,000 26,000 --
Kent Thomas Hultquist 5,000 5,000 --
Wheat First Securities CSDN FBO
Bobby L. Humphreys, Jr. IRA
A/C #4345-8482 2,000 2,000 --
William L. Hunter, III, TTEE
William L. Hunter P/S Plan 20,000 20,000 --
William L. Hunter, III 40,000 40,000 --
Harlan G. Irmler & Connie S.
Irmler Jt Ten 7,500 7,500 --
Ben G. Jarnagin 2,000 2,000 --
Elizabeth B. Jaynes 10,000 10,000 --
National Investor Services Corp.
FBO Mark P. Jendrek 3,000 3,000 --
Elizabeth M. Jenkins CSDN
FBO Caroline B. Jenkins 2,500 2,500 --
Elizabeth M. Jenkins 3,000 3,000 --
Allen Jenneman 6,500 6,500 --
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<PAGE>
Wheat First Securities CSDN
Edgar H. Jessee
IRA A/C #4506-5743 9,200 9,200 --
H. Kenneth Johnson II & Carol B.
Johnson Jt Ten 6,000 6,000 --
Delaware Charter Guarantee & Trust,
TTEE FBO Patricia L. Julian IRA
A/C #4636-9659 4,600 4,600 --
Wheat First Securities CSDN FBO
Richard Julian IRA A/C #4637-0236 4,000 4,000 --
Richard E. Jung 1,500 1,500 --
Wheat First Securities CSDN FBO
Virginia C. Kasper IRA
A/C #46672316 3,000 3,000 --
Dorothy C. Kehr TTEE FBO
The Kehr Family Trust DTD 7/16/91 5,000 5,000 --
Keith M. Kimbrell, TTEE
Cumberland Radiological Group, PC 10,000 10,000 --
Kerbs Law Properties 10,000 10,000 --
Terry L. Kerbs & Pamela L.
Kerbs Jt Ten 10,000 10,000 --
Max Kindler & Anna Kindler Jt Ten 3,600 3,600 --
Terry King 3,000 3,000 --
Mitzi Kopotic 200 200 --
John F. Kotsianas 3,000 3,000 --
Gerd O. Krohn 6,000 6,000 --
Sidney H. Law 2,000 2,000 --
David S. Leever & Gary W.
Leever & Forrest L. Leever Jt Ten 3,000 3,000 --
Roy A. Lemasters 1,000 1,000 --
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<PAGE>
Victoria S. Lichtman 6,000 6,000 --
Wheat First Securities CSDN FBO
Marion F. Love IRA A/C #5169-6586 15,000 15,000 --
Ameritrade Inc. CSDN FBO
Timothy G. Lundy IRA
Rollover #288 010217 3,000 3,000 --
Ralph C. Mahin TTEE FBO Lisa R.
Champlain Trust DTD 9/28/89 10,000 10,000 --
AG Edwards & Sons Inc. Custodian
for Jane C. Marquiss Sep IRA
Account 15,000 15,000 --
Debra A. Martin 400 400 --
Tara G. Martin 1,500 1,500 --
Joe Mont McAfee 6,000 6,000 --
James F. McCloud & Mildred T.
McCloud Jt Ten 5,000 5,000 --
Delaware Charter Trust CSDN FBO
Eugene C. McColley IRA 3,000 3,000 --
Eugene C. McColley 5,000 5,000 --
James M. McCoy, MD 3,000 3,000 --
Donald A. McElvaney & Mignon
McElvaney Jt Ten 3,000 3,000 --
Alfred F. McFee 4,000 4,000 --
George B. McGuffin 10,000 10,000 --
Dashiell P. McKay 3,000 3,000 --
James T. McKay 35,150 35,150 --
Wheat First Securities CSDN FBO
James T. McKay Sep IRA
A/C #5516-6065 3,000 3,000 --
T.E. McMaster 3,000 3,000 --
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<PAGE>
Thomas H. Metcalf TTEE OBGYN
Associates of Oak Ridge 6,000 6,000 --
James E. Milas IRA Rollover Trust
Old Kent Bank, TTEE
U/A/D 9/12/94 6,000 6,000 --
George E. Miller & Karen E.
Miller Jt Ten 1,500 1,500 --
Frederick H. & Wanda F. Minks
TTEES FBO The Minks Family
Revocable Living Trust
DTD 12/1/92 5,000 5,000 --
Roswell & Wanda Monroe Family
Trust DTD 1/31/90 Roswell &
Wanda Monroe TTEES 3,000 3,000 --
Niel Montagino 4,000 4,000 --
Jack C. Moore 1,500 1,500 --
J. Henry Morgan 6,000 6,000 --
William R. Morton & Mary Lynn
Morton 2,500 2,500 --
Thomas N. Murphy 3,000 3,000 --
Wheat First Securities CSDN FBO
Glen E. Needham IRA
A/C #5930-3495 2,000 2,000 --
Eugene L. Neidiger 11,500 11,500 --
Regina L. Neidiger 2,900 2,900 --
Gary Neill 3,000 3,000 --
NI Securities Corp. 1,200 1,200 --
Michael L. Nixon & Ginger S.
Nixon Jt Ten 3,000 3,000 --
William J. Nooney 3,000 3,000 --
John C. Nowell 27,000 27,000 --
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<PAGE>
Tom Owens & Phyllis J. Owens
Jt Ten 3,000 3,000 --
Oyen Family Joint Trust William
Oyen & Coralyn S. Oyen Trustees 6,000 6,000 --
Andrew S. Pakes 400 400 --
Palm States Equities 9,625 9,625 --
Robert L. Parrish 8,000 8,000 --
Perfection Chain Products, Inc. 6,000 6,000 --
Wheat First Securities, CSDN FBO
Edward V. Pershing IRA
A/C #6297-5767 4,000 4,000 --
Natasha Persons 3,000 3,000 --
Ameritrade Inc. CSDN FBO Roy
Persons IRA #288 002884 8,000 8,000 --
Scott W. Peters, MD 2,500 2,500 --
John Christian Peterson 3,000 3,000 --
Anthony B. Petrelli 11,000 11,000 --
Albert M. Petty & Cathy E. Petty
Jt Ten 10,000 10,000 --
Will T. Pflanze, MD 2,000 2,000 --
Wheat First Securities CSDN FBO
Barbara M. Phillips IRA
A/C #6327-4580 5,000 5,000 --
Ameritrade Inc. CSDN FBO
David G. Phillips IRA
Rollover #288 013527 3,000 3,000 --
Wheat First Securities CSDN FBO
William E. Phillips IRA
A/C #6341-5805 5,600 5,600 --
Richard J. Piccoli 3,000 3,000 --
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<PAGE>
Thomas F. Pierson PC 1,500 1,500 --
Ameritrade Inc. CSDN FBO
Beverly A. Pitman IRA
Rollover #288 016363 3,000 3,000 --
G. Keith Purkey 10,000 10,000 --
AG Edwards & Sons Inc. C/F
Keith Purkey IRA
A/C #669 002459 030 1,000 1,000 --
AG Edwards & Son Inc. C/F
Treva H. Purkey IRA
A/C #669 002475 030 1,000 1,000 --
Stanley Ranch 4,000 4,000 --
David B. Reath, Trustee,
David B. Reath Retirement Plan 9,000 9,000 --
Fuad Reveiz 6,000 6,000 --
Vincent E. Rook 3,000 3,000 --
John M. Royer, MD 10,000 10,000 --
Claude L. Royston 6,000 6,000 --
Lawrence H. Saumers TTEE FBO
Lawrence H. Saumers Trust
DTD 12/31/91 6,000 6,000 --
David Saylor & Jackie Saylor Jt Ten 6,000 6,000 --
George W. Schanen TTEE FBO
George W. Schanen Revocable Trust 4,000 4,000 --
James K. Scruggs 5,000 5,000 --
William A. (Pat) Scruggs 21,000 21,000 --
Janet M. Searl 3,000 3,000 --
Walter R. Secosky 3,000 3,000 --
Walter R. Secosky TTEE
Secosky & Johnson PA PSP & Trust 6,000 6,000 --
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<PAGE>
Walter R. Secosky, DDS 6,000 6,000 --
Lincoln Trust Company CSDN FBO
Dick Sena IRA A/C 60057159 1,175 1,175 --
Dick L. Sena 3,000 3,000 --
Douglas Shoffner & Glenda
Shoffner Jt Ten 20,000 20,000 --
Kenneth B. Smith & Rowena W.
Smith Jt Ten 3,000 3,000 --
Robert G. Smith 10,000 10,000 --
Nelson Edward Snellenberger II 4,000 4,000 --
Larrimett J. Spies 5,000 5,000 --
Nancy E. Sprague TTEE FBO
Nancy E. Sprague Trust DTD 5/26/93 7,000 7,000 --
Karen M. Stanhope TTEE FBO
Karen M. Stanhope Revocable
Trust DTD 5/13/92 7,000 7,000 --
Carla G. Stewart 7,000 7,000 --
Wheat First Securities CSDN FBO
Cory T. Strobel IRA A/C #7599-1786 6,200 6,200 --
Patrick R. Sughroue 10,000 10,000 --
Brenda B. Suttles 400 400 --
Wheat First Securities CSDN FBO
David H. Sutton Sep/IRA
A/C #7639-2712 2,000 2,000 --
Richard A. Swanson & Marilyn E.
Swanson Jt Ten 10,000 10,000 --
Michael W. Swift & Leslie C.
Swift Jt Ten 3,000 3,000 --
Alan L. Talesnick 3,000 3,000 --
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<PAGE>
Darrell Thomas & Beth
Thomas Jt Ten 3,000 3,000 --
William F. Thomas & Bonnie M.
Thomas Jt Ten 3,000 3,000 --
Wheat First Securities CSDN Roy M.
Thompson IRA U/A
DTD 12/11/96 A/C #7800-9429 4,000 4,000 --
Derry M. Thompson 69,291 69,291 --
Dina Ticktin 3,000 3,000 --
Harold Ticktin TTEE FBO Harold
Ticktin Second Restated Living Trust 10,000 10,000 --
Robert Ticktin 5,000 5,000 --
Harold Ticktin TTEE FBO Harold
Ticktin Second Restated Living Trust 6,000 6,000 --
Beverly A. Tripple & Harvey D.
Tripple Jt Ten 3,000 3,000 --
Frank S. Tsakeres 5,000 5,000 --
Robert C. Tucker, Jr. 2,000 2,000 --
John J. Turk, Jr. 1,626 1,626 --
David L. Tuttle 1,000 1,000 --
Wheat First Securities CSDN FBO
Darlene H. Vickers
IRA A/C 8038-7728 6,000 6,000 --
Wheat First Securities CSDN FBO
Marvin H. Vickers
IRA A/C #8039-2774 8,000 8,000 --
Frank W. Visciano & Lorraine
Visciano Jt Ten 3,000 3,000 --
Paul Wakefield 4,000 4,000 --
Paul H. Wakefield, MD 6,000 6,000 --
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<PAGE>
Margaret Walker 10,000 10,000 --
William W. Walker 1,500 1,500 --
Elizabeth Wall 10,000 10,000 --
Wheat First Securities CSDN
Joseph Wallace IRA A/C #6297-5748 5,000 5,000 --
Wheat First Securities CSDN FBO
Robert E. Ward IRA A/C #8155-7863 3,000 3,000 --
Robert E. Warner & Patricia J.
Warner Jt Ten 1,500 1,500 --
Todd Wedel 10,000 10,000 --
Wheat First Securities CSDN FBO
Willie Welch IRA A/C #8256-4058 2,000 2,000 --
Robert Charles Werts & Patricia
Schultz Werts Jt Ten 4,000 4,000 --
David W. Whalen and Sherry
Ann Heater 2,000 2,000 --
Wheat First Securities CSDN
Edgar H. Jessee IRA
R/O A/C #4506-5743 800 800 --
Ward S. Whelchel 6,000 6,000 --
Alan Whiton, MD, TTEE Alan
Whiton MD PS Plan 5,000 5,000 --
O. Lee Wilson, III 2,000 2,000 --
Carol Wimberly 6,000 6,000 --
Gregg A. Woodall & Sherrye L.
Woodall Jt Ten 2,000 2,000 --
Delaware Charter Guaranty & Trust
TTEE FBO Douglas A. Yoakley
IRA A/C #8638-0530 2,000 2,000 --
-30-
<PAGE>
Michael J. Zurhellen 5,000 5,000 --
----- -----
Total 1,834,235 1,834,235 --
- ---------------------
<FN>
<F1> Pursuant to SEC regulations, shares are deemed to be
"beneficially owned" by a person if such person, directly or
indirectly, has or shares the power to vote or dispose of such
shares or the right to acquire the power to vote or dispose of
such shares within 60 days, including any right to acquire shares
through the exercise of any option, warrant or right, regardless
of whether such person has any economic interest in such shares.
<F2> The shares covered by this Prospectus previously were issued to
the above Selling Shareholders in private placement transactions.
The shares are now being registered pursuant to an agreement
between the Company and the Selling Shareholders. The Selling
Shareholders may, but are not required to, and may have no present
intention to, sell any of the shares being registered hereby.
However, this column represents the total number of shares each
Selling Shareholder may offer for sale pursuant to this Prospectus.
<F3> The above table represents shares believed by the Company, after
reasonable investigation, to be "beneficially owned" by the
persons indicated. It is possible that certain persons listed
above beneficially own additional shares held in street name.
The Company believes that none of the above persons beneficially
own more than 5% of the outstanding common stock of the Company.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
GENERAL. The Company anticipates that sales, if any, will be
made through normal market transactions. While not anticipated,
Selling Shareholders are not prohibited from selling shares from time
to time, in one or more transactions, that may involve block
transactions, on The Nasdaq SmallCap Market, the Boston Stock Exchange
or otherwise, at market prices prevailing at the time of sale, at
negotiated prices, or at fixed prices, that may be changed. Such sales
may be effected by the Selling Shareholders directly or through
brokers, agents, underwriters or dealers.
The Selling Shareholders are not restricted as to the number of
or price at which Shares may be sold at any one time. It is possible
-31-
<PAGE>
that a significant number of Shares could be sold at the same time,
which may have an adverse effect on the market price of the Common
Stock. There are no contractual arrangements between any Selling
Shareholder and the Company with regard to the sale of the Shares.
Each Selling Shareholder will be subject to the applicable provisions
of the Exchange Act and the rules and regulations thereunder, as well
as applicable state securities laws.
PROSPECTUS SUPPLEMENT. Upon being notified by a Selling
Shareholder that a particular offer to sell Shares is made where the
Selling Shareholder has made a material arrangement with a broker-
dealer for the sale of the Shares through a block trade, special
offer, exchange distribution, secondary distribution or any block
trade has taken place, to the extent required pursuant to Rule 424
under the Securities Act, the Company will file a Prospectus
Supplement with the SEC. The Prospectus Supplement will set forth (i)
the name of each Selling Shareholder; (ii) the number of shares
involved; (iii) the price at which the shares were sold; (iv) the
names of any participating brokers, dealers, agents or member firms
involved; (v) any discounts, commissions and other items paid as
compensation from, and the resulting net proceeds to, the Selling
Shareholder; and (vi) other facts material to the transaction.
DIRECT SALES BY SELLING SHAREHOLDERS. The Company anticipates
that the Selling Shareholders will sell shares over an extended period
of time through customary brokerage channels in which a broker
solicits purchasers. The Shares may be sold directly by the Selling
Shareholder to institutional investors or others, who may be deemed to
be underwriters within the meaning of the Securities Act with respect
to any resale thereof. To the extent required by the Securities Act
and upon notification by the Selling Shareholder, the terms of any
such sales, including the terms of any bidding or auction process,
will be described in a Prospectus Supplement relating to such sale.
SALES BY UNDERWRITERS. If a Selling Shareholder utilizes
underwriters in a sale, the offered shares may be acquired by the
underwriters for their own account and resold from time to time in one
or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of
sale. The shares may be offered to the public either through
underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as underwriters.
The underwriter or underwriters with respect to a particular
underwritten offering to be named in a Prospectus Supplement relating
to such offering and, if an underwriting syndicate is used, the
managing underwriter or underwriters, will be set forth on the cover
of such Prospectus Supplement. Unless otherwise set forth in the
-32-
<PAGE>
Prospectus Supplement relating thereto, the obligations of the
underwriters to purchase the Offered Securities will be subject to
conditions precedent and the underwriters will be obligated to
purchase all of the Offered Securities if any are purchased.
SALES BY DEALERS. If a Selling Shareholder utilizes dealers in
the sale of Shares in respect of which this Prospectus is delivered,
the Selling Shareholder will sell such Shares to the dealers as
principals. The dealers may then resell such Shares to the public at
varying prices to be determined by such dealers at the time of resale.
The names of the dealers and the terms of the transaction will be set
forth in a Prospectus Supplement relating thereto. The Selling
Shareholder also may loan or pledge the Shares to a broker-dealer and
the broker-dealer may sell the Shares so loaned or upon a default the
broker-dealer may effect sales of the pledged Shares pursuant to this
Prospectus.
SALES BY AGENTS. Other than in normal market transactions, if a
Selling Shareholder uses an agent, the agent will be named, and the
terms of the agency and any commissions will be set forth, in a
Prospectus Supplement relating thereto. Unless otherwise indicated in
the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
EXPENSES. The Company will bear all costs and expenses of the
registration of the Shares under the Securities Act and certain state
securities laws, other than fees of counsel for the Selling
Shareholder and any discounts or commissions payable with respect to
sales of the Shares. The Selling Shareholder will pay any transaction
costs associated with effecting any sales that occur.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for
the Company by Patrick R. Sughroue, P.C., of Grand Rapids, Michigan.
EXPERTS
The consolidated financial statements incorporated in this
Prospectus by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997, have been audited by Plante
& Moran, LLP, independent public accountants, as stated in their
report that also is incorporated in this Prospectus by reference and
have been so incorporated in reliance upon the reports of such firm
given upon its authority as experts in accounting and auditing.
-33-
<PAGE>
The oil and gas reserves incorporated in this Prospectus by reference
from the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997, have been prepared by Walbe & Associates, Inc.,
independent geologist (with respect to reserves as of December 31, 1996),
and Wright & Company, Inc., independent petroleum consultant (with
respect to reserves as of December 31, 1997), as stated in their
respective reports that also are incorporated in this Prospectus by
reference and have been so incorporated in reliance upon the reports
of such firms given upon their authority as experts with respect to
those matters contained in the reports.
INDEMNIFICATION
The Company's Charter provides that a director shall not be
personally liable to the Company or its shareholders for monetary
damages for breach of the director's fiduciary duties. However,
monetary damages may not be eliminated for (i) breaches of the
director's duty of loyalty to the Company or its shareholders, (ii)
acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, or (iii) liability under
the Tennessee Business Corporation Act.
The Company's Bylaws provide that the Company is required to
indemnify directors and officers of the Company to the full extent
permitted by the laws of the State of Tennessee. The board of
directors is authorized to cause the Company to indemnify individuals
who are not officers and directors of the Company. The Company's
Bylaws further permit the board of directors to advance expenses of
defense to directors and officers of the Company.
Pursuant to the Placement Agent Agreement, dated September 10,
1997, as amended, between the Company and Neidiger, Tucker, Bruner,
Inc., the Company has agreed to indemnify each Selling Shareholder
against all loss, claim, damage, expense or liability to which each
Selling Shareholder may become subject under the Securities Act, the
Exchange Act or otherwise, arising from the Registration Statement, of
which this Prospectus is a part. Similarly, each Selling Shareholder
has agreed to severally, but not jointly, indemnify the Company, its
officers and directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act, or
Section 20(a) of the Exchange Act, against all loss, claim, damage or
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Securities Act, the Exchange
Act or otherwise, arising from information furnished in writing by the
Selling Shareholder or on the Selling Shareholder's behalf for
specific inclusion in the Registration Statement.
-34-
<PAGE>
In connection with the Company's initial public offering, the
Company agreed to indemnify the underwriters against certain civil
liabilities, including liabilities under the federal securities laws.
If such indemnification is unavailable or insufficient, the Company
and the underwriters agreed to damage contribution arrangements based
upon the relative benefits received from the initial public offering
and the relative fault resulting in damages. In addition, certain
representatives of the underwriters who received warrants in the
initial public offering are entitled to indemnification from the
Company against certain civil liabilities, including liabilities under
the federal securities laws.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the registrant pursuant to the foregoing
provisions, the registrant has been informed that in the opinion of
the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable.
-35-
<PAGE>
==============================================================================
No person has been authorized to give any information or to make any
representation other than as contained or incorporated by reference in
this Prospectus in connection with the securities offered hereby. If
given, such information or representation should not be relied upon as
having been authorized.
This Prospectus does not constitute an offer of any securities other than
those described on the cover page or an offer to sell or a solicitation
of an offer to buy within any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation within such jurisdiction.
Neither the delivery of this Prospectus nor any sales made pursuant to
this Prospectus shall under any circumstances create any implication
that there has been no change in the information contained herein or in
the affairs of Energy Search, Incorporated since the date of this
Prospectus.
TABLE OF CONTENTS
Available Information. . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation by Reference . . . . . . . . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Description of Capital Stock . . . . . . . . . . . . . . . . . . . .12
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . .12
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . .12
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . .28
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .30
<PAGE>
1,834,235 Shares of
Common Stock
[ENERGY SEARCH INCORPORATED LOGO]
==============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses payable by the Company in connection with the
issuance and distribution of the securities being registered are
estimated to be:
<TABLE>
<CAPTION>
<S> <C> <C>
Registration Fee . . . . . . . . . . . . . . $ 4,870.00
Legal Fees and Expenses. . . . . . . . . . . 5,000.00
Accountant's Fees and Expenses . . . . . . . 2,500.00
Printing Fees and Expenses . . . . . . . . . 500.00
TOTAL. . . . . . . . . . . . . . . . . . . . $12,870.00
</TABLE>
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Charter and Bylaws generally require the Company to
indemnify its directors and officers to the fullest extent permissible
under Tennessee law against all expenses (including attorneys' fees)
incurred in any proceeding (whether or not such proceeding was by or
in the right of the Company, a subsidiary or otherwise) in which they
were a party because of their position as a director or officer of the
Company or because they served at the request of the Company as a
director, officer, employee or agent of another corporation or entity.
The provision also provides for the advancement of litigation expenses
at the request of a director or officer under certain circumstances.
Tennessee law generally permits indemnification of expenses
incurred in the defense or settlement of a derivative or third-party
action, provided that there is a determination by a majority vote of
(a) a quorum of disinterested directors, or (b) if a quorum cannot be
obtained, by a majority vote of a committee of the board which
consists of at least two disinterested directors, or (c) if there are
no such directors or committee or if such directors or committee so
directs, by independent special legal counsel in a written opinion or
(d) by the shareholders, but shares owned by or voted under the
control of directors who are parties to the proceeding may not vote on
the determination, that the person seeking indemnification acted in
good faith and in a manner the person reasonably believed to be in (in
II-1
<PAGE>
the case of action in an official capacity) or not opposed to (in the
case of action other than in an official capacity) the best interests
of the corporation. Without court approval, however, no
indemnification may be made in respect of any derivative action in
which the person is adjudged liable to the corporation. Tennessee law
requires indemnification of expenses when the individual being
indemnified has successfully defended the action on the merits or
otherwise.
Item 16. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
3.1 Amended and Restated Charter of the Registrant<F1>
3.2 Bylaws of the Registrant<F2>
4.1 Specimen of Common Stock Certificate<F3>
4.2 Specimen of Redeemable Series A Common Stock Purchase
Warrant Certificate<F3>
4.3 Specimen of Underwriters' Warrant Certificate<F3>
4.4 Charter (See Exhibit 3.1)
4.5 Bylaws (See Exhibit 3.2)
5 Opinion of Patrick R. Sughroue, P.C.<F4>
23.1 Consent of Independent Accountant, Plante & Moran, LLP, CPA
23.2 Consent of Independent Petroleum Consultant, Wright &
Company, Inc.
23.3 Consent of Patrick R. Sughroue, P.C. (included in Exhibit 5.1)
23.4 Consent of Independent Geologist, Walbe & Associates, Inc.
- ----------------
[FN]
<F1> Previously filed with the Company's Definitive Proxy Statement
filed on April 28, 1998 with the Securities and Exchange
Commission, and here incorporated by reference.
<F2> Previously filed with the Company's Quarterly Report on Form
10-QSB filed on August 14, 1998 with the Securities and
Exchange Commission, and here incorporated by reference
<F3> Previously filed with the Company's Registration Statement on
Form SB-2 (Registration No. 333-12755) filed with the Securities and
Exchange Commission, and here incorporated by reference.
<F4> Previously filed with the Company's Registration Statement on
Form S-3 (Registration No. 333-58407) filed with the Securities
and Exchange Commission, and here incorporated by reference.
</FN>
II-2
<PAGE>
Item 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to
this registrant statement;
(i) To include any prospectus required by
Section 10(a) (3) of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts
or events arising after the effective date of the
registration statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registrant statement; and
(iii) To include any material information
with respect to the plan of distribution not
previously disclosed in the registration statement
or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities
offered therein, and the offering of such securities at
that time shall be deemed to be the initial BONA FIDE
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
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 the City of Knoxville,
State of Tennessee, on September 1, 1998
ENERGY SEARCH, INCORPORATED
By /S/ RICHARD S. COOPER
Richard S. Cooper
Its President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
September 1, 1998 /S/ CHARLES P. TORREY, JR.
Charles P. Torrey, Jr.
Chief Executive Officer (Principal
Executive Officer) and Director
September 1, 1998 /S/ RICHARD S. COOPER
Richard S. Cooper
President and Director
September 1, 1998 /S/ ROBERT L. REMINE
Robert L. Remine
Secretary, Treasurer (Principal
Financial and Accounting Officer),
and Director
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
registration statement on Form S-3 (Amendment No. 1) of our report dated
February 20, 1998, on the financial statements of the Company for the years
ended December 31, 1996 and December 31, 1997 included in the Company's
annual report on Form 10-KSB for the year ended December 31, 1997. We also
consent to the reference to our firm under the caption "Experts" in the
Company's registration statement on Form S-3 (Amendment No. 1).
/S/ PLANTE & MORAN, LLP
PLANTE & MORAN, LLP
August 31, 1998
Grand Rapids, Michigan
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PETROLEUM CONSULTANT
Wright & Company, Inc., (Wright) hereby consents to the incorporation
by reference in this registration statement on Form S-3 (Amendment No. 1)
of our report dated March 4, 1998, on the oil and gas reserves of the
Company as of January 1, 1998 included in the Company's annual report on
Form 10-KSB for the year ended December 31, 1997. We also consent to the
reference to our firm under the caption "Experts" in the Company's
registration statement on Form S-3 (Amendment No. 1).
WRIGHT & COMPANY, INC.
By: /S/D. RANDALL WRIGHT
D. Randall Wright
President
Wright & Company, Inc.
Brentwood, TN
September 1, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT GEOLOGIST
I hereby consent to the incorporation by reference in this
registration statement on Form S-3 (Amendment No. 1) of my report dated
August 31, 1997, on the oil and gas reserves of the Company as of December
31, 1996 included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1997. I also consent to the reference to me under
the caption "Experts" in the Company's registration statement on Form S-3
(Amendment No. 1).
/S/ WALBE & ASSOCIATES, INC.
WALBE & ASSOCIATES, INC.
September 1, 1998
Charleston, West Virginia
