As filed with the Securities and Exchange Commission on April 25, 2003
Registration No. 333- ______
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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HARKEN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 95-2841597
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
580 WestLake Park Boulevard, Suite 600
Houston, Texas 77079
(281) 504-4000
(Address, including zip code, and telephone number including area code, of
registrant's principal executive offices)
Anna M. Williams
Executive Vice President-Finance
and Chief Financial Officer
Harken Energy Corporation
580 WestLake Park Boulevard, Suite 600
Houston, Texas 77079
(281) 504-4000
(Name and address, including zip code, and telephone number including area
code, of agent for service)
Copy to:
Amar Budarapu
Baker & McKenzie
2001 Ross Avenue, Suite 2300
Dallas, Texas 75201
(214) 978-3000
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Approximate date of commencement of proposed sale of securities to the
public: From time to time 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 following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SHARES TO BE AGGREGATE OFFERING AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PRICE PER SECURITY (2) PRICE (2) FEE (2)
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Common Stock, par value $0.01 per share (3) 16,874,890 $ 0.33 $ 5,568,713.70 $ 451
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
registration statement covers any additional shares of common stock of
Harken Energy Corporation that become issuable by reason of any stock
split, stock dividend or similar transaction.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based on the average of the high and low sales
prices of the common stock as reported by the American Stock Exchange on
April 21, 2003.
(3) Includes preferred stock purchase rights attached thereto, for which no
separate fee is payable pursuant to Rule 457(i).
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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, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and neither the selling
stockholders we are not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED APRIL 25, 2003
PROSPECTUS
16,874,890 Shares of Common Stock
[LOGO OF HARKEN ENERGY CORPORATION]
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We have prepared this prospectus to allow the selling stockholders we
identify in this prospectus to sell from time to time of up to an aggregate of
16,874,890 shares of our common stock. The selling stockholders' shares of
common stock being offered for sale include preferred stock purchase rights
attached to the common stock under our stockholder rights plan. We will not
receive any of the proceeds from the sale of common stock by the selling
stockholders.
The shares of common stock covered by this prospectus may be sold at
market prices prevailing at the time of sale or at negotiated prices. The
selling stockholders may effect such transactions by selling the shares to or
through broker-dealers. These broker-dealers, if used, may receive discounts,
concessions or commissions from the selling stockholders or from the purchaser
of the shares. The selling stockholders will receive the purchase price of the
shares of stock sold less any such discounts, concessions or commissions. The
selling stockholders will be responsible for any such discounts, concessions or
commissions.
Our common stock is listed for trading on the American Stock Exchange
under the trading symbol "HEC." On April 21, 2003, the last reported sales price
of our common stock on the American Stock Exchange was $0.33 per share.
An investment in shares of our common stock involves risks. You should
carefully consider the risk factors beginning on page 4 of this prospectus prior
to investing in our common stock.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is ___________, 2003.
TABLE OF CONTENTS
Page
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THE COMPANY................................................................. 3
THE OFFERING................................................................ 3
USE OF PROCEEDS............................................................. 3
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS.................................. 3
RISK FACTORS................................................................ 4
INFORMATION ABOUT THE SELLING STOCKHOLDERS.................................. 18
PLAN OF DISTRIBUTION........................................................ 21
LEGAL MATTERS............................................................... 23
EXPERTS..................................................................... 23
WHERE YOU CAN FIND MORE INFORMATION......................................... 23
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You should rely only on the information in this prospectus and the
additional information described under the heading "Where You Can Find More
Information." We have not authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. Neither the selling stockholders nor we
are making an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information in this
prospectus and the additional information described under the heading "Where You
Can Find More Information" were accurate on the date on the front cover of the
prospectus only. Our business, financial condition, results of operations and
prospects may have changed since that date.
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2
THE COMPANY
Our company explores for, develops and produces oil and gas both
domestically and internationally. Our domestic operations are primarily located
in the onshore and offshore Gulf Coast regions of South Texas and Louisiana, in
portions of West Texas and the Texas Panhandle. Our international operations are
primarily concentrated in Colombia, Peru and Panama.
Our company was incorporated in 1973 in the State of California and
reincorporated in 1979 in the State of Delaware. Our principal offices are
located at 580 WestLake Park Boulevard, Suite 600, Houston Texas 77079, and our
telephone number is (281) 504-4000.
Unless the context otherwise requires, references to "Harken," "we,"
"us," "our" or the "Company" refer to Harken Energy Corporation and its
subsidiaries.
THE OFFERING
This prospectus relates to 16,874,890 shares of our common stock that
may be offered from time to time by the selling stockholders. These shares of
common stock include preferred stock purchase rights attached to such common
stock under our stockholder rights plan. Registration of the common stock does
not necessarily mean that all or any portion of such shares will be offered for
sale by the selling stockholders.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of common
stock offered by this prospectus.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
We believe that certain statements contained or incorporated by
reference in this prospectus are "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 and are considered
prospective. The following statements are or may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995:
. statements before, after or including the words "may," "will," "could,"
"should," "believe," "expect," "future," "potential," "anticipate,"
"intend," "plan," "estimate" or "continue" or the negative or other
variations of these words; and
. other statements about matters that are not historical facts.
We may be unable to achieve the future results covered by the
forward-looking statements. The statements are subject to risks, uncertainties
and other factors that could cause actual results to differ materially from the
future results that the statements express or imply. See "Risk Factors." Please
do not place undue reliance on these forward-looking statements, which speak
only as of the date of this prospectus.
3
RISK FACTORS
Investing in our common stock involves a high degree of risk. Prior to
making an investment decision, you should carefully consider all of the
information in this prospectus and evaluate the following risk factors.
RISKS ASSOCIATED WITH OUR FINANCIAL CONDITION:
If we do not continue to meet the listing requirements of the American Stock
Exchange, our common stock could be delisted.
The American Stock Exchange requires companies to fulfill certain
requirements in order for their shares to continue to be listed. The securities
of a company may be considered for delisting if the company fails to meet
certain financial thresholds, including if the company has stockholders' equity
of less than $6 million and has sustained losses from continuing operations
and/or net losses in our five most recent fiscal years. As of December 31, 2002,
our stockholders' equity was $5.1 million and, as discussed below, we have
sustained losses in each of our last five fiscal years. As of March 31, 2003,
Harken's stockholders' equity has increased to an amount over $6.0 million.
There can be no assurance that our stockholders' equity will remain above $6.0
million or that we will not report additional losses in the future. If these
aspects of our financial condition do not improve, our common stock may be
considered for delisting.
If our common stock is delisted from the American Stock Exchange for
any reason and we are deemed not to have used our "best efforts" to maintain
such listing, we will be in default under our outstanding 5% European Notes and,
as a result of cross-default provisions, our other debt obligations. Any default
under our debt agreements will result in substantially all our debt obligations
becoming due in full. We do not have sufficient funds to pay our debt
obligations in cash and there is no assurance we will obtain such funds if such
debt became due, which would result in a material adverse effect on our
financial position and results of operations. The potential delisting of our
common stock could adversely affect our ability to raise capital in the future
by issuing common stock or securities convertible into common stock.
We have a history of losses and may suffer losses in the future.
We have reported losses in each of the last five fiscal years,
including a net loss of approximately $9.8 million for the year ended December
31, 2002. We have reported cumulative net losses of approximately $272 million
over the last five fiscal years. Our ability to generate net income is strongly
affected by, among other factors, our ability to successfully drill our
undeveloped reserves as well as the market price of crude oil and natural gas.
During the fourth quarter of 2000, we recorded a writedown of our oil and gas
properties of approximately $156 million primarily due to a significant
reduction in our proved undeveloped reserves in Colombia following the drilling
of a non-productive well. If we are unsuccessful in drilling productive wells or
the market price of crude oil and natural gas declines, we may report additional
losses in the future. Consequently, future losses may adversely affect our
business, prospects, financial condition, results of operations and cash flows.
If we cannot obtain stockholder approval for the issuance of shares of common
stock to redeem certain of our existing convertible notes and we are unable to
pay cash at maturity, we could be subject to potential delisting of our common
stock from the American Stock Exchange.
The issuance of a number of shares that is greater than 20% of our
currently outstanding shares of common stock requires stockholder approval as a
condition to listing such additional shares on the American Stock Exchange.
Currently, we do not have sufficient funds to pay our 5% Convertible Notes
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(referred to as the Benz Convertible Notes) and the promissory note issued to
Waverley Investments Limited that matures in September 2003 (referred to as the
Waverley Note) in cash upon maturity, or to otherwise redeem or repurchase these
notes. We also have the right to redeem for shares of common stock approximately
$5.7 million principal amount of the Benz Convertible Notes that mature in
November 2003 and $1.7 million principal amount of the Waverley Note. The exact
number of shares which may be issued in connection with redemptions of the Benz
Convertible Notes and the Waverley Note will depend upon the number of shares of
common stock outstanding at that time, the amount of notes to be redeemed for
common stock and the average market price of our common stock at the time of the
redemptions. The redemption for common stock of the notes may result in the
issuance of a number of shares that is greater than 20% of our currently
outstanding shares of common stock. Consequently, the rules of the American
Stock Exchange may require additional stockholder approval as a condition to
listing such additional shares on that exchange.
If we do not obtain required stockholder approvals, our common stock
could be subject to potential delisting from the American Stock Exchange. See
also "- If we do not continue to meet the listing requirements of the American
Stock Exchange, our common stock could be delisted."
We may have an insufficient number of authorized shares of common stock to
redeem convertible notes due in 2003, which would cause us to restructure the
notes or to pay cash at maturity - neither of which we may be able to
accomplish.
We currently have 225 million shares of common stock authorized for
issuance. As of March 31, 2003, approximately 99 million shares were outstanding
and 51 million shares were reserved for issuance. There are approximately 76
million shares of common stock available for issuance. See "-Risks associated
with market conditions - we may issue additional shares of common stock that may
dilute the value of our common stock and adversely affect the market price of
our common stock."
We have given a notice of redemption for the 5% European Notes on May
26, 2003 for shares of common stock at an approximate redemption price of $0.35.
After giving effect to this planned redemption of the 5% European Notes, the
redemption of the Benz Convertible Notes and the Waverley Note may result in an
issuance of shares that is in excess of the amount of shares currently
authorized for issuance. We have included a proposal to increase our authorized
common stock in the preliminary proxy statement for our annual stockholders
meeting scheduled to be held later this year. Absent receiving stockholder
approval at a meeting, we would be required to otherwise restructure the
then-outstanding notes prior to maturity or pay cash at maturity if, at the time
of redemption, the amount of shares required for redemption of those notes
exceeds our then-authorized shares. There can be no assurance that, in such an
event, we will be successful in restructuring our obligations under the
outstanding notes prior to maturity. We currently do not have sufficient funds
to pay such notes in cash upon maturity and it is unlikely that we will have
such funds prior to maturity. If we are unsuccessful in redeeming the
then-outstanding Benz Convertible Notes and Waverley Note prior to maturity for
common stock, we would experience a material adverse impact on our financial
position and results of operations.
The table below reflects the number of shares of common stock required
to be issued in order to redeem our currently outstanding convertible notes due
in 2003 (using the approximate $0.35 redemption price per share of common stock
for the 5% European Notes and assuming a redemption price of $0.20 per share of
common stock for the Benz Convertible Notes and the Waverley Note):
Amount Shares of Common Stock to be
Indebtedness Outstanding Issued in Redemption Maturity Date
-------------------------- ------------ ---------------------------- -----------------
5% European Notes $ 14,110,000 47,845,947 May 26, 2003
Waverley Note $ 1,705,000 8,525,000 September 1, 2003
Benz Convertible Notes $ 5,668,708 32,595,071 November 26, 2003
5
Our financial condition may suffer if estimates of our oil and gas reserve
information are adjusted, and fluctuations in oil and gas prices and other
factors affect our oil and gas reserves.
Our oil and gas reserve information is based upon criteria mandated by
the Securities and Exchange Commission (referred to as the SEC), and reflects
only estimates of the accumulation of oil and gas and the economic
recoverability of those volumes. Our future production, revenues and
expenditures with respect to such oil and gas reserves will likely be different
from estimates, and any material differences may negatively affect our business,
financial condition and results of operations.
Petroleum engineering is a subjective process of estimating underground
accumulations of oil and gas that cannot be measured in an exact manner.
Estimates of economically recoverable oil and gas reserves and of future net
cash flows necessarily depend upon a number of variable factors and assumptions.
Because all reserve estimates are to some degree subjective, each of
the following items may prove to differ materially from that assumed in
estimating reserves:
. the quantities of oil and gas that are ultimately recovered,
. the production and operating costs incurred,
. the amount and timing of future development expenditures, and
. future oil and gas sales prices.
Furthermore, different reserve engineers may make different estimates
of reserves and cash flow based on the same available data.
The estimated discounted future net cash flows described in our Annual
Report on Form 10-K for the year ended December 31, 2002 should not be
considered as the current market value of the estimated oil and gas reserves
attributable to our properties from proved reserves. Such estimates are based on
prices and costs as of the date of the estimate, in accordance with SEC
requirements, while future prices and costs may be materially higher or lower.
The SEC requires that we report our oil and natural gas reserves using the price
as of the last day of the year. Using lower values in forecasting reserves will
result in a shorter life being given to producing oil and natural gas properties
because such properties, as their production levels are estimated to decline,
will reach an uneconomic limit, with lower prices, at an earlier date. There can
be no assurance that a decrease in oil and gas prices or other differences in
our estimates of our reserve will not adversely affect our financial condition
and results of operations.
We may require future waivers and amendments to our bank credit facility
covenant requirements.
Our bank credit facility with Guaranty Bank, FSB requires certain of
our subsidiaries (referred to as the Borrowers), to maintain certain financial
covenant ratios and requirements, as calculated on a quarterly basis. The
Guaranty Bank facility requires the Borrowers, among other things, to maintain a
maximum liability to equity ratio (as defined in the agreement) of not more than
1.0 to 1.0, a current ratio (as defined in the agreement) of not less than 1.0
to 1.0, and a debt service coverage ratio (as defined in the agreement) of not
less than 1.25 to 1.0. In addition, the agreement requires that general and
administrative expenses of the Borrowers must not exceed 25% of the Borrowers'
net revenue for each quarter. The Guaranty Bank facility matures on December 6,
2005.
6
If Harken or the Borrowers are not in compliance with their bank
financial covenant ratios or requirements in the future and are unable to obtain
a waiver or amendment to the Guaranty Bank facility requirements, the bank
credit facility would be in default and callable by Guaranty Bank. In addition,
due to cross-default provisions in our indentures for our 5% European Notes, 7%
Senior Convertible Notes due 2006 and 2007 (collectively, referred to as the 7%
European Notes) and Benz Convertible Notes and Waverley Note, substantially all
of our debt obligations would become due in full if any debt is in default.
Expectations of future operating results and continued compliance with financial
covenants cannot be assured and our lenders' actions are not controllable by us.
If our projections of future operating results are not achieved and future
waivers or amendments of the Guaranty Bank facility are not received and our
debt is placed in default, we will experience a material adverse impact on our
financial position and results of operations.
The Guaranty Bank facility prohibits cash dividends, loans, advances
and similar payments to be made to us by the Borrowers. Therefore, the Borrowers
will not be able to provide us with funds to be used for the repayment of the
Benz Notes, the Waverley Note or other debt obligations or for other uses,
unless the Borrowers obtain Guaranty Bank's consent.
If estimated discounted future net cash flows decrease, we may be required to
take additional writedowns.
We periodically review the carrying value of our oil and gas properties
under applicable full-cost accounting rules. These rules require a writedown of
the carrying value of oil and gas properties if the carrying value exceeds the
applicable estimated discounted future net cash flows from proved oil and gas
reserves. Given the volatility of oil and gas prices, it is reasonably possible
that the estimated discounted future net cash flows could change in the near
term. If oil and gas prices decline in the future, even if only for a short
period of time, it is possible that additional writedowns of oil and gas
properties could occur. Whether we will be required to take such a charge will
depend on the prices for oil and gas at the end of any quarter and the effect of
reserve additions or revisions, property sales and capital expenditures during
such quarter.
Harken will be controlled by Lyford as long as Lyford owns a majority of the
voting power of Harken's common stock, and Harken's other stockholders will be
unable to affect the outcome of stockholder voting during this time.
As a result of Harken's rights offering, the standby purchase agreement
and other securities held by Lyford, Lyford presently beneficially owns
approximately 65% of the combined voting power of Harken's outstanding common
stock and is able to determine the outcome of all corporate actions requiring
stockholder approval. Because Lyford has the ability to control Harken, Lyford
has the power to act without taking the best interests of Harken into
consideration. For example, Lyford will control decisions with respect to:
. the direction and policies of Harken, including the election and
removal of directors,
. mergers or other business combinations involving Harken,
. the acquisition or disposition of assets by Harken,
. future issuances of Harken's common stock or other securities,
. the incurrence of debt by Harken,
. the payment of dividends, if any, on Harken's common stock, and
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. amendments to Harken's certificate of incorporation and bylaws.
Such concentration of ownership may also have the effect of delaying,
deferring or preventing a future change of control of Harken. In connection with
the redemption of the 5% European Notes due May 26, 2003, we may issue up to
approximately 47.8 million shares of common stock. As a result of this
redemption, Lyford's ownership percentage may decrease below 50%. However,
Lyford may remain as the single largest beneficial owner of Harken common stock.
RISKS ASSOCIATED WITH MARKET CONDITIONS:
Our stock price is volatile and the value of any investment in our common stock
may fluctuate.
Our stock price has been and is highly volatile, and we believe this
volatility is due to, among other things:
. the results of our drilling,
. current expectations of our future financial performance,
. commodity prices of oil and natural gas,
. the progress and ultimate success of our capital plan, including our
actions with respect to our Benz Convertible Notes and Waverley Note,
and
. the volatility of the market in general.
For example, our common stock price has fluctuated from a high of $15
per share to a low of $0.16 per share over the last three years ending December
31, 2002. This volatility may affect the market value of our common stock in the
future. See Part II, Item 5: Market for Registrant's Common Equity and Related
Stockholder Matters in our Annual Report on Form 10-K for the year ended
December 31, 2002.
Future sales of our common stock pursuant to outstanding registration statements
may affect the market price of our common stock.
In addition to the registration statement of which this prospectus
forms a part, there are currently several registration statements with respect
to our common stock that are effective pursuant to which certain of our
stockholders may sell up to an aggregate of 54.3 million shares of common stock.
Any such sale of stock may also decrease the market price of our common stock.
We may issue additional shares of common stock that may dilute the value of our
common stock and adversely affect the market price of our common stock.
We may issue up to approximately 47.8 million shares of common stock in
connection with the redemption of the 5% European Notes maturing on May 26, 2003
at a redemption price of approximately $0.35 per share. In addition, we may
issue additional shares of common stock in the following scenarios:
. approximately 1.5 million shares of common stock may be required to be
issued pursuant to our stock options,
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. approximately 6.2 million shares of common stock may be issued pursuant
to other securities exercisable or exchangeable, or convertible into,
shares of common stock,
. approximately 8.525 million shares of common stock may be issued in
connection with the redemption of the Waverley Note maturing on
September 1, 2003 (assuming a redemption price of $0.20 per share),
. approximately 32.6 million shares of common stock may be issued in
connection with the redemption of the Benz Convertible Notes maturing
on November 26, 2003 (assuming a redemption price of $0.20 per share),
. approximately 39.8 million shares of common stock may be issued in
connection with the conversion of the 7% European Notes maturing in
2006 and 2007 (using the adjusted conversion rate of $0.36 per share or
the initial conversion rate of $0.50, as appropriate), and
. a significant number of additional shares of common stock may be issued
for financing or other purposes.
A large issuance of shares of common stock in any or all of the above
scenarios will decrease the ownership percentage of current outstanding
stockholders and will likely result in a decrease in the market price of our
common stock. Any large issuance will also likely result in a change in control
of Harken.
In addition, we may elect to issue a significant number of additional
shares of common stock for financing or other purposes, which could result in a
decrease in the market price of our common stock.
If we redeem our existing convertible notes with shares of common stock,
stockholders will suffer a significant dilution of their ownership percentage
and a decrease in the market value of our common stock and the redemptions may
result in a change in control of Harken.
Any redemptions of our existing convertible notes involving a large
issuance of shares could result in a substantial dilution of stockholders'
ownership percentage of our common stock and may result in a decrease in the
market value of our common stock. The number of new shares to be issued could
also likely result in a change in control of Harken and, depending on the
ownership of the notes, a small group of stockholders could control the election
of the board of directors and the approval of other matters presented for
consideration by the stockholders, which could include mergers, acquisitions,
amendments to our charter and various corporate governance actions. Stockholders
may also incur immediate and likely substantial net asset dilution.
Specifically, the redemption of the 5% European Notes, the Benz
Convertible Notes and the Waverley Note by converting them into common stock
could likely result in substantial dilution of our existing common stock. In
addition, the number of new shares to be issued may result in a change of
control of Harken. For example, up to approximately 47.8 million shares of
common stock may be issued in connection with the redemption of the 5% European
Notes maturing on May 26, 2003 at a redemption price of approximately $0.35 per
share. If the Benz Convertible Notes are redeemed at an assumed redemption price
of $0.20 per share, we would be required to issue to the noteholders
approximately 5.75 million shares of common stock for every $1,000,000 of Benz
Convertible Notes redeemed at such price. In addition, at a $0.20 redemption
price, Harken would also be required to issue to Waverley approximately 8.525
million shares of common stock to redeem the outstanding principal balance of
the Waverley Note. If all of the outstanding notes were redeemed as described
above, the noteholders would receive an aggregate of up to approximately 89
million shares of common stock and, collectively, could control over 47% of our
common stock.
9
We have issued shares of preferred stock with greater rights than our common
stock and may issue additional shares of preferred stock in the future.
We are permitted under our charter to issue up to 10 million shares of
preferred stock. We can issue shares of our preferred stock in one or more
series and can set the terms of the preferred stock without seeking any further
approval from our common stockholders. Any preferred stock that we issue may
rank ahead of our common stock in terms of dividend priority or liquidation
premiums and may have greater voting rights than our common stock. At March 31,
2003, we had outstanding 385,638 shares of Series G1 preferred stock and 93,150
shares of Series G2 preferred stock. These shares of preferred stock have rights
senior to our common stock with respect to dividends and liquidation. In
addition, such preferred stock may be converted into shares of common stock,
which could dilute the value of common stock to current stockholders and could
adversely affect the market price of our common stock. Each share of Series G1
preferred stock and Series G2 preferred stock may be converted into shares of
common stock at conversion prices of $12.50 and $3.00 per share of common stock,
respectively, for each $100.00 liquidation value of a share of such preferred
stock plus the amount of any accrued and unpaid dividends.
Our domestic operating strategic plan includes the acquisition of additional
reserves through business combinations.
Our domestic operations have shifted from primarily an exploration and
development focus to an acquisition growth strategy, with a reduced emphasis on
exploration. We are seeking additional acquisition opportunities to expand our
domestic operations and increase our oil and gas reserves in North America. We
may not be able to consummate future acquisitions on favorable terms.
Additionally, any such future transactions may not achieve favorable financial
results.
Future business combinations may also involve the issuance of shares of
our common stock, which could have a dilutive effect on stockholders' percentage
ownership. We may not have a sufficient number of authorized shares to issue in
any such business combinations and we may need to obtain stockholder approval to
authorize additional shares for issuance. Further, the use of shares in business
combinations will reduce the number of shares available for the redemption of
existing convertible notes.
In addition, acquisitions may require substantial financial
expenditures that will need to be financed through cash flow from operations or
future debt and equity offerings by us and we may not be able to acquire
companies or oil and gas properties using our equity as currency. In the case of
cash acquisitions, we may not be able to generate sufficient cash flow from
operations or obtain debt or equity financing sufficient to fund future
acquisitions of reserves.
RISKS ASSOCIATED WITH OUR OPERATIONS:
Oil and gas price fluctuations in the market may adversely affect the results of
our operations.
The results of our operations are highly dependent upon the prices
received for our oil and natural gas production. Substantially all of our sales
of oil and natural gas are made in the spot market, or pursuant to contracts
based on spot market prices, and not pursuant to long-term, fixed-price
contracts. Accordingly, the prices received for our oil and natural gas
production are dependent upon numerous factors beyond our control. These factors
include the level of consumer product demand, governmental regulations and
taxes, the price and availability of alternative fuels, the level of foreign
imports of oil and natural gas and the overall economic environment. Significant
declines in prices for oil and natural gas could have a material adverse effect
on our financial condition, results of operations and quantities of reserves
recoverable on an economic basis. Any significant decline in prices of oil or
gas could have a material adverse effect on our financial condition and results
of operations. Recently, the price of oil and
10
natural gas has been volatile. For example, during 2001, the price for a barrel
(bbl) of oil ranged from a high of $29.25 to a low of $14.25 and the price for a
thousand cubic feet (Mcf) of gas ranged from a high of $10.53 to a low of $1.74.
During 2002, the price for a bbl of oil ranged from a high of $29.50 to a low of
$14.75 and the price for a Mcf of gas ranged from a high of $5.32 to a low of
$1.98.
Our operations require significant expenditures of capital that may not be
recovered.
We require significant expenditures of capital in order to locate and
acquire producing properties and to drill exploratory wells. In conducting
exploration and development activities from a particular well, the presence of
unanticipated pressure or irregularities in formations, miscalculations or
accidents may cause our exploration, development and production activities to be
unsuccessful, potentially resulting in abandoning the well. This could result in
a total loss of our investment. In addition, the cost and timing of drilling,
completing and operating wells is difficult to predict.
The oil and gas we produce may not be readily marketable at the time of
production.
Crude oil, natural gas, condensate and other oil and gas products are
generally sold to other oil and gas companies, government agencies and other
industries. The availability of ready markets for oil and gas that we might
discover and the prices obtained for such oil and gas depend on many factors
beyond our control, including:
. the extent of local production and imports of oil and gas,
. the proximity and capacity of pipelines and other transportation
facilities,
. fluctuating demand for oil and gas,
. the marketing of competitive fuels, and
. the effects of governmental regulation of oil and gas production and
sales.
Natural gas associated with oil production is often not marketable due
to demand or transportation limitations and is often flared at the producing
well site. Pipeline facilities do not exist in certain areas of exploration and,
therefore, any actual sales of discovered oil and gas might be delayed for
extended periods until such facilities are constructed.
We may encounter operating hazards that may result in substantial losses.
We are subject to operating hazards normally associated with the
exploration and production of oil and gas, including blowouts, explosions, oil
spills, cratering, pollution, earthquakes, labor disruptions and fires. The
occurrence of any such operating hazards could result in substantial losses to
us due to injury or loss of life and damage to or destruction of oil and gas
wells, formations, production facilities or other properties. We maintain
insurance coverage limiting financial loss resulting from certain of these
operating hazards. We do not maintain full insurance coverage for all matters
that may adversely affect our operations, including war, terrorism, nuclear
reactions, government fines, treatment of waste, blowout expenses and business
interruptions. Losses and liabilities arising from uninsured or underinsured
events could reduce our revenues or increase our costs. There can be no
assurance that any insurance will be adequate to cover losses or liabilities
associated with operational hazards. We cannot predict the continued
availability of insurance, or its availability at premium levels that justify
its purchase.
11
Drilling oil and gas wells particularly in certain regions of the United States
and foreign countries could be hindered by hurricanes, earthquakes and other
weather-related operating risks.
Our operations in the Louisiana wetlands, the onshore regions of Texas
and in Colombia, Peru and Panama are subject to risks from hurricanes and other
natural disasters. Damage caused by hurricanes, earthquakes or other operating
hazards could result in substantial losses to us. We are not covered by
insurance for any business interruption resulting from such events and, upon the
occurrence of a natural disaster, this lack of coverage could have a material
adverse effect on our financial position and results of operations.
We face strong competition from larger oil and gas companies, which could result
in adverse effects on our business.
The exploration and production business is highly competitive. Many of
our competitors have substantially larger financial resources, staffs and
facilities. Our competitors in the United States include numerous major oil and
gas exploration and production companies and in Colombia, Peru and Panama
include such major oil and gas companies as BP Amoco, Exxon/Mobil, Texaco/Shell,
Conoco/Phillips and Arco. These major oil and gas companies are often better
positioned to obtain the rights to exploratory acreage for which we compete.
Our operations are subject to various litigation that could have an adverse
effect on our business.
Presently, various of our subsidiaries are defendants in various
litigation matters. The nature of our and our subsidiaries' operations also
expose us to further possible litigation claims in the future. For example, we
are currently a party to the following pending proceedings:
. In September 1997, D. E. Rice and Karen Rice, as Trustees for the Rice
Family Living Trust (collectively referred to as Rice) filed a lawsuit
against Harken Exploration Company, a wholly-owned subsidiary of
Harken, in Texas state court. Rice claims damages in an amount of
approximately $40 million from Harken Exploration Company's alleged
spills on Rice's property.
. In December 1999, 420 Energy Investment, Inc. and ERI Investments, Inc.
(collectively referred to as 420 Energy) filed a lawsuit against XPLOR
Energy, Inc., a wholly-owned subsidiary of Harken (referred to as
XPLOR), in Delaware state court. 420 Energy alleges that they are
entitled to appraisal and payment of the fair value of their common
stock in XPLOR as of the date XPLOR merged with us.
. In August 2001, a new lawsuit was filed by New West Resources, Inc.
(referred to as New West), a former XPLOR stockholder, against XPLOR,
Harken and other defendants in Texas state court. New West claims that
it lost its $6 million investment in XPLOR as a result of
misrepresentations by XPLOR and breach of fiduciary duties by certain
XPLOR directors.
. In December 2002, Black Point Limited (referred to as Black Point)
filed a lawsuit against Global Energy Development LTD, a subsidiary of
Harken, in Illinois federal court. Black Point alleges that Global
Energy Development LTD, aided and abetted by officers of Harken,
fraudulently induced Black Point to spend time and money locating
prospective business partners in the People's Republic of China. Black
Point seeks breach of contract damages of $1.5 million from Global
Energy Development LTD, that amount being Black Point's projected
success fee on an unconsummated $20 million investment by a Chinese
partner.
12
There is risk that any matter in litigation could be adversely decided
against us or our subsidiaries, regardless of their belief, opinion and
position, which could have a material adverse effect on our financial condition
and results of operations. Litigation is highly costly and the costs associated
with defending litigation could also have a material adverse effect on our
financial condition. For further detail concerning our pending litigation,
please see Part I, Item 3, Legal Proceedings in our Annual Report on Form 10-K
for the year ended December 31, 2002.
Compliance with, or breach of, environmental laws can be costly and could limit
our operations.
Our operations are subject to numerous and frequently changing laws and
regulations governing the discharge of materials into the environment or
otherwise relating to environmental protection. We own or lease, and have in the
past owned or leased, properties that have been used for the exploration and
production of oil and gas and these properties and the wastes disposed on these
properties may be subject to the Comprehensive Environmental Response,
Compensation and Liability Act, the Oil Pollution Act of 1990, the Resource
Conservation and Recovery Act, the Federal Water Pollution Control Act and
analogous state laws. Under such laws, we could be required to remove or
remediate previously released wastes or property contamination.
Laws and regulations protecting the environment have generally become
more stringent and, may in some cases, impose "strict liability" for
environmental damage. Strict liability means that we may be held liable for
damage without regard to whether we were negligent or otherwise at fault.
Environmental laws and regulations may expose us to liability for the conduct of
or conditions caused by others or for acts that were in compliance with all
applicable laws at the time they were performed. Failure to comply with these
laws and regulations may result in the imposition of administrative, civil and
criminal penalties.
While we believe that our operations are in substantial compliance with
existing requirements of governmental bodies, our ability to conduct continued
operations is subject to satisfying applicable regulatory and permitting
controls. Our current permits and authorizations and ability to get future
permits and authorizations, particularly in foreign countries, may be
susceptible, on a going forward basis, to increased scrutiny, greater complexity
resulting in increased costs, or delays in receiving appropriate authorizations.
In particular, we have experienced and may continue to experience delays in
obtaining permits and authorization in Colombia necessary for our operations. In
addition, recent judicial and political developments in Costa Rica have
significantly and adversely affected our ability to acquire necessary
environmental permits and severely limit the opportunity for future oil and gas
exploration in Costa Rica. As a result of these developments, we fully impaired
our investment through our subsidiary, Global, in certain onshore and offshore
properties in Costa Rica, as reflected on our consolidated balance sheet for the
year ended December 31, 2001.
We are required to obtain an environmental permit or approval from the
governments in Colombia, Costa Rica, Peru and Panama prior to conducting seismic
operations, drilling a well or constructing a pipeline in such foreign
locations. Our operations in foreign countries have been delayed in the past and
could be delayed in the future through the process of obtaining an environmental
permit. Compliance with these laws and regulations may increase our costs of
operations, as well as further restrict our foreign operations.
Costa Rica has implemented policies and laws with a high level of
attention to the protection of its ecological areas and environment. As a
result, the operations of our indirect subsidiary, Harken Costa Rica Holdings,
in Costa Rica are subject to much greater control, scrutiny and restrictions
than are usually encountered in international exploration operations. Due to
such additional regulations and requirements in Costa Rica, as well as recent
rulings by Costa Rica government agencies, Harken Costa Rica Holdings will
likely not be able to continue operations in Costa Rica for the foreseeable
future.
13
Our foreign operations involve substantial costs and are subject to certain
risks because the oil and gas industries in such countries are less developed.
The oil and gas industries in Colombia, Costa Rica, Peru and Panama are
not as developed as the oil and gas industry in the United States. As a result,
our drilling and development operations in many instances take longer to
complete and often cost more than similar operations in the United States. The
availability of technical expertise, specific equipment and supplies is more
limited in Colombia, Costa Rica, Peru and Panama than in the United States. We
expect that such factors will continue to subject our international operations
to economic and operating risks not experienced in our domestic operations.
We follow the full cost method of accounting for exploration and
development of oil and gas reserves in which all of our acquisition, exploration
and development costs are capitalized. Costs related to the acquisition, holding
and initial exploration of oil and gas associated with our contracts in
countries with no proved reserves are initially capitalized, including internal
costs directly identified with acquisition, exploration and development
activities. If we abandon all exploration efforts in a country where no proved
reserves are assigned, all acquisition and exploration costs associated with the
country are expensed. From time to time, we make assessments as to whether our
investment within a country is impaired and whether exploration activities
within a country will be abandoned based on our analysis of drilling results,
seismic data and other information we believe to be relevant. Due to the
unpredictable nature of exploration drilling activities, the amount and timing
of impairment expenses are difficult to predict.
If we fail to comply with the terms of certain contracts related to our foreign
operations, we could lose our rights under each of those contracts.
The terms of each of the Colombia Association Contracts, the Costa Rica
Contract, the Peruvian Technical Evaluation Agreement and the Panamanian
Technical Evaluation Agreement require that we perform certain activities, such
as seismic interpretations and the drilling of required wells, in accordance
with those contracts and agreements. Our failure to timely perform those
activities as required could result in the loss of our rights under a particular
contract, which would likely result in a significant loss to us. As of March 31,
2003, we were in compliance with the requirements of each of the Colombia
Association Contracts, the Peruvian Technical Evaluation Agreement and the
Panamanian Technical Evaluation Agreement. For further detail concerning these
contracts and agreements, please see Part I, Item 1, Business in our Annual
Report on Form 10-K for the year ended December 31, 2002.
We require significant additional financing for our foreign operations, which
financing may not be available.
We anticipate that full development of our existing and future oil and
gas discoveries and prospects in Colombia, Peru and Panama may take several
years and require significant additional capital expenditures. If we are unable
to timely obtain adequate funds to finance these investments, our ability to
develop oil and gas reserves in these countries may be severely limited or
substantially delayed. Such limitations or delay would likely result in
substantial losses for Harken and Global.
We anticipate that amounts required to fund Global's foreign activities
will be funded from existing cash balances, asset sales, stock issuances,
production payments, operating cash flows and from joint venture partners. We
estimate a cost of $2.5 million in 2003 for the completion of a well in Colombia
required to be drilled by Global pursuant to the Cajaro Association Contract
with Empresa Colombia de Petroleos. The exact usage of other future funding
sources is unknown at this time and there can be no assurance that Global will
have adequate funds available to finance our foreign operations.
14
Our foreign operations are subject to political, economic and other
uncertainties.
Global currently conducts significant operations in Colombia, Peru and
Panama and may also conduct operations in other foreign countries in the future.
At December 31, 2002, approximately 38% of our proved reserves and 31% of our
consolidated revenues were related to Global's Colombian operations. Exploration
and production operations in foreign countries are subject to political,
economic and other uncertainties, including:
. the risk of war, revolution, border disputes, expropriation,
renegotiation or modification of existing contracts, import, export and
transportation regulations and tariffs resulting in loss of revenue,
property and equipment,
. taxation policies, including royalty and tax increases and retroactive
tax claims,
. exchange controls, currency fluctuations and other uncertainties
arising out of foreign government sovereignty over international
operations,
. laws and policies of the United States affecting foreign trade,
taxation and investment, and
. the possibility of being subjected to the jurisdiction of foreign
courts in connection with legal disputes and the possible inability to
subject foreign persons to the jurisdiction of courts in the United
States.
Central and South America and certain other regions of the world have a
history of political and economic instability. This instability could result in
new governments or the adoption of new policies, laws or regulations that might
assume a substantially more hostile attitude toward foreign investment. In an
extreme case, such a change could result in termination of contract rights and
expropriation of foreign-owned assets. Any such activity could result in a
significant loss to Harken and Global.
Guerrilla activity in Colombia could disrupt or delay Global's operations, and
we are concerned about safeguarding Global's operations and personnel in
Colombia.
Colombia's 37-year armed conflict between the government and leftist
guerrilla groups has escalated in recent years. The current government's quest
for peace was unsuccessful. The breakdown of peace negotiations has resulted in
increased military action by the Colombian government directed against the rebel
groups operating in Colombia. Unless the parties determine to return to peace
negotiations, the military confrontation with the rebel groups is expected to
continue. Also, the increased activity of right-wing paramilitary groups, formed
in opposition to the left-wing FARC and ELN groups, has contributed to the
escalation in violence. The increase in violence has affected business interests
in Colombia. Targeting such enterprises as symbols of foreign exploitation,
particularly in the North of the country, the rebel groups have attempted to
hamper production of hydrocarbons. The cumulative effect of escalation in the
armed conflict and the resulting unstable political and security situation has
led to increased risks and costs and the downgrading of Colombia's country risk
rating. Global's oil and gas operations are in areas outside guerrilla control
and with the exception of its increased security requirements, our operations
continue mostly unaffected, although from time to time, guerilla activity in
Colombia has delayed our projects there. This guerilla activity has increased
over the last few years, causing delays in the development of our fields in
Colombia. Guerilla activity, such as road blockades, has also from time to time
slowed our deployment of workers in the field and affected our operations. In
addition, guerillas could attempt to disrupt the flow of our production through
pipelines. In addition to these security issues, we have also become the subject
of media focus in Colombia that may further compromise our security position in
the country.
15
There can be no assurance that attempts to reduce or prevent guerilla
activity will be successful or that guerilla activity will not disrupt Global's
operations in the future. There can also be no assurance that Global can
maintain the safety of its operations and personnel in Colombia or that this
violence will not affect its operations in the future. Continued or heightened
security concerns in Colombia could also result in a significant loss to Harken
and Global.
The United States government may impose economic or trade sanctions on Colombia
that could result in a significant loss to Harken and Global.
Colombia is among several nations whose progress in stemming the
production and transit of illegal drugs is subject to annual certification by
the President of the United States. Although Colombia was so certified in 2002,
there can be no assurance that, in the future, Colombia will receive
certification or a national interest waiver. The failure to receive
certification or a national interest waiver may result in any of the following:
. all bilateral aid, except anti-narcotics and humanitarian aid, would be
suspended,
. the Export-Import Bank of the United States and the Overseas Private
Investment Corporation would not approve financing for new projects in
Colombia,
. United States representatives at multilateral lending institutions
would be required to vote against all loan requests from Colombia,
although such votes would not constitute vetoes, and
. the President of the United States and Congress would retain the right
to apply future trade sanctions.
Each of these consequences could result in adverse economic
consequences in Colombia and could further heighten the political and economic
risks associated with our operations there. Any changes in the holders of
significant government offices could have adverse consequences on our
relationship with the Colombian national oil company and the Colombian
government's ability to control guerrilla activities and could exacerbate the
factors relating to our foreign operations discussed above.
Any sanctions imposed on Colombia by the United States government could
threaten our ability to obtain necessary financing to develop the Colombian
properties or cause Colombia to retaliate against us, including by nationalizing
our Colombian assets. Accordingly, the imposition of the foregoing economic and
trade sanctions on Colombia would likely result in a substantial loss to Harken
and Global and a decrease in the price of our common stock. There can be no
assurance that the United States will not impose sanctions on Colombia in the
future or predict the effect in Colombia that these sanctions might cause.
We may suffer losses from exchange rate fluctuations.
We account for our Colombian, Costa Rican, Peruvian and Panamanian
operations using the U.S. dollar as the functional currency. The costs
associated with our exploration efforts in Colombia, Costa Rica, Peru and Panama
have typically been denominated in U.S. dollars. We expect that a substantial
portion of our future Colombian revenues may be denominated in Colombian pesos.
To the extent that the amount of our revenues denominated in Colombian pesos is
greater than the amount of costs denominated in Colombian pesos, we could suffer
a loss if the value of the Colombian peso were to drop relative to the value of
the U.S. dollar. Any substantial currency fluctuations could have a material
adverse effect on our results of operations. In recent years the value of the
Colombian peso relative to the U.S. dollar has declined. For example, the
average exchange rate for the Colombian peso into U.S.
16
dollars for December 2002 was 0.000355, as compared to an average of 0.000434
for December 2001 and 0.000456 for December 2000.
RISK RELATING TO ARTHUR ANDERSEN LLP'S LACK OF CONSENT:
Representatives of Arthur Andersen are not available to consent to the inclusion
of their report on our financial statements in this prospectus, and you will not
be able to recover against Arthur Andersen under Section 11 of the Securities
Act of 1933, as amended.
Arthur Andersen was our independent accountant for our consolidated
financial statements for the year ended December 31, 2000. Representatives for
Arthur Andersen are not available to provide the consent required for the
inclusion of their report on those financial statements incorporated in this
prospectus, and we have dispensed with the requirement to file their consent in
reliance upon Rule 437a of the Securities Act of 1933, as amended. Because
Arthur Andersen has not consented to the inclusion of their report in this
prospectus, you will not be able to recover against Arthur Andersen under
Section 11 of the Securities Act of 1933, as amended (referred to as the
Securities Act), for any false or misleading statements of a material fact
contained in the financial statements audited by Arthur Andersen that are
incorporated by reference or any omissions to state a material fact required to
be stated therein. Any claims against Arthur Andersen related to any such false
or misleading statements and omissions may be limited.
17
INFORMATION ABOUT THE SELLING STOCKHOLDERS
This prospectus relates to the offer and sale from time to time of up
to an aggregate of 16,874,890 shares of our common stock for the account of the
selling stockholders identified herein. Of such shares:
. 4,000,000 shares are reserved for issuance upon the conversion of 7%
European Notes due 2006 that were issued on February 13, 2003;
. 8,930,445 additional shares reserved for issuance upon the conversion
of 7% European Notes due 2007 that were issued on June 18, 2003, June
19, 2002, August 13, 2002, August 30, 2002, October 9, 2002 and October
31, 2002; and
. 3,944,445 shares are reserved for issuance upon the conversion of a 7%
European Note due 2007 that was issued on January 28, 2003.
The 7% European Notes due 2006 will be convertible into shares of
common stock at an initial conversion price of $0.40 per share, subject to
adjustment in certain circumstances, at the option of the noteholder at any time
after the effective date of the registration statement of which this prospectus
is part (referred to as the Effective Date). Upon conversion of any note by a
noteholder, we will issue shares of common stock for the outstanding principal
amount of the note plus accrued interest thereon through the Conversion Date (as
defined in the 7% European Notes due 2006).
The 7% European Notes due 2006 may be redeemed at our option, at any
time and from time to time, in whole or in part, for cash equal to the
outstanding principal and accrued interest to the date of redemption, upon not
less than 30 calendar days notice to the noteholders.
The 7% European Notes due 2007 were convertible into shares of common
stock at an initial conversion price of $0.50 per share, subject to adjustment
in certain circumstances, at the option of the noteholder at any time after the
Effective Date. Upon conversion of any note by a noteholder, we will issue
shares of common stock for the outstanding principal amount of the note plus
accrued interest thereon through the Conversion Date (as defined in the 7%
European Notes due 2007). Commencing 90 days after the Effective Date, the 7%
European Notes due 2007 may be converted in whole, at our option, if at any time
the average of the closing Market Price (as defined below) of the shares
underlying the 7% European Notes due 2007 in any 30 consecutive calendar day
period after registration equals or exceeds 125% of the Conversion Price, which
was initially $0.50 and is subject to adjustment pursuant to the terms of the 7%
European Notes due 2007. The Conversion Price for the 7% European Notes due 2007
that were issued on June 18, 2002, June 19, 2002, August 13, 2002, August 30,
2002, October 9, 2002, October 31, 2002 and January 28, 2003 was adjusted to
$0.36 due to our recent rights offering. We are required to give notice that we
have met the criteria for mandatory conversion within 30 days of having met such
criteria. "Market Price" means the daily closing sale price of the shares of
common stock on the American Stock Exchange or other Stock Exchange, as provided
in the terms and conditions of the 7% European Notes due 2007.
The 7% European Notes due 2007 may be redeemed at our option, at any
time and from time to time, in whole or in part, for cash equal to the
outstanding principal and accrued interest to the date of redemption, upon not
less than 30 calendar days notice to the noteholders. Commencing March 31, 2006
and if the shares underlying the 7% European Notes are Freely Tradable (as
defined in the 7% European Notes due 2007) and are listed on a Stock Exchange
(as defined in the 7% European Notes due 2007), we may redeem, upon not less
than 30 calendar days notice to the noteholders, up to 50% of the 7% European
Notes due 2007 for shares of common stock and, on March 31, 2007, the maturity
date, we may redeem, upon not less than 30 calendar days notice to the
noteholders, all remaining notes for shares of common stock. If we elect to
redeem the 7% European Notes due 2007 for shares of common stock, each
18
note will be redeemed for the number of shares of common stock equal to 110% of
the face value of the 7% European Notes due 2007 divided by the average of the
Market Price of the common stock over the period of 120 Stock Exchange Business
Days (as defined in the 7% European Notes due 2007) immediately preceding the
date of notice of such redemption.
With respect to the shares which may be issued in connection with the
7% European Notes, we have agreed to file a "shelf" registration statement with
the SEC pursuant to Rule 415 under the Securities Act covering the sale of
shares of common stock issued upon conversion of the 7% European Notes. We have
agreed to use our best efforts to maintain the effectiveness of such
registration statement and to refile such registration statement from time to
time in the event its effectiveness lapses, until all such shares registered
thereby are freely tradable in the United States. In addition, we have agreed to
bear certain expenses of registration of the shares of common stock under the
federal and state securities laws.
We are registering the shares of common stock covered by this
prospectus to fulfill our registration obligations to the holders of our 7%
European Notes.
The selling stockholders have not had any position, office or other
material relationship with us or any of our affiliates in the last three years
other than as a result of the ownership of shares of our common stock or other
securities. The chart below describes the number of shares of common stock owned
by the selling stockholders, the number of shares of common stock which may be
offered for sale by the selling stockholders and the number of shares of common
stock the selling stockholders will own if all of the shares of common stock
held by the selling stockholders are sold. Any or all of the shares listed below
may be offered for sale by the selling stockholders from time to time.
PERCENT OF
SHARES OWNED SHARES SHARES OWNED COMMON STOCK
PRIOR TO OFFERED AFTER THE OWNED AFTER THE
SELLING STOCKHOLDERS THE OFFERING HEREBY OFFERING (1) OFFERING (1)
--------------------------------------------- ------------ ------------ ------------ ---------------
Holders of 7% European Notes due 2006 (2)
Elliott International LP 2,231,692 2,200,000 31,692 *
The Liverpool Limited Partnership 1,826,281 1,800,000 26,281 *
Holders of 7% European Notes due 2007 (3)
Credit Suisse Private Bank 555,556 155,556 400,000 *
Lombard Odier 666,667 186,667 480,000 *
Credit Agricole Indosuez 1,277,778 357,778 920,000 *
Bank Hofmann 194,444 54,444 140,000 *
Bank Leu 138,889 38,889 100,000 *
UBS, Lugano 138,889 38,889 100,000 *
BDL, Banco di Lugano 138,889 38,889 100,000 *
Banque de Depots et De Gestion *
Lasusanne 666,667 186,667 480,000
Bank von Ernst (Liechtenstein) AG 1,972,222 552,222 1,420,000 1.42%
FES First Equity Securities AG 17,498,889 4,868,889 12,630,000 11.35%
Kraemer Schwab & Co AG 722,222 202,222 520,000 *
19
PERCENT OF
SHARES OWNED SHARES SHARES OWNED COMMON STOCK
PRIOR TO OFFERED AFTER THE OWNED AFTER THE
SELLING STOCKHOLDERS THE OFFERING HEREBY OFFERING (1) OFFERING (1)
--------------------------------------------- ------------ ------------ ------------ ---------------
LB (Swiss) Privatbank AG, Zurich 55,556 15,556 40,000 *
Nomura International Plc 2,222,222 622,222 1,600,000 1.59%
Heinz Wurtenberger 235,000 56,000 179,000 *
Verwaltungs-und Privat-Bank 5,666,666 1,555,555(4) 4,111,111 4.00%
Holders of 7% European Notes due 2007 (5)
NCL Investments 1,000,000 1,000,000 -0- -0-
Courtts Bank 833,333 833,333 -0- -0-
Gesfid 333,333 333,333 -0- -0-
Bank von Ernst & Cie AG 277,778 277,778 -0- -0-
Van Lanschot Bank 277,778 277,778 -0- -0-
Dr. Hans Rudolf Steiner 277,778 277,778 -0- -0-
Dr. Bruno Weber 277,778 277,778 -0- -0-
ZKB 222,222 222,222 -0- -0-
UBS (Merlo) 138,889 138,889 -0- -0-
Verwaltungs-und Privat-Bank 5,666,666 111,111(6) 5,555,555 5.33%
Guy Chenaux 111,111 111,111 -0- -0-
Peter Wissman 55,556 55,556 -0- -0-
Werner Altorfer 27,778 27,778 -0- -0-
----------
* Less than 1%
(1) Assumes no other disposition or acquisition of common stock and all shares
of common stock offered hereby are sold.
(2) Consists of shares of Harken's common stock issuable upon conversion of the
7% European Notes due 2006 issued on February 13, 2003.
(3) Consists of shares of Harken's common stock issuable upon conversion of the
7% European Notes due 2007 issued on June 18, 2002, June 19, 2002, August
13, 2002, August 30, 2002, October 9, 2002 and October 31, 2002. The shares
offered hereby for these persons consist of additional shares of Harken's
common stock issuable upon conversion of such notes due to the conversion
price of the notes being adjusted to $0.36 following the February 2003
announcement of the terms of Harken's recent rights offering.
(4) Does not include shares of Harken's common stock offered hereby that are
issuable upon conversion of the 7% European Note due 2007 issued on January
28, 2003
(5) Consists of shares of Harken's common stock issuable upon conversion of the
7% European Note due 2007 issued on January 28, 2003.
(6) Does not include additional shares of Harken's common stock offered hereby
that are issuable upon conversion of the 7% European Note due 2007 issued
on October 9, 2002.
20
PLAN OF DISTRIBUTION
We are registering the common stock covered by this prospectus on
behalf of the selling stockholders. As used herein, "selling stockholders"
include donees and pledgees selling shares received from a named selling
stockholder after the date of this prospectus. We will bear all costs, expenses
and fees in connection with the registration of the common stock offered hereby.
Brokerage commissions and similar selling expenses, if any, attributable to the
sale of shares of common stock will be borne by the selling stockholders. Sales
of shares of common stock may be effected by selling stockholders from time to
time in one or more of the following transactions, or in other kinds of
transactions:
. a block trade in which the selling stockholder's broker or dealer will
attempt to sell the shares as agent, but may position and resell all or
a portion of the block as a principal to facilitate the transaction,
. a broker or dealer may purchase the common stock as a principal and
then resell the common stock for its own account pursuant to this
prospectus,
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers,
. transactions on the American Stock Exchange or on any national
securities exchange or U.S. inter-dealer system of a registered
national securities association on which our common stock may be listed
or quoted at the time of sale,
. in the over-the-counter market,
. in privately negotiated transactions,
. through put or call options transactions relating to the common stock,
. through short sales of shares of common stock, or
. a combination of such methods of sale.
Sales of shares of common stock may be effected by selling stockholders
at market prices prevailing at the time of sale or at negotiated prices. To our
knowledge, none of the selling stockholders have entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding
the sale of their securities, nor is there an underwriter or coordinating broker
acting in connection with the proposed sale of shares of common stock offered by
this prospectus.
The selling stockholders may effect such transactions by selling shares
of common stock directly to purchasers or to or through broker-dealers, which
may act as agents or principals. Such broker-dealers may receive compensation in
the form of discounts, concessions, or commissions from the selling stockholders
and/or the purchasers of shares of common stock for whom such broker-dealers may
act as agents or to whom they sell as principal, or both (which compensation as
to a particular broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in connection
with the sale of shares of common stock might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act and any commissions
received by such broker-dealers and any profit on the resale of the common stock
sold by them while acting as principals might be deemed to be underwriting
discounts or commissions under the Securities Act. The selling stockholders may
agree to indemnify any agent, dealer
21
or broker-dealer that participates in transactions involving sales of the common
stock against certain liabilities, including liabilities arising under the
Securities Act.
Because selling stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling stockholders
will be subject to the prospectus delivery requirements of the Securities Act,
which may include delivery through the facilities of the American Stock Exchange
pursuant to Rule 153 under the Securities Act. We have informed the selling
stockholders that the anti-manipulative provisions of Regulation M promulgated
under the Securities Exchange Act of 1934, as amended, may apply to their sales
in the market.
Selling stockholders also may resell all or a portion of the common
stock in open market transactions in reliance upon Rule 144 under the Securities
Act, provided they meet the criteria and conform to the requirements of such
Rule.
Upon our being notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares of
common stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the Act,
disclosing:
. the name of each such selling stockholder and of the participating
broker-dealer(s),
. the number of shares involved,
. the price at which such shares were sold,
. the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable,
. that such broker-dealer(s) did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus, and
. other facts material to the transaction.
In addition, upon our being notified by a selling stockholder that a
donee or pledgee of a selling stockholder intends to sell more than 500 shares
of common stock, a supplement to this prospectus will be filed.
22
LEGAL MATTERS
The validity of the shares of common stock will be passed upon by the
law firm of Baker & McKenzie, Dallas, Texas.
EXPERTS
The consolidated financial statements of Harken Energy Corporation at
December 31, 2002 and 2001, and for each of the two years in the period ended
December 31, 2002, appearing in Harken Energy Corporation's Annual Report on
Form 10-K, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Harken Energy Corporation at
December 31, 2000 and for the year then ended appearing in Harken Energy
Corporation's Annual Report on Form 10-K, have been audited by Arthur Andersen
LLP, independent auditors who have ceased operations, as set forth in their
report thereon included therein and incorporated herein by reference. For a
discussion of the risks related to Arthur Andersen's audit of our financial
statements for the year ended December 31, 2000, please see "Risk Related to
Arthur Andersen LLP's Lack of Consent" under Risk Factors.
Our oil and gas reserves in the United States have been reviewed by our
independent reserve engineers, Netherland, Sewell & Associates, Inc., as stated
in their report thereon. Harken's disclosures of its domestic oil and gas
reserves included in its Form 10-K for the year ending December 31, 2002, have
been presented in reliance upon the authority of such firm as experts in
petroleum engineering.
Our oil and gas reserves in Colombia have been reviewed by our
independent reserve engineers, Ryder Scott Company, as stated in their report
thereon. Harken's disclosures of its oil and gas reserves in Colombia included
in its Form 10-K for the year ending December 31, 2002, have been presented in
reliance upon the authority of such firm as experts in petroleum engineering.
We have not been able to obtain, after reasonable efforts, the written
consent of Arthur Andersen LLP to us naming it in this prospectus as having
certified our consolidated financial statements for the year ended December 31,
2000, as required by Section 7 of the Securities Act. Accordingly, Arthur
Andersen will not have any liability under Section 11 of the Securities Act of
1933 for any false and misleading statements and omissions contained in this
prospectus, including the financial statements incorporated by reference, and
any claims against Arthur Andersen related to any such false and misleading
statements and omissions may be limited.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other information with the SEC.
Such reports, proxy statements and other information concerning our Company can
be read and copied at the SEC's public reference room at 450 Fifth Street, NW,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The SEC maintains an Internet site at
http://www.sec.gov that contains reports, proxy statements and other information
regarding issuers that file information electronically, including our Company.
Our common stock is listed on the American Stock Exchange. These reports, proxy
statements and other information can also be read and copied at the offices of
the American Stock Exchange at 86 Trinity Place, New York, New York 10006.
The SEC allows us to "incorporate by reference" the information we file
with the SEC. This permits us to disclose important information to you by
referencing these filed documents. Any
23
information referenced this way is considered part of this prospectus, and any
information filed with the SEC after the date on the cover of this prospectus
will automatically be deemed to update and supercede this information. We
incorporate by reference the documents listed below and any future filings made
by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended, until all of the securities described in this
prospectus are sold:
. our Annual Report on Form 10-K for the year ended December 31, 2002,
filed with the SEC on March 27, 2003,
. our Current Report on Form 8-K dated February 13, 2003, filed with the
SEC on February 14, 2003,
. our Current Report on Form 8-K dated March 18, 2003, filed with the SEC
on March 20, 2003,
. our Current Report on Form 8-K dated March 20, 2003, filed with the SEC
on March 20, 2003,
. our Current Report on Form 8-K dated March 26, 2003, filed with the SEC
on March 28, 2003,
. our Current Report on Form 8-K dated April 25, 2003, filed with the SEC
on April 25, 2003,
. the description of our common stock contained in our registration
statement on Form 8-A, filed with the SEC on June 1, 1989, including
all amendments and reports filed for the purpose of updating such
description, and
. the description of our preferred stock purchase rights as contained in
our registration statement on Form 8-A, filed with the SEC on April 7,
1998, including all amendments and reports filed for the purpose of
updating such description.
This prospectus is part of a registration statement filed with the SEC.
This prospectus does not contain all the information contained in the
registration statement. The full registration statement can be obtained from the
SEC. This prospectus contains a general description of our Company and the
securities being offered for sale. You should read this prospectus together with
the additional information incorporated by reference.
You can request a copy of any document incorporated by reference in
this prospectus, at no cost, by writing or telephoning us at the following:
Harken Energy Corporation
580 WestLake Park Boulevard, Suite 600
Houston, Texas 77079
Attention: Anna M. Williams
Telephone: (281) 504-4000
24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the registration of the shares of common
stock covered by this prospectus are set forth in the following table. All
amounts except the registration fee are estimated:
Securities and Exchange Commission registration fee......... $ 451
American Stock Exchange listing fee......................... 22,500
Printing and engraving expenses............................. 1,000
Accounting fees and expenses................................ 6,000
Legal fees and expenses..................................... 10,000
Miscellaneous............................................... 3,000
----------
Total................................................... $ 42,951
----------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of Delaware
("Delaware Law"), a Delaware corporation may indemnify its directors, officers,
employees and agents against expenses (including attorneys fees), judgments,
fines and settlements in nonderivative suits, actually and reasonably incurred
by them in connection with the defense of any action, suit or proceeding in
which they or any of them were or are made parties or are threatened to be made
parties by reason of their serving or having served in such capacity. Delaware
law, however, provides that such person must have acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, and in the case of a criminal action, such person must have had
no reasonable cause to believe his or her conduct was unlawful. Section 145
further provides that in connection with the defense or settlement of any action
by or in the right of the corporation, a Delaware corporation may indemnify its
directors and officers against expenses actually and reasonably incurred by them
if, in connection with the matters in issue, they acted in good faith, in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, except that no indemnification may be made with respect to any
claim, issue or matter as to which such person has been adjudged liable for
negligence or misconduct unless the Court of Chancery or the court in which such
action or suit is brought approves such indemnification. Section 145 further
permits a Delaware corporation to grant its directors and officers additional
rights of indemnification through bylaw provisions and otherwise, and to
purchase indemnity insurance on behalf of its directors and officers.
Indemnification is mandatory to the extent a claim, issue or matter has been
successfully defended.
Article Ten of our certificate of incorporation and Article VII of our
bylaws provide, in general, that we shall indemnify our directors and officers
under certain of the circumstances defined in Section 145. We have entered into
agreements with each member of our board of directors pursuant to which it will
advance to each director costs of litigation in accordance with the
indemnification provisions of our Certificate of Incorporation and bylaws.
II-1
ITEM 16. EXHIBITS.
4.1 Form of certificate representing shares of Harken common stock,
par value $.01 per share (filed as Exhibit 1 to Harken's
Registration Statement on Form 8-A, File No. 1-10262, filed with
the SEC on June 1, 1989 and incorporated by reference herein).
4.2 Rights Agreement, dated as of April 6, 1998, by and between
Harken Energy Corporation and ChaseMellon Shareholder Services
L.L.C., as Rights Agent (filed as Exhibit 4 to Harken's Current
Report on Form 8-K dated April 7, 1998, file No. 1-10262, and
incorporated by reference herein).
4.3 Amendment to Rights Agreement by and between Harken Energy
Corporation and American Stock Transfer and Trust Company
(successor to Mellon Investor Services LLC, (formerly known as
ChaseMellon Shareholder Services L.L.C.), as Rights Agent, dated
June 18, 2002 (filed as Exhibit 4.11 to Harken's Quarterly Report
on Form 10-Q for the period ended September 30, 2002, File No.
1-10262, and incorporated by reference herein).
4.4 Amendment to Rights Agreement by and between Harken Energy
Corporation and American Stock Transfer and Trust Company
(successor to Mellon Investor Services LLC, (formerly known as
ChaseMellon Shareholder Services L.L.C.), as Rights Agent, dated
August 27, 2002 (filed as Exhibit 4.12 to Harken's Quarterly
Report on Form 10-Q for the period ended September 30, 2002, File
No. 1-10262, and incorporated by reference herein).
4.5 Certificate of Designations of Series E Junior Participating
Preferred Stock (filed as Exhibit A to Exhibit 4 to Harken's
Current Report on Form 8-K dated April 7, 1998, file No. 1-10262,
and incorporated by reference herein).
4.6 Certificate of Increase of Series E Junior Participating
Preferred Stock of Harken Energy Corporation (filed as Exhibit
4.6 to Harken's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002, File No. 1-10262, and incorporated by
reference herein).
4.7 Certificate of Designations of Series G1 Convertible Preferred
Stock (filed as Exhibit 3.7 to Harken's Current Report on Form
8-K dated February 13, 2003, File No. 1-10262, and incorporated
by reference herein).
4.8 Certificate of Increase of Series G1 Convertible Preferred Stock
of Harken Energy Corporation (filed as Exhibit 3.8 to Harken's
Current Report on Form 8-K dated February 13, 2003, File No.
1-10262, and incorporated by reference herein).
4.9 Certificate of Designations of Series G2 Convertible Preferred
Stock (filed as Exhibit 4.10 to Harken's Annual Report on Form
10-K, as amended, for the fiscal year ended December 31, 2001,
File No. 1-10262, and incorporated by reference herein).
5.1+ Opinion of Baker & McKenzie.
23.1* Consent of Ernst & Young LLP.
23.2* Consent of Ryder Scott Company.
23.3* Consent of Netherland, Sewell & Associates, Inc.
23.4+ Consent of Baker & McKenzie (included in opinion to be filed as
Exhibit 5.1).
24.1* Powers of Attorney.
II-2
----------
* Filed herewith
+ To be filed by amendment
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (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.
(b) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs b(1)(i) and b(2)(ii) above do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that, in the opinion of the SEC, 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
II-3
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.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
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-4
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 Houston, State of Texas, on this 25th day of April,
2003.
HARKEN ENERGY CORPORATION
*
--------------------------------
Mikel D. Faulkner, Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
* Chairman of the Board April 25, 2003
---------------------------------
Alan G. Quasha
* Director and Chief Executive Officer April 25, 2003
---------------------------------
Mikel D. Faulkner (Principal Executive Officer)
* Director April 25, 2003
---------------------------------
J. William Petty
* Director April 25, 2003
---------------------------------
Michael M. Ameen, Jr.
* Director April 25, 2003
---------------------------------
Hobart A. Smith
* Director April 25, 2003
---------------------------------
Marvin M. Chronister
/s/ Anna M. Williams Executive Vice President - Finance and April 25, 2003
--------------------------------- Chief Financial Officer (Principal
Anna M. Williams Financial Officer)
* Anna M. Williams, by signing her
name hereto, does hereby sign this
registration statement on behalf of
Harken Energy Corporation and each of
the above-named officers and directors
of such company pursuant to powers of
attorney, executed on behalf of the
Company and each officer and director.
/s/ Anna M. Williams
-----------------------------------
Anna M. Williams, Attorney-in-Fact
II-5
INDEX TO EXHIBITS
4.1 Form of certificate representing shares of Harken common stock, par
value $.01 per share (filed as Exhibit 1 to Harken's Registration
Statement on Form 8-A, File No. 1-10262, filed with the SEC on June
1, 1989 and incorporated by reference herein).
4.2 Rights Agreement, dated as of April 6, 1998, by and between Harken
Energy Corporation and ChaseMellon Shareholder Services L.L.C., as
Rights Agent (filed as Exhibit 4 to Harken's Current Report on Form
8-K dated April 7, 1998, file No. 1-10262, and incorporated by
reference herein).
4.3 Amendment to Rights Agreement by and between Harken Energy
Corporation and American Stock Transfer and Trust Company (successor
to Mellon Investor Services LLC, (formerly known as ChaseMellon
Shareholder Services L.L.C.), as Rights Agent, dated June 18, 2002
(filed as Exhibit 4.11 to Harken's Quarterly Report on Form 10-Q for
the period ended September 30, 2002, File No. 1-10262, and
incorporated by reference herein).
4.4 Amendment to Rights Agreement by and between Harken Energy
Corporation and American Stock Transfer and Trust Company (successor
to Mellon Investor Services LLC, (formerly known as ChaseMellon
Shareholder Services L.L.C.), as Rights Agent, dated August 27, 2002
(filed as Exhibit 4.12 to Harken's Quarterly Report on Form 10-Q for
the period ended September 30, 2002, File No. 1-10262, and
incorporated by reference herein).
4.5 Certificate of Designations of Series E Junior Participating
Preferred Stock (filed as Exhibit A to Exhibit 4 to Harken's Current
Report on Form 8-K dated April 7, 1998, file No. 1-10262, and
incorporated by reference herein).
4.6 Certificate of Increase of Series E Junior Participating Preferred
Stock of Harken Energy Corporation (filed as Exhibit 4.6 to Harken's
Annual Report on Form 10-K for the fiscal year ended December 31,
2002, File No. 1-10262, and incorporated by reference herein).
4.7 Certificate of Designations of Series G1 Convertible Preferred Stock
(filed as Exhibit 3.7 to Harken's Current Report on Form 8-K dated
February 13, 2003, File No. 1-10262, and incorporated by reference
herein).
4.8 Certificate of Increase of Series G1 Convertible Preferred Stock of
Harken Energy Corporation (filed as Exhibit 3.8 to Harken's Current
Report on Form 8-K dated February 13, 2003, File No. 1-10262, and
incorporated by reference herein).
4.9 Certificate of Designations of Series G2 Convertible Preferred Stock
(filed as Exhibit 4.10 to Harken's Annual Report on Form 10-K, as
amended, for the fiscal year ended December 31, 2001, File No.
1-10262, and incorporated by reference herein).
5.1+ Opinion of Baker & McKenzie.
23.1* Consent of Ernst & Young LLP.
23.2* Consent of Ryder Scott Company.
23.3* Consent of Netherland, Sewell & Associates, Inc.
23.4+ Consent of Baker & McKenzie (included in opinion to be filed as
Exhibit 5.1).
24.1* Powers of Attorney.
----------
* Filed herewith
+ To be filed by amendment