As filed with the Securities and Exchange Commission on April 4, 2006.
Registration No. 333-_____
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ABRAXAS PETROLEUM CORPORATION
(Exact Name of Registrant as Specified in its Charter)
For Co-Registrants, see "Table of Co-Registrants."
Robert L. G. Watson
President and Chief Executive Officer
Abraxas Petroleum Corporation
500 North Loop 1604 East, Suite 100 500 North Loop 1604 East, Suite 100
San Antonio, Texas 78232 San Antonio, Texas 78232
(210) 490-4788 (210) 490-4788
(Address, including zip code, (Name, address, including zip code,
and telephone number, including area code, and telephone number,
of registrants' principal executive offices) including area code,
of agent for service)
Copies to:
Steven R. Jacobs
Jackson Walker L.L.P.
112 E. Pecan Street, Suite 2100
San Antonio, Texas 78205
(210) 978-7700
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box:[ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please 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 this form is a registration statement pursuant to General Instruction
I.D. or a post-effective amendment thereto that shall become effective upon
filing with the Commission pursuant to Rule 462(e) under the Securities Act,
check the following box:[ ]
If this form is a post-effective amendment to a registration statement
filed pursuant to General Instruction I.D. filed to register additional
securities or additional classes of securities pursuant to Rule 413(b) under the
Securities Act, check the following box:[ ]
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------------------------
CALCULATION OF REGISTRATION FEE(1)
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered per Unit (1) Price (1) Registration
Fee
---------------------- ---------------- ------------------- ------------------- ----------------
Debt Securities (2)
Common Stock, par
value $.01 per share
(3)
Preferred Stock, par
value $.01 per share
(3)(4)(5)(6)
Depositary Shares (5)
Warrants (6)
Guarantees (7)
Units
(2)(3)(4)(5)(6)(7)
Total $150,000,000(1) 100% $150,000,000(1) $16,050
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering price
of all securities issued from time to time pursuant to this registration
statement exceed $[150,000,000]. Any securities registered hereunder may be sold
separately or as units with other securities registered hereunder. The proposed
maximum offering price per unit will be determined from time to time in
connection with the issuance of the securities registered hereunder.
(2) There are being registered hereunder an indeterminate principal amount of
debt securities that may be sold from time to time. If any debt securities are
being issued at an original issue discount, then the offering price shall be in
such greater principal amount as shall result in an aggregate initial offering
price not to exceed $[150,000,000], less the dollar amount of any securities
previously issued hereunder.
(3) There are being registered hereunder an indeterminate number of shares of
common stock that may be sold from time to time. There are also being registered
hereunder an indeterminate number of shares of common stock as shall be issuable
upon conversion or redemption of preferred stock or debt securities registered
hereby.
(4) There are being registered hereunder an indeterminate number of shares of
preferred stock as may be sold from time to time by Abraxas.
(5) There are being registered hereunder an indeterminate number of depositary
shares to be evidenced by depositary receipts issued pursuant to a deposit
agreement. In the event Abraxas elects to offer to the public fractional
interests in shares of preferred stock registered hereunder, depositary receipts
will be distributed to those persons purchasing such fractional interests, and
the shares of preferred stock will be issued to the depositary under the deposit
agreement.
(6) There are being registered hereunder an indeterminate amount and number of
warrants, representing rights to purchase preferred stock, common stock or debt
securities registered hereby or equity securities issued by an unaffiliated
corporation or other entity and held by one or more of the registrants.
(7) Guarantees may be provided by subsidiaries of Abraxas of the payment of the
principal and interest on the debt securities. No additional consideration will
be received for the guarantees and, pursuant to Rule 457(n), no additional fee
is required.
The registrants hereby amend this registration statement on such date or dates
as may be necessary to delay its effective date until the registrants shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
TABLE OF CO-REGISTRANTS
Each of the following subsidiaries and any other subsidiary of Abraxas
Petroleum Corporation that becomes a guarantor of certain of the securities
registered hereby, is hereby deemed to be a registrant.
Jurisdiction of I.R.S. Employer
Exact Name as Specified in their Charters Incorporation or Identification Number
Organization
------------------------------------------- --------------------- --------------------------
Eastside Coal Company, Inc. Colorado 74-227540
Sandia Oil & Gas Corporation Texas 74-236896
Sandia Operating Corp. Texas 74-246870
Wamsutter Holdings, Inc. Wyoming 74-289701
Western Associated Energy Corporation Texas 74-193787
The address and telephone number of the principal executive offices of
Eastside Coal Company, Inc. is 500 North Loop 1604 East, Suite 100, San Antonio,
TX 78232, (210) 490-4788 and the agent for service at such address is Robert
L.G. Watson. The address and telephone number of the principal executive offices
of Sandia Oil & Gas Corporation and Sandia Operating Corp. is 500 North Loop
1604 East, Suite 100, San Antonio, TX 78232, (210) 490-4788 and the agent for
service at such address is Robert L.G. Watson. The address and telephone number
of the principal executive offices of Wamsutter Holdings, Inc. is 500 North Loop
1604 East, Suite 100, San Antonio, TX 78232, (210) 490-4788 and the agent for
service at such address is Robert L.G. Watson. The address and telephone number
of the principal executive offices of Western Associated Energy Corporation is
500 North Loop 1604 East, Suite 100, San Antonio, TX 78232, (210) 490-4788 and
the agent for service at such address is Robert L.G. Watson.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED APRIL 4, 2006
ABRAXAS PETROLEUM CORPORATION
$150,000,000
------------------------------------------------------
Debt Securities
Common Stock
Preferred Stock
Depositary Shares
Warrants
Guarantees
Units
------------------------------------------------------
We may offer, from time to time, in one or more series:
o unsecured senior debt securities;
o secured senior debt securities;
o unsecured subordinated debt securities;
o secured subordinated debt securities;
o shares of common stock;
o shares of preferred stock;
o shares of preferred stock that may be represented by depositary
shares;
o warrants to purchase debt securities, common stock, preferred stock
or other securities; and
o units to purchase one or more debt securities, common stock,
preferred stock, depositary shares or warrants or any combination of
such securities.
The securities:
o will have a maximum aggregate offering price of $150,000,000;
o will be offered at prices and on terms to be set forth in an
accompanying prospectus supplement;
o may be offered separately or together, or in separate series;
o may be convertible into or exchangeable for other securities;
o may be guaranteed by certain of our subsidiaries; and
o may be listed on a national securities association, if specified in
an accompanying prospectus supplement.
Our common stock is listed on The American Stock Exchange under the symbol
"ABP."
We will provide the specific terms of the securities in supplements to this
prospectus. This prospectus may be used to offer and sell securities only if it
is accompanied by a prospectus supplement.
YOU SHOULD READ THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT CAREFULLY
BEFORE YOU INVEST, INCLUDING THE RISK FACTORS WHICH BEGIN ON PAGE 2 OF THIS
PROSPECTUS.
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.
This prospectus is dated _____________, 2006
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS.........................................................ii
WHERE YOU CAN FIND MORE INFORMATION...........................................ii
INCORPORATION BY REFERENCE....................................................ii
FORWARD-LOOKING INFORMATION...................................................iv
ABOUT ABRAXAS..................................................................1
RISK FACTORS...................................................................2
USE OF PROCEEDS...............................................................10
DILUTION......................................................................10
RATIO OF EARNINGS TO FIXED CHARGES............................................10
DESCRIPTION OF DEBT SECURITIES................................................10
DESCRIPTION OF CAPITAL STOCK..................................................17
DESCRIPTION OF WARRANTS.......................................................21
DESCRIPTION OF UNITS..........................................................22
PLAN OF DISTRIBUTION..........................................................22
LEGAL MATTERS.................................................................24
EXPERTS.......................................................................24
INDEX OF FINANCIAL STATEMENTS................................................F-1
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may sell different types of the securities
described in this prospectus in one or more offerings up to a total offering
amount of $[150,000,000].
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering and the securities offered by us in that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described under the heading "Where You Can
Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
Our SEC filings are available to the public over the Internet at the SEC's
web site at www.sec.gov. You may also read and copy any document we file at the
SEC's public reference rooms located at 100 F Street, N.E., Washington D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms and their copy charges. Also, using our website,
www.abraxaspetroleum.com, you can access electronic copies of documents we file
with the SEC, including our annual reports on Form 10-K, quarterly reports on
Form 10-Q, and current reports on Form 8-K and any amendments to those reports.
Information on our website is not incorporated by reference in this prospectus.
Access to those electronic filings is available as soon as practical after
filing with the SEC. You may also request a copy of those filings, excluding
exhibits, at no cost by writing, emailing or telephoning our principal executive
office, which is:
500 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
Attn: Chris Williford
(210) 490-4788
INCORPORATION BY REFERENCE
The following documents we filed with the SEC pursuant to the Exchange Act
are incorporated herein by reference:
o our Annual Report on Form 10-K for the fiscal year ended December
31, 2005, filed with the Commission on March 23, 2006;
o our Current Report on Form 8-K filed with the Commission on January
11, 2006;
o our Current Report on Form 8-K filed with the Commission on January
27, 2006;
o our Current Report on Form 8-K filed with the Commission on February
8, 2006;
o our Current Report on Form 8-K filed with the Commission on February
28, 2006;
o our Current Report on Form 8-K filed with the Commission on March 6,
2006;
o our Notification on Form 12b-25 filed with the Commission on March
16, 2006;
o our Current Report on Form 8-K filed with the Commission on March
17, 2006;
o our Current Report on Form 8-K filed with the Commission on March
22, 2006;
o our Quarterly Report on Form 10-Q/A (for the quarter ended March 31,
2005) filed with the Commission on March 30, 2006;
o our Quarterly Report on Form 10-Q/A (for the quarter ended June 30,
2005) filed with the Commission on March 30, 2006;
ii
o our Quarterly Report on Form 10-Q/A (for the quarter ended September
30, 2005) filed with the Commission on March 30, 2006; and
o the description of our common stock contained in our Registration
Statement on Form 8-A, filed with the Commission on August 17, 2000,
including any amendments or reports filed for the purpose of
updating such description.
Notwithstanding the foregoing, information that we elect to furnish, but
not file, or have furnished, but not filed, with the Commission in accordance
with Commission rules and regulations is not incorporated into this Registration
Statement and does not constitute a part hereof.
All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act (excluding any information that we elect to furnish, but not
file, or furnish, but do not file, with the Commission in accordance with
Commission rules and regulations) subsequent to the date of this filing and
prior to the termination of this offering shall be deemed to be incorporated in
this prospectus and to be a part hereof from the date of the filing of such
document. Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for all purposes to the extent that
a statement contained in this prospectus, or in any other subsequently filed
document which is also incorporated or deemed to be incorporated by reference,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
Upon written or oral request, we will provide to each person, including any
beneficial owner, to whom a prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference in the prospectus but not
delivered with the prospectus. Inquiries should be directed to:
500 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
Attn: Chris Williford
(210) 490-4788
iii
FORWARD-LOOKING INFORMATION
We make forward-looking statements throughout this prospectus and the
documents included or incorporated by reference in this prospectus. Whenever you
read a statement that is not simply a statement of historical fact (such as
statements including words like "believe," "expect," "anticipate," "intend,"
"plan," "seek," "estimate," "could," "potentially" or similar expressions), you
must remember that these are forward-looking statements, and that our
expectations may not be correct, even though we believe they are reasonable. The
forward-looking information contained in this prospectus or in the documents
included or incorporated by reference in this prospectus is generally located in
the material set forth under the headings "About Abraxas," "Risk Factors,"
"Business," and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" but may be found in other locations as well. These
forward-looking statements generally relate to our plans and objectives for
future operations and are based upon our management's reasonable estimates of
future results or trends. The factors that may affect our expectations regarding
our operations include, among others, the following:
o our high debt level;
o our success in development, exploitation and exploration activities;
o our ability to make planned capital expenditures;
o declines in our production of natural gas and crude oil;
o prices for natural gas and crude oil;
o our ability to raise equity capital or incur additional
indebtedness;
o political and economic conditions in oil producing countries,
especially those in the Middle East;
o price and availability of alternative fuels;
o our restrictive debt covenants;
o our acquisition and divestiture activities;
o results of our hedging activities; and
o other factors discussed elsewhere in this prospectus and the
documents incorporated by reference in this offering memorandum.
iv
ABOUT ABRAXAS
Abraxas Petroleum Corporation is an independent energy company engaged
primarily in the acquisition, development, exploitation and production of
natural gas and crude oil. Our principal means of growth has been through the
acquisition and subsequent development and exploitation of producing properties.
Our core areas of operation are in south and west Texas and east central
Wyoming. Our current producing properties are typically characterized by
long-lived reserves, established production profiles and an emphasis on natural
gas. As a result of our historical acquisition activities, we believe that we
have a substantial inventory of low risk exploitation and development
opportunities, the successful completion of which is critical to the maintenance
and growth of our current production levels. When we use the terms "Abraxas,"
"we," "us," "our," or the "Company," we are referring to Abraxas Petroleum
Corporation, together with its consolidated subsidiaries, unless the context
otherwise requires.
Abraxas was originally incorporated in Texas in 1977 and re-incorporated in
Nevada in 1990 when it became a public company. Our common stock is listed on
The American Stock Exchange under the symbol "ABP." Our principal offices are
located at 500 North Loop 1604 East, Suite 100, San Antonio, Texas 78232, and
our telephone number is (210) 490-4788. Information contained on our website,
www.abraxaspetroleum.com, is not part of this prospectus.
1
RISK FACTORS
Risks Related to Our Business
We have a highly leveraged capital structure, which limits our operating
and financial flexibility.
We have a highly leveraged capital structure. At March 27, 2006, we had
total indebtedness, including our floating rate senior secured notes due 2009,
or notes, which we issued in connection with our October 2004 refinancing, of
approximately $130.8 million, all of which is secured indebtedness. We also had
availability of $9.2 million under our $15.0 million senior secured revolving
credit facility, all of which is also secured indebtedness.
Our highly leveraged capital structure will have several important effects
on our future operations, including:
o a substantial amount of our cash flow from operations will be
required to service our indebtedness, which will reduce the funds
that would otherwise be available for operations, capital
expenditures and expansion opportunities, including developing our
properties;
o the covenants contained in our revolving credit facility require us
to meet certain financial tests and comply with certain other
restrictions, including limitations on capital expenditures. These
restrictions, together with those in the indenture governing the
notes, may limit our ability to undertake certain activities and
respond to changes in our business and our industry;
o our debt level may impair our ability to obtain additional capital,
through equity offerings or debt financings, for working capital,
capital expenditures, or refinancing of indebtedness;
o our debt level makes us more vulnerable to economic downturns and
adverse developments in our industry (especially declines in natural
gas and crude oil prices) and the economy in general; and
o the notes and our revolving credit facility are subject to variable
interest rates which makes us vulnerable to interest rate increases.
We may not be able to fund the substantial capital expenditures that will
be required for us to increase our reserves and our production.
We are required to make substantial capital expenditures to develop our
existing reserves and to discover new reserves. Historically, we have financed
our capital expenditures primarily with cash flow from operations, borrowings
under credit facilities, sales of producing properties and sales of equity
securities, and we expect to continue to do so in the future; however, we cannot
assure you that we will have sufficient capital resources in the future to
finance our capital expenditures.
Volatility in natural gas and crude oil prices, the timing of our drilling
program and our drilling results will affect our cash flow from operations.
Lower prices and/or lower production will also decrease revenues and cash flow,
thus reducing the amount of financial resources available to meet our capital
requirements, including reducing the amount available to pursue our drilling
opportunities. If our cash flow from operations does not increase as a result of
our planned capital expenditures, a greater percentage of our cash flow from
operations will be required for debt service and our planned capital
expenditures would, by necessity, be decreased.
The borrowing base under our revolving credit facility will be determined
from time to time by our lenders, consistent with their customary natural gas
and crude oil lending practices. Reductions in estimates of our natural gas and
crude oil reserves could result in a reduction in our borrowing base, which
would reduce the amount of financial resources available under our revolving
credit facility to meet our capital requirements. Such a reduction could be the
result of lower commodity prices or production, inability to drill or
unfavorable drilling results, changes in natural gas and crude oil reserve
2
engineering, the lenders' inability to agree to an adequate borrowing base or
adverse changes in the lenders' practices regarding estimation of reserves.
If cash flow from operations or our borrowing base decrease for any reason,
our ability to undertake exploitation and development activities could be
adversely affected. As a result, our ability to replace production may be
limited. In addition, if the borrowing base under our revolving credit facility
is reduced, we would be required to reduce our borrowings under our revolving
credit facility so that such borrowings do not exceed the borrowing base. This
could further reduce the cash available to us for capital spending and, if we
did not have sufficient capital to reduce our borrowing level, could cause us to
default under our revolving credit facility and the notes.
We have sold producing properties to provide us with liquidity and capital
resources in the past and may do so in the future. After any such sale, we would
expect to utilize the proceeds to drill new wells. If we cannot replace the
production lost from properties sold with production from new properties, our
cash flow from operations will likely decrease which, in turn, would decrease
the amount of cash available for debt service and additional capital spending.
We may be unable to acquire or develop additional reserves, in which case
our results of operations and financial condition would be adversely affected.
Our future natural gas and crude oil production, and therefore our success,
is highly dependent upon our ability to find, acquire and develop additional
reserves that are profitable to produce. The rate of production from our natural
gas and crude oil properties and our proved reserves will decline as our
reserves are produced unless we acquire additional properties containing proved
reserves, conduct successful development and exploitation activities or, through
engineering studies, identify additional behind-pipe zones or secondary recovery
reserves. We cannot assure you that our exploration, exploitation and
development activities will result in increases in our proved reserves. As our
proved reserves, and consequently our production, decline, our cash flow from
operations and the amount that we are able to borrow under our revolving credit
facility will also decline. In addition, approximately 52% of our total
estimated proved reserves at December 31, 2005 were undeveloped. By their
nature, estimates of undeveloped reserves are less certain. Recovery of such
reserves will require significant capital expenditures and successful drilling
operations.
Our production is currently concentrated in one well.
Approximately 30% of our current production is from a single well in west
Texas. If production from this well decreases, it would have a material impact
on our revenues, cash flow from operations and financial condition. This well is
subject to all of the risks typically associated with natural gas wells,
including the risks described in "Risks Related to Our Industry - Our operations
are subject to the numerous risks of natural gas and crude oil drilling and
production activities."
We may not find any commercially productive natural gas or crude oil
reservoirs.
We cannot assure you that the new wells we drill will be productive or that
we will recover all or any portion of our capital investment. Drilling for
natural gas and crude oil may be unprofitable. Dry holes and wells that are
productive but do not produce sufficient net revenues after drilling, operating
and other costs are unprofitable. The inherent risk of not finding commercially
productive reservoirs will be compounded by the fact that 52% of our total
estimated proved reserves at December 31, 2005 were undeveloped. By their
nature, estimates of undeveloped reserves are less certain. Recovery of such
reserves will require significant capital expenditures and successful drilling
operations. In addition, our properties may be susceptible to drainage from
production by other operations on adjacent properties. If the volume of natural
gas and crude oil we produce decreases, our cash flow from operations will
decrease.
Restrictive debt covenants could limit our growth and our ability to
finance our operations, fund our capital needs, respond to changing conditions
and engage in other business activities that may be in our best interest.
Our revolving credit facility and the indenture governing the notes contain
a number of significant covenants that, among other things, limit our ability
to:
3
o incur or guarantee additional indebtedness and issue certain types
of preferred stock or redeemable stock;
o transfer or sell assets;
o create liens on assets;
o pay dividends or make other distributions on capital stock or make
other restricted payments, including repurchasing, redeeming or
retiring capital stock or subordinated debt or making certain
investments or acquisitions;
o engage in transactions with affiliates;
o guarantee other indebtedness;
o make any change in the principal nature of our business;
o prepay, redeem, purchase or otherwise acquire any of our or our
restricted subsidiaries' indebtedness;
o permit a change of control;
o directly or indirectly make or acquire any investment;
o cause a restricted subsidiary to issue or sell our capital stock;
and
o consolidate, merge or transfer all or substantially all of the
consolidated assets of Abraxas and our restricted subsidiaries.
In addition, our revolving credit facility requires us to maintain
compliance with specified financial ratios and satisfy certain financial
condition tests. Our ability to comply with these ratios and financial condition
tests may be affected by events beyond our control, and we cannot assure you
that we will meet these ratios and financial condition tests. These financial
ratio restrictions and financial condition tests could limit our ability to
obtain future financings, make needed capital expenditures, withstand a future
downturn in our business or the economy in general or otherwise conduct
necessary or desirable corporate activities.
A breach of any of these covenants or our inability to comply with the
required financial ratios or financial condition tests could result in a default
under our revolving credit facility and the notes. A default, if not cured or
waived, could result in all of our indebtedness, including the notes, becoming
immediately due and payable. If that should occur, we may not be able to pay all
such debt or to borrow sufficient funds to refinance it. Even if new financing
were then available, it may not be on terms that are acceptable to us.
The marketability of our production depends largely upon the availability,
proximity and capacity of natural gas gathering systems, pipelines and
processing facilities.
The marketability of our production depends in part upon processing and
transportation facilities. Transportation space on such gathering systems and
pipelines is occasionally limited and at times unavailable due to repairs or
improvements being made to such facilities or due to such space being utilized
by other companies with priority transportation agreements. Our access to
transportation options can also be affected by U.S. Federal and state regulation
of natural gas and crude oil production and transportation, general economic
conditions and changes in supply and demand. These factors and the availability
of markets are beyond our control. If market factors dramatically change, the
financial impact on us could be substantial and adversely affect our ability to
produce and market natural gas and crude oil.
Hedging transactions have in the past impacted, and may in the future
impact, our cash flow from operations.
We enter into hedging arrangements from time to time to reduce our exposure
to fluctuations in natural gas and crude oil prices and to achieve more
predictable cash flow. In 2003 and 2005, we incurred hedging costs of $842,000
and $592,000, respectively, resulting from the price floors we established. For
the year ended December 31, 2004, we recognized a gain from hedging activities
of approximately $118,000. Currently, we believe our hedging arrangements, which
4
are in the form of price floors, do not expose us to significant financial risk.
We cannot assure you that the hedging transactions we have entered into, or
will enter into, will adequately protect us from financial loss due to
circumstances such as:
o highly volatile natural gas and crude oil prices;
o our production being less than expected; or
o a counterparty to one of our hedging transactions defaulting on our
contractual obligations.
We have experienced significant operating losses in the past.
We recorded net losses from continuing operations for 2003 of $12.8
million. We recorded net income from continuing operations for 2004 and 2005 of
$3.0 million and $6.3 million, respectively. Net income from continuing
operations in 2004 included $12.6 million of gain on debt extinguishment
relating to our October 2004 refinancing and a deferred tax benefit of $6.1
million. We cannot assure you that we will continue to be profitable in the
future.
Lower natural gas and crude oil prices increase the risk of ceiling
limitation write-downs.
We use the full cost method to account for our natural gas and crude oil
operations. Accordingly, we capitalize the cost to acquire, explore for and
develop natural gas and crude oil properties. Under full cost accounting rules,
the net capitalized cost of natural gas and crude oil properties may not exceed
a "ceiling limit" which is based upon the present value of estimated future net
cash flows from proved reserves, discounted at 10%. If net capitalized costs of
natural gas and crude oil properties exceed the ceiling limit, we must charge
the amount of the excess to earnings. This is called a "ceiling limitation
write-down." This charge does not impact cash flow from operating activities,
but does reduce our stockholders' equity and earnings. The risk that we will be
required to write-down the carrying value of natural gas and crude oil
properties increases when natural gas and crude oil prices are low. In addition,
write-downs may occur if we experience substantial downward adjustments to our
estimated proved reserves. An expense recorded in one period may not be reversed
in a subsequent period even though higher natural gas and crude oil prices may
have increased the ceiling applicable to the subsequent period.
We have incurred ceiling limitation write-downs in the past. We cannot
assure you that we will not experience additional ceiling limitation write-downs
in the future.
Use of our net operating loss carryforwards may be limited.
At December 31, 2005, we had, subject to the limitation discussed below,
$190.0 million of net operating loss carryforwards for U.S. tax purposes. These
loss carryforwards will expire through 2025 if not utilized. In addition, as to
a portion of the U.S. net operating loss carryforwards, the amount of such
carryforwards that we can use annually is limited under U.S. tax law. Moreover,
uncertainties exist as to the future utilization of the operating loss
carryforwards under the criteria set forth under FASB Statement No. 109.
Therefore, we have established a valuation allowance of $73.0 million and $67.0
million for deferred tax assets at December 31, 2004 and 2005, respectively.
We depend on our Chairman, President and CEO and the loss of his services
could have an adverse effect on our operations.
We depend to a large extent on Robert L. G. Watson, our Chairman of the
Board, President and Chief Executive Officer, for our management and business
and financial contacts. Mr. Watson may terminate his employment agreement with
us at any time on 30 days notice, but, if he terminates without cause, he would
not be entitled to the severance benefits provided under the terms of that
agreement. Mr. Watson is not precluded from working for, with or on behalf of a
competitor upon termination of his employment with us. If Mr. Watson were no
longer able or willing to act as our Chairman, the loss of his services could
have an adverse effect on our operations. In addition, in connection with the
initial public offering by our previously wholly-owned subsidiary, Grey Wolf
Exploration Inc., we, Grey Wolf and Mr. Watson agreed that Mr. Watson would
continue to serve as our Chief Executive Officer and President and as the Chief
Executive Officer for Grey Wolf, with Mr. Watson devoting two-thirds of his time
5
to his positions and duties with us and one-third of his time to his position
and duties with Grey Wolf. In consideration for receiving Mr. Watson's services,
Grey Wolf makes an annual payment to Abraxas of US$100,000 and reimburses
Abraxas for Mr. Watson's expenses incurred in connection with providing such
services.
Risks Related to Our Industry
Market conditions for natural gas and crude oil, and particularly
volatility of prices for natural gas and crude oil, could adversely affect our
revenue, cash flows, profitability and growth.
Our revenue, cash flows, profitability and future rate of growth depend
substantially upon prevailing prices for natural gas and crude oil. Natural gas
prices affect us more than crude oil prices because most of our production and
reserves are natural gas. Prices also affect the amount of cash flow available
for capital expenditures and our ability to borrow money or raise additional
capital. Lower prices may also make it uneconomical for us to increase or even
continue current production levels of natural gas and crude oil.
Prices for natural gas and crude oil are subject to large fluctuations in
response to relatively minor changes in the supply and demand for natural gas
and crude oil, market uncertainty and a variety of other factors beyond our
control, including:
o changes in foreign and domestic supply and demand for natural gas
and crude oil;
o political stability and economic conditions in oil producing
countries, particularly in the Middle East;
o general economic conditions;
o domestic and foreign governmental regulation; and
o the price and availability of alternative fuel sources.
In addition to decreasing our revenue and cash flow from operations, low or
declining natural gas and crude oil prices could have additional material
adverse effects on us, such as:
o reducing the overall volume of natural gas and crude oil that we can
produce economically, thereby adversely affecting our revenue,
profitability and cash flow and our ability to perform our
obligations with respect to the notes;
o reducing our borrowing base under the credit facility; and
o impairing our borrowing capacity and our ability to obtain equity
capital.
Estimates of our proved reserves and future net revenue are uncertain and
inherently imprecise.
The process of estimating natural gas and crude oil reserves is complex
involving decisions and assumptions in evaluating the available geological,
geophysical, engineering and economic data. Accordingly, these estimates are
imprecise. Actual future production, natural gas and crude oil prices, revenues,
taxes, development expenditures, operating expenses and quantities of
recoverable natural gas and crude oil reserves most likely will vary from those
estimated. Any significant variance could materially affect the estimated
quantities and present value of reserves set forth in this report. In addition,
we may adjust estimates of proved reserves to reflect production history,
results of exploitation and development, prevailing natural gas and crude oil
prices and other factors, many of which are beyond our control.
The estimates of our reserves are based upon various assumptions about
future production levels, prices and costs that may not prove to be correct over
time. In particular, estimates of natural gas and crude oil reserves, future net
revenue from proved reserves and the PV-10 thereof for our natural gas and crude
oil properties are based on the assumption that future natural gas and crude oil
prices remain the same as natural gas and crude oil prices at December 31, 2005.
The sales prices as of such date used for purposes of such estimates were $8.84
per Mcf of natural gas and $56.92 per Bbl of crude oil. This compares with $4.94
per Mcf of natural gas and $41.01 per Bbl of crude oil as of December 31, 2004.
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These estimates also assume that we will make future capital expenditures of
approximately $84.2 million in the aggregate through 2024, with the majority
expected to be incurred from 2006 to 2009, which are necessary to develop and
realize the value of proved undeveloped reserves on our properties. Any
significant variance in actual results from these assumptions could also
materially affect the estimated quantity and value of reserves set forth in this
report.
The present value of future net revenues we disclose may not be the current
market value of our estimated natural gas and crude oil reserves. In accordance
with SEC requirements, the estimated discounted future net cash flows from
proved reserves are generally based on prices and costs as of the end of the
period of the estimate. Actual future prices and costs may be materially higher
or lower than the prices and costs as of the end of the year of the estimate.
Any changes in consumption by natural gas purchasers or in governmental
regulations or taxation will also affect actual future net cash flows. The
timing of both the production and the expenses from the development and
production of natural gas and crude oil properties will affect the timing of
actual future net cash flows from proved reserves and their present value. In
addition, the 10% discount factor, which is required by the SEC to be used in
calculating discounted future net cash flows for reporting purposes, is not
necessarily the most accurate discount factor. The effective interest rate at
various times and the risks associated with us or the natural gas and crude oil
industry in general will affect the accuracy of the 10% discount factor.
Our operations are subject to the numerous risks of natural gas and crude
oil drilling and production activities.
Our natural gas and crude oil drilling and production activities are
subject to numerous risks, many of which are beyond our control. These risks
include the risk of fire, explosions, blow-outs, pipe failure, abnormally
pressured formations and environmental hazards. Environmental hazards include
oil spills, natural gas leaks, ruptures and discharges of toxic gases. In
addition, title problems, weather conditions and mechanical difficulties or
shortages or delays in delivery of drilling rigs and other equipment could
negatively affect our operations. If any of these or other similar industry
operating risks occur, we could have substantial losses. Substantial losses also
may result from injury or loss of life, severe damage to or destruction of
property, clean-up responsibilities, regulatory investigation and penalties and
suspension of operations. In accordance with industry practice, we maintain
insurance against some, but not all, of the risks described above. We cannot
assure you that our insurance will be adequate to cover losses or liabilities.
Also, we cannot predict the continued availability of insurance at premium
levels that justify its purchase.
We operate in a highly competitive industry which may adversely affect our
operations.
We operate in a highly competitive environment. The principal resources
necessary for the exploration and production of natural gas and crude oil are
leasehold prospects under which natural gas and crude oil reserves may be
discovered, drilling rigs and related equipment to explore for such reserves and
knowledgeable personnel to conduct all phases of natural gas and crude oil
operations. We must compete for such resources with both major natural gas and
crude oil companies and independent operators. Many of these competitors have
financial and other resources substantially greater than ours. Although we
believe our current operating and financial resources are adequate to preclude
any significant disruption of our operations in the immediate future, we cannot
assure you that such materials and resources will be available to us.
The unavailability or high cost of drilling rigs, equipment, supplies,
insurance, personnel and crude oil field services could adversely affect our
ability to execute our exploration and development plans on a timely basis and
within our budget.
Our industry is cyclical and, from time to time, there is a shortage of
drilling rigs, equipment, supplies, insurance or qualified personnel. During
these periods, the costs and delivery times of rigs, equipment and supplies are
substantially greater. In addition, the demand for, and wage rates of, qualified
drilling rig crews rise as the number of active rigs in service increases. As a
result of increasing levels of exploration and production in response to strong
prices of natural gas and crude oil, the demand for oilfield services has risen
and the costs of these services are increasing.
7
Our natural gas and crude oil operations are subject to various Federal,
state and local regulations that materially affect our operations.
Matters regulated include permits for drilling operations, drilling and
abandonment bonds, reports concerning operations, the spacing of wells and
unitization and pooling of properties and taxation. At various times, regulatory
agencies have imposed price controls and limitations on production. In order to
conserve supplies of natural gas and crude oil, these agencies have restricted
the rates of flow of natural gas and crude oil wells below actual production
capacity. Federal, state and local laws regulate production, handling, storage,
transportation and disposal of natural gas and crude oil, by-products from
natural gas and crude oil and other substances and materials produced or used in
connection with natural gas and crude oil operations. To date, our expenditures
related to complying with these laws and for remediation of existing
environmental contamination have not been significant. We believe that we are in
substantial compliance with all applicable laws and regulations. However, the
requirements of such laws and regulations are frequently changed. We cannot
predict the ultimate cost of compliance with these requirements or their effect
on our operations.
Risks Related to our Common Stock
We do not pay dividends on our common stock.
We have never paid a cash dividend on our common stock and the terms of the
revolving credit facility and the indenture relating to the notes limit our
ability to pay dividends on our common stock.
Shares eligible for future sale may depress our stock price.
At March 27, 2006, we had 42,588,237 shares of common stock outstanding of
which 3,991,679 shares were held by affiliates and, in addition, 2,588,963
shares of common stock were subject to outstanding options granted under certain
stock option plans (of which 1,704,838 shares were vested at March 27, 2006).
All of the shares of common stock held by affiliates are restricted or
control securities under Rule 144 promulgated under the Securities Act of 1933,
as amended (the "Securities Act"). The shares of the common stock issuable upon
exercise of the stock options have been registered under the Securities Act.
Sales of shares of common stock under Rule 144 or another exemption under the
Securities Act or pursuant to a registration statement could have a material
adverse effect on the price of the common stock and could impair our ability to
raise additional capital through the sale of equity securities.
The price of our common stock has been volatile and could continue to
fluctuate substantially.
Our common stock is traded on The American Stock Exchange. The market price
of our common stock has been volatile and could fluctuate substantially based on
a variety of factors, including the following:
o fluctuations in commodity prices;
o variations in results of operations;
o legislative or regulatory changes;
o general trends in the industry;
o market conditions; and
o analysts' estimates and other events in the natural gas and crude
oil industry.
We may issue shares of preferred stock with greater rights than shares of
our common stock.
Subject to the rules of The American Stock Exchange, our articles of
incorporation authorize our board of directors to issue one or more series of
preferred stock and set the terms of the preferred stock without seeking any
further approval from holders of our common stock. Any preferred stock that is
issued may rank ahead of our common stock in terms of dividends, priority and
liquidation premiums and may have greater voting rights than our common stock.
8
Anti-takeover provisions could make a third party acquisition of Abraxas
difficult.
Our articles of incorporation and bylaws provide for a classified board of
directors, with each member serving a three-year term, and eliminate the ability
of stockholders to call special meetings or take action by written consent. Each
of the provisions in the articles of incorporation and bylaws could make it more
difficult for a third party to acquire Abraxas without the approval of our
board. In addition, the Nevada corporate statute also contains certain
provisions that could make an acquisition by a third party more difficult.
An active market may not develop for our common stock.
Our common stock is quoted on The American Stock Exchange. While there is
currently one specialist in our common stock, this specialist is not obligated
to continue to make a market in our common stock. In this event, the liquidity
of our common stock could be adversely impacted and a stockholder could have
difficulty obtaining accurate stock quotes.
Future issuance of additional shares of our common stock could cause
dilution of ownership interests and adversely affect our stock price.
We may in the future issue our previously authorized and unissued
securities, resulting in the dilution of the ownership interests of our current
stockholders and purchasers of common stock offered hereby. We are currently
authorized to issue 200,000,000 shares of common stock with such rights as
determined by our board of directors. The potential issuance of such additional
shares of common stock may create downward pressure on the trading price of our
common stock. We may also issue additional shares of our common stock or other
securities that are convertible into or exercisable for common stock for capital
raising or other business purposes. Future sales of substantial amounts of
common stock, or the perception that sales could occur, could have a material
adverse effect on the price of our common stock.
9
USE OF PROCEEDS
Unless we specify otherwise in the applicable prospectus supplement, the
net proceeds we receive from the sale of the securities offered by this
prospectus and any prospectus supplement will be used for general corporate
purposes. General corporate purposes may include any of the following:
o repaying debt;
o providing working capital;
o funding capital expenditures;
o paying for possible acquisitions or the expansion of our business;
or
o repurchasing our capital stock.
We may temporarily invest the net proceeds we receive from any offering of
securities or use the net proceeds to repay short-term debt until we can use
them for their stated purposes.
DILUTION
Our net tangible book value at December 31, 2005 was $(0.56) per share of
common stock. Net tangible book value per share of common stock is determined by
dividing our tangible net worth, which is tangible assets less liabilities, by
the total number of shares of our common stock outstanding. If we offer shares
of our common stock, purchasers of our common stock in that offering may
experience immediate dilution in net tangible book value per share. The
prospectus supplement relating to an offering of shares of our common stock will
set forth the information regarding any dilutive effect of that offering.
RATIO OF EARNINGS TO FIXED CHARGES
The following table contains our consolidated ratio of earnings to fixed
charges for the periods indicated. You should read these ratios in connection
with our consolidated financial statements, including the notes to those
statements, incorporated by reference in this prospectus.
Year Ended December 31,
-------------------------------------------------------------------
2001 2002 2003 2004 2005
---- ---- ---- ---- ----
Ratio of
earnings to
fixed charges * * * 1.2x 1.4x
* Earnings inadequate to cover fixed charges.
Earnings consist of income (loss) from continuing operations before income
taxes plus fixed charges. Fixed charges consist of interest expenses and
amortization of deferred financing fees. Our earnings were inadequate to cover
fixed charges in 2001, 2002 and 2003 by $14.3 million and $55.2 million and
$13.2 million, respectively. In 2004, we had earnings of $22.7 million and fixed
charges of $19.7 million. In 2005, we had earnings of $21.9 million and fixed
charges of $15.6 million. Our ratio of earnings to fixed charges was 1.2x and
1.4x in 2004 and 2005, respectively.
DESCRIPTION OF DEBT SECURITIES
The following description of debt securities sets forth certain general
terms and provisions of the debt securities to which this prospectus and any
prospectus supplement may relate. The particular terms of any series of debt
10
Securities and the extent to which the general provisions may apply to a
particular series of debt securities will be described in a prospectus
supplement relating to that series. The debt securities will be issued under one
or more separate indentures between us and a trustee to be named in the
prospectus supplement. Senior debt securities will be issued under a senior
indenture and subordinated debt securities will be issued under a subordinated
indenture. Together the senior indenture and the subordinated indenture are
called indentures.
Because we have included only a summary of the indenture terms, you must
read the indentures in full to understand every detail of the terms of the debt
securities. The summary is not complete. The forms of the indentures have been
filed as exhibits to the registration statement to which this prospectus relates
and you should read the indentures for provisions that may be important to you.
As used in this section of the prospectus and under the caption
"Description of Capital Stock," the terms "we," "our" and "us" mean Abraxas
Petroleum Corporation only, and not its subsidiaries.
General
Unless otherwise indicated in the applicable prospectus supplement, the
debt securities will be our direct, unsecured obligations. The senior debt
securities will rank equally with all of our other senior and unsubordinated
debt. The subordinated debt securities will have a junior position to certain of
our debt, as described in the subordinated securities themselves or under the
supplemental indenture under which they are issued.
We conduct some of our operations through our subsidiaries. To the extent
of such operations, holders of debt securities will have a position junior to
the prior claims of creditors of our subsidiaries, including trade creditors,
debtholders, secured creditors, taxing authorities and guarantee holders, and
any preferred stockholders, except to the extent that we may ourself be a
creditor with recognized and unsubordinated claims against any subsidiary.
If specified in the prospectus supplement, the debt securities will be
general obligations of our subsidiaries that execute subsidiary guarantees.
Unless otherwise specified in the prospectus supplement, such subsidiary
guarantees will be unsecured obligations. See "- Subsidiary Guarantees."
A prospectus supplement and a supplemental indenture relating to any series
of debt securities being offered will include specific terms relating to the
offering. These terms will include some or all of the following:
o the title and type of the debt securities;
o any limit upon the total principal amount of the debt securities;
o the dates on which the principal and premium (if any) of the debt
securities will be payable;
o the interest rate or rates, or the method of determination thereof,
that the debt securities will bear and the interest payment dates
for the debt securities;
o places where payments of the principal, premium, if any, and
interest may be made on the debt securities;
o any optional redemption periods;
o any subordination and the terms thereof;
o any sinking fund, amortization or other provisions that would
obligate us to redeem, repurchase or repay some or all of the debt
securities;
o if other than US dollars, the currency or currencies, or the form of
other securities or property in which principal of (and premium, if
any) and/or interest on the debt securities will or may be payable;
o any index or other method used to determine the amount of payment of
principal of (and premium, if any) and/or interest on the debt
securities;
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o whether any portion of the principal amount of such debt securities
is payable upon declaration of the acceleration of the maturity
thereof;
o any additional means of satisfaction or discharge of the debt
securities;
o whether our subsidiaries will provide guarantees of the debt
securities, and the terms of any subordination of such guarantee;
o whether the debt securities will be secured or unsecured;
o any deletions, modifications, or additions to the events of default
or covenants pertaining to the debt securities or made for the
benefit of the holders thereof;
o whether the debt securities will be convertible or exchangeable and,
if so, the provisions regarding convertibility or exchangeability of
the debt securities;
o whether the debt securities will be subject to certain optional
interest rate reset provisions;
o whether the debt securities will be issued as a global debt security
and, in that case, the identity of the depository for the debt
securities; and
o any other terms of the debt securities.
Neither of the indentures limits the amount of debt securities that may be
issued. Each indenture allows debt securities to be issued up to the principal
amount that may be authorized by us and may be in any currency or currency unit
designated by us.
Debt securities of a series may be issued in registered, bearer, coupon or
global form.
The prospectus supplement for each series of debt securities will state
whether the debt securities will be issued in registered form and whether the
debt securities will be in denominations other than $1,000 each or multiples
thereof.
Original Issue Discount
One or more series of debt securities offered by this prospectus may be
sold at a substantial discount below their stated principal amount, bearing no
interest or interest at a rate that at the time of issuance is below market
rates. The federal income tax consequences and special considerations applicable
to any series of debt securities generally will be described in the applicable
prospectus supplement.
Subsidiary Guarantees
Our payment obligations under any series of the debt securities may be
jointly and severally guaranteed by one or more of our subsidiaries. If a series
of debt securities is so guaranteed by any of our subsidiaries, such
subsidiaries will execute a supplemental indenture or notation of guarantee as
further evidence of their guarantee. The applicable prospectus supplement will
describe the terms of any guarantee by our subsidiaries.
The obligations of each subsidiary under its subsidiary guarantee may be
limited to the maximum amount that will not result in such guarantee obligations
constituting a fraudulent conveyance or fraudulent transfer under federal or
state law, after giving effect to all other contingent and fixed liabilities of
that subsidiary and any collections from or payments made by or on behalf of any
other subsidiary guarantor in respect to its obligations under its subsidiary
guarantee.
Each indenture may restrict consolidations or mergers with or into a
subsidiary guarantor or provide for the release of a subsidiary from a
subsidiary guarantee, as set forth in a related prospectus supplement, the
applicable indenture, and any applicable related supplemental indenture.
If a series of debt securities is guaranteed by our subsidiaries and is
designated as subordinate to our senior debt, then the guarantee by those
subsidiaries will be subordinated to their senior debt and will be subordinated
to any guarantees by those subsidiaries of our senior debt. See "-
Subordination."
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Subordination
Under the subordinated indenture, payment of the principal, interest and
any premium on the subordinated debt securities will generally be subordinated
and junior in right of payment to the prior payment in full of any debt
specified in the applicable prospectus supplement and supplemental indenture as
being senior to the subordinated debt.
Consolidation, Merger or Sale
The indentures generally permit a consolidation or merger between us and
another entity. They also permit the sale by us of all or substantially all of
our property and assets. If this happens, the remaining or acquiring entity
shall assume all of our responsibilities and liabilities under the indentures,
including the payment of all amounts due on the debt securities and performance
of the covenants in the indentures. However, we will consolidate or merge with
or into any other entity or sell all or substantially all of our assets only
according to the terms and conditions of the indentures. The remaining or
acquiring entity will be substituted for us in the indentures with the same
effect as if it had been an original party to the indentures. Thereafter, the
successor entity may exercise our rights and powers under any indenture, in our
name or in its own name. Any act or proceeding required or permitted to be done
by our board of directors or any of our officers may be done by the board or
officers of the successor entity. If we sell all or substantially all of our
assets, upon compliance with these provisions, we shall be released from all our
liabilities and obligations under any indenture and under the debt securities.
Modification of Indentures
Under each indenture our rights and obligations and the rights of the
holders may be modified with the consent of the holders of a majority in
aggregate principal amount of the outstanding debt securities of each series
affected by the modification. No modification of the principal or interest
payment terms, and no modification reducing the percentage required for
modifications, is effective against any holder without its consent.
Events of Default
Each of the indentures defines an event of default with respect to debt
securities of any series as any of the following events:
o failure to pay interest on any debt security for 30 days after it is
due;
o failure to pay the principal of or premium, if any, on any debt
security when due;
o failure to deposit any sinking fund payment for 30 days after it is
due;
o failure to perform any other covenant in the indenture that
continues for 60 days after being given written notice;
o certain events of bankruptcy, insolvency or reorganization; or
o any other event of default included in any indenture or supplemental
indenture.
An event of default for a particular series of debt securities does not
necessarily constitute an event of default for any other series of debt
securities issued under an indenture. The trustee may withhold notice to the
holders of debt securities of any default (except in the payment of principal or
interest) if it considers such withholding of notice to be in the best interests
of the holders.
If an event of default for any series of debt securities occurs and
continues, the trustee or the holders of at least 25% in aggregate principal
amount of the debt securities of the series may declare the entire principal of
all the debt securities of that series to be due and payable immediately. If an
event of default occurs and is continuing with respect to all series of debt
securities as a result of a failure to perform a covenant applicable to all
securities or because of bankruptcy, insolvency or reorganization, the trustee
or the holders of at least 25% in aggregate principal amount of all of the debt
securities may declare the entire principal of all the debt securities to be due
and payable immediately. If either of these events occurs, subject to certain
conditions, the holders of a majority of the aggregate principal amount of the
debt securities of that series (or of the debt securities of all series, as the
case may be) can void the declaration. There is no automatic acceleration, even
in the event of bankruptcy, insolvency or reorganization.
13
Other than its duties in case of a default, a trustee is not obligated to
exercise any of its rights or powers under any indenture at the request, order
or direction of any holders, unless the holders offer the trustee reasonable
indemnity. If they provide this reasonable indemnification, the holders of a
majority in principal amount of any series of debt securities may direct the
time, method and place of conducting any proceeding or any remedy available to
the trustee, or exercising any power conferred upon the trustee, for any series
of debt securities.
Covenants
Under the indentures, we will:
o pay the principal of, and interest and any premium on, the debt
securities when due;
o maintain a place of payment;
o deliver a report to the trustee at the end of each fiscal year
reviewing our obligations under the indentures; and
o deposit sufficient funds with any paying agent on or before the due
date for any principal, interest or premium.
Equal and Ratable Securitization
Neither we nor any restricted subsidiary may secure senior debt securities
of any series unless the debt securities of every other series are also equally
and ratably secured. The subordinated securities have no such restrictive
covenant.
Payment and Transfer
Principal, interest and any premium on fully registered securities will be
paid at designated places. Payment will be made by check mailed to the persons
in whose names the debt securities are registered on days specified in the
indentures or any prospectus supplement. Debt securities payments in other forms
will be paid at a place designated by us and specified in a prospectus
supplement.
Fully registered securities may be transferred or exchanged at the
corporate trust office of the trustee or at any other office or agency
maintained by us for such purposes without the payment of any service charge
except for any tax or governmental charge.
Global Securities
Certain series of the debt securities may be issued as permanent global
debt securities to be deposited with a depositary with respect to that series.
Unless otherwise indicated in the prospectus supplement, the following is a
summary of the depository arrangements applicable to debt securities issued in
permanent global form and for which The Depositary Trust Company ("DTC") acts as
depositary.
Each global debt security will be deposited with, or on behalf of, DTC, as
depositary, or its nominee and registered in the name of a nominee of DTC.
Except under the limited circumstances described below, global debt securities
are not exchangeable for definitive certificated debt securities.
Ownership of beneficial interests in a global debt security is limited to
institutions that have accounts with DTC or its nominee ("participants") or
persons that may hold interests through participants. In addition, ownership of
beneficial interests by participants in a global debt security will be evidenced
only by, and the transfer of that ownership interest will be effected only
through, records maintained by DTC or its nominee for a global debt security.
Ownership of beneficial interests in a global debt security by persons that hold
through participants will be evidenced only by, and the transfer of that
ownership interest within that participant will be effected only through,
records maintained by that participant. DTC has no knowledge of the actual
beneficial owners of the debt securities. Beneficial owners will not receive
written confirmation from DTC of their purchase, but beneficial owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the participants through
which the beneficial owners entered the transaction. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in a global debt security.
14
Payment of principal of, and interest on, debt securities represented by a
global debt security registered in the name of or held by DTC or its nominee
will be made to DTC or its nominee, as the case may be, as the registered owner
and holder of the global debt security representing those debt securities. We
have been advised by DTC that upon receipt of any payment of principal of, or
interest on, a global debt security, DTC will immediately credit accounts of
participants on its book-entry registration and transfer system with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of that global debt security as shown in the records of DTC. Payments by
participants to owners of beneficial interests in a global debt security held
through those participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the sole
responsibility of those participants, subject to any statutory or regulatory
requirements that may be in effect from time to time.
Neither we, any trustee nor any of our respective agents will be
responsible for any aspect of the records of DTC, any nominee or any participant
relating to, or payments made on account of, beneficial interests in a permanent
global debt security or for maintaining, supervising or reviewing any of the
records of DTC, any nominee or any participant relating to such beneficial
interests.
A global debt security is exchangeable for definitive debt securities
registered in the name of, and a transfer of a global debt security may be
registered to, any person other than DTC or its nominee, only if:
o DTC notifies us that it is unwilling or unable to continue as
depositary for that global debt security or at any time DTC ceases
to be registered under the Securities Exchange Act of 1934;
o we determine in our discretion that the global debt security shall
be exchangeable for definitive debt securities in registered form;
or
o there shall have occurred and be continuing an event of default or
an event which, with notice or the lapse of time or both, would
constitute an event of default under the debt securities.
Any global debt security that is exchangeable pursuant to the preceding
sentence will be exchangeable in whole for definitive debt securities in
registered form, of like tenor and of an equal aggregate principal amount as the
global debt security, in denominations specified in the applicable prospectus
supplement (if other than $1,000 and integral multiples of $1,000). The
definitive debt securities will be registered by the registrar in the name or
names instructed by DTC. We expect that these instructions may be based upon
directions received by DTC from its participants with respect to ownership of
beneficial interests in the global debt security.
Except as provided above, owners of the beneficial interests in a global
debt security will not be entitled to receive physical delivery of debt
securities in definitive form and will not be considered the holders of debt
securities for any purpose under the indentures. No global debt security shall
be exchangeable except for another global debt security of like denomination and
tenor to be registered in the name of DTC or its nominee. Accordingly, each
person owning a beneficial interest in a global debt security must rely on the
procedures of DTC and, if that person is not a participant, on the procedures of
the participant through which that person owns its interest, to exercise any
rights of a holder under the global debt security or the indentures.
We understand that, under existing industry practices, in the event that we
request any action of holders, or an owner of a beneficial interest in a global
debt security desires to give or take any action that a holder is entitled to
give or take under the debt securities or the indentures, DTC would authorize
the participants holding the relevant beneficial interests to give or take that
action, and those participants would authorize beneficial owners owning through
those participants to give or take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
DTC has advised us that DTC is a limited purpose trust company organized
under the laws of the State of New York, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code and a "clearing agency" registered under the Securities Exchange Act of
1934. DTC was created to hold securities of its participants and to facilitate
the clearance and settlement of securities transactions among its participants
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in those securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations. DTC is
owned by a number of its participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to DTC's book-entry system is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the Securities and Exchange Commission.
Defeasance
We will be discharged from our obligations on the debt securities of any
series at any time if we deposit with the trustee sufficient cash or government
securities to pay the principal, interest, any premium and any other sums due to
the stated maturity date or a redemption date of the debt securities of the
series. If this happens, the holders of the debt securities of the series will
not be entitled to the benefits of the indenture except for registration of
transfer and exchange of debt securities and replacement of lost, stolen or
mutilated debt securities.
We must also obtain an opinion of counsel to the effect that as a result of
the defeasance, holders of that series of debt securities will not recognize
income, gain or loss for federal income tax purposes and will be subject to
federal income tax on the same amount, in the same manner and at the same time
as would have been the case if such defeasance had not occurred.
Meetings
Each indenture contains provisions describing how meetings of the holders
of debt securities of a series may be convened. A meeting may be called at any
time by the trustee, and also, upon request, by us or the holders of at least
20% in principal amount of the outstanding debt securities of a series. A notice
of the meeting must always be given in the manner described under "Notices"
below. Generally speaking, except for any consent that must be given by all
holders of a series as described under "Modification of Indentures" above, any
resolution presented at a meeting of the holders of a series of debt securities
may be adopted by the affirmative vote of the holders of a majority in principal
amount of the outstanding debt securities of that series, unless the indenture
allows the action to be voted upon to be taken with the approval of the holders
of a different specific percentage of principal amount of outstanding debt
securities of a series. In that case, the holders of outstanding debt securities
of at least the specified percentage must vote in favor of the action. Any
resolution passed or decision taken at any meeting of holders of debt securities
of any series in accordance with the applicable indenture will be binding on all
holders of debt securities of that series and any related coupons, unless, as
discussed in "Modification of Indentures" above, the action is only effective
against holders that have approved it. The quorum at any meeting called to adopt
a resolution, and at any reconvened meeting, will be holders holding or
representing a majority in principal amount of the outstanding debt securities
of a series.
Governing Law
Each indenture and the debt securities will be governed by and construed in
accordance with the laws of the State of New York.
Notices
Notices to holders of debt securities will be given by mail to the
addresses of such holders as they appear in the security register.
Revolving Credit Facility
Our revolving credit facility provides for a maximum $15 million in
commitments and matures in 2008. Borrowings under our revolving credit facility
are secured by substantially all of our natural gas and crude oil properties.
The collateral value and borrowing base are redetermined semi-annually and are
based in part on prevailing natural gas and crude oil prices. The revolving
credit facility agreement contains various covenants and restrictive provisions,
which limit our ability, among other things, to incur additional indebtedness,
sell properties, purchase or redeem our capital stock, pay dividends, make
investments or loans, create liens and make certain acquisitions as well as
certain financial covenants.
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Senior Notes
We have issued $125.0 million of floating rate senior secured notes that
mature in 2009. The senior notes are secured obligations ranking equally with
our revolving credit facility and have covenants similar to the revolving credit
facility. The notes are guaranteed by all of our current subsidiaries.
DESCRIPTION OF CAPITAL STOCK
Common Stock
Abraxas is currently authorized to issue up to 200,000,000 shares of common
stock, par value $.01 per share.
As of March 27, 2006, there were 42,588,327 shares of our common stock
issued and outstanding. Holders of the common stock are entitled to cast one
vote for each share held of record on all matters submitted to a vote of
stockholders and are not entitled to cumulate votes for the election of
directors. Holders of common stock do not have preemptive rights to subscribe
for additional shares of common stock issued by us.
Holders of our common stock are entitled to receive dividends as may be
declared by the Board of Directors out of funds legally available therefor.
Under the terms of the notes indenture and our revolving credit facility, we may
not pay dividends on shares of our common stock. In the event of liquidation,
holders of the common stock are entitled to share pro rata in any distribution
of our assets remaining after payment of liabilities, subject to the preferences
and rights of the holders of any outstanding shares of our preferred stock. All
of the outstanding shares of our common stock are fully paid and nonassessable.
Preferred Stock
Our articles of incorporation authorize the issuance of up to 1,000,000
shares of preferred stock, par value $.01 per share, in one or more series. The
Board of Directors is authorized, without any further action by stockholders, to
determine the rights, preferences, privileges and restrictions of any series of
preferred stock, the number of shares constituting any such series, and the
designation thereof. The rights of holders of common stock will be subject to,
and may be adversely affected by, the rights of holders of any preferred stock
that may be issued in the future.
If we offer preferred stock, a description will be filed with the SEC and
the certificate of designation for any series of preferred stock will be
described in a prospectus supplement. If so indicated in the prospectus
supplement relating to a particular series of preferred stock, the terms of any
such series of preferred stock may differ from the terms set forth below. The
terms of the preferred stock may include:
o the title of the series and the number of shares in the series;
o the price at which the preferred stock will be offered;
o the dividend rate or rates or method of calculating the rates, the
dates on which the dividends will be payable, whether or not
dividends will be cumulative or noncumulative and, if cumulative,
the dates from which dividends on the preferred stock being offered
will cumulate;
o the voting rights, if any, of holders of shares of the preferred
stock being offered;
o the provisions for a sinking fund, if any, and the provisions for
redemption, if applicable, of the preferred stock being offered;
o the liquidation preference per share;
o the terms and conditions, if applicable, upon which the preferred
stock being offered will be convertible into our common stock,
including the conversion price, or the manner of calculating the
conversion price, and the conversion period;
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o the terms and conditions, if applicable, upon which the preferred
stock being offered will be exchangeable for debt securities,
including the exchange price, or the manner of calculating the
exchange price, and the exchange period;
o any listing of the preferred stock being offered on any securities
exchange;
o whether interests in the shares of the series will be represented by
depositary shares;
o the relative ranking and preferences of the preferred stock being
offered as to dividend rights and rights upon liquidation,
dissolution or the winding up of our affairs;
o any limitations on the issuance of any class or series of preferred
stock ranking senior or equal to the series of preferred stock being
offered as to dividend rights and rights upon liquidation,
dissolution or the winding up of our affairs; and
o any additional rights, preferences, qualifications, limitations and
restrictions of the series.
Upon issuance, the shares of preferred stock will be fully paid and
nonassessable, which means that holders thereof will have paid their purchase
price in full and we may not require them to pay additional funds. Holders of
preferred stock will not have any preemptive rights.
The transfer agent and registrar for the preferred stock will be identified
in the applicable prospectus supplement.
Depositary Shares
We may, at our option, elect to offer fractional shares of preferred stock,
rather than full shares of preferred stock. If we do, we will issue to the
public receipts for depositary shares, and each of these depositary shares will
represent a fraction of a share of a particular series of preferred stock.
Description of Depositary Shares.
The shares of any series of preferred stock underlying the depositary
shares will be deposited under a deposit agreement between us and a bank or
trust company selected by us to be the depositary. Subject to the terms of the
deposit agreement, each owner of a depositary share will be entitled, in
proportion to the applicable fractional interest in shares of preferred stock
underlying that depositary share, to all the rights and preferences of the
preferred stock underlying that depositary share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be issued to those
persons who purchase the fractional interests in the preferred stock underlying
the depositary shares, in accordance with the terms of the offering. The
following summary of the deposit agreement, the depositary shares and the
depositary receipts is not complete. You should refer to the forms of the
deposit agreement and depositary receipts that may be filed as exhibits to the
registration statement in the event we issue depositary shares.
Dividends and Other Distributions.
The depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to record holders of
depositary shares relating to that preferred stock in proportion to the number
of depositary shares owned by those holders.
If there is a distribution other than in cash, the depositary will
distribute property received by it to record holders of depositary shares that
are entitled to receive the distribution, unless the depositary determines that
it is not feasible to make the distribution. If this occurs, the depositary may,
with our approval, sell the property and distribute the net proceeds from the
sale to the applicable holders.
Redemption of Depositary Shares.
If a series of preferred stock underlying the depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds received
by the depositary resulting from the redemption, in whole or in part, of that
series of preferred stock held by the depositary. The redemption price per
depositary share will be equal to the applicable fraction of the redemption
price per share payable with respect to that series of the preferred stock.
Whenever we redeem shares of preferred stock that are held by the depositary,
the depositary will redeem, as of the same redemption date, the number of
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depositary shares representing the shares of preferred stock so redeemed. If
fewer than all the depositary shares are to be redeemed, the depositary shares
to be redeemed will be selected by lot or pro rata as determined by the
depositary.
After the date fixed for redemption, the depositary shares called for
redemption will no longer be outstanding, and all rights of holders of those
depositary shares will cease, except the right to receive any money, securities,
or other property upon surrender to the depositary of the depositary receipts
evidencing those depositary shares.
Voting the Preferred Stock.
Upon receipt of notice of any meeting at which holders of preferred stock
are entitled to vote, the depositary will mail the information contained in the
notice of meeting to record holders of the depositary shares underlying that
preferred stock. Each record holder of those depositary shares on the record
date (which will be the same date as the record date for the preferred stock)
will be entitled to instruct the depositary as to the exercise of the voting
rights pertaining to the amount of the preferred stock underlying that holder's
depositary shares. The depositary will try, as far as practicable, to vote the
number of shares of preferred stock underlying those depositary shares in
accordance with such instructions, and we will agree to take all action which
may be deemed necessary by the depositary in order to enable the depositary to
do so. The depositary will not vote the shares of preferred stock to the extent
it does not receive specific instructions from holders of depositary shares
underlying the preferred stock.
Amendment and Termination of the Depositary Agreement.
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may be amended at any time by agreement
between us and the depositary. However, any amendment that materially and
adversely alters the rights of holders of depositary shares will not be
effective unless the amendment has been approved by holders of at least a
majority of the depositary shares then outstanding. The deposit agreement may be
terminated by us or by the depositary only if (i) all outstanding depositary
shares have been redeemed or (ii) there has been a final distribution of the
underlying preferred stock in connection with our liquidation, dissolution or
winding up and the preferred stock has been distributed to holders of depositary
receipts.
Resignation and Removal of Depositary.
The depositary may resign at any time by delivering a notice to us of its
election to do so. We may remove the depositary at any time. Any such
resignation or removal will take effect upon the appointment of a successor
depositary and its acceptance of its appointment. The successor depositary must
be appointed within 60 days after delivery of the notice of resignation or
removal.
Miscellaneous.
The depositary will forward to holders of depository receipts all reports
and communications from us that we deliver to the depositary and that we are
required to furnish to the holders of the preferred stock.
Neither we nor the depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those of
the depositary will be limited to the performance in good faith of our
respective duties under the deposit agreement. Neither we nor the depositary
will be obligated to prosecute or defend any legal proceeding in respect of any
depositary shares or preferred stock unless satisfactory indemnity is furnished.
We and the depositary may rely upon written advice of counsel or accountants, or
upon information provided by persons presenting preferred stock for deposit,
holders of depositary receipts or other persons believed to be competent and on
documents believed to be genuine.
Anti-takeover Effects of Certain Provisions of the Articles of Incorporation and
Bylaws
Our articles of incorporation and bylaws provide for the Board of Directors
to be divided into three classes of directors serving staggered three-year
terms. As a result, approximately one-third of the Board of Directors will be
elected each year. The articles of incorporation and bylaws provide that the
Board of Directors will consist of not less than three nor more than twelve
members, with the exact number to be determined from time to time by the
affirmative vote of a majority of directors then in office. The Board of
Directors, and not the stockholders, has the authority to determine the number
of directors. This provision could prevent any stockholder from obtaining
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majority representation on our Board of Directors by enlarging the Board of
Directors and by filling the new directorships with the stockholder's own
nominees. In addition, directors may be removed by the stockholders only for
cause.
The articles of incorporation and bylaws provide that special meetings of
our stockholders may be called only by the Chairman of the Board, the President
or a majority of the members of the Board of Directors. This provision may make
it more difficult for stockholders to take actions opposed by the Board of
Directors.
The articles of incorporation and bylaws provide that any action required
to be taken or which may be taken by holders of our common stock must be
effected at a duly called annual or special meeting of such holders, and may not
be taken by any written consent of such stockholders. These provisions may have
the effect of delaying consideration of a stockholder proposal until the next
annual meeting unless a special meeting is called by the persons set forth
above. The provisions of the articles of incorporation and bylaws prohibiting
stockholder action by written consent could prevent holders of a majority of the
voting power of Abraxas from using the written consent procedure to take
stockholder action and result in us taking action without giving all of our
stockholders entitled to vote on a proposed action the opportunity to
participate in determining such proposed action.
Anti-Takeover Statutes
The Nevada General Corporation Law (the "Nevada GCL") contains two
provisions, described below as "Combination Provisions" and the "Control Share
Act," that may make the unsolicited or hostile attempts to acquire control of
Abraxas through certain types of transactions more difficult.
Restrictions on Certain Combinations between Nevada Resident Corporations
and Interested Stockholders.
The Nevada GCL includes certain provisions (the "Combination Provisions")
prohibiting certain "combinations" (generally defined to include certain
mergers, disposition of assets transactions, and share issuance or transfer
transactions) between a resident domestic corporation and an "interested
stockholder" (generally defined to be the beneficial owner of 10% or more of the
voting power of the outstanding shares of the corporation), except those
combinations which are approved by a corporation's board of directors before the
interested stockholder first obtained a 10% interest in the corporation's stock.
There are additional exceptions to the prohibition, which apply to combinations
if they occur more than three years after the interested stockholder's date of
acquiring shares. The Combination Provisions apply unless the corporation elects
against their application in its original articles of incorporation or an
amendment thereto, or timely elected against their application in its bylaws no
later than October 31, 1991. Our articles of incorporation and bylaws do not
currently contain a provision rendering the Combination Provisions inapplicable
to us.
Nevada Control Share Act.
Nevada's Control Share Acquisition Act (the "Control Share Act") imposes
procedural hurdles on and curtails greenmail practices of corporate raiders. The
Control Share Act temporarily disenfranchises the voting power of "control
shares" of a person or group ("Acquiring Person") purchasing a "controlling
interest" in an "issuing corporation" (as defined in the Nevada GCL) not opting
out of the Control Share Act. In this regard, the Control Share Act will apply
to an issuing corporation unless, before an acquisition is made, the articles of
incorporation or bylaws in effect on the tenth day following the acquisition of
a controlling interest provide that it is inapplicable. Our articles of
incorporation and bylaws do not currently contain a provision rendering the
Control Share Act inapplicable to us.
Under the Control Share Act, an issuing corporation is a corporation
organized in Nevada which has 200 or more stockholders, at least 100 of whom are
stockholders of record and residents of Nevada, and which does business in
Nevada directly or through an affiliated company. Our status at the time of the
occurrence of a transaction governed by the Control Share Act (assuming that our
articles of incorporation or bylaws have not by that time been amended to
include an opting out provision) would determine whether the Control Share Act
is applicable.
The Control Share Act requires an Acquiring Person to take certain
procedural steps before such Acquiring Person can obtain the full voting power
of the control shares. Control shares are the shares of a corporation (1)
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acquired or offered to be acquired which will enable the Acquiring Person to own
a controlling interest, and (2) acquired within 90 days immediately preceding
that date. A controlling interest is defined as the ownership of shares which
would enable the Acquiring Person to exercise certain graduated amounts
(beginning with one-fifth) of all voting power of the corporation. The Acquiring
Person may not vote any control shares without first obtaining approval from the
stockholders not characterized as interested stockholders.
To obtain voting rights in control shares, the Acquiring Person must file a
statement at the registered office of the issuer ("Offeror's Statement") setting
forth certain information about the acquisition or intended acquisition of
stock. The Offeror's Statement may also request a special meeting of
stockholders to determine the voting rights to be accorded to the Acquiring
Person. A special meeting of stockholders must then be held at the Acquiring
Person's expense within 30 to 50 days after the Offeror's Statement is filed. If
a special meeting is not requested by the Acquiring Person, the matter will be
addressed at the next regular or special meeting of stockholders.
At the special or annual meeting at which the issue of voting rights of
control shares will be addressed, interested stockholders may not vote on the
question of granting voting rights to control the corporation or its parent
unless the articles of incorporation of the issuing corporation provide
otherwise. Our articles of incorporation do not currently contain a provision
allowing for such voting power.
If full voting power is granted to the Acquiring Person by the
disinterested stockholders, and the Acquiring Person has acquired control shares
with a majority or more of the voting power, then (unless otherwise provided in
the articles of incorporation or bylaws in effect on the tenth day following the
acquisition of a controlling interest) all stockholders of record, other than
the Acquiring Person, who have not voted in favor of authorizing voting rights
for the control shares, must be sent a "dissenter's notice" advising them of the
fact and of their right to receive "fair value" for their shares. Our articles
of incorporation and bylaws do not provide otherwise. By the date set in the
dissenter's notice, which may not be less than 30 nor more than 60 days after
the dissenter's notice is delivered, any such stockholder may demand to receive
from the corporation the fair value for all or part of his shares. Fair value is
defined in the Control Share Act as "not less than the highest price per share
paid by the Acquiring Person in an acquisition."
The Control Share Act permits a corporation to redeem the control shares in
the following two instances, if so provided in the articles of incorporation or
bylaws of the corporation in effect on the tenth day following the acquisition
of a controlling interest: (1) if the Acquiring Person fails to deliver the
Offeror's Statement to the corporation within 10 days after the Acquiring
Person's acquisition of the control shares; or (2) if an Offeror's Statement is
delivered, but the control shares are not accorded full voting rights by the
stockholders. Our articles of incorporation and bylaws do not so provided.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt or equity securities. We may issue
warrants independently or together with any offered securities. The warrants may
be attached to or separate from those offered securities. We may issue the
warrants under warrant agreements to be entered into between us and a bank or
trust company, as warrant agent, all as described in the applicable prospectus
supplement.
The prospectus supplement relating to any warrants that we may offer will
contain the specific terms of the warrants. These terms may include the
following:
o the title of the warrants;
o the designation, amount and terms of the securities for which the
warrants are exercisable;
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o the designation and terms of the other securities, if any, with
which the warrants are to be issued and the number of warrants
issued with each other security;
o the price or prices at which the warrants will issued;
o the aggregate number of warrants;
o any provisions for adjustment of the number of amount of securities
receivable upon exercise of the warrants or the exercise price of
the warrants;
o the price or prices at which the securities purchasable upon
exercise of the warrants may be purchased;
o if applicable, the date on and after which the warrants and the
securities purchasable upon exercise of the warrants will be
separately transferable;
o the date on which the right to exercise the warrants will commence,
and the date on which the right will expire;
o the maximum or minimum number of warrants that may be exercised at
any time;
o information with respect to book-entry procedures, if any; and
o any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
Further terms of the warrants and the applicable warrant agreement will be
set forth in the applicable prospectus supplement.
DESCRIPTION OF UNITS
As specified in the applicable prospectus supplement, we may issue units
consisting of one or more debt securities, shares of common stock, shares of
preferred stock, depositary shares or warrants or any combination of such
securities, including guarantees of any securities.
The applicable prospectus supplement will specify the following terms of
any units in respect of which this prospectus is being delivered:
o the terms of the units and of any of the debt securities, common
stock, preferred stock, depositary shares, warrants and guarantees
comprising the units, including whether and under what circumstances
the securities comprising the units may be traded separately;
o a description of the terms of any unit agreement governing the
units; and
o a description of the provisions for the payment, settlement,
transfer or exchange of the units.
PLAN OF DISTRIBUTION
We may sell securities pursuant to this prospectus (a) through underwriters
or dealers, (b) through agents, (c) directly to one or more purchasers or (d)
through a combination of any such methods of sale. The prospectus supplement
relating to any offering of securities may include the following information:
o the terms of the offer;
o the names of any underwriters, dealers or agents;
o the name or names of any managing underwriter or underwriters;
o the purchase price of the securities from us;
o the net proceeds to us from the sale of the securities;
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o any delayed delivery arrangements;
o any underwriting discounts, commissions or other items constituting
underwriters' compensation;
o any initial public offering price;
o any discounts or concessions allowed or reallowed or paid to
dealers; and
o any commissions paid to agents.
Sales Through Underwriters or Dealers
If we use underwriters in the sale, the underwriters will acquire the
securities for their own accounts. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the underwriters to
purchase the securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered securities if they
purchase any of them. The underwriters may change from time to time any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters may also impose a penalty bid, which means that selling concessions
allowed to syndicate members or other broker-dealers for the offered securities
sold for their account may be reclaimed by the syndicate if the offered
securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the offered securities, which may be higher than the price that
might otherwise prevail in the open market. If commenced, the underwriters may
discontinue these activities at any time.
If we use dealers in the sale of securities, we will sell the securities to
them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale.
Direct Sales and Sales Through Agents
We may sell the securities directly. In this case, no underwriters or
agents would be involved. We may sell securities upon the exercise of rights
that we may issue to our securityholders. We may also sell the securities
directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any sale
of those securities.
We may sell the securities through agents we designate from time to time.
Unless we inform you otherwise in the prospectus supplement, any agent will
agree to use its reasonable best efforts to solicit purchases for the period of
its appointment.
General Information
Underwriters, dealers and agents that participate in the distribution of
our securities may be underwriters as defined in the Securities Act, and any
discounts or commissions they receive and any profit they make on the resale of
the offered securities may be treated as underwriting discounts and commissions
under the Securities Act. Any underwriters or agents will be identified and
their compensation described in a prospectus supplement. We may indemnify,
underwriters, dealers and agents against certain civil liabilities, including
liabilities under the Securities Act, or make contributions to payments they may
be required to make relating to those liabilities. Our underwriters, dealers,
and agents, or their affiliates, may be customers of, engage in transactions
with, or perform services for us in the ordinary course of business.
Each series of securities offered by this prospectus may be a new issue of
securities with no established trading market. Any underwriters to whom
securities offered by this prospectus are sold by us for public offering and
sale may make a market in the securities offered by this prospectus, but the
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underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any securities offered by this prospectus.
Representatives of the underwriters through whom our securities are sold
for public offering and sale may engage in over-allotment, stabilizing
transactions, syndicate short covering transactions and penalty bids in
accordance with Regulation M under the Exchange Act. Over-allotment involves
syndicate sales in excess of the offering size, which creates a syndicate short
position. Stabilizing transactions permit bids to purchase the offered
securities so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the offered securities
in the open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit the representative of the
underwriters to reclaim a selling concession from a syndicate member when the
offered securities originally sold by such syndicate member are purchased in a
syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the offered securities to be higher than it would otherwise
be in the absence of such transactions. These transactions may be effected on a
national securities exchange and, if commenced, may be discontinued at any time.
Underwriters, dealers and agents may be customers of, engage in transactions
with or perform services for, us and our subsidiaries in the ordinary course of
business.
LEGAL MATTERS
Certain legal matters in connection with the securities offered pursuant to
this prospectus will be passed upon by Jackson Walker L.L.P., San Antonio,
Texas. Underwriters, dealers and agents, if any, who we will identify in a
prospectus supplement, may have their counsel pass upon certain legal matters in
connection with the securities offered by this prospectus.
EXPERTS
The consolidated financial statements of Abraxas as of December 31, 2005
and December 31, 2004 and for the years ended December 31, 2005, December 31,
2004 and December 31, 2003, included in this prospectus have been audited by BDO
Seidman, LLP, independent registered public accounting firm, as stated in their
report appearing herein (which report expresses an unqualified opinion and
includes a paragraph referring to a change in accounting method), and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The historical reserve information prepared by DeGolyer and MacNaughton
included in this prospectus has been included herein in reliance upon the
authority of such firm as experts with respect to matters contained in such
reserve reports.
24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated amounts of expenses,
other than underwriting discounts, to be borne by us in connection with the
offering described in this Registration Statement:
Securities and Exchange Commission Registration Fee................$ 16,050
Printing and Engraving Expenses....................................$ 1,000
Accounting Fees and Expenses.......................................$ 10,000
Legal Fees and Expenses............................................$ 20,000
Listing Fee........................................................$ 45,000
Miscellaneous Expenses.............................................$ 25,000
---------
Total Expenses.............................................$117,050
========
Item 15. Indemnification of Directors and Officers
Our articles of incorporation contain a provision that eliminates the
personal monetary liability of directors and officers to us and our stockholders
for a breach of fiduciary duties to the extent currently allowed under the
Nevada GCL. To the extent certain claims against directors or officers are
limited to equitable remedies, this provision of our articles of incorporation
may reduce the likelihood of derivative litigation and may discourage
stockholders or management from initiating litigation against directors or
officers for breach of their duty of care. Additionally, equitable remedies may
not be effective in many situations. If a stockholder's only remedy is to enjoin
the completion of the Board of Director's action, this remedy would be
ineffective if the stockholder did not become aware of a transaction or event
until after it had been completed. In such a situation, it is possible that we
and our stockholders would have no effective remedy against the directors or
officers.
Liability for monetary damages has not been eliminated for acts or
omissions which involve intentional misconduct, fraud or a knowing violation of
law or payment of an improper dividend in violation of section 78.300 of the
Nevada Statute. The limitation of liability also does not eliminate or limit
director liability arising in connection with causes of action brought under the
Federal securities laws.
The Nevada GCL permits a corporation to indemnify certain persons,
including officers and directors, who are (or are threatened to be made) parties
against all expenses (including attorneys' fees) actually and reasonably
incurred by, or imposed upon, him in connection with the defense by reason of
his being or having been a director or officer if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful, except
where he has been adjudged by a court of competent jurisdiction (and after
exhaustion of all appeals) to be liable for gross negligence or willful
misconduct in the performance of duty. Our bylaws provide indemnification to the
same extent allowed pursuant to the foregoing provisions of the Nevada GCL.
Nevada corporations also are authorized to obtain insurance to protect
officers and directors from certain liabilities, including liabilities against
which the corporation cannot indemnify its directors and officers. We currently
have a directors' and officers' liability insurance policy in effect providing
$10.0 million in coverage and an additional $1.0 million in coverage for certain
employment related claims.
We have entered into indemnity agreements with each of our directors and
officers. These agreements provide for indemnification to the extent permitted
by the Nevada GCL.
Item 16. Exhibits
The following Exhibits either are filed as part of this registration
statement or incorporated by reference to documents previously filed or will be
filed by amendment. Exhibit numbers correspond to the exhibits required by Item
601 of Regulation S-K.
II-1
Exhibit..
Number Description
1.1** Form of Equity Underwriting Agreement.
1.2** Form of Debt Underwriting Agreement.
3.1 Articles of Incorporation of Abraxas. (Filed as Exhibit 3.1 to
Abraxas' Registration Statement on Form S-4, No. 33-36565 (the
"S-4 Registration Statement")).
3.2 Articles of Amendment to the Articles of Incorporation of Abraxas
dated October 22, 1990. (Filed as Exhibit 3.3 to the S-4
Registration Statement).
3.3 Articles of Amendment to the Articles of Incorporation of Abraxas
dated December 18, 1990. (Filed as Exhibit 3.4 to the S-4
Registration Statement).
3.4 Articles of Amendment to the Articles of Incorporation of Abraxas
dated June 8, 1995. (Filed as Exhibit 3.4 to Abraxas' Registration
Statement on Form S-3, No. 333-00398 (the "S-3 Registration
Statement")).
3.5 Articles of Amendment to the Articles of Incorporation of Abraxas
dated as of August 12, 2000. (Filed as Exhibit 3.5 to Abraxas'
Annual Report on Form 10-K filed April 2, 2001).
3.6 Amended and Restated Bylaws of Abraxas. (Filed as Exhibit 3.6 to
Abraxas' Annual Report on Form 10-K filed April 5, 2002).
4.1 Specimen Common Stock Certificate of Abraxas. (Filed as Exhibit
4.1 to the S-4 Registration Statement).
4.2 Specimen Preferred Stock Certificate of Abraxas. (Filed as Exhibit
4.2 to Abraxas' Annual Report on Form 10-K filed on March 31,
1995).
4.3* Form of Senior Indenture.
4.4* Form of Subordinated Indenture.
5.1* Opinion of Jackson Walker L.L.P.
12.1* Statement regarding Computation of Ratios.
23.1* Consent of BDO Seidman, LLP.
23.2* Consent of DeGolyer and MacNaughton.
23.3* Consent of Jackson Walker L.L.P. (Filed with Exhibit 5.1).
24.1* Power of Attorney of Craig S. Bartlett, Jr.
24.2* Power of Attorney of Franklin A. Burke.
24.3* Power of Attorney of Harold D. Carter.
24.4* Power of Attorney of Ralph F. Cox.
24.5* Power of Attorney of Barry J. Galt.
24.6* Power of Attorney of Dennis E. Logue.
24.7* Power of Attorney of Paul A. Powell, Jr.
24.8* Power of Attorney of Joseph A. Wagda.
25.1* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 for the Senior Indenture and the
Subordinated Indenture.
* Filed herewith.
** To be filed by amendment.
II-2
Item 17. Undertakings
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (other
than as provided in the proviso and instructions to Item 512(a) of
Regulation S-K): (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 Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table
in the effective registration statement; and (iii) to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement;
provided, however, that paragraphs (1)(i), (ii) and (iii) of this
section do not apply if the Registration Statement is on Form S-3 and
the information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished to
the Commission by the registrants pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement, or is contained in a form of
prospectus filed pursuant to Rule 424(b) that is part of 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.
(4) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser: (i) if the registrants are
relying on Rule 430B: (A) Each prospectus filed by the registrants
pursuant to Rule 424(b)(3) shall be deemed to be part of the
Registration Statement as of the date the filed prospectus was deemed
part of and included in the Registration Statement; and (B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or
(x) for the purpose of providing the information required by section
10(a) of the Securities Act of 1933 shall be deemed to be part of and
included in the Registration Statement as of the earlier of the date
such form of prospectus is first used after effectiveness or the date
of the first contract of sale of 314 securities in the offering
described in the prospectus. As provided in Rule 430B, for liability
purposes of the issuer and any person that is at that date an
underwriter, such date shall be deemed to be a new effective date of
the Registration Statement relating to the securities in the
Registration Statement to which that prospectus relates, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such effective date,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such effective date; or
(ii) if the registrants are subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to
an offering, other than registration statements relying on Rule 430B or
other than prospectuses filed in reliance on Rule 430A, shall be deemed
to be part of and included in the registration statement as of the date
it is first used after effectiveness. Provided, however, that no
II-3
statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the
registrants under the Securities Act of 1933 to any purchaser in the
initial distribution of the securities: The undersigned registrants
undertake that in a primary offering of securities of the undersigned
registrants pursuant to this Registration Statement, regardless of the
underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of
the following communications, the undersigned registrants will be a
seller to the purchaser and will be considered to offer or sell such
securities to such purchaser: (i) Any preliminary prospectus or
prospectus of the undersigned registrants relating to the offering
required to be filed pursuant to Rule 424; (ii) Any free writing
prospectus relating to the offering prepared by or on behalf of the
undersigned registrants or used or referred to by the undersigned
registrants; (iii) The portion of any other free writing prospectus
relating to the offering containing material information about the
undersigned registrants or their securities provided by or on behalf of
the undersigned registrants; and (iv) Any other communication that is
an offer in the offering made by the undersigned registrants to the
purchaser.
(6) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrants' annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(7) (i) 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
registrants pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(ii) 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.
(8) The undersigned registrants hereby undertake to file an
application for the purpose of determining the eligibility of the
trustee to act under subsection (a) of Section 310 of the Trust
Indenture Act ("Act") in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)2 of the Act.
(9) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants, the registrants have been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants 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 registrants will, unless in the opinion of their 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 Act and will be
governed by the final adjudication of such issue.
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 San Antonio, State of Texas, on April 4, 2006.
ABRAXAS PETROLEUM CORPORATION
(Registrant)
By: /s/ Robert L. G. Watson
--------------------------------------------
Robert L. G. Watson, Chairman of the Board,
President and Chief Executive Officer
II-5
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Name and Title Date
--------- -------------- ----
/s/ Robert L. G. Watson Chairman of the Board, President, April 4, 2006
-------------------------------- Chief Executive Officer
Robert L. G. Watson (Principal Executive Officer) and
Director
/s/ Chris E. Williford Executive Vice President, April 4, 2006
-------------------------------- Treasurer, and Chief Financial
Chris E. Williford Officer (Principal Financial and
Accounting Officer)
/s/ Craig S. Bartlett, Jr.* Director April 4, 2006
--------------------------------
Craig S. Bartlett, Jr.
/s/ Franklin A. Burke* Director April 4, 2006
--------------------------------
Franklin A. Burke
/s/ Harold D. Carter* Director April 4, 2006
--------------------------------
Harold D. Carter
/s/ Ralph F. Cox* Director April 4, 2006
--------------------------------
Ralph F. Cox
/s/ Barry J. Galt* Director April 4, 2006
--------------------------------
Barry J. Galt
/s/ Dennis E. Logue* Director April 4, 2006
--------------------------------
Dennis E. Logue
/s/ Paul A. Powell, Jr. * Director April 4, 2006
--------------------------------
Paul A. Powell, Jr.
/s/ Joseph A. Wagda* Director April 4, 2006
--------------------------------
Joseph A. Wagda
* By: Chris E. Williford, Attorney-in-Fact.
II-6
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 San Antonio, Texas, on April 4, 2006.
EASTSIDE COAL COMPANY, INC.
By: /s/ Robert L.G. Watson
---------------------------------------
President
II-7
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 date indicated.
Signature Name and Title Date
--------- -------------- ----
/s/ Robert L.G. Watson President (Principal Executive April 4, 2006
--------------------------- Officer) and Director of
Robert L.G. Watson Eastside Coal Company, Inc.
/s/ Chris E. Williford Vice President (Principal April 4, 2006
--------------------------- Accounting Officer) and
Chris E. Williford Director of Eastside Coal
Company, Inc.
II-8
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 San Antonio, Texas, on April 4, 2006.
SANDIA OIL & GAS CORPORATION
By: /s/ Robert L.G. Watson
-----------------------------------
President
II-9
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 date indicated.
Signature Name and Title Date
--------- -------------- ----
/s/ Robert L.G. Watson President April 4, 2006
--------------------------- (Principal Executive Officer)
Robert L.G. Watson and Director of Sandia Oil
& Gas Corporation
/s/ Chris E. Williford Vice President April 4, 2006
--------------------------- (Principal Financial
Chris E. Williford and Accounting Officer)
and Director of Sandia Oil
&Gas Corporation
II-10
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 San Antonio, Texas, on April 4, 2006.
SANDIA OPERATING CORP.
By: /s/ Robert L.G. Watson
---------------------------------------
President
II-11
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 date indicated.
Signature Name and Title Date
--------- -------------- ----
/s/ Robert L.G. Watson President (Principal Executive
-------------------------- Officer) and Director of
Robert L.G. Watso Sandia Operating Corp. April 4, 2006
/s/ Chris E. Williford Vice President (Principal April 4, 2006
-------------------------- Financial and Accounting
Chris E. Williford Officer) and Director of Sandia
Operating Corp.
II-12
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 San Antonio, Texas, on April 4, 2006.
WAMSUTTER HOLDINGS, INC.
By: /s/ Robert L.G. Watson
---------------------------------------
President
II-13
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 date indicated.
Signature Name and Title Date
--------- -------------- ----
/s/ Robert L.G. Watson President (Principal Executive April 4, 2006
------------------------- Officer) and Director of
Robert L.G. Watson Wamsutter
/s/ Chris E. Williford Vice President (Principal April 4, 2006
------------------------- Financial and Accounting
Chris E. Williford Officer) and Director of Wamsutter
II-14
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 San Antonio, Texas, on April 4, 2006.
WESTERN ASSOCIATED ENERGY CORPORATION
By: /s/ Robert L.G. Watson
---------------------------------------
President
II-15
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 date indicated.
Signature Name and Title Date
--------- -------------- ----
/s/ Robert L.G. Watson President (Principal Executive April 4, 2006
--------------------------- Officer) and Director of
Robert L.G. Watson Western Associated Energy
Corporation
/s/ Chris E. Williford Vice President (Principal April 4, 2006
--------------------------- Accounting Officer) and
Chris E. Williford Director of Western Associated
Energy Corporation
II-16
EXHIBIT INDEX
Exhibit
Number Description
1.1** Form of Equity Underwriting Agreement.
1.2** Form of Debt Underwriting Agreement.
3.1 Articles of Incorporation of Abraxas. (Filed as Exhibit 3.1 to
Abraxas' Registration Statement on Form S-4, No. 33-36565 (the
"S-4 Registration Statement")).
3.2 Articles of Amendment to the Articles of Incorporation of Abraxas
dated October 22, 1990. (Filed as Exhibit 3.3 to the S-4
Registration Statement).
3.3 Articles of Amendment to the Articles of Incorporation of Abraxas
dated December 18, 1990. (Filed as Exhibit 3.4 to the S-4
Registration Statement).
3.4 Articles of Amendment to the Articles of Incorporation of Abraxas
dated June 8, 1995. (Filed as Exhibit 3.4 to Abraxas' Registration
Statement on Form S-3, No. 333-00398 (the "S-3 Registration
Statement")).
3.5 Articles of Amendment to the Articles of Incorporation of Abraxas
dated as of August 12, 2000. (Filed as Exhibit 3.5 to Abraxas'
Annual Report on Form 10-K filed April 2, 2001).
3.6 Amended and Restated Bylaws of Abraxas. (Filed as Exhibit 3.6 to
Abraxas' Annual Report on Form 10-K filed April 5, 2002).
4.1 Specimen Common Stock Certificate of Abraxas. (Filed as Exhibit
4.1 to the S-4 Registration Statement).
4.2 Specimen Preferred Stock Certificate of Abraxas. (Filed as Exhibit
4.2 to Abraxas' Annual Report on Form 10-K filed on March 31,
1995).
4.3* Form of Senior Indenture.
4.4* Form of Subordinated Indenture.
5.1* Opinion of Jackson Walker L.L.P.
12.1* Statement regarding Computation of Ratios.
23.1* Consent of BDO Seidman, LLP.
23.2* Consent of DeGolyer and MacNaughton.
23.3* Consent of Jackson Walker L.L.P. (Filed with Exhibit 5.1).
24.1* Power of Attorney of Craig S. Bartlett, Jr.
24.2* Power of Attorney of Franklin A. Burke.
24.3* Power of Attorney of Harold D. Carter.
24.4* Power of Attorney of Ralph F. Cox.
24.5* Power of Attorney of Barry J. Galt.
24.6* Power of Attorney of Dennis E. Logue.
24.7* Power of Attorney of Paul A. Powell, Jr.
24.8* Power of Attorney of Joseph A. Wagda.
25.1* Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 for the Senior Indenture and the
Subordinated Indenture.
* Filed herewith.
** To be filed by amendment.
II-17