As filed with the Securities and Exchange Commission on August 15, 2001
Registration No. 333-67156
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HARKEN ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of 95-2841597
incorporation or organization) (I.R.S. employer identification number)
HARKEN ENERGY CORPORATION
16285 PARK TEN PLACE, SUITE 600
HOUSTON, TEXAS 77084
(281) 717-1300
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
LARRY E. CUMMINGS
GENERAL COUNSEL
HARKEN ENERGY CORPORATION
16285 PARK TEN PLACE, SUITE 600
HOUSTON, TEXAS 77084
(281) 717-1300
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
SUBJECT TO COMPLETION DATED AUGUST 15, 2001
PROSPECTUS
3,968,920 Shares
HARKEN ENERGY CORPORATION
Common Stock
__________
The selling stockholders of Harken Energy Corporation described in this
prospectus are offering for sale 3,968,920 shares of common stock of Harken
Energy Corporation. The selling stockholders' shares of common stock being
offered for sale include preferred stock purchase rights attached to the common
stock under Harken's Stockholder Rights Plan. Harken will not receive any of
the proceeds from the sale of the 3,968,920 shares of common stock.
The selling stockholders may offer their shares from time to time in open
market transactions on the American Stock Exchange or in private transactions,
at prevailing market prices or at privately negotiated prices. The selling
stockholders may effect such transactions by selling the shares to or through
broker-dealers. These broker-dealers, if used, may receive discounts,
concessions or commissions from the selling stockholders or from the purchaser
of the shares. The selling stockholders will receive the purchase price of the
shares of common stock sold less any such discounts, concessions or commissions.
The selling stockholders will be responsible for any such discounts, concessions
or commissions.
The common stock is traded on the American Stock Exchange, under the symbol
"HEC." On August 14, 2001, the closing sales price of the common stock was $1.90
per share. Harken's principal offices are located at 16285 Park Ten Place, Suite
600, Houston Texas 77084, and its telephone number is (281) 717-1300.
PROSPECTIVE INVESTORS SHOULD CONSIDER AND REVIEW THE INFORMATION UNDER THE
HEADING "RISK FACTORS" BEGINNING ON PAGE 3 PRIOR TO INVESTING IN THE COMMON
STOCK.
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.
The date of this prospectus is _________________, 2001.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and neither the selling
stockholders nor we are soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
TABLE OF CONTENTS
Page
----
The Company.................................. 3
Risk Factors................................. 3
Safe Harbor for Forward-Looking Statements... 10
Where You Can Get More Information........... 10
Use of Proceeds.............................. 11
Information About the Selling Stockholders... 11
Plan of Distribution......................... 14
Legal Matters................................ 15
Experts...................................... 15
YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS PROSPECTUS AND THE
ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN GET MORE
INFORMATION." WE HAVE NOT AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU WITH
DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR INCONSISTENT
INFORMATION, YOU SHOULD NOT RELY ON IT. NEITHER THE SELLING STOCKHOLDERS NOR WE
ARE MAKING AN OFFER TO SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER
OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS AND THE ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING "WHERE
YOU CAN GET MORE INFORMATION" WERE ACCURATE ON THE DATE ON THE FRONT COVER OF
THE PROSPECTUS ONLY. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS
AND PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
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THE COMPANY
Harken explores for, develops and produces oil and gas both domestically
and internationally. Harken's domestic operations are primarily located in the
onshore and offshore Gulf Coast regions of South Texas and Louisiana, in
portions of West Texas and the Texas Panhandle. Harken's international
operations are primarily concentrated in the Republic of Colombia, the Republic
of Costa Rica and the Republic of Peru.
Harken was incorporated in 1973 in the State of California and
reincorporated in 1979 in the State of Delaware. Harken's principal offices are
located at 16285 Park Ten Place, Suite 600, Houston Texas 77084, and its
telephone number is (281) 717-1300.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider carefully all of the information in this prospectus and should evaluate
the following risk factors.
RISKS ASSOCIATED WITH HARKEN'S OPERATIONS
HARKEN'S OIL AND GAS EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES ARE
SUBJECT TO VARIOUS INDUSTRY OPERATING RISKS
Harken's oil and gas operations will be subject to the economic risks
typically associated with exploration, development and production activities,
including the necessity of significant expenditures to locate and acquire
producing properties and to drill exploratory wells. In conducting exploration
and development activities, the presence of unanticipated pressure or
irregularities in formations, miscalculations or accidents may cause Harken's
exploration, development and production activities to be unsuccessful
potentially resulting in abandoning the particular well. This could result in a
total loss of Harken's investment. In addition, the cost and timing of drilling,
completing and operating wells is often uncertain.
Crude oil, natural gas, condensate, and other oil and gas products
generally are sold to other oil and gas companies, government agencies and other
industries. The availability of ready markets for oil and gas that might be
discovered by Harken and the prices obtained for such oil and gas depend on many
factors beyond Harken's control, including the extent of local production and
imports of oil and gas, the proximity and capacity of pipelines and other
transportation facilities, fluctuating demands for oil and gas, the marketing of
competitive fuels, and the effects of governmental regulation of oil and gas
production and sales. Natural gas associated with economic oil production is
often not economically marketable due to the above demand or transportation
limitations and is often flared at the producing well site. Pipeline facilities
do not exist in certain areas of exploration and, therefore, any actual sales of
discovered oil and gas might be delayed for extended periods until such
facilities are constructed.
Harken's oil and gas business is also subject to all of the operating risks
normally associated with the exploration for and production of oil and gas,
including, without limitation, blowouts, cratering, pollution, earthquakes,
labor disruptions and fires, each of which could result in substantial losses to
Harken due to injury or loss of life and damage to or destruction of oil and gas
wells, formations, production facilities or other properties. In accordance with
customary industry practices, Harken maintains insurance coverage limiting
financial loss resulting from certain of these operating hazards. Losses and
liabilities arising from uninsured or underinsured events could reduce revenues
and increase costs to Harken. There can be no assurance that any insurance will
be adequate to cover losses or liabilities. Harken cannot predict the continued
availability of insurance, or its availability at premium levels that justify
its purchase.
HARKEN'S OPERATIONS ARE SUBJECT TO ENVIRONMENTAL LAWS AND REGULATIONS
Our operations are subject to stringent foreign, federal, state and local
laws and regulations governing the discharge of materials into the environment
or otherwise relating to environmental protection. These laws and
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regulations may require the acquisition of a permit before drilling commences,
restrict the types, quantities and concentrations of various substances that can
be released into the environment, limit or prohibit construction or drilling
activities on certain sensitive lands, and impose substantial liabilities for
pollution resulting from former or current operations. Failure to comply with
these laws and regulations may result in the imposition of administrative, civil
and criminal penalties. Changes in environmental laws and regulations occur
frequently, and any changes that result in more stringent and costly waste
management or cleanup requirements could have a material adverse effect on our
operations, as well as those of the oil and gas industry in general. While we
believe that the Company is in substantial compliance with current environmental
laws and regulations, there is no assurance that this trend will continue in the
future.
The Comprehensive Environmental Response, Compensation and Liability Act,
referred to as CERCLA but also known as "Superfund," and comparable state laws
impose liability without regard to fault or the legality of the original conduct
on certain classes of persons who are considered to be responsible for the
release of a "hazardous substance" into the environment. These persons include
the owner or operator of the disposal site where the release occurred and
companies who arrange for the disposal or transport of the hazardous substances
found at the site. Under CERCLA, such persons may be subject to joint and
several liability for the costs of cleaning up the released hazardous
substances, for damages to natural resources, and for the costs of certain
health studies. The Resource Conservation and Recovery Act, referred to as RCRA,
generally does not regulate most wastes generated by the exploration and
production of oil and gas. However, these wastes may be regulated as solid
waste. Also, ordinary industrial wastes, such as paint wastes, waste solvents,
and laboratory wastes, may be regulated as hazardous waste. The Company owns or
leases, and has in the past owned or leased, properties that have been used for
the exploration and production of oil and gas. In addition, many of these
properties have been operated by third parties whose treatment and release of
hydrocarbons or other wastes were not under the Company's control. These
properties and the wastes disposed on these properties may be subject to CERCLA,
RCRA, and analogous state laws. Under such laws, the Company could be required
to remove or remediate previously released wastes or property contamination.
The Oil Pollution Act of 1990, referred to as OPA, pertains to the
prevention of and response to spills or discharges of hazardous substances or
oil into navigable water of the United States. Under OPA, a person owning or
operating a facility or equipment from which there is a discharge or threat of a
discharge of oil into or upon navigable waters or adjoining shorelines is
liable, regardless of fault, as a "responsible party" for removal costs and
damages. Federal law imposes strict, joint and several liability on facility
owners for containment and clean-up costs and certain other damages, including
natural resource damages arising from a spill. The OPA establishes a liability
limit for onshore facilities of $350 million; however, a party cannot take
advantage of this liability limit if the spill is caused by gross negligence or
willful misconduct, if the spill resulted from a violation of a federal safety,
construction, or operating regulation, or if a party fails to report a spill or
cooperate in the cleanup. The Federal Water Pollution Control Act, also
referred to as the Clean Water Act and analogous state laws impose strict
controls regarding the discharge of pollutants, including produced waters and
other oil and gas wastes, into state waters or waters of the United States. The
discharge of pollutants into regulated waters is prohibited, except in accord
with the terms of a permit issued by EPA or the state. Federal regulations
under the OPA and the Clean Water Act also require certain owners and operators
of facilities that store or otherwise handle oil, such as us, to prepare and
implement spill prevention, control and countermeasure plans and spill response
plans relating to possible discharge of oil into surface waters.
Our operations outside of the U.S. are potentially subject to similar laws
and regulations in Costa Rica, Colombia and Peru. We believe that while Harken
is in substantial compliance with existing requirements of governmental bodies
in these foreign countries, our ability to conduct continued operations are
subject to satisfying applicable regulatory and permitting controls, any of
which may be susceptible, on a going forward basis, to increased scrutiny,
greater complexity resulting in increased costs, or delays in receiving
appropriate authorizations.
Our oil and gas exploration and productions operations in Colombia,
including well drilling, pipeline construction, and seismic activities, require
specific federal and local environmental licenses and permits, the acquisition
of which in the past have been subject to extensive delays. We may continue to
experience similar delays
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in the future. Failure to obtain these licenses and permits in a timely manner
may prevent us from obtaining alternative financing.
HARKEN'S OIL AND GAS OPERATIONS IN LESS DEVELOPED OIL AND GAS INDUSTRIES SUCH AS
COLOMBIA, COSTA RICA AND PERU INVOLVE SUBSTANTIAL COSTS AND ARE SUBJECT TO
VARIOUS ECONOMIC RISKS
The oil and gas industries in Colombia, Costa Rica and Peru are not as
developed as the oil and gas industry in the U.S. As a result, Harken's
drilling and development operations in many instances take longer to complete
and often cost more than similar operations in the U.S. The availability of
technical expertise, specific equipment and supplies may be more limited in
Colombia, Costa Rica and Peru than in the U.S. Harken expects that such factors
will continue to subject Harken to economic and operating risks not experienced
in the U.S.
Harken follows the full cost method of accounting for exploration and
development of oil and gas reserves in which all acquisition, exploration and
development costs are capitalized. Costs related to acquisition, holding and
initial exploration of contracts in countries with no proved reserves are
initially capitalized, including internal costs directly identified with
acquisition, exploration and development activities. If Harken abandons all
exploration efforts in a country where no proved reserves are assigned, all
acquisition and exploration costs associated with the country are expensed.
Harken's assessments of whether its investment within a country are impaired and
whether exploration activities within a country will be abandoned are made from
time to time based on its review and assessment of drilling results, seismic
data and other information it deems relevant. Due to the unpredictable nature of
exploration drilling activities, the amount and timing of impairment expenses
are difficult to predict.
IF HARKEN FAILS TO COMPLY WITH THE TERMS OF A COLOMBIA ASSOCIATION CONTRACT, THE
COSTA RICA CONTRACT OR THE PERUVIAN TECHNICAL EVALUATION AGREEMENT, IT COULD
LOSE ITS RIGHTS UNDER EACH OF THOSE CONTRACTS
Terms of each of the Colombia Association Contracts, the Costa Rica
Contract and the Peruvian Technical Evaluation Agreement commit Harken to
perform certain activities in accordance with a prescribed timetable. Failure
by Harken to perform those activities as required could result in Harken losing
its rights under the particular contract, which could potentially have a
material adverse effect on Harken's business. As of June 30, 2001, Harken was
in compliance with the requirements of each of the Colombia Association
Contracts, the Costa Rica Contract, as amended and/or waived, and the Peruvian
Technical Evaluation Agreement.
HARKEN MAY BE UNABLE TO OBTAIN ADDITIONAL FINANCING FOR ITS MIDDLE AMERICAN
ACTIVITIES, WHICH COULD RESTRICT ITS OPERATIONS
Harken anticipates that full development of its existing and future oil and
gas discoveries in Colombia, Costa Rica and Peru may take several years and may
require extensive production and transportation facilities requiring significant
additional capital expenditures. If Harken is unable to timely obtain adequate
funds to finance these investments, it could limit or substantially delay
Harken's ability to develop its oil and gas reserves. In such a case, Harken's
business and results of operations could suffer.
MKJ Xploration, Inc. ("MKJ") is seeking additional joint venture partner
participation for its Costa Rica work program obligations prior to drilling the
Moin #2 well. There can be no assurances that a joint venture partner can be
obtained. Failure to obtain such joint venture partner could prevent or delay
the parties' ability to develop its Costa Rica Contract.
Harken cannot predict the ultimate amount of expenditures for its Middle
American operations. Harken anticipates that amounts required to fund its
Middle American activities will be funded from its existing cash balances, asset
sales, stock issuances, production payments, operating cash flows and from joint
venture partners. Harken cannot assure you that it will have adequate funds
available to it to fund its Middle American activities.
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HARKEN'S OPERATIONS IN COLOMBIA, COSTA RICA, PERU AND OTHER FOREIGN COUNTRIES
WILL BE SUBJECT TO POLITICAL, ECONOMIC AND OTHER UNCERTAINTIES
Harken conducts significant operations in Colombia and Costa Rica, and may
also conduct operations in Peru and other foreign countries in the future. At
December 31, 2000, approximately 13% of Harken's proved reserves were related to
Harken's Colombian operations. Operations in foreign countries, particularly in
the oil and gas business, are subject to political, economic and other
uncertainties, including:
. the risk of war, revolution, border disputes, expropriation, renegotiation or
modification of existing contracts, import, export and transportation
regulations and tariffs resulting in loss of revenue, property and equipment;
. taxation policies, including royalty and tax increases and retroactive tax
claims;
. exchange controls, currency fluctuations and other uncertainties arising out
of foreign government sovereignty over Harken's international operations;
. laws and policies of the United States affecting foreign trade, taxation and
investment; and
. the possibility of having to be subject to the exclusive jurisdiction of
foreign courts in connection with legal disputes and the possible inability
to subject foreign persons to the jurisdiction of courts in the United
States.
Central and South America and other regions of the world have a history of
political and economic instability. This instability could result in new
governments or the adoption of new policies that might assume a substantially
more hostile attitude toward foreign investment. In an extreme case, such a
change could result in termination of contract rights and expropriation of
foreign-owned assets. These uncertainties could adversely affect Harken's
interests.
GUERRILLA ACTIVITY IN COLOMBIA COULD DISRUPT OR DELAY HARKEN'S OPERATIONS, AND
HARKEN HAS CONCERNS ABOUT SAFEGUARDING ITS OPERATIONS AND PERSONNEL IN COLOMBIA.
From time to time, guerilla activity in Colombia has delayed Harken's
projects there. This guerilla activity has increased over the last few years,
causing delays in the development of Harken's fields in Colombia. Guerilla
activity has also from time to time slowed Harken's ability to put workers in
the field, and has affected Harken's operations by implementing road blockades
and similar actions. In addition, it is possible that guerillas could attempt to
disrupt the flow of Harken's production through pipelines. In addition, Harken's
concerns over safeguarding its operations and personnel in Colombia have
increased dramatically with the recent occurrences of threats of violence
throughout the country. In addition to these security issues, Harken has also
become the subject of media focus in Colombia that may further complicate its
security position in the country.
Harken and the Colombian government have taken steps to maintain security
and favorable relations with the local population. These steps have included the
hiring of security to patrol Harken's facilities, and programs to provide local
communities with health and educational assistance. Harken expects that it will
be required to continue these steps throughout the term of its interest in
Colombia.
Harken's operating plans in Colombia are continuing, subject to the ongoing
monitoring of these security developments. Harken is also currently analyzing
and upgrading its security procedures and has initiated action to expand
security measures for both personnel and field operations. Harken cannot assure
you that these attempts to reduce or prevent guerilla activity will be
successful or that guerilla activity will not disrupt operations in the future.
Harken also cannot assure you that it will be successful in maintaining the
safety of its operations and personnel in Colombia from violence there or that
this violence will not affect its operations in the future. Continued or
heightened security concerns in Colombia could also adversely affect Harken's
interests, which could potentially
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have a material adverse effect on Harken's business.
IF THE UNITED STATES IMPOSES ECONOMIC OR TRADE SANCTIONS ON COLOMBIA, HARKEN'S
OPERATIONS IN COLOMBIA MAY BE ADVERSELY AFFECTED
Colombia is among several nations whose progress in stemming the production
and transit of illegal drugs is subject to annual certification by the President
of the United States. The President of the United States has announced that
Colombia would be certified. There can be no assurance that, in the future,
Colombia will receive certification or a national interest waiver. The
consequences of the failure to receive certification or a national interest
waiver generally include the following: all bilateral aid, except anti-narcotics
and humanitarian aid, would be suspended; the Export-Import Bank of the United
States and the Overseas Private Investment Corporation would not approve
financing for new projects in Colombia; U.S. representatives at multilateral
lending institutions would be required to vote against all loan requests from
Colombia, although such votes would not constitute vetoes; and the President of
the United States and Congress would retain the right to apply future trade
sanctions. Each of these consequences could result in adverse economic
consequences in Colombia and could further heighten the political and economic
risks associated with Harken's operations in Colombia. Any changes in the
holders of significant government offices could have adverse consequences on
Harken's relationship with the Colombian national oil company and the Colombian
government's ability to control guerrilla activities and could exacerbate the
factors relating to foreign operations discussed above.
If the United States were to impose sanctions on Colombia, it could affect
Harken's ability to obtain the financing it needs in order to develop its
Colombian properties. The imposition of sanctions on Colombia could also cause
Colombia to retaliate against Harken, including by nationalizing Harken's
Colombian assets. Accordingly, imposition of the foregoing economic and trade
sanctions on Colombia could materially affect the performance of Harken's common
stock and its long-term financial results. We cannot assure you the United
States will not impose sanctions on Colombia in the future or predict the effect
in Colombia that these sanctions might cause.
HARKEN COULD SUFFER LOSSES FROM EXCHANGE RATE FLUCTUATIONS
Harken accounts for its Colombian, Costa Rican and Peruvian operations
using the U.S. dollar as its functional currency. The costs associated with
Harken's exploration efforts in Colombia, Costa Rica and Peru have typically
been denominated in U.S. dollars. Harken expects that a substantial portion of
its future Colombian revenues may be denominated in Colombian pesos. To the
extent that the amount of Harken's revenues denominated in Colombian pesos is
greater than the amount of costs denominated in Colombian pesos, Harken could
suffer a loss if the value of the Colombian peso were to drop relative to the
value of the U.S. dollar, which could have a material adverse effect on Harken's
results of operations.
DRILLING OIL AND GAS WELLS IN COLOMBIA, COSTA RICA AND PERU COULD BE HINDERED BY
HURRICANES, EARTHQUAKES AND OTHER OPERATING RISKS
Harken's operations in Colombia, Costa Rica and Peru are subject to risks
from hurricanes and other natural disasters. Damage caused by hurricanes,
earthquakes or other operating hazards could result in substantial losses to
Harken. The occurrence of such an event that is not fully covered by insurance
could have a material adverse effect on the financial position and results of
operations of Harken.
HARKEN FACES STRONG COMPETITION FROM LARGER OIL AND GAS COMPANIES
The exploration and production business is highly competitive. Many of
Harken's competitors have substantially larger financial resources, staffs and
facilities than Harken. Harken's competitors in Colombia, Costa Rica and Peru
include such major oil and gas companies as BP Amoco, Exxon/Mobil, Texaco,
Conoco, Shell and Arco. These major oil and gas companies are often better
positioned to obtain the rights to exploratory acreage that Harken competes for.
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GOVERNMENT AGENCIES IN COLOMBIA, COSTA RICA AND PERU CAN INCREASE HARKEN'S COSTS
AND CAN TERMINATE OR SUSPEND OPERATIONS
In Costa Rica, Colombia, and Peru the laws governing the oil and gas
industry require Harken to obtain an environmental permit or approval prior to
conducting seismic operations, drilling a well or constructing a pipeline. The
process of obtaining an environmental permit has delayed Harken's operations in
the past, and could do so again in the future. Compliance with these laws and
regulations may increase Harken's costs of operations, as well as further
restricting its activities.
In Costa Rica, due to the country's high attention to the protection of its
ecological areas and environment, Harken's operations may be subject to much
greater control, scrutiny and restrictions than are usually encountered in
international exploration operations. Due to such additional regulations and
requirements in Costa Rica, Harken may likely encounter further delays in its
operations, future challenges to the implementation of its Costa Rica Contract
and significant increases in its projected costs.
RISKS ASSOCIATED WITH MARKET CONDITIONS
THE TRADING PRICE OF HARKEN COMMON STOCK MAY BE SIGNIFICANTLY AFFECTED BY THE
RESULTS OF DRILLING ACTIVITY IN COLOMBIA, COSTA RICA AND PERU
Harken believes that the price of its common stock may fluctuate
significantly based upon the success or failure of each well that Harken drills
in Colombia, Costa Rica and Peru. Based in part on the results of such drilling
activity in Colombia, the market price of Harken's common stock declined
significantly in 1999 and 2000. From August 13, 1999 through August 14, 2001,
Harken's common stock has ranged from a high of $20.00 per share to a low of
$1.75 per share (as adjusted for the one-for-ten reverse stock split occurring
on November 7, 2000).
HARKEN MAY ISSUE ADDITIONAL SHARES OF COMMON STOCK WHICH MAY DILUTE THE VALUE OF
HARKEN COMMON STOCK TO CURRENT STOCKHOLDERS AND MAY ADVERSELY AFFECT THE MARKET
PRICE OF HARKEN'S COMMON STOCK
Harken may be required to issue up to approximately 11.2 million shares of
common stock as a result of its outstanding warrants, stock options, convertible
notes and preferred stock which could become exercised or converted,
particularly in the event of an increase in the market price of Harken common
stock. If Harken issues additional shares, it could result in significant
dilution in your ownership position in Harken. In addition, Harken could elect
to issue a significant number of additional shares of common stock for financing
or other purposes, which could have an adverse effect on the market price of the
common stock.
There are currently several registration statements with respect to the
common stock that are or will become effective, pursuant to which certain
selling stockholders of Harken may sell up to an aggregate of 4,343,555 shares
of common stock. If the selling stockholders named in such registration
statements sell all of the shares of common stock registered pursuant to such
registration statements, such sales could cause an adverse effect on the market
price of the common stock.
HARKEN MAY ISSUE SHARES OF PREFERRED STOCK WITH GREATER RIGHTS THAN ITS COMMON
STOCK
Harken is permitted under its charter to issue up to ten million shares of
preferred stock. Harken can issue shares of its preferred stock in one or more
series and can set the terms of the preferred stock without seeking any further
approval from its common stockholders. Any preferred stock that is issued by
Harken may rank ahead of its common stock in terms of dividend priority or
liquidation premiums and may have greater voting rights than its
As of the date hereof, Harken has issued 494,465 shares of Series G1 Preferred
Stock and 95,800 shares of Series G2 Preferred Stock in private placement
transactions exempt from registration under the Securities Act of 1933. These
shares of preferred stock have rights senior to Harken common stock with respect
to dividends and liquidation. In addition, such preferred stock may be converted
into shares of common stock, which could dilute the value of common stock to
current stockholders and could adversely affect the market price of Harken's
common
8
stock.
FUTURE ACQUISITIONS MAY DILUTE YOUR PERCENTAGE OWNERSHIP IN HARKEN OR REQUIRE
SUBSTANTIAL EXPENDITURES
Harken's strategic plan includes the acquisition of additional reserves,
including through business combination transactions. Harken may not be able to
consummate future acquisitions on favorable terms. Additionally, future
acquisitions may not achieve favorable financial results.
Future acquisitions may involve the issuance of shares of Harken common
stock, which could have a dilutive effect on the current stockholders of Harken.
Furthermore, acquisitions may require substantial financial expenditures that
will need to be financed through cash flow from operations or future debt and
equity offerings by Harken. Harken may not be able to acquire companies or oil
and gas properties using its equity as currency. In the case of cash
acquisitions, Harken may not be able to generate sufficient cash flow from
operations or obtain debt or equity financing sufficient to fund future
acquisitions of reserves.
RISKS ASSOCIATED WITH HARKEN'S FINANCIAL CONDITION
IF ESTIMATES OF HARKEN'S OIL AND GAS RESERVE INFORMATION ARE ADJUSTED, HARKEN'S
FINANCIAL CONDITION MAY SUFFER
Harken's proved oil and gas reserve information is based upon criteria
mandated by the Securities and Exchange Commission ("SEC") and represents only
estimates. Harken's actual production, revenues and expenditures with respect
to such oil and gas reserves will likely be different from estimates and the
differences may be material. If estimates of oil and gas reserves are greater
than actual production amounts, or if actual production costs and expenditures
are greater than estimates, Harken's business, financial condition, and results
of operations may be negatively affected.
Harken's reserve estimates of future production volumes are based on
underlying estimates of the accumulation of oil and gas and the economic
recoverability of those volumes. Petroleum engineering is a subjective process
of estimating underground accumulations of oil and gas that cannot be measured
in an exact manner. Estimates of economically recoverable oil and gas reserves
and of future net cash flows necessarily depend upon a number of variable
factors and assumptions.
Because all reserve estimates are to some degree subjective, each of the
following items may prove to differ materially from those assumed in estimating
reserves:
. the quantities of oil and gas that are ultimately recovered;
. the production and operating costs incurred;
. the amount and timing of future development expenditures; and
. future oil and gas sales prices.
Furthermore, different reserve engineers may make different estimates of
reserves and cash flows based on the same available data.
The estimated discounted future net cash flows described in Harken's Annual
Report on Form 10-K should not be considered as the current market value of the
estimated oil and gas reserves attributable to Harken's properties from proved
reserves because such estimates are based on prices and costs as of the date of
the estimate, in accordance with SEC requirements, while future prices and costs
may be materially higher or lower.
9
HARKEN HAS A HISTORY OF LOSSES AND MAY SUFFER LOSSES IN THE FUTURE
Harken has reported losses in each of the last five years including a net
loss of $152,933,000 for the year ended December 31, 2000 which was primarily
caused by the writedown of Harken's Colombian oil properties. Harken has
reported cumulative net losses of approximately $222 million over the last five
years. Harken's ability to generate net income is strongly affected by, among
other factors, the market price of crude oil and natural gas. If the market
price of crude oil and natural gas declines, Harken may report additional losses
in the future. See discussion below of potential additional future writedowns in
the event oil and gas prices decrease.
IF ESTIMATED DISCOUNTED FUTURE NET CASH FLOWS DECREASE, HARKEN MAY BE REQUIRED
TO TAKE ADDITIONAL WRITEDOWNS
Harken must periodically review the carrying value of its oil and gas
properties under applicable full-cost accounting rules. These rules require a
writedown of the carrying value of oil and gas properties if the carrying value
exceeds the applicable estimated discounted future net cash flows from proved
oil and gas reserves. Given the volatility of oil and gas prices, it is
reasonably possible that the estimated discounted future net cash flows could
change in the near term. If oil and gas prices decline in the future, even if
only for a short period of time, it is possible that additional writedowns of
oil and gas properties could occur. Whether Harken will be required to take such
a charge will depend on the prices for oil and gas at the end of any quarter and
the effect of reserve additions or revisions and capital expenditures during
such quarter.
Beginning in December 2000, and through the first half of the first quarter
of 2001, Harken drilled the Olivo #2 well in Colombia. Due primarily to the
results of the Olivo #2 well, and the corresponding significant reduction
in Harken's proved undeveloped reserves on its Bolivar Association Contract
area, and to a lesser extent due to a reduction in Harken's proved producing
reserves due to production information, Harken recognized a non-cash
charge in the amount of approximately $156.4 million as of December 31, 2000.
Such amount represents a writedown of the carrying value of Harken's Colombian
evaluated oil properties.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
We believe that certain statements contained or incorporated by reference
in this prospectus are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 and are considered prospective.
The following statements are or may constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995:
. statements before, after or including the words "may", "will", "could",
"should", "believe", "expect", "future", "potential", "anticipate", "intend",
"plan", "estimate" or "continue" or the negative or other variations of these
words; and
. other statements about matters that are not historical facts.
We may be unable to achieve the future results covered by the forward-
looking statements. The statements are subject to risks, uncertainties and
other factors that could cause actual results to differ materially from the
future results that the statements express or imply. See "Risk Factors".
Please do not put undue reliance on these forward-looking statements, which
speak only as of the date of this prospectus.
WHERE YOU CAN GET MORE INFORMATION
Harken files reports, proxy statements, and other information with the SEC.
Such reports, proxy statements and other information concerning Harken can be
read and copied at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The SEC maintains an Internet site at
http://www.sec.gov that contains reports, proxy statements and other information
regarding issuers that file information electronically, including Harken.
Harken's
10
common stock is listed on the American Stock Exchange. These reports, proxy
statements and other information can also be read and copied at the offices of
the American Stock Exchange at 86 Trinity Place, New York, New York 10006.
The SEC allows Harken to "incorporate by reference" the information it
files with the SEC. This permits Harken to disclose important information to
you by referencing these filed documents. Any information referenced this way
is considered part of this prospectus, and any information filed with the SEC
after the date on the cover of this prospectus will automatically be deemed to
update and supercede this information. Harken incorporates by reference the
following documents which have been filed with the SEC:
(1) Annual Report on Form 10-K for the year ended December 31, 2000;
(2) Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;
(3) Quarterly Report on Form 10-Q for the quarter ended June 30, 2001;
(4) Current Report on Form 8-K filed with the SEC on July 24, 2001; and
(5) The description of the common stock contained in Harken's Registration
Statement on Form 8-A, as amended, including all amendments and reports
filed for the purpose of updating such description; and the description of
Harken's Preferred Stock Purchase Rights as contained in Harken's
Registration Statement on Form 8-A, filed with the Commission on April 7,
1998, including all amendments and reports filed for the purpose of
updating such description.
Harken also incorporates by reference any future filings made with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934, as amended (the
"Exchange Act") until the selling stockholders sell all of the shares of common
stock.
This prospectus is part of a registration statement filed with the SEC.
This prospectus does not contain all the information contained in the
registration statement. The full registration statement can be obtained from
the SEC. This prospectus contains a general description of Harken and the
securities being offered for sale. You should read this prospectus together
with the additional information incorporated by reference.
You can request a copy of any document incorporated by reference in this
prospectus in writing or by phone. Requests for copies should be directed to
Larry E. Cummings, Harken Energy Corporation, 16285 Park Ten Place, Suite 600,
Houston, Texas 77084 (Telephone: (281) 717-1300). Copies of any document
incorporated by reference, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the documents that this
prospectus incorporates, will be provided at no cost to you.
USE OF PROCEEDS
Harken will not receive any part of the proceeds from the sale of shares of
common stock by the selling stockholders.
INFORMATION ABOUT THE SELLING STOCKHOLDERS
This prospectus covers the offer and sale by the selling stockholders of an
aggregate of 3,968,920 shares of common stock. These shares consist of shares
of Harken's common stock issuable upon the conversion of Harken's Series G1
Preferred Stock (the "Series G1 Preferred").
On August 25, 2000, the Harken Board of Directors approved the
authorization and issuance of up to 240,000 shares of Series G1 Preferred, and
on May 8, 2001, the Board of Directors increased this amount to 700,000 shares
of Series G1 Preferred. As of the date hereof, there are 494,465 shares of
Series G1 Preferred outstanding. The following is a summary of the material
terms of the Series G1 Preferred Stock and is qualified in its entirety by
11
the full rendition of the Certificate of Designations, Preferences and Rights of
the Series G1 Preferred, which was filed as an exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 2000.
The Series G1 Preferred has a liquidation value of $100 per share and is
convertible at the holder's option into Harken common stock at a conversion
price of $12.50 per share of underlying Harken common stock (the "Series G1
Preferred Conversion Price") for each $100 liquidation value per share of Series
G1 Preferred Stock, subject to adjustment in certain circumstances. After the
shares of Harken common stock underlying the Series G1 Preferred have become
freely tradable, if for any period of twenty consecutive trading days the
average of the closing prices of Harken common stock during such period shall
have equaled or exceeded the Target Price (as defined below), each share of
Series G1 Preferred will be convertible by Harken into that number of shares of
Harken common stock equal to (x) each $100 liquidation value per share of Series
G1 Preferred plus the amount of any accrued and unpaid dividends (whether or not
earned or declared) on the Series G1 Preferred (including an amount equal to
certain prorated dividends) divided by (y) the Series G1 Preferred Conversion
Price. Such Target Price is initially equal to the Series G1 Preferred
Conversion Price multiplied by 110%. On the first day following the first
anniversary of the closing date of the Series G1 Preferred, the Target Price
will be reduced to an amount equal to (x) the Series G1 Preferred Conversion
Price less $0.10 (the "Adjusted Conversion Price") multiplied by (y) 110%. On
the first day following each anniversary of the closing date thereafter, the
Target Price will be reduced to an amount equal to (x) the Adjusted Conversion
Price then in effect less $0.10 multiplied by (y) 110%. The Target Price cannot
be less than $8.10.
The holders of Series G1 Preferred are entitled to receive dividends at an
annual rate equal to $8 per share when, as and if declared by the Harken Board
of Directors. All dividends on the Series G1 Preferred are cumulative and
payable semi-annually in arrears, payable on June 30 and December 30. At
Harken's option, dividends may also be payable in Harken common stock at $12.50
per share of Harken common stock. Harken also may redeem the Series G1
Preferred in whole or in part for cash at any time at $100 per share plus any
accrued and unpaid dividends. In addition, on or after June 1, 2004, Harken may
further elect, in any six-month period, to redeem up to 50% of the outstanding
Series G1 Preferred with shares of Harken common stock valued at an average
market price, and using a Redemption Value of the Series G1 Preferred that
includes a 5% to 10% premium, with such premium based on the market
capitalization of Harken at the time of redemption.
On May 22, 2001, a selling stockholder, RP&C International (Guernsey)
Limited ("RP&C"), provided written notice to Harken of its election to convert
500 shares of Series G1 Preferred into common stock. This notification obligated
Harken to file a registration statement with respect to the shares of common
stock issuable on the conversion of the Series G1 Preferred. Harken is
obligated to file this registration statement at the earliest practicable date,
but in any event prior to 90 days following its receipt of this initial notice.
Harken is also obligated to use its best efforts to cause the SEC to declare
this registration statement (and any necessary amendments) effective. Harken
has also agreed to use its best efforts to maintain the effectiveness of the
registration statement, and to refile a registration statement from time to time
in the event its effectiveness lapses, until all shares of common stock issuable
on the conversion of the Series G1 either issued or that may be issued are
freely tradeable (as defined in the Certificate of Designations for the Series
G1 Preferred) in the United States.
In May of 1998, Harken consummated an offering (the "Notes Offering") of
$85,000,000 of 5% Senior Convertible Notes Due May 26, 2003 (the "Notes"). Under
the terms of the Notes Offering, prior to maturity and unless previously
redeemed, the Notes were convertible by the holders thereof into shares of
Harken common stock at a price of $65.00, subject to adjustment under certain
circumstances. Except for RP&C, the selling stockholders have not had any
position, office or other material relationship with Harken in the last three
years other than Notes held by certain of the selling stockholders.
RP&C has served as agent for Harken in various transactions during the last
three years including the (a) Notes Offering, (b) a private exchange in February
2000 of $6,000,000 face amount of Notes for Harken common stock, (c) several
repurchases by Harken of certain of the Notes in the open market and (d) several
private placements of both common stock and preferred stock.
12
The chart below describes the number of shares of common stock underlying
the Series G1 Preferred owned by the selling stockholders, the number of shares
of common stock which may be offered for sale by the selling stockholders and
the number of shares of common stock the selling stockholders will own if all of
the shares of common stock held by the selling stockholders are sold. Any or
all of the shares listed below may be offered for sale by the selling
stockholders or their nominees from time to time.
PERCENT OF
SHARES OWNED SHARES SHARES OWNED COMMON STOCK
PRIOR TO OFFERED AFTER THE OWNED AFTER THE
SELLING STOCKHOLDERS THE OFFERING (1) HEREBY OFFERING (2) OFFERING (2)
------------------------------------------------- -------------------- ------------- ---------------- ----------------
JS Cresvale Securities 104,000 104,000 -0- -0-
Bank Julius Baer & Co. Ltd. 408,800 408,800 -0- -0-
Brown Brothers Harriman 10,800 10,800 -0- -0-
Apple Manufacturing 192,000 192,000 -0- -0-
Perry Limited 136,400 136,400 -0- -0-
Xanthus Ltd. 48,000 48,000 -0- -0-
Rush & Co. Swiss American Securities 4,800 4,800 -0- -0-
Sreedeswar Holdings, Inc. 226,480 226,480 -0- -0-
Rock Nominees Limited 6,400 6,400 -0- -0-
EFG Private Bank 109,080 109,080 -0- -0-
Marcuard Cook & CIE 14,400 14,400 -0- -0-
San Juan Investments Ltd. 48,000 48,000 -0- -0-
Renaissance US Growth and Income Trust Plc 588,800 588,800 -0- -0-
AKB Privatbank Zurich AG 31,760 31,760 -0- -0-
Coutts Bank (Schweiz) AG 28,560 28,560 -0- -0-
Bank Hoffman AG 7,920 7,920 -0- -0-
Banca Del Gottardo Lugano 111,400 111,400 -0- -0-
Verit Liegenschaften und Beteiligungen 8,000 8,000 -0- -0-
SIS-Sega-UBS 2,400 2,400 -0- -0-
Egger & Co. 142,800 142,800 -0- -0-
Egger & Co. 142,800 142,800 -0- -0-
Elliott International, L.P. 142,800 142,800 -0- -0-
Lombard Odier & Cie. 33,600 33,600 -0- -0-
Coutts Bank (Switzerland) 26,400 26,400 -0- -0-
Morgan Stanley & Co. International Ltd. 441,600 441,600 -0- -0-
The Liverpool Limited Partnership 142,800 142,800 -0- -0-
HSBC Global Custody Nominees Ltd. 441,600 441,600 -0- -0-
Basler Kantonalbank 28,560 28,560 -0- -0-
LB (Swiss) Privatbank AG 8,568 8,568 -0- -0-
Centrum Bank AG 77,112 77,112 -0- -0-
Bruno Battaini 7,200 7,200 -0- -0-
13
James Ladner 36,560 36,560 -0- -0-
RP&C International (Guernsey) Limited 208,520 208,520 -0- -0-
___________________
(1) Consists of shares of Harken's common stock issuable upon conversion of the
Series G1 Preferred.
(2) Assumes no other disposition or acquisition of common stock and all shares
of common stock are sold.
PLAN OF DISTRIBUTION
Harken will not receive any proceeds from the sale of common stock owned by
the selling stockholders. It is anticipated that the selling stockholders will
offer the shares of common stock for sale from time to time, directly or through
broker-dealers or underwriters who may act solely as agents or may acquire the
shares of common stock as principals, in all cases as designated by the selling
stockholders. Such underwriters or broker-dealers, acting either as principal
or as agent, may receive compensation in the form of usual and customary or
specifically negotiated underwriting discounts, concessions or commissions from
the selling stockholders or the purchasers of the 3,968,920 shares of common
stock offered in this prospectus for whom they may act as agent.
The net proceeds to the selling stockholders from the sale of common stock
will be the purchase price of the common stock sold less the aggregate agents'
commissions and underwriters' discounts, if any, and other expenses of issuance
and distribution not borne by Harken. The selling stockholders and any dealers
or agents that participate in the distribution of common stock may be deemed to
be "underwriters" within the meaning of the Securities Act.
At any time a particular offer of common stock is made, and if required by
SEC rules and regulations, the specific shares of common stock to be sold, the
purchase price, public offering price, the names of any such agent, dealer or
underwriter and any commission or discount with will be described in an
accompanying prospectus supplement. The prospectus supplement may be in the
form of a post-effective amendment to the Registration Statement of which this
prospectus is a part, and will be filed with the SEC.
The shares of common stock being offered by the selling stockholders will
be sold in one or more transactions, which may include block transactions, on
the American Stock Exchange or on any other market on which the common stock may
be trading, in privately-negotiated transactions, through the writing of options
on the shares of common stock, short sales or any combination thereof. The sale
price to the public may be the market price prevailing at the time of sale, or a
different price negotiated by the selling stockholders. The shares of common
stock may also be sold pursuant to Rule 144. The selling stockholders shall
have the sole and absolute discretion not to accept any purchase offer or make
any sale of shares of common stock if they deem the purchase price to be
unsatisfactory.
The selling stockholders, alternatively, may sell all or any part of the
3,968,920 shares of common stock offered in this prospectus through an
underwriter. The selling stockholders have not entered into any agreement with
a prospective underwriter and there is no assurance that any such agreement will
be entered into. If the selling stockholders enter into such an agreement, the
relevant details will be set forth in a supplement or revisions to this
prospectus.
The selling stockholders and any other persons participating in the sale or
distribution of the shares of common stock will be subject to applicable
provisions of the Exchange Act and the rules and regulations passed by the SEC,
which may limit the timing of purchases and sales of any of the shares of common
stock by the selling stockholders or any other such person. This may affect the
marketability of the shares of common stock.
14
LEGAL MATTERS
The validity of the shares of common stock will be passed upon for Harken
Energy Corporation by Larry E. Cummings, General Counsel of Harken.
EXPERTS
The audited consolidated financial statements of Harken Energy Corporation
incorporated by reference into this prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
Harken's oil and gas reserves in Colombia have been reviewed by its
independent reserve engineers, Gaffney, Cline & Associates, Inc., as stated in
their report thereon. Harken's disclosures of its oil and gas reserves in
Colombia included in its Form 10-K for the year ending December 31, 2000, have
been presented in reliance upon the authority of such firm as experts in
petroleum engineering.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid by Harken in connection with the offering described
in this Registration Statement are estimated as follows:
Commission Registration Fee $2,073.76
Printing and Engraving Expenses $ 500.00
Accounting Fees and Expenses $2,500.00
Blue Sky Fees and Expenses $ -0-
Miscellaneous $ 426.24
---------
Total $5,500.00
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Section 145 of the General Corporation Law of the State of Delaware
("Delaware Law"), a Delaware corporation may indemnify its directors, officers,
employees and agents against expenses (including attorneys fees), judgments,
fines and settlements in nonderivative suits, actually and reasonably incurred
by them in connection with the defense of any action, suit or proceeding in
which they or any of them were or are made parties or are threatened to be made
parties by reason of their serving or having served in such capacity. Delaware
law, however, provides that such person must have acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, and in the case of a criminal action, such person must have had
no reasonable cause to believe his or her conduct was unlawful. Section 145
further provides that in connection with the defense or settlement of any action
by or in the right of the corporation, a Delaware corporation may indemnify its
directors and officers against expenses actually and reasonably incurred by them
if, in connection with the matters in issue, they acted in good faith, in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation, except that no indemnification may be made with respect to any
claim, issue or matter as to which such person has been adjudged liable for
negligence or misconduct unless the Court of Chancery or the court in which such
action or suit is brought approves such indemnification. Section 145 further
permits a Delaware corporation to grant its directors and officers additional
rights of indemnification through bylaw provisions and otherwise, and to
purchase indemnity insurance on behalf of its directors and officers.
Indemnification is mandatory to the extent a claim, issue or matter has been
successfully defended.
Article Ten of Harken's Certificate of Incorporation and Article VII of
Harken's bylaws provide, in general, that Harken shall indemnify its directors
and officers under certain of the circumstances defined in Section 145. Harken
has entered into agreements with each member of its Board of Directors pursuant
to which it will advance to each director costs of litigation in accordance with
the indemnification provisions of Harken's Certificate of Incorporation and
bylaws.
Item 16. Exhibits.
4.1 - Form of certificate representing shares of Harken common stock, par value $.01 per
share (filed as Exhibit 1 to Harken's Registration Statement on Form 8-A, File No.
0-9207, and incorporated by reference herein).
4.2 - Certificate of Designations, Powers, Preferences and Rights of Series A Cumulative
Convertible Preferred Stock, $1.00 par value, of Harken Energy Corporation (filed
as Exhibit 4.1 to Harken's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, File No. 0-9207, and incorporated by reference herein).
4.3 - Certificate of Designations, Powers, Preferences and Rights of Series B Cumulative
Convertible Preferred Stock, $1.00 par value, of Harken Energy Corporation (filed
as Exhibit 4.2 to Harken's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, File No. 0-9207, and incorporated by reference herein).
4.4 - Certificate of the Designations, Powers, Preferences and Rights of Series C
Cumulative Convertible Preferred Stock, $1.00 par value of Harken Energy
Corporation (filed as Exhibit 4.3 to Harken's Annual Report on Form 10-K for fiscal
year ended December 31, 1989, File No. 0-9207, and incorporated by reference
herein).
4.5 - Certificate of the Designations of Series D Preferred Stock, $1.00 par value of
Harken Energy Corporation (filed as Exhibit 4.3 to Harken's Quarterly Report on
Form 10-Q for the fiscal quarter ended September 30, 1995, File No. 0-9207, and
incorporated by reference herein).
4.6 - Rights Agreement, dated as of April 6, 1999, by and between Harken Energy
Corporation and ChaseMellon Shareholder Services L.L.C., as Rights Agent (filed as
Exhibit 4 to Harken's Current Report on Form 8-K dated April 7, 1999, File No.
0-9207, and incorporated by reference herein).
4.7 - Certificate of Designations of Series E Junior Participating Preferred Stock (filed
as Exhibit B to Exhibit 4 to Harken's Current Report on Form 8-K dated April 7,
1999, File No. 0-9207, and incorporated by reference herein).
4.8 - Certificate of Designations, Preferences and Rights of Series F Convertible
Preferred Stock (filed as Exhibit 4.8 to Harken's Quarterly Report on Form 10-Q for
the period ended June 30, 1998, File No. 0-9207, and incorporated by reference
herein).
4.9 - Certificate of Designations, Preferences and Rights of Series G1 Convertible
Preferred Stock (filed as Exhibit 4.9 to Harken's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000, File no. 0-9207, and incorporated by
reference herein).
5.1* - Opinion of Larry E. Cummings.
23.1* - Consent of Arthur Andersen LLP.
23.2* - Consent of Gaffney, Cline & Associates, Inc.
23.3* - Consent of Larry E. Cummings (included in opinion filed as Exhibit 5.1).
24.1* - Powers of Attorney.
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or 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.
(b) The undersigned Registrant hereby undertakes:
II-2
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-3
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on August 15, 2001.
HARKEN ENERGY CORPORATION
*
------------------------------
Mikel D. Faulkner, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
* Chairman of the Board and Chief August 15, 2001
----------------------------------- Executive Officer (Principal
Mikel D. Faulkner Executive Officer)
*
----------------------------------- President, Chief Operating Officer August 15, 2001
Bruce N. Huff and Director
* Vice Chairman and Director August 15, 2001
-----------------------------------
Stephen C. Voss
Director
-----------------------------------
J. William Petty
* Director August 15, 2001
-----------------------------------
Michael M. Ameen, Jr.
* Director August 15, 2001
-----------------------------------
Hobart A. Smith
* Director August 15, 2001
-----------------------------------
Larry Akers
Director
-----------------------------------
Robert Gerrity
II-4
*Larry E. Cummings, by signing his name hereto, does hereby sign this
Registration Statement on behalf of Harken Energy Corporation and each of the
above-named officers and directors of such Company pursuant to powers of
attorney, executed on behalf of Harken and each officer and director.
/s/ Larry E. Cummings
----------------------
Larry E. Cummings, Attorney-in-Fact
II-5
INDEX TO EXHIBITS
Sequentially
Exhibit No. Exhibit Numbered Page
-------------- -------------------------------------------------------- -----------------
4.1 Form of certificate representing shares of Harken
common stock, par value $.01 per share (filed as
Exhibit 1 to Harken's Registration Statement on Form
8-A, File No. 0-9207, and incorporated by reference
herein).
4.2 Certificate of Designations, Powers, Preferences and
Rights of Series A Cumulative Convertible Preferred
Stock, $1.00 par value, of Harken Energy Corporation
(filed as Exhibit 4.1 to Harken's Annual Report on
Form 10-K for the fiscal year ended December 31,
1989, File No. 0-9207, and incorporated by reference
herein).
4.3 Certificate of Designations, Powers, Preferences and
Rights of Series B Cumulative Convertible Preferred
Stock, $1.00 par value, of Harken Energy Corporation
(filed as Exhibit 4.2 to Harken's Annual Report on
Form 10-K for the fiscal year ended December 31,
1989, File No. 0-9207, and incorporated by reference
herein).
4.4 Certificate of the Designations, Powers, Preferences
and Rights of Series C Cumulative Convertible
Preferred Stock, $1.00 par value of Harken Energy
Corporation (filed as Exhibit 4.3 to Harken's Annual
Report on Form 10-K for fiscal year ended December
31, 1989, File No. 0-9207, and incorporated by
reference herein).
4.5 Certificate of the Designations of Series D
Preferred Stock, $1.00 par value of Harken Energy
Corporation (filed as Exhibit 4.3 to Harken's
Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1995, File No. 0-9207, and
incorporated by reference herein).
4.6 Rights Agreement, dated as of April 6, 1999, by and
between Harken Energy Corporation and ChaseMellon
Shareholder Services L.L.C., as Rights Agent (filed
as Exhibit 4 to Harken's Current Report on Form 8-K
dated April 7, 1999, File No. 0-9207, and
incorporated by reference herein).
4.7 Certificate of Designations of Series E Junior
Participating Preferred Stock (filed as Exhibit B to
Exhibit 4 to Harken's Current Report on Form 8-K
dated April 7, 1999, File No. 0-9207, and
incorporated by reference herein).
4.8 Certificate of Designations, Preferences and Rights
of Series F Convertible Preferred Stock (filed as
Exhibit 4.8 to Harken's Quarterly Report on Form
10-Q for the period ended June 30, 1998, File No.
0-9207, and incorporated by reference herein).
4.9 Certificate of Designations, Preferences and Rights
of Series G1 Convertible Preferred Stock (filed as
Exhibit 4.9 to Harken's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000, File
no. 0-9207, and incorporated by reference herein).
Sequentially
Exhibit No. Exhibit Numbered Page
-------------- -------------------------------------------------------- -----------------
*5.1 Opinion of Larry E. Cummings.
*23.1 Consent of Arthur Andersen LLP.
*23.2 Consent of Gaffney, Cline & Associates, Inc.
*23.3 Consent of Larry E. Cummings (included in opinion
filed as Exhibit 5.1).
*24.1 Powers of Attorney.
* Previously filed.
2