Prospectus - 11.16.06
Filed
pursuant to Rule 424(b)(3)
Registration
No. 333-136778
PROSPECTUS
4,954,571
Shares
of Common Stock
Carrizo
Oil & Gas, Inc.
_______________________
This
prospectus covers the offer and resale of shares of common stock by the selling
shareholders identified on page 15 of this prospectus. These shares of
common stock include 4,402,569 shares issued and outstanding and 552,002
shares
issuable upon exercise of stock options held by certain of our officers and
directors. We will not receive any proceeds from these resales.
The
selling shareholders may offer and sell the shares from time to time.
The selling shareholders may offer the shares at prevailing market prices,
at prices related to such prevailing market prices, at negotiated prices or
at
fixed prices.
Our
common stock is quoted on the NASDAQ Global Select Market under the symbol
“CRZO.” On November 15, 2006, the last reported sale price of the common
stock on the NASDAQ Global Select Market was $31.49.
You
should consider carefully the risk factors beginning on page 3 of this
prospectus before purchasing any shares of our 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 November 16, 2006.
Table
of Contents
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Page
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|
|
Summary |
1
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|
Risk
Factors |
3
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|
|
Forward-Looking
Statements |
13
|
|
|
Use
of Proceeds |
14
|
|
|
Selling
Shareholders |
15
|
|
|
Plan
of Distribution |
20
|
|
|
Description
of Capital Stock |
22
|
|
|
Legal
Matters |
25
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|
|
Experts |
25
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|
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Where
You Can Find More Information |
25
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|
_______________________
You
should rely only on the information contained in or incorporated by reference
into this prospectus. We have not authorized anyone to provide you with
different information. You should assume that the information appearing in
or
incorporated by reference into this prospectus is accurate as of the date
on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
Summary
Carrizo
Oil & Gas, Inc.
We
are an independent energy company engaged in the exploration, development
and production of natural gas and oil. Our current operations are
focused
in proven, producing natural gas and oil geologic trends along the
onshore
Gulf Coast area in Texas and Louisiana, primarily in the Miocene,
Wilcox,
Frio and Vicksburg trends, and, since mid_2003, in the Barnett Shale
area
in North Texas. Our other interests include properties in East Texas
and a
coalbed methane investment in the Rocky Mountains. We have obtained
licenses to explore in the U.K. North Sea. We have also acquired
acreage
in shale plays in the Barnett/Woodford in West Texas/New Mexico,
Floyd/Neal in Mississippi/Alabama, the western New Albany in Kentucky
and
the Fayetteville in Arkansas. Unless the context otherwise requires,
all
references to “we,” “us,” “our” and “the Company” refer to Carrizo Oil
& Gas, Inc. and its subsidiaries. The term “you” refers to a
prospective investor.
Risk
Factors
There
are a number of risks that could mitigate our competitive strengths
or
limit our ability to successfully implement our business strategies,
including those described in this prospectus and the documents
incorporated by reference herein. In addition, while we may implement
our
business strategies, the benefits derived from such implementation
may be
mitigated, in whole or in part, if we suffer from one or more of
the risks
described under “Risk Factors” in this prospectus or in the “Risk Factors”
section in our Annual Report on Form 10-K/A for the year ended December
31, 2005 or in any of our other periodic reports filed with the Securities
and Exchange Commission (the “SEC”).
How
to Contact Us
Our
principal executive offices are located at 1000 Louisiana,
Suite 1500, Houston, Texas 77002, and our telephone number at
that location is (713) 328-1000. Information contained on our
website, http://www.carrizo.cc, is not part of this
prospectus.
|
The
Offering
|
|
Common
stock offered:
|
|
|
|
By
us.....................................
|
No
shares.
|
|
|
By
the selling shareholders...
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4,402,569
shares issued and outstanding.
552,002
shares issuable upon exercise of stock options.
|
|
|
Common
stock outstanding.............
|
25,940,361
shares.
|
|
|
Use
of proceeds...........................
|
We
will not receive any of the proceeds from the sale of shares
of our common
stock by the selling shareholders. See “Use of Proceeds.”
|
NASDAQ
symbol.............................
|
“CRZO”
|
|
|
The
number of shares of our common stock to be outstanding is based
on the
number of shares outstanding as of November 3, 2006.
|
Risk
Factors
An
investment in our common stock involves a high degree of risk. You should
carefully consider both the risks described below and the risk factors
incorporated by reference herein, in addition to the other information
set forth
or incorporated by reference in this prospectus, before purchasing shares
of our
common stock. If any of those risks actually occur, our business, operating
results and financial condition could be materially adversely affected.
In such
a case, the trading price of our common stock could decline, and you may
lose
all or part of your investment. Additional risks not currently known to
us or
that we currently deem immaterial may also have a material adverse affect
on us.
Risks
Related to Our Company
Natural
gas and oil drilling is a speculative activity and involves numerous risks
and
substantial and uncertain costs that could adversely affect
us.
Our
success will be largely dependent upon the success of our drilling program.
Drilling for natural gas and oil involves numerous risks, including the
risk
that no commercially productive natural gas or oil reservoirs will be
discovered. The cost of drilling, completing and operating wells is substantial
and uncertain, and drilling operations may be curtailed, delayed or canceled
as
a result of a variety of factors beyond our control, including:
|
· |
unexpected
or adverse drilling conditions;
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|
· |
elevated
pressure
or
irregularities in geologic
formations;
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· |
equipment
failures
or
accidents;
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|
· |
adverse
weather conditions;
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· |
compliance
with governmental
requirements; and
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|
· |
shortages
or delays in the
availability of drilling rigs, crews and
equipment.
|
Because
we identify the areas desirable for drilling from 3-D seismic data covering
large areas, we may not seek to acquire an option
or lease
rights until after the seismic data is analyzed or until the drilling locations
are also identified; in those cases, we may not be permitted to lease,
drill or
produce natural gas or oil from those locations.
Even
if
drilled, our completed wells may not produce reserves of natural gas or
oil that
are economically viable or that meet our earlier estimates of economically
recoverable reserves. Our overall drilling success rate or our drilling
success
rate for activity within a particular project area may decline. Unsuccessful
drilling activities could result in a significant decline in our production
and
revenues and materially harm our operations and financial condition by
reducing
our available cash and resources. Because of the risks and uncertainties
of our
business, our future performance in exploration and drilling may not be
comparable to our historical performance described in this prospectus and
in our
filings with the SEC.
We
may not adhere to our proposed drilling schedule.
Our
final
determination of whether to drill any scheduled or budgeted wells will
be
dependent on a number of factors, including:
|
· |
the
results of our exploration efforts and the acquisition, review
and
analysis of the seismic data;
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· |
the
availability of sufficient capital resources to us and the other
participants for the drilling of the
prospects;
|
|
· |
the
approval of the prospects by the other participants after additional
data
has been compiled;
|
|
· |
economic
and industry conditions at the time of drilling, including prevailing
and
anticipated prices for natural gas and oil and the availability
and prices
of drilling rigs and crews;
and
|
|
· |
the
availability of leases and permits on reasonable terms for the
prospects.
|
Although
we have identified or budgeted for numerous drilling prospects, we may not
be
able to lease or drill those prospects within our expected time frame or
at all.
Wells that are currently part of our capital budget may be based on statistical
results of drilling activities in other 3-D project areas that we believe
are
geologically similar rather than on analysis of seismic or other data in
the
prospect area, in which case actual drilling and results are likely to vary,
possibly materially, from those statistical results. In addition, our drilling
schedule may vary from our expectations because of future
uncertainties.
Our
reserve data and estimated discounted future net cash flows are estimates
based
on assumptions that may be inaccurate and are based on existing economic
and
operating conditions that may change in the future.
There
are
uncertainties inherent in estimating natural gas and oil reserves and their
estimated value, including many factors beyond the control of the producer.
The
reserve data set forth or incorporated by reference in this prospectus and
our
Annual Report on Form 10-K/A for the year ended December 31, 2005 represents
only estimates. Reservoir engineering is a subjective and inexact process
of
estimating underground accumulations of natural gas and oil that cannot be
measured in an exact manner and is based on assumptions that may vary
considerably from actual results.
Accordingly,
reserve estimates may be subject to upward or downward adjustment, and actual
production, revenue and expenditures with respect to our reserves likely
will
vary, possibly materially, from estimates. Additionally, there recently has
been
increased debate and disagreement over the classification of reserves, with
particular focus on proved undeveloped reserves. Changes in interpretations
as
to classification standards, or disagreements with our interpretations, could
cause us to write down these reserves.
As
of
December 31, 2005, approximately 80.9% of our proved reserves were proved
undeveloped and proved nonproducing. Moreover, some of the producing wells
included in our reserve reports as of December 31, 2005 had produced for a
relatively short period of time as of that date. Because most of our reserve
estimates are calculated using volumetric analysis, those estimates are less
reliable than estimates based on a lengthy production history. Volumetric
analysis involves estimating the volume of a reservoir based on the net feet
of
pay of the structure and an estimation of the area covered by the structure
based on seismic analysis. In addition, realization or recognition of our
proved
undeveloped reserves will depend on our development schedule and plans. Lack
of
certainty with respect to development plans for proved undeveloped reserves
could cause the discontinuation of the classification of these reserves as
proved. Although we have accelerated our development of the Camp Hill Field
in
East Texas, we have in the past chosen to delay development of our proved
undeveloped reserves in the Camp Hill Field in favor of pursuing shorter-term
exploration projects with higher potential rates of return, adding to our
lease
position in this field and further evaluating additional economic enhancements
for this field's development.
The
discounted future net cash flows included in this prospectus and our Annual
Report on Form 10-K/A for the year ended December 31, 2005 are not necessarily
the same as the current market value of our estimated natural gas and oil
reserves. As required by the SEC, the estimated discounted future net cash
flows
from proved reserves are based on prices and costs as of the date of the
estimate. Actual future net cash flows also will be affected by factors such
as:
|
· |
the
actual prices we receive for natural gas and
oil;
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· |
our
actual operating
costs in producing natural gas and
oil;
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· |
the
amount and timing of actual
production;
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· |
supply
and demand for natural gas and
oil;
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· |
increases
or decreases in consumption of natural gas and oil;
and
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· |
changes
in governmental
regulations or
taxation.
|
In
addition, the 10% discount factor we use when calculating discounted future
net
cash flows for reporting requirements in compliance with the Statement of
Financial Accounting Standards No. 69 may not be the most
appropriate
discount factor based on interest rates in effect from time to time and
risks
associated with us or the natural gas and oil industry in general.
We
depend on successful exploration, development and acquisitions to maintain
reserves and revenue in the future.
In
general, the volume of production from natural gas and oil properties declines
as reserves are depleted, with the rate of decline depending on reservoir
characteristics. Except to the extent we conduct successful exploration
and
development activities or acquire properties containing proved reserves,
or
both, our proved reserves will decline as reserves are produced. Our future
natural gas and oil production is, therefore, highly dependent on our level
of
success in finding or acquiring additional reserves. In addition, we are
dependent on finding partners for our exploratory activity. To the extent
that
others in the industry do not have the financial resources or choose not
to
participate in our exploration activities, we will be adversely
affected.
Natural
gas and oil prices are highly volatile, and lower prices will negatively
affect
our financial results.
Our
revenue, profitability, cash flow, future growth and ability to borrow
funds or
obtain additional capital, as well as the carrying value of our properties,
are
substantially dependent on prevailing prices of natural gas and oil.
Historically, the markets for natural gas and oil prices have been volatile,
and
those markets are likely to continue to be volatile in the future. It is
impossible to predict future natural gas and oil price movements with certainty.
Prices for natural gas and oil are subject to wide fluctuation in response
to
relatively minor changes in the supply of and demand for natural gas and
oil,
market uncertainty and a variety of additional factors beyond our control.
These
factors include:
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· |
the
level of consumer product demand;
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· |
overall
economic
conditions;
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· |
domestic
and foreign governmental
relations;
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· |
the
price and availability of alternative
fuels;
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· |
the
level and price of foreign imports of oil
and liquefied natural gas;
and
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· |
the
ability of the members of the Organization
of Petroleum Exporting
Countries to agree upon and maintain
oil price controls.
|
Declines
in natural gas and oil prices may materially adversely affect our financial
condition, liquidity and ability to finance planned capital expenditures
and
results of operations.
We
face strong competition from other natural gas and oil
companies.
We
encounter competition from other natural gas and oil companies in all areas
of
our operations, including the acquisition of exploratory prospects and
proven
properties. Our competitors include major integrated natural gas and oil
companies and numerous independent natural gas and oil companies, individuals
and drilling and income programs. Many of our competitors are large,
well-established companies that have been engaged in the natural gas and
oil
business much longer than we have and possess substantially larger operating
staffs and greater capital resources than we do. These companies may be
able to
pay more for exploratory projects and productive natural gas and oil properties
and may be able to define, evaluate, bid for and purchase a greater number
of
properties and prospects than our financial or human resources permit.
In
addition, these companies may be able to expend greater resources on the
existing and changing technologies that we believe are and will be increasingly
important to attaining success in the industry. Such competitors may also
be in a better position to secure oilfield services and equipment on a
timely
basis or on favorable terms. We may not be able to conduct our operations,
evaluate and select suitable properties and consummate transactions successfully
in this highly competitive environment.
We
may not be able to keep pace with technological developments in our
industry.
The
natural gas and oil industry is characterized by rapid and significant
technological advancements and introductions of new products and services using
new technologies. As others use or develop new technologies, we may be placed
at
a competitive disadvantage, and competitive pressures may force us to implement
those new technologies at substantial cost. In addition, other natural gas
and
oil companies may have greater financial, technical and personnel resources
that
allow them to enjoy technological advantages and may in the future allow them
to
implement new technologies before we can. We may not be able to respond to
these
competitive pressures and implement new technologies on a timely basis or at
an
acceptable cost. If one or more of the technologies we use now or in the future
were to become obsolete or if we are unable to use the most advanced
commercially available technology, our business, financial condition and results
of operations could be materially adversely affected.
As
of December 31, 2004, December 31, 2005, June 30,
2006 and September 30, 2006, we had material weaknesses in our internal
controls, and our internal control over financial reporting was not effective
as
of those dates. If we fail to maintain an effective system of internal controls,
we may not be able to provide timely and accurate financial
statements.
As
more
fully described in our annual report on Form 10-K/A for the year ended December
31, 2005 under Item 9A, “Controls and Procedures,” our management identified
three material weaknesses over the effectiveness of our internal controls.
These material weaknesses also resulted in us not being able to file
our annual report during the time allowed by the SEC. As a result of the
material weaknesses, management concluded that, as of December 31, 2005, we
did
not maintain effective internal control over financial reporting. As more fully
described in our Annual Report on Form 10-K/A for the year ended December 31,
2004, management also concluded that during 2004 we did not maintain effective
internal control over financial reporting.
Management
identified each of the three material weaknesses referred to above in March
of
2006 in connection with the preparation of our financial statements and the
work
related to management’s annual report on internal control over financial
reporting. The material weakness in our 2005 year-end close process resulted
from accounting and financial staff vacancies beginning in the fourth quarter
of
2005. Other similar vacancies existed during the 2004 year-end close process,
which resulted in a material weakness as of December 31, 2004. The second
material weakness, relating to our hedging practices, was identified in March
2006 by our management in connection with the preparation of our annual
financial statements and the work related to management’s annual report on
internal control over financial reporting. The underlying hedge accounting
issues were identified and brought to management’s attention by Pannell Kerr
Forster of Texas, P.C. (“PKF”) and led management to identify a material
weakness and therefore conclude that such material weakness was present as
of
December 31, 2005 and December 31, 2004. Management’s identification of this
material weakness ultimately led to the restatement of our 2004 financial
statements and our quarterly financial statements for the first nine months
of
2005. Management determined that this financial restatement was an additional
effect of the year-end close process material weakness. Management also
determined that the cumulative impact of the deficiencies associated with
hedging practices was not material prior to 2004. The third material weakness
related to various errors and omissions made during the 2005 year-end close
process that were identified by PKF in March 2006 and led management to identify
these errors as a material weakness and therefore conclude that such material
weakness was present as of December 31, 2005. The material weakness began in
the
fourth quarter of 2005 and was related to our accounting and financial staff
vacancies.
The
Public Company Accounting Oversight Board has defined a material weakness as
a
control deficiency, or combination of control deficiencies, that results in
more
than a remote likelihood that a material misstatement of the annual or interim
statements will not be prevented or detected. Accordingly, a material weakness
increases the risk that the financial information we report contains material
errors. As more fully described in our quarterly report on Form 10-Q for the
quarter ended September 30, 2006, as amended by our Form 10-Q/A, not all of
these deficiencies have been remedied.
We
have
implemented initiatives to remediate the material weaknesses in our internal
controls. The steps we have taken and are taking to address the material
weaknesses may not be effective. However, any failure to effectively address
a
material weakness or other control deficiency or implement required new or
improved controls,
or
difficulties encountered in their implementation, could limit our ability to
obtain financing, harm our reputation, disrupt our ability to process key
components of our result of operations and financial condition timely and
accurately and cause us to fail to meet our reporting obligations under rules
of
the SEC and NASDAQ and our various debt arrangements. Any failure to remediate
the material weaknesses identified in our evaluation of our internal controls
could preclude our management from determining our internal control over
financial reporting is effective or otherwise from issuing in a timely manner
our management report in 2007.
We
are not eligible to register shares on Form S-3 as
a result of our failure to timely file our Form 10-K.
Our
inability to timely file our Form 10-K for the year ended December 31,
2005, which was related to our financial restatement, may have an adverse
impact on us. In particular, we expect that we will not be eligible to use
a
registration statement on Form S-3 for a period of 12 months after becoming
current with our filings. The inability to use Form S-3 may impair our ability
or increase our costs and the complexity of our efforts to raise funds in the
public markets.
We
are subject to various governmental regulations and environmental
risks.
Natural
gas and oil operations are subject to various federal, state and local
government regulations that may change from time to time. Matters subject to
regulation include discharge permits for drilling operations, plug and
abandonment bonds, reports concerning operations, the spacing of wells,
unitization and pooling of properties and taxation. From time to time,
regulatory agencies have imposed price controls and limitations on production
by
restricting the rate of flow of natural gas and oil wells below actual
production capacity in order to conserve supplies of natural gas and oil. Other
federal, state and local laws and regulations relating primarily to the
protection of human health and the environment apply to the development,
production, handling, storage, transportation and disposal of natural gas and
oil, by-products thereof and other substances and materials produced or used
in
connection with natural gas and oil operations. In addition, we may be liable
for environmental damages caused by previous owners of property we purchase
or
lease. As a result, we may incur substantial liabilities to third parties or
governmental entities and may be required to incur substantial remediation
costs. Further, we or our affiliates hold certain mineral leases in the State
of
Montana that require coalbed methane drilling permits, the issuance of which
has
been challenged in pending litigation. We may not be able to obtain new permits
in an optimal time period or at all. We also are subject to changing and
extensive tax laws, the effects of which cannot be predicted. Compliance with
existing, new or modified laws and regulations could have a material adverse
effect on our business, financial condition and results of
operations.
We
are subject to various operating and other casualty risks that could result
in
liability exposure or the loss of production and revenues.
The
natural gas and oil business involves operating hazards such as:
|
· |
uncontrollable
flows of oil, natural gas or well
fluids;
|
|
· |
geologic
formations with abnormal
pressures;
|
|
· |
pipeline
ruptures or spills;
|
|
· |
releases
of toxic gases;
and
|
|
· |
other
environmental
hazards and
risks.
|
Any
of
these hazards and risks can result in the loss of hydrocarbons, environmental
pollution, personal injury claims and other damage to our properties and the
property of others.
We
may not have enough insurance to cover all of the risks we
face.
In
accordance with customary industry practices, we maintain insurance coverage
against some, but not all, potential losses in order to protect against the
risks we face. We do not carry business interruption insurance. We may elect
not
to carry insurance if our management believes that the cost of available
insurance is excessive relative to the risks presented. In addition, we cannot
insure fully against pollution and environmental risks. The occurrence of
an
event not fully covered by insurance could have a material adverse effect
on our
financial condition and results of operations.
We
cannot control the activities on properties we do not operate and are unable
to
ensure their proper operation and profitability.
We
do not
operate
all of
the properties in which we have an interest. As a result, we have limited
ability to exercise influence over, and control the risks associated with,
operations of these properties. The failure of an operator of our wells to
adequately perform operations, an operator's breach of the applicable agreements
or an operator's failure to act in ways that are in our best interests could
reduce our production and revenues. The success and timing of our drilling
and
development activities on properties operated by others therefore depend
upon a
number of factors outside of our control, including the operator’s:
|
· |
timing
and amount of capital expenditures;
|
|
· |
expertise
and financial resources;
|
|
· |
inclusion
of other participants in drilling wells;
and
|
The
marketability of our natural gas production depends on facilities that we
typically do not own or control, which could result in a curtailment of
production and revenues.
The
marketability of our production depends in part upon the availability, proximity
and capacity of natural gas gathering systems, pipelines and processing
facilities. We generally deliver natural gas through gas gathering systems
and
gas pipelines that we do not own under interruptible or short-term
transportation agreements. Under the interruptible transportation agreements,
the transportation of our natural gas may be interrupted due to capacity
constraints on the applicable system, for maintenance or repair of the system,
or for other reasons as dictated by the particular agreements. Our ability
to
produce and market natural gas on a commercial basis could be harmed by any
significant change in the cost or availability of such markets, systems or
pipelines.
Our
future acquisitions may yield revenues or production that varies significantly
from our projections.
In
acquiring producing properties, we assess the recoverable reserves, future
natural gas and oil prices, operating costs, potential liabilities and other
factors relating to the properties. Our assessments are necessarily inexact
and
their accuracy is inherently uncertain. Our review of a subject property
in
connection with our acquisition assessment will not reveal all existing or
potential problems or permit us to become sufficiently familiar with the
property to assess fully its deficiencies and capabilities. We may not inspect
every well, and we may not be able to observe structural and environmental
problems even when we do inspect a well. If problems are identified, the
seller
may be unwilling or unable to provide effective contractual protection against
all or part of those problems. Any acquisition of property interests may
not be
economically successful, and unsuccessful acquisitions may have a material
adverse effect on our financial condition and future results of
operations.
Our
business may suffer if we lose key personnel.
We
depend
to a large extent on the
services
of certain key management personnel, including our executive officers and
other
key employees, the loss of any of whom could have a material adverse effect
on
our operations. We have entered into employment agreements with each of S.P.
Johnson IV, our President and Chief Executive Officer; Paul F. Boling, our
Chief
Financial Officer; J. Bradley Fisher, our Vice President of Operations; Gregory
E. Evans, our Vice President of Exploration; and Richard H. Smith, our Vice
President of Land. However, as a
practical
matter, any employment agreement we may enter into will not ensure the retention
of our employees. We do not maintain key-man life insurance with respect to
any
of our employees. As a result, we are not insured against any losses resulting
from the death of our key employees. Our success will be dependent on our
ability to continue to employ and retain skilled technical
personnel.
We
may experience difficulty in achieving and managing future
growth.
We
have
experienced growth in the past primarily through the expansion of our drilling
program. Future growth may place strains on our financial, technical,
operational and administrative resources and cause us to rely more on project
partners and independent contractors, possibly negatively affecting our
financial condition and results of operations. Our ability to grow will depend
on a number of factors, including:
|
· |
our
ability to obtain leases or options on properties, including
those for
which we have 3-D seismic
data;
|
|
· |
our
ability to acquire
additional 3-D seismic
data;
|
|
· |
our
ability to identify and acquire new exploratory
prospects;
|
|
· |
our
ability to develop existing
prospects;
|
|
· |
our
ability to continue to retain and attract skilled
personnel;
|
|
· |
our
ability to maintain or enter into new relationships
with project partners
and independent
contractors;
|
|
· |
the
results of our drilling
program;
|
We
may
not be successful in upgrading our technical, operations and administrative
resources or in increasing our ability to internally provide certain of the
services currently provided by outside sources, and we may not be able to
maintain or enter into new relationships with project partners and independent
contractors. Our inability to achieve or manage growth may adversely affect
our
financial condition and results of operations.
We
may continue to enter into derivative transactions to manage the price risks
associated with our production, but which may result in our
making cash payments or prevent us from benefiting to the fullest extent
possible from increases in prices for natural gas and oil.
Because
natural gas and oil prices are unstable, we periodically enter into
price-risk-management transactions such as swaps, collars, futures and options
to reduce our exposure to price declines associated with a portion of our
natural gas and oil production and thereby to achieve a more predictable cash
flow. The use of these arrangements limits our ability to benefit from increases
in the prices of natural gas and oil. Our derivative arrangements may apply
to
only a portion of our production, thereby providing only partial protection
against declines in natural gas and oil prices. These arrangements may expose
us
to the risk of financial loss in certain circumstances, including instances
in
which production is less than expected, our customers fail to purchase
contracted quantities of natural gas and oil or a sudden, unexpected event
materially impacts natural gas or oil prices.
We
have substantial capital requirements that, if not met, may hinder
operations.
We
have
experienced and expect to continue to experience substantial capital needs
as a
result of our active exploration, development and acquisition programs. We
expect that additional external financing will be required in the future to
fund
our growth. We may not be able to obtain additional financing, and financing
under existing or new credit facilities may not be available in the future.
Even
if additional capital becomes available, it may not be on terms acceptable
to
us. Without additional capital resources, we may be forced to limit or defer
our
planned natural gas and oil exploration and development program and thereby
adversely affect the recoverability and ultimate value
of
our
natural gas and oil properties, in turn negatively affecting our business,
financial condition and results of operations.
High
demand for oil field services and related equipment and
personnel and the ability of suppliers to meet that demand may limit our
ability to drill and produce our oil and natural gas
properties.
Due
to
current industry demands, well service providers and related equipment and
personnel are in short supply. This is causing escalating prices, delays in
drilling and other exploration activities, the possibility of poor services
coupled with potential damage to downhole reservoirs and personnel injuries.
Such pressures will likely increase the actual cost of services, extend the
time
to secure such services and add costs for damages due to any accidents sustained
from the over use of equipment and inexperienced personnel.
Our
credit facilities contain operating restrictions and financial covenants, and
we
may have difficulty obtaining additional credit.
Over
the
past few years, increases
in
commodity prices and proved reserve amounts and the resulting increase in our
estimated discounted future net revenue have allowed us to increase our
available borrowing amounts. In the future, commodity prices may decline, we
may
increase our borrowings or our borrowing base may be adjusted downward, thereby
reducing our borrowing capacity. Our credit facilities are secured by a pledge
of substantially all of our producing natural gas and oil properties and assets,
are guaranteed by our subsidiaries and contain covenants that limit additional
borrowings, dividends, the incurrence of liens, investments, sales or pledges
of
assets, changes in control, repurchases or redemptions for cash of our common
stock, speculative commodity transactions and other matters. The credit
facilities also require that specified financial ratios be maintained. We may
not be able to refinance our debt or obtain additional financing, particularly
in view of our credit facilities, restrictions on our ability to incur
additional debt and the fact that substantially all of our assets are currently
pledged to secure obligations under the credit facilities. The restrictions
of
our credit facilities and our difficulty in obtaining additional debt financing
may have adverse consequences on our operations and financial results
including:
|
· |
our
ability to obtain financing for working capital, capital
expenditures, our
drilling program, purchases of new technology or other
purposes;
|
|
· |
our
ability to borrow additional funds and dispose of
assets;
|
|
· |
our
vulnerability to increases in interest
rates;
|
|
· |
unfavorable
terms obtained on additional
financing;
|
|
· |
using
a substantial portion of our cash flow to make
debt service payments,
which will reduce the funds that would otherwise
be available for
operations and future business
opportunities;
|
|
· |
our
ability to meet debt service requirements
if there is a substantial
decrease in our operating cash flow or
an increase in our expenses, which
could require us to modify our operations,
including curtailing portions
of our drilling program, selling assets,
reducing our capital
expenditures, refinancing all or a portion
of our existing debt or
obtaining additional financing;
and
|
|
· |
our
vulnerability to downturns in our business
or the
economy.
|
In
addition, under the terms of our credit facilities,
our borrowing base is
subject to redeterminations at least semi-annually
based in part on prevailing
natural gas and oil prices. In the event the amount
outstanding exceeds the
redetermined borrowing base, we could be forced to
repay a portion of our
borrowings. We may not have sufficient funds to make
any required repayment. If
we do not have sufficient funds and are otherwise unable
to negotiate renewals
of our borrowings or arrange new financing, we may
have to sell a portion of our
assets.
We
may record ceiling limitation write-downs that would reduce our shareholders'
equity.
We
use
the full-cost method of accounting for investments in natural gas and oil
properties. Accordingly, we capitalize all the direct costs of acquiring,
exploring for and developing natural gas and oil properties. Under the full-cost
accounting rules, the net capitalized cost of natural gas and oil properties
may
not exceed a “ceiling limit”
that
is
based upon the present value of estimated future net revenues from proved
reserves, discounted at 10%, plus the lower of the cost or the fair market
value
of unproved properties. If net capitalized costs of natural gas and oil
properties exceed the ceiling limit, we must charge the amount of the excess
to
operations through depreciation, depletion and amortization expense. This
charge
is called a “ceiling limitation write-down.” This charge does not impact cash
flow from operating activities but does reduce our shareholders' equity.
The
risk that we will be required to write down the carrying value of our natural
gas and oil properties increases when natural gas and oil prices are low
or
volatile. In addition, write-downs would occur if we were to experience
sufficient downward adjustments to our estimated proved reserves or the present
value of estimated future net revenues, as further discussed above in “Risk
Factors—Risks Related to Our Company—Our reserve data and estimated discount
future net cash flows are estimates based upon assumptions that may be
inaccurate and are based on existing economic and operating conditions that
may
change in the future.” Once incurred, a write-down of natural gas and oil
properties is not reversible at a later date. See “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Critical Accounting
Policies and Estimates” in our Annual Report on Form 10-K/A for the year ended
December 31, 2005 for additional information on these matters.
We
participate in natural gas and oil leases with third
parties.
We
may
own less than 100% of the working interest in certain leases acquired by
us, and
other parties will own the remaining portion of the working interest. Financial
risks are inherent in any operation where the cost of drilling, equipping,
completing and operating wells is shared by more than one person. We could
be
held liable for the joint activity obligations of the other working interest
owners such as nonpayment of costs and liabilities arising from the actions
of
the working interest owners. In the event other working interest owners do
not
pay their share of such costs, we would likely have to pay those costs, which
could materially adversely affect our financial condition.
We
may incur losses as a result of title deficiencies.
We
purchase working and revenue interests in the natural gas and oil leasehold
interests upon which we will perform our exploration activities from third
parties or directly from the mineral fee owners. The existence of a material
title deficiency can render a lease worthless and can adversely affect our
results of operations and financial condition. Title insurance covering mineral
leaseholds is not generally available and, in all instances, we forego the
expense of retaining lawyers to examine the title to the mineral interest
to be
placed under lease or already placed under lease until the drilling block
is
assembled and ready to be drilled. As is customary in our industry, we rely
upon
the judgment of natural gas and oil lease brokers or independent landmen
who
perform the field work in examining records in the appropriate governmental
offices and abstract facilities before attempting to acquire or place under
lease a specific mineral interest. We, in some cases, perform curative work
to
correct deficiencies in the marketability of the title to us. The work might
include obtaining affidavits of heirship or causing an estate to be
administered. In cases involving more serious title problems, the amount
paid
for affected natural gas and oil leases can be generally lost, and the target
area can become undrillable.
A
substantial portion of our operations is exposed to the additional risk of
tropical weather disturbances.
A
substantial portion
of our
production and reserves is located onshore South Louisiana and Texas. Operations
in this area are subject to tropical weather disturbances. Some of these
disturbances can be severe enough to cause substantial damage to facilities
and
possibly interrupt production. For example, a number of our wells in the
Gulf
Coast were shut in following Hurricanes Katrina and Rita in 2005. In accordance
with customary industry practices, we maintain insurance against some, but
not
all, of these risks.
Losses
could occur for uninsured risks or in amounts in excess of existing insurance
coverage. We cannot assure you that we will be able to maintain adequate
insurance in the future at rates we consider reasonable or that any particular
types of coverage will be available. An event that is not fully covered by
insurance could have a material adverse effect on our financial position
and
results of operations.
The
threat and impact of terrorist attacks or similar hostilities may adversely
impact our operations.
We
cannot
assess the extent of either the threat or the potential impact of future
terrorist attacks on the energy industry in general, and on us in particular,
either in the short-term or in the long-term. Uncertainty surrounding such
hostilities may affect our operations in unpredictable ways, including the
possibility that infrastructure facilities, including pipelines and gathering
systems, production facilities, processing plants and refineries, could be
targets of, or indirect casualties of, an act of terror or war.
Risks
Related to Our Common Stock
Sales
of substantial amounts of shares of our common stock could cause the price
of
our common stock to decrease.
This
prospectus covers the resale by the selling shareholders of a substantial number
of shares of our common stock. These shares previously were not freely tradeable
in the market. Our stock price may decrease due to the additional amount of
shares available in the market.
In
connection with our recently completed private placement, our executive officers
and directors have agreed to a “lock-up” until the 30th day after the date on
which the registration statement of which this prospectus is a part is declared
effective by the SEC with respect to all of the shares of common stock that
they
beneficially own, including securities that are convertible into shares of
common stock and securities that are exchangeable or exercisable for shares
of
common stock. These holders include Messrs. Johnson, Loyd and Webster who
collectively are beneficial owners of in excess of 3,590,293 shares and who
have
registered their shares in the registration statement of which this prospectus
is a part. This means that, subject to certain exceptions, until the
registration statement is declared effective by the SEC, such persons may not
offer, sell, pledge or otherwise dispose of these securities without the prior
written consent of the managing placement agent in our private placement. The
lock-up agreements may be waived by the managing placement agent without public
notice. The expiration or waiver of these lock-up agreements would result in
additional shares being eligible for future sale.
The
market price of our common stock is volatile.
The
trading price of our common stock and the price at which we may sell common
stock in the future are subject to large fluctuations in response to any of
the
following:
|
· |
limited
trading volume in our common stock;
|
|
· |
quarterly
variations in operating results;
|
|
· |
general
financial market conditions;
|
|
· |
the
prices of natural gas and oil;
|
|
· |
announcements
by us and our competitors;
|
|
· |
our
ability to raise additional funds;
|
|
· |
our
involvement in litigation;
|
|
· |
changes
in government regulations;
and
|
We
do not anticipate paying dividends on our common stock in the near
future.
We
have
not
paid
any dividends on our common stock in the past and do not intend to pay cash
dividends on our common stock
in the
foreseeable future. We currently intend to retain any earnings for the future
operation and development of our business, including exploration, development
and acquisition activities. Any future dividend payments will be restricted
by
the terms of our credit facilities.
Certain
anti-takeover provisions may affect your rights as a
shareholder.
Our
articles of incorporation authorize our board of directors to set the terms
of
and issue additional preferred stock without shareholder approval. Our board
of
directors could use the preferred stock as a means to delay, defer or prevent
a
takeover attempt that a shareholder might consider to be in our best interest.
In addition, our credit facilities contain terms that may restrict our ability
to enter into change of control transactions, including requirements to repay
our credit facilities on a change in control. These provisions, along with
specified provisions of the Texas Business Corporation Act and our articles
of
incorporation and bylaws, may discourage or impede transactions involving actual
or potential changes in our control, including transactions that otherwise
could
involve payment of a premium over prevailing market prices to holders of our
common stock.
Forward-Looking
Statements
This
prospectus and the documents included or incorporated by reference in this
prospectus contain statements concerning our expectations, beliefs, plans,
objectives, goals, strategies, future events or performance and underlying
assumptions and other statements that are not historical facts. These statements
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. You generally can identify our forward-looking
statements by the words “anticipate,” “believe,” “budgeted,” “continue,”
“could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,”
“plan,” “potential,” “predict,” “projection,” “scheduled,” “should,” “will” or
other similar words. These forward-looking statements include, among others,
statements regarding:
|
· |
our
ability to explore for and develop natural gas and oil
resources
successfully and
economically;
|
|
· |
our
estimates of the timing and number of wells we expect
to drill and other
exploration
activities;
|
|
· |
anticipated
trends in our
business;
|
|
· |
our
future results of
operations;
|
|
· |
our
liquidity and our ability to finance our
exploration and development
activities;
|
|
· |
our
capital expenditure
program;
|
|
· |
future
market conditions in the oil and
gas
industry;
|
|
· |
our
ability to make and integrate
acquisitions;
and
|
|
· |
the
impact of governmental
regulation.
|
More
specifically, our forward-looking statements include, among others, statements
relating to our schedule, targets, estimates or results of future drilling,
including the number, timing and results of wells, budgeted wells, increases
in
wells, the timing and risk involved in drilling follow-up wells, expected
working or net revenue interests, planned expenditures, prospects budgeted
and
other future capital expenditures, risk profile of oil and gas exploration,
acquisition of 3-D seismic data (including number, timing and size of projects),
planned evaluation of prospects, probability of prospects having oil and natural
gas, expected production or reserves, increases in reserves, acreage, working
capital requirements, hedging activities, the ability of expected sources of
liquidity to implement our business strategy, future hiring, future exploration
activity, production rates, potential drilling locations targeting coal seams,
the outcome of legal challenges to new coalbed methane drilling permits in
Montana, financing for our 2006 exploration and development program, all and
any
other statements regarding future operations, financial results, business plans
and cash needs and other statements that are not historical facts.
Such
statements involve risks and uncertainties, including, but not limited to,
those
relating to our dependence on our exploratory drilling activities, the
volatility of oil and natural gas prices, the need to replace reserves depleted
by production, operating risks of oil and natural gas operations, our dependence
on our key personnel, factors that affect our ability to manage our growth
and
achieve our business strategy, risks relating to our limited operating history,
technological changes, our significant capital requirements, the potential
impact of government regulations, adverse regulatory determinations, including
those related to coalbed methane drilling in Montana, litigation, competition,
the uncertainty of reserve information and future net revenue estimates,
property acquisition risks, industry partner issues, availability of equipment,
weather and other factors detailed herein and in our other filings with the
SEC.
We
have
based our forward-looking statements on our management’s beliefs and assumptions
based on information available to our management at the time the statements
are
made. We caution you that assumptions, beliefs, expectations, intentions and
projections about future events may and often do vary materially from actual
results. Therefore, we cannot assure you that actual results will not differ
materially from those expressed or implied by our forward-looking
statements.
Some
of
the factors that could cause actual results to differ from those expressed
or
implied in forward-looking statements are described under “Risk Factors” in this
prospectus and described under “Risk Factors” and elsewhere in the documents
that we incorporate by reference into this prospectus, including our Annual
Report on Form 10-K/A for the fiscal year ended December 31, 2005 and
in our other periodic reports filed with the SEC. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual outcomes may vary materially from those indicated. All
subsequent written and oral forward-looking statements attributable to us or
persons acting on our behalf are expressly qualified in their entirety by
reference to these risks and uncertainties. You should not place undue reliance
on our forward-looking statements. Each forward-looking statement speaks only
as
of the date of the particular statement, and we undertake no duty to update
any
forward-looking statement.
Use
of Proceeds
All
of
the shares of common stock covered by this prospectus are being sold by the
selling shareholders. See “Selling Shareholders.” We will not receive any
proceeds from these sales of shares of our common stock.
Selling
Shareholders
This
prospectus covers the offer and resale by the selling shareholders listed in
the
following table, or their partners, pledgees, donees, transferees or other
successors that receive the shares and their corresponding registration rights
in accordance with the registration rights agreement to which the selling
shareholder is party, of 4,954,571 shares of our common stock. These shares
of
common stock include 4,402,569 shares issued and outstanding and 552,002 shares
issuable upon exercise of stock options granted by us to certain of our officers
and directors named below. The stock options were issued pursuant to our
Long-Term Incentive Plan.
The
following table provides information regarding the beneficial ownership of
our
common stock held by the selling shareholders as of November 3, 2006 and the
shares included in the offering.
|
|
Shares
of Common Stock
|
|
Name
|
|
Beneficially
Owned
Prior to
the
Offering (1)
|
|
Offered
Hereby
(2)
|
|
Beneficially
Owned
After
the
Offering
|
|
As
a Percent of
Total
Outstanding
After
the Offering (3)
|
|
KMF
Partners, LP (4)
|
|
|
50,000
|
|
|
50,000
|
|
|
─
|
|
|
*
|
|
Deephaven
Relative Value Equity Trading Ltd. (5)
|
|
|
125,000
|
|
|
125,000
|
|
|
─
|
|
|
*
|
|
Deephaven
Event Trading Ltd. (6)
|
|
|
347,500
|
|
|
347,500
|
|
|
─
|
|
|
*
|
|
Deephaven
Distressed Opportunities Trading Ltd. (7)
|
|
|
125,000
|
|
|
125,000
|
|
|
─
|
|
|
*
|
|
MA
Deep Event Ltd. (6)
|
|
|
27,500
|
|
|
27,500
|
|
|
─
|
|
|
*
|
|
BBT
Fund, L.P. (8)
|
|
|
23,600
|
|
|
23,600
|
|
|
─
|
|
|
*
|
|
CAP
Fund, L.P. (9)
|
|
|
11,600
|
|
|
11,600
|
|
|
─
|
|
|
*
|
|
SRI
Fund, L.P. (10)
|
|
|
4,800
|
|
|
4,800
|
|
|
─
|
|
|
*
|
|
Glacier
Partners (11)
|
|
|
30,000
|
|
|
30,000
|
|
|
─
|
|
|
*
|
|
Rainier
Investment Management, Inc. (12)
|
|
|
929,592
|
|
|
205,000
|
|
|
724,592
|
|
|
2.8
|
%
|
UBS
O’Connor LLC (13)
|
|
|
400,000
|
|
|
400,000
|
|
|
-
|
|
|
*
|
|
Paul
B. Loyd, Jr.
|
|
|
222,490
|
|
|
223,990
|
|
|
-
|
|
|
*
|
|
Steven
A. Webster
|
|
|
2,590,490
|
|
|
2,590,490
|
|
|
-
|
|
|
*
|
|
S.P.
Johnson IV
|
|
|
784,535
|
|
|
790,091
|
|
|
─
|
|
|
*
|
|
Total
|
|
|
5,672,107
|
|
|
4,954,571
|
|
|
724,592
|
|
|
2.8
|
%
|
______________________________________
*
|
Represents
less than 1%
|
(1)
|
The
table includes shares of common stock that can be acquired through
the
exercise of stock options within 60 days of November 3, 2006 as follows:
Mr. Loyd - 28,000, Mr. Webster - 285,834 and Mr. Johnson -
231,112.
|
(2)
|
The
shares of common stock offered hereby include shares that can be
acquired
through the exercise of stock options as follows: Mr. Loyd - 29,500
(28,000 of which are vested), Mr. Webster - 285,834 (285,834 of which
are
vested) and Mr. Johnson - 236,668 (231,112 of which are
vested).
|
(3)
|
The
percent of the class owned by each of the selling shareholders has
been
computed assuming the exercise of all stock options deemed to be
beneficially owned by that person, and assuming that no stock options
held
by any other person have been exercised.
|
(4)
|
Karen
Fleiss, the managing partner of KMF Partners, LP, may be deemed to
have
sole voting and investment power over these
shares.
|
(5)
|
Thomas
Rectenwald, Portfolio Manager, may be deemed to have sole voting
and
investment power over these shares.
|
(6)
|
Matthew
Halbower, Portfolio Manager, may be deemed to have sole voting and
investment power of these shares.
|
(7)
|
Jeffrey
Golbus, Portfolio Manager, may be deemed to have sole voting
and
investment power of these
shares.
|
(8)
|
BBT
Fund, L.P. is controlled by its managing partners, BBT Genpar,
L.P. BBT
Genpar, L.P. is controlled by its general partner, BBT-FW, Inc.
BBT-FW,
Inc. is controlled by its president and sole stockholder, Sid R.
Bass. Sid
R. Bass may be deemed to have sole voting and investment power
over these
shares.
|
(9)
|
CAP
Fund, L.P. is controlled by its managing general partner, CAP Genpar,
L.P.
CAP Genpar, L.P. is controlled by its general partner, CAP-FW,
Inc.
CAP-FW, Inc. is controlled by its president and sole stockholder,
Sid R.
Bass. Sid R. Bass may be deemed to have sole voting and investment
power
over these shares.
|
(10)
|
SRI
Fund, L.P. is controlled by its managing general partner, SRI Genpar,
L.P.
SRI Genpar, L.P. is controlled by its general partner, BBT-FW,
Inc.
BBT-FW, Inc. is controlled by its president and sole stockholder,
Sid R.
Bass. Sid R. Bass may be deemed to have sole voting and investment
power
over these shares.
|
(11)
|
Peter
Castellanos, partner of Glacier Partners, may be deemed to have
sole
voting and investment power over these shares.
|
(12)
James Margard, Chief Investment Officer of Rainier Investment Management,
Inc.,
may be deemed to have sole voting and investment power over these shares.
(13)
The
shares are beneficially owned by (a) Fundamental Market Neutral MAC 81 Limited
(26,675 shares), O’Connor Global Fundamental Market Neutral Long/Short Master
Limited (194,700 shares) and O’Connor Global Multi-Strategy Alpha Master Limited
(53,625 shares), each of which is controlled by Kipp Schrage, and (b) O’Connor
PIPES Corporate Strategies Master Limited (125,000 shares), which is controlled
by Jeffrey Putman. Each of these funds has ceded investment control to UBS
O'Connor LLC, the Investment Manager. The Investment Manager may be deemed
to
have sole voting and investment power over these shares. UBS O'Connor LLC
is a
wholly owned subsidiary of UBS AG, which is traded on the New York Stock
Exchange.
The
selling shareholders, or their partners, pledgees, donees, transferees or
other
successors that receive the shares and their corresponding registration in
accordance with the registration rights agreement to which the selling
shareholder is party (each also a selling shareholder for purposes of this
prospectus), may sell up to all of the shares of our common stock shown in
the
table above under the heading “Offered Hereby” pursuant to this prospectus in
one or more transactions from time to time as described below under “Plan of
Distribution.” However, the selling shareholders are not obligated to sell any
of the shares of our common stock offered by this prospectus.
Some
of
the selling shareholders either have or have had a material relationship
with us
within the past three years.
Private
Placements
In
July
2006, we sold an aggregate of 1.35 million shares of our common stock to
KMF
Partners LP, Deephaven Relative Value Equity Trading Ltd., Deephaven Event
Trading, Ltd., Deephaven Distressed Opportunities Trading, Ltd., MA Deep
Event
Ltd., BBT Fund, L.P., CAP Fund L.P., SRI Fund, L.P., Glacier Partners, Rainier
Investment Management, Inc. and UBS O’Connor LLC at a price of $26.00 per share
in a private placement. In connection with this private placement, we entered
into subscription and registration rights agreements with these institutional
investors, which provide registration rights with respect to the shares
purchased in the private placement. We are generally required to file this
registration statement to register the resale of such shares under the
Securities Act of 1933, as amended (the “Securities Act”), within 30 days of the
closing of the private placement. We are subject to certain covenants under
the
terms of the subscription and registration rights agreements, including the
requirement that this registration statement be kept effective for resale
of
shares for two years, subject to certain “blackout periods” when sales may not
be made by these investors. In certain situations, we are required to indemnify
these investors, including without limitation, for certain liabilities under
the
Securities Act.
In
June
2005, we sold an aggregate of 1.2 million shares of our common stock to a
group
of institutional investors at a price of $15.25 per share in a private
placement. Deephaven Event Trading Ltd., Deephaven Distressed Opportunities
Trading Ltd. and certain affiliated funds purchased 150,000 shares in that
transaction.
2002
Financing
In
February 2002, we sold 60,000 shares of our Series B preferred stock and
warrants to purchase 252,632 shares of our common stock for an aggregate
purchase price of $6.0 million, including $2.0 million of Series B preferred
stock and 84,211 warrants sold to Mr. Webster. In June 2004, Mr. Webster
converted all of his Series B preferred stock (approximately 25,195 shares)
into
442,025 shares of common stock. Currently, no shares of Series B preferred
stock remain outstanding. In March 2005, Mr. Webster converted all of his
2002 warrants into 54,669 shares of common stock. Currently, no 2002 warrants
remain outstanding. Each of our series of warrants was exercisable on a cashless
basis at the option of the holder. We also entered into a registration rights
agreement relating to the shares of common stock issuable upon conversion of
the
Series B preferred stock and the exercise of the related warrants.
Pinnacle
Transaction
During
the second quarter of 2003, we and Rocky Mountain Gas, Inc. (“RMG”) each
contributed our interests in certain natural gas and oil leases in Wyoming
and
Montana in areas prospective for coalbed methane to a newly formed entity,
Pinnacle Gas Resources, Inc. In exchange for the contribution of these assets,
we and RMG each received 37.5% of the common stock of Pinnacle and options
to
purchase additional Pinnacle common stock, or, on a fully diluted basis, we
and
RMG each received an ownership interest in Pinnacle of 26.9%. U.S. Energy Corp.
and Crested Corp. (collectively, “US Energy”) later succeeded to RMG’s interest
in Pinnacle. We retained our interests in approximately 145,000 gross acres
in
the Castle Rock project area in Montana and the Oyster Ridge project area in
Wyoming. We no longer have a drilling obligation in connection with the oil
and
natural gas leases contributed to Pinnacle.
Simultaneously
with the contribution of these assets, affiliates and related parties of CSFB
Private Equity (the “CSFB Parties”), contributed approximately $17.6 million of
cash to Pinnacle in return for redeemable preferred stock of Pinnacle, 25%
of
Pinnacle’s common stock as of the closing date and warrants to purchase Pinnacle
common stock at an exercise price of $100.00 per share, subject to
adjustments.
In
March
2004, the CSFB parties contributed additional funds of $11.8 million to continue
funding the 2004 development program of Pinnacle. In 2005, the CSFB Parties
contributed $15.0 million to Pinnacle to finance an acquisition of additional
acreage. CCBM and U.S. Energy Corp. elected not to participate in the equity
contribution. In November 2005, the CSFB Parties and a former Pinnacle employee
received 30,000 and 2,000 shares of Pinnacle common stock, respectively, after
exercising certain warrants and options.
In
April
2006, prior to and in connection with a private placement by Pinnacle of
7,400,000 shares of its common stock, Pinnacle issued 25 new shares of its
common stock to each of its stockholders for each existing share in a stock
split; Pinnacle redeemed the preferred stock held by the CSFB Parties at 110%
of
par value; the CSFB Parties exercised all of their warrants on a “cashless” net
exercise basis; and we and U.S. Energy exercised our respective options on
a
“cashless” net exercise basis. On April 11, 2006, after the stock split, the
redemption of the preferred stock, the warrant and option exercises and the
private placement, we owned 2,459,102 shares of Pinnacle’s common stock, and our
ownership of Pinnacle was 9.5% on a fully diluted basis. On such date, U.S.
Energy and the CSFB Parties owned 2,459,102 and 7,306,782 shares of Pinnacle’s
common stock, respectively, and their ownership of Pinnacle was 9.5% and 28.3%
on a fully diluted basis, respectively.
We
previously had the right to appoint two members of Pinnacle’s board of
directors. We agreed to give up this right in connection with the transactions
described above. However, Mr. Johnson and another of our directors currently
serve on Pinnacle’s board of directors.
Immediately
following its formation, Pinnacle acquired an approximate 50% working interest
in existing leases and approximately 36,529 gross acres prospective for coalbed
methane development in the Powder River Basin of Wyoming from an unaffiliated
party for $6.2 million. At the time of the Pinnacle transaction, these wells
were producing at a combined gross rate of approximately 2.5 MMcfd, or an
estimated 1 MMcfd net to Pinnacle. At the end of 2005 Pinnacle’s production was
approximately 17.8 Mmcfe/d gross (6.0 Mmcfe/d net). As of December 31,
2005, Pinnacle owned interests in approximately 418,000 gross acres (272,000
net) in the Powder River Basin.
Our
Chairman, Steven A. Webster, serves as Chairman of Global Energy Partners,
which
through June 30, 2005, was an affiliate of CSFB Private Equity. Mr. Webster
now
serves as Co-Managing Partner of Avista Capital Partners LP, which is not
affiliated with CSFB but which has an affiliate that provides consulting
services to an affiliate of CSFB. Mr. Webster has entered into a consulting
contract with CSFB Private Equity to assist through 2006 in monitoring certain
of its investments, including Pinnacle. Mr. Webster and certain of his Avista
associates serve on the board of directors of Pinnacle.
We,
the
CSFB Parties, RMG, U.S. Energy, Peter G. Schoonmaker, Gary W. Uhland and
Pinnacle also entered into an agreement providing generally for multiple
demand
registration rights with respect to the Pinnacle common stock in favor of
the
CSFB Parties, one demand registration right in favor of us and U.S. Energy
and
certain piggyback registration rights for us and U.S. Energy, subject to
the
satisfaction of specified conditions.
On
September 22, 2006, U.S. Energy sold all of its 2,459,102 shares of Pinnacle’s
common stock to the CSFB Parties.
Other
Transactions
Messrs.
Webster, Loyd and Johnson have each been a member of our board of directors
since 1993. Mr. Webster has served as chairman of our board of directors
since
1997. Mr. Johnson has served as our President and Chief Executive Officer
since
December 1993.
Information
regarding compensation paid by us to our executive officers and directors
and
related arrangements may be found in our 2006 definitive proxy statement,
filed
with the SEC on May 1, 2006.
In
the
first quarter of 2004, due to the low number of shares of Common Stock available
for issuance under the Incentive Plan, the Compensation Committee recommended
and the Board of Directors approved the award of a special cash bonus in
lieu of
stock options to Mr. Webster. The special bonus was paid to Mr. Webster in
three
equal installments of $40,000 on April 15, 2004, August 31, 2004 and February
28, 2005.
In
December 2001, we sold to Mr. Webster a 2% working interest in certain leases
in
Matagorda County and the right to participate in the Staubach #1 well located
within those leases in exchange for $20,000 and the payment by Mr. Webster
of a
33% promoted interest for the drilling costs through casing point of that
well.
The terms of this sale were consistent with the terms of sales to other
participants in this project.
In
December 1999, we entered into a registration rights agreement with certain
of
our founding shareholders, including Messrs. Webster, Loyd and Johnson, that
provided the shareholders with registration rights relating to shares held
by
them at the time and shares acquired through the exercise or conversion of
securities that are convertible into common stock.
In
November 1999, we entered into a month-to-month agreement with San Felipe
Resource Company, an entity owned by Mr. Webster, under which Mr. Webster
provides consulting services to us in exchange for a fee of $9,000 per month,
which was increased to $12,000 per month effective April 2003. In May 2006,
in
connection with his consulting services, Mr. Webster received restricted
stock
pursuant to our Long-Term Incentive Plan, and he is
eligible to receive additional such awards. We also provide office space
for Mr.
Webster’s son.
Due
to
the limited capital available in the first half of 2006 to fund all of our
ongoing lease acquisition efforts in the Barnett Shale and other shale plays,
we
elected to enter into several lease option agreements with a number of third
parties and with Mr. Webster. The terms and conditions of the leasing
arrangement with Mr. Webster are consistent with the leasing arrangements
we
have entered into with other third parties. These leasing arrangements provide
us the option to purchase leases from the counterparties, over an option
period,
generally 90 days, for the counterparties’ original cost of the leases plus an
option fee. Strategically, these leasing arrangements have allowed us to
temporarily control important acreage positions during period that we have
lacked sufficient capital to directly acquire such oil and gas
leases.
Since
May
2006, we have acquired certain oil and gas leases through the aforementioned
lease option arrangement with Mr. Webster. The acquisitions were made pursuant
to a land option agreement between Mr. Webster and us dated January 25, 2006.
The terms and conditions of this leasing arrangement with Mr. Webster are
consistent with leasing arrangements we have entered into with the other
third
parties. Under the option agreement, Mr. Webster agreed to acquire oil and
gas
leases in areas where we are actively leasing or that we deem prospective.
On or
before the 90th day from the date that Mr. Webster acquires any lease in
these
areas, we have the option to acquire these leases from Mr. Webster for 110%
of
Mr. Webster’s purchase price or, on the 90th day, pay a non-refundable 10%
option extension fee to add a second 90-day option period. On or before the
end
of this second 90-day option period, we have the option to pay Mr. Webster
110%
of his original purchase price to acquire the lease. If, at the end of the
second option period, we have not exercised our purchase option, Mr. Webster
will retain ownership of the oil and gas leases. In addition to the cash
payments described above, we will assign a one-half of one percent of 8/8ths
overriding royalty interest (proportionally reduced to the actual net interest
in any given lease acquired) on any lease we acquire from Mr. Webster in
the
first 90-day option period and a one percent of 8/8ths overriding royalty
interest (also proportionally reduced) on any lease acquired from Mr. Webster
in
the second 90-day option period. As of September 30, 2006, Mr. Webster has
acquired oil and gas leases for approximately $4.2 million, we paid
approximately $4.4 million for leases from Mr. Webster and we have made option
extension payments of approximately $48,000 to Mr. Webster. There are currently
no outstanding lease options under our arrangement with Mr. Webster. We may
continue to use these arrangements as a strategic alternative.
We
and
Deephaven MCF Acquisition LLC, which
is
an affiliate of the selling shareholders Deephaven
Relative Value Equity Trading Ltd.,
Deephaven
Event Trading Ltd., Deephaven Distressed Opportunities Trading Ltd. and MA
Deep
Event Ltd, entered into a land option agreement dated May 2, 2006. Under
the
option agreement, Deephaven MCF Acquisition LLC agreed to acquire oil and
gas
leases in areas where we are actively leasing or that we deem prospective.
On or
before the 120th
day from
the date that Deephaven MCF Acquisition LLC acquires any lease in these areas,
we have the option to acquire these leases from Deephaven MCF Acquisition
LLC
for 110% of its purchase price or, on or before the 120th
day, pay
a non-refundable 10% option extension fee to add a second 120-day option
period.
On or before the end of this second 120-day option period, we have the option
to
pay Deephaven MCF Acquisition LLC 110% of its original purchase price to
acquire
the lease. If, at the end of the second option period, we have not exercised
our
purchase option, Deephaven MCF Acquisition LLC will retain ownership of the
oil
and gas leases. In addition to the cash payments described above, we will
assign
a one percent of 8/8ths overriding royalty interest (proportionally reduced
to
the actual net interest in any given lease acquired) on any lease we acquire
from Deephaven MCF Acquisition LLC in the first 120-day option period and
a two
percent of 8/8ths overriding royalty interest (also proportionally reduced)
on
any lease acquired from Deephaven MCF Acquisition LLC in the second 120-day
option period. Since the effective date of the option agreement, Deephaven
MCF
Acquisition LLC has acquired oil and gas leases (totaling approximately 5,306
acres) for $1,903,000, and we have paid approximately $1,114,000 to acquire
leases from Deephaven MCF Acquisition LLC (totaling approximately 2,861 acres)
pursuant to the option agreement.
The
shares of common stock being sold by the selling shareholders are being
registered pursuant to registration rights agreements with those shareholders.
Under those agreements, we are paying the costs of registration and have
agreed
to indemnify the selling shareholders against certain liabilities, including
liabilities arising under the Securities Act.
Plan
of Distribution
As
of the
date of this prospectus, we have not been advised by the selling shareholders
as
to any plan of distribution. Distributions of the shares by the selling
shareholders, or by their partners, pledgees, donees (including charitable
organizations), transferees or other successors in interest, may from time
to
time be offered for sale either directly by such individual, or through
underwriters, dealers or agents or on any exchange on which the shares may
from
time to time be traded, in the over-the-counter market, or in independently
negotiated transactions or otherwise. The methods by which the shares may be
sold include:
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a
block trade (which may involve crosses) in which the
broker or dealer so
engaged will attempt to sell the securities as agent
but may position and
resell a portion of the block as principal to facilitate
the
transaction;
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purchases
by a broker or dealer as principal and resale by
such broker or dealer for
its own account pursuant to this
prospectus;
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through
options, swaps and
derivatives;
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exchange
distributions and/or secondary
distributions;
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settlement
of short
sales;
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sales
in the over-the-counter
market;
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underwritten
transactions;
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brokers
or dealers may agree with the
selling shareholders to sell
a specified
number of such shares at a
stipulated price per
share;
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ordinary
brokerage transactions
and transactions in which
the broker solicits
purchasers;
and
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privately
negotiated
transactions.
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The
selling shareholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.
Such
transactions may be effected by the selling shareholders at market prices
prevailing at the time of sale or at negotiated prices. The selling shareholders
may effect such transactions by selling the securities to underwriters or to
or
through broker-dealers, and such underwriters or broker-dealers may receive
compensations in the form of discounts or commissions from the selling
shareholders and may receive commissions from the purchasers of the securities
for whom they may act as agent. The selling shareholders may agree to indemnify
any underwriter, broker-dealer or agent that participates in transactions
involving sales of the shares against certain liabilities, including liabilities
arising under the Securities Act. We have agreed to register the shares for
sale
under the Securities Act and to indemnify the selling shareholders and each
person who participates as an underwriter in the offering of the shares against
certain civil liabilities, including certain liabilities under the Securities
Act.
In
connection with sales of the securities under this prospectus, the selling
shareholders may enter into hedging transactions with broker-dealers, who may
in
turn engage in short sales of the securities in the course of hedging the
positions they assume. The selling shareholders also may sell securities short
and deliver them to close their short positions, or loan or pledge the
securities to broker-dealers that in turn may sell them.
The
selling shareholders may from time to time pledge or grant a security interest
in some or all of the common stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell shares of common stock from time to time under this prospectus,
or under an
amendment
to this prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act amending the list of selling shareholders to include the pledgee,
transferee or other successors in interest as selling shareholders under this
prospectus.
The
selling shareholders and any underwriters, dealers or agents that participate
in
distribution of the securities may be deemed to be underwriters, and any profit
on sale of the securities by them and any discounts, commissions or concessions
received by any underwriter, dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act.
There
can
be no assurances that the selling shareholders will sell any or all of the
securities offered under this prospectus.
Description
of Capital Stock
The
description of our capital stock in this section is a summary and is not
intended to be complete. For a complete description of our capital stock, please
read our amended and restated articles of incorporation and our amended and
restated bylaws, which have been filed with the SEC.
General
Our
authorized capital stock consists of (1) 40,000,000 shares of common stock,
par
value $0.01 per share, and (2) 10,000,000 shares of preferred stock, par value
$0.01 per share. Approximately 25,940,361 shares of our common stock and no
shares of preferred stock were outstanding as of November 3, 2006.
Common
Stock
The
holders of our common stock are entitled to one vote per share on all matters
on
which shareholders are permitted to vote. The holders of our common stock have
no preemptive rights to purchase or subscribe for our securities, and our common
stock is not convertible or subject to redemption by us.
Subject
to the rights of the holders of any class of our capital stock having any
preference or priority over our common stock, the holders of our common stock
are entitled to dividends in such amounts as may be declared by our board of
directors from time to time out of funds legally available for such payments
and, if we are liquidated, dissolved or wound up, to a ratable share of any
distribution to shareholders, after satisfaction of all our liabilities and
the
prior rights of any outstanding class of our preferred stock.
American
Stock Transfer & Trust Company is the registrar and transfer agent for our
common stock.
Preferred
Stock
Our
board
of directors has the authority, without shareholder approval, to issue shares
of
preferred stock in one or more series, and to fix the number and terms of each
such series. We have no present plan to issue additional shares of preferred
stock.
The
issuance of shares of preferred stock could adversely affect the voting power
of
holders of our common stock, discourage an unsolicited acquisition proposal
or
make it more difficult for a third party to gain control of the Company. For
instance, the issuance of a series of preferred stock might impede a business
combination by including class voting rights that would enable the holder to
block such a transaction or facilitate a business combination by including
voting rights that would provide a required percentage vote of the shareholders.
Although our board of directors is required to make any determination to issue
preferred stock based on its judgment as to the best interests of our
shareholders, the board could act in a manner that would discourage an
acquisition attempt or other transaction that some of the shareholders might
believe to be in their best interests or in which shareholders might receive
a
premium for their stock over the then market price of the stock. Our board
of
directors does not presently intend to seek shareholder approval prior to any
issuance of currently authorized stock unless otherwise required by law or
the
rules of the NASDAQ Global Select Market.
Special
Meetings
Our
articles of incorporation provide that special meetings of our shareholders
may
be called only by the chairman of our board of directors, our president, a
majority of our board of directors or by shareholders holding not less than
50%
of our outstanding voting stock.
Voting
Our
common stock does not have cumulative voting rights. Accordingly, holders of
a
majority of the total votes entitled to vote in an election of directors will
be
able to elect all of the directors.
Our
articles of incorporation or Texas law requires the affirmative vote of holders
of:
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66
2/3% of the outstanding shares entitled to vote on
the matter to approve
any merger, consolidation or share exchange, any
dissolution of the
Company or certain dispositions of all or substantially
all of our assets
in which we do not continue to engage in a business
or apply a portion of
the consideration received in connection with the
transaction to the
conduct of a business in which we engage following
the transaction;
and
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a
majority of the outstanding shares entitled
to vote on the matter to
approve any amendment to our articles of incorporation
or any other matter
for which a shareholder vote is required by
the Texas Business Corporation
Act. If any class or series of shares is entitled
to vote as a class with
regard to these events, the vote required will
be the affirmative vote of
the holders of a majority of the outstanding
shares within each class or
series of shares entitled to vote thereon as
a class and at least a
majority of the outstanding shares of capital
stock otherwise entitled to
vote thereon.
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Our
bylaws provide that shareholders who wish to nominate directors or to bring
business before a shareholders’ meeting must notify us and provide pertinent
information at least 80 days before the meeting date, or within 10 days after
public announcement pursuant to our bylaws of the meeting date, if the meeting
date has not been publicly announced at least 90 days in advance.
Our
articles of incorporation and bylaws provide that no director may be removed
from office except for cause and upon the affirmative vote of the holders of
a
majority of the votes entitled to be cast in the election of our directors.
The
following events constitute “cause”:
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the
director has been convicted, or is granted immunity
to testify where
another has been convicted, of a
felony;
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the
director has been found by a court or by
the affirmative vote of a
majority of all other directors to be grossly
negligent or guilty of
willful misconduct in the performance of
duties to
us;
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the
director is adjudicated mentally incompetent;
or
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the
director has been found by a court
or by the affirmative vote of a
majority of all other directors
to have breached his duty of loyalty
to us
or our shareholders or to have
engaged in a transaction with us
from which
the director derived an improper
personal
benefit.
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Business
Combination Law
We
are
subject to Part Thirteen (the “Business Combination Law”) of the Texas Business
Corporation Act. In general, the Business Combination Law prevents an
“affiliated shareholder” or its affiliates or associates from entering into or
engaging in a “business combination” with an “issuing public corporation” during
the three-year period immediately following the affiliated shareholder’s
acquisition of shares unless:
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before
the date the person became an affiliated shareholder,
the board of
directors of the issuing public corporation approved
the business
combination or the acquisition of shares made
by the affiliated
shareholder on that date;
or
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not
less than six months after the date the
person became an affiliated
shareholder, the business combination is
approved by the affirmative vote
of holders of at least two-thirds of the
issuing public corporation’s
outstanding voting shares not beneficially
owned by the affiliated
shareholder or its affiliates or
associates.
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For
the
purposes of the Business Combination Law, an “affiliated shareholder” is defined
generally as a person who is or was within the preceding three-year period
the
beneficial owner of 20% or more of a corporation’s outstanding voting shares. A
“business combination” is defined generally to include:
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mergers
or share exchanges;
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dispositions
of assets having an aggregate value equal
to 10% or more of the market
value of the assets or of the outstanding
common stock representing 10% or
more of the earning power or net income
of the
corporation;
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certain
issuances or transaction by the corporation
that would increase the
affiliated shareholder’s number of shares of the
corporation;
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certain
liquidations or dissolutions; and
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the
receipt of tax, guarantee, loan or other financial
benefits by an
affiliated shareholder of the
corporation.
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An
“issuing public corporation” is defined generally as a Texas corporation with
100 or more shareholders, any voting shares registered under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), or any voting shares
qualified for trading in a national market
system.
The
Business Combination Law does not apply to a business combination of an issuing
public corporation that elects not be governed thereby through either its
original articles of incorporation or bylaws or by an amendment thereof. Our
articles of incorporation and bylaws do not so provide, nor do we currently
intend to make any such amendments.
In
discharging the duties of a director under Texas law, a director, in considering
the best interests of the Company, may consider the long-term as well as the
short-term interests of the Company and our shareholders, including the
possibility that those interests may be best served by our continued
independence.
Limitation
of Director Liability and Indemnification Arrangements
Our
articles of incorporation contain a provision that limits the liability of
our
directors as permitted by the Texas Business Corporation Act. The provision
eliminates the personal liability of a director to us and our shareholders
for
monetary damages for an act or omission in the director’s capacity as a
director. The provision does not change the liability of a director for breach
of his duty of loyalty to us or to our shareholders, for an act or omission
not
in good faith that involves intentional misconduct or a knowing violation of
law, for an act or omission for which the liability of a director is expressly
provided for by an applicable statute, or in respect of any transaction from
which a director received an improper personal benefit. Pursuant to our articles
of incorporation, the liability of directors will be further limited or
eliminated without action by shareholders if Texas law is amended to further
limit or eliminate the personal liability of directors.
Our
bylaws provide for the indemnification of our officers and directors, and the
advancement to them of expenses in connection with proceedings and claims,
to
the fullest extent permitted by the Texas Business Corporation Act. We have
also
entered into indemnification agreements with each of our directors and some
of
our officers that contractually provide for indemnification and expense
advancement and include related provisions meant to facilitate the indemnitee’s
receipt of such benefits. In addition, we have purchased directors’ and
officers’ liability insurance policies for our directors and officers. Our
bylaws and these agreements with directors and officers provide for
indemnification for amounts:
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in
respect of the deductibles for these insurance
policies;
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that
exceed the liability limits of our
insurance policies; and
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that
are available, were available or become
available to us or are generally
available to companies comparable to us
but which our officers or
directors determine is inadvisable for
us to purchase, given the
cost.
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Such
indemnification may be made even though our directors and officers would not
otherwise be entitled to indemnification under other provisions of our bylaws
or
these agreements.
Legal
Matters
Certain
legal matters in connection with the common stock offered by this prospectus
will be passed on for us by our outside counsel, Baker Botts L.L.P., Houston,
Texas.
Experts
The
consolidated financial statements of Carrizo Oil & Gas, Inc. for the year
ended December 31, 2003, appearing
in Carrizo Oil & Gas, Inc.’s Annual Report on Form 10-K/A for the year ended
December 31, 2005, incorporated
herein by reference, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their report
thereon, included therein, and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
Our
consolidated financial statements and management’s assessment of the
effectiveness of internal control over financial reporting (which is included
in
Management’s Report on Internal Control of Financial Reporting) for the years
ended December 31, 2004 and 2005, appearing in Carrizo Oil & Gas, Inc.’s
Annual Report on Form 10-K/A for the year ended December 31, 2005, incorporated
by reference in this prospectus and registration statement, have been audited
by
Pannell Kerr Forster of Texas, P.C, independent registered public accounting
firm, to the extent indicated in their reports thereon also incorporated by
reference. Such consolidated financial statements and management’s assessment of
the effectiveness of internal control over financial reporting have been so
incorporated herein by reference in reliance on such reports given on the
authority of said firm as experts in accounting and auditing.
The
letter reports of Ryder Scott Company, Fairchild & Wells, Inc., and DeGolyer
and MacNaughton, each independent consulting petroleum engineers, and certain
information with respect to our oil and gas reserves derived from such reports
has been incorporated by reference into this prospectus upon the authority
of
each such firm as experts with respect to such matters covered in such reports
and in giving such reports.
Where
You Can Find More Information
We
file
annual, quarterly and current reports, proxy statements and other information
with the SEC. You may read and copy this registration statement and any other
documents we file at the SEC’s Public Reference Room at 100 F Street, N.E., Room
1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the Public Reference Room. Our SEC filings are also available
to
the public at the SEC’s Internet site at http://www.sec.gov and our website at
http://www.carrizo.cc under “Links─SEC Documents.” Copies of these reports,
proxy statements and other information concerning us can also be inspected
at
the offices of the Nasdaq Stock Market, Inc., which are located at 1735 K Street
N.W., Washington, D.C. 20006. Information on our website or any other website
is
not incorporated by reference in this prospectus and does not constitute part
of
this prospectus.
This
prospectus is part of a registration statement and does not contain all of
the
information included in the registration statement. Whenever a reference is
made
in this prospectus to any of our contracts or other documents, the reference
may
not be complete and, for a copy of the contract or document, you should refer
to
the exhibits that are part of the registration statement.
The
SEC
allows us to “incorporate by reference” into this prospectus the information we
file with it, which means that we can disclose important information to you
by
referring you to those documents. Information incorporated by reference is
considered to be part of this prospectus, except for any information that is
superseded by information included directly in this prospectus. Any statement
contained in this prospectus or a document
incorporated
by reference in this prospectus will be deemed to be modified or superseded
for
purposes of this prospectus to the extent that a statement contained in this
prospectus or in any other subsequently filed document that is incorporated
by
reference in this prospectus modifies or superseded the statement. Any statement
so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this prospectus. We incorporate by reference
the documents listed below (excluding any portions of such documents that have
been “furnished” but not “filed” for purposes of the Exchange Act).
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· |
Our
Annual Report on Form 10-K for the year
ended December 31, 2005, as
amended by our Form 10-K/A filed on April 11,
2006;
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· |
Our
Quarterly Report on Form 10-Q for
the quarter ended March 31,
2006;
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· |
Our
Quarterly Report on Form 10-Q for the quarter
ended June 30,
2006;
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· |
Our
Quarterly Report on Form 10-Q for
the quarter ended September 30,
2006, as amended by our Form 10-Q/A
filed on November 16,
2006;
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· |
Our
Current Reports on Form 8-K filed on January
27, 2006, March 9, 2006,
April 3, 2006, April 7, 2006, May 30, 2006, June 20, 2006, July
28,
2006, July 31, 2006 and September 22, 2006;
and
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the
description of our common stock
in the Company’s Registration Statement on
Form 8-A (Registration No. 000-22915)
filed on July 31,
1997.
|
We
will
provide a copy of any and all of the information that is
incorporated by
reference in this prospectus to any person, including a
beneficial owner, to
whom a prospectus is delivered, without charge, upon written
or oral request.
You may obtain a copy of these filings by writing or
telephoning:
Carrizo
Oil & Gas, Inc.
Attention:
Investor Relations
1000 Louisiana
Street, Suite 1500
Houston,
Texas 77002
(713)
328-1000.
Carrizo
Oil & Gas, Inc.
4,954,571
Shares
of Common Stock
____________________
PROSPECTUS
____________________
November
16, 2006