-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, kqBEwFQh6+ZWHfs47k37qf/LdnZm5IAQMmTuOYeBdd7ut7o7nTlypcj7FFg/lEhv I2QKzo9Jwu0COaT4yxsBgg== 0000899078-95-000072.txt : 19950621 0000899078-95-000072.hdr.sgml : 19950621 ACCESSION NUMBER: 0000899078-95-000072 CONFORMED SUBMISSION TYPE: 424B1 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950620 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAIRN ENERGY USA INC CENTRAL INDEX KEY: 0000353153 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 232169839 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B1 SEC ACT: 1933 Act SEC FILE NUMBER: 033-59199 FILM NUMBER: 95548075 BUSINESS ADDRESS: STREET 1: 8235 DOUGLAS AVE STE 1221 CITY: DALLAS STATE: TX ZIP: 75225 BUSINESS PHONE: 2143690316 MAIL ADDRESS: STREET 1: 8235 DOUGLAS AVE STREET 2: STE 1221 CITY: DALLAS STATE: TX ZIP: 75225 FORMER COMPANY: FORMER CONFORMED NAME: OMNI EXPLORATION INC DATE OF NAME CHANGE: 19920703 424B1 1 Filed pursuant to Rule 424(b)(1) Registration No. 33-59199 PROSPECTUS 2,623,260 Shares CAIRN ENERGY USA, INC. Common Stock This Prospectus relates to an aggregate of 2,623,260 shares (the "Shares") of common stock, par value $.01 per share (the "Common Stock"), of Cairn Energy USA, Inc., a Delaware corporation (the "Company"), that are being offered for sale by Cairn Energy PLC, a Scottish corporation (the "Selling Stockholder"). The Company will receive no part of the proceeds of such sales. The expenses (other than commissions and discounts of underwriters, brokers, dealers or agents) incurred in connection with this offering are expected to be approximately $78,000. Substantially all of such expenses will be paid by the Company. The Company's Common Stock is traded on the NASDAQ Stock Market National Market ("NNM") under the symbol "CEUS." On June 16, 1995, the closing price for the Common Stock on the NNM was $10. _______________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Under- Proceeds Price To writing To Selling Public Discount(1) Stockholder(2) Per Share $10.00 $0.25 $9.75 Total $26,232,600 $655,815 $25,576,785
(1) The Company and the Selling Stockholder have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) For acting as agent on behalf of the Selling Stockholder, Societe Generale Strauss Turnbull Securities Limited will receive from the Selling Stockholder a commission of 1% of the net proceeds to the Selling Stockholder. See "Underwriting." The Shares are offered, subject to prior sale, when, as and if delivered to and accepted by the Underwriters and subject to their right to reject any order in whole or in part. It is expected that delivery of the Shares will be made against payment therefor on or about June 22, 1995. Morgan Keegan & Company, Inc. SOUTHCOAST CAPITAL C o r p o r a t i o n The date of this Prospectus is June 19, 1995. THE COMPANY The registrant, Cairn Energy USA, Inc., a Delaware corporation (the "Company"), was incorporated on May 5, 1981 in Delaware as "Omni Exploration, Inc." On September 29, 1992, Cairn Energy USA, Inc., an oil and gas exploration and development company and wholly-owned subsidiary of Cairn Energy PLC, a Scottish corporation (the "Selling Stockholder"), merged with and into the registrant with the registrant being the survivor (the "Merger"). Pursuant to the Merger, the registrant changed its name to "Cairn Energy USA, Inc." As used in this Prospectus, "Omni" refers to Omni Exploration, Inc. prior to the Merger, "Cairn USA" refers to the corporation prior to the Merger that merged into Omni Exploration, Inc. and the "Company" refers to the surviving corporation in the Merger. Because Omni was the reporting company under the federal securities laws and the surviving corporation in the Merger (but was not the survivor for accounting purposes), all references to the Company prior to September 29, 1992 are to Omni, except for financial data and oil and gas information. As a result of the accounting treatment of the Merger, all financial data and oil and gas information of the Company prior to September 29, 1992 are the historical financial data and oil and gas information of Cairn USA. The Company's principal executive offices are located at 8235 Douglas Avenue, Suite 1221, Dallas, Texas 75225 and its telephone number is (214) 369-0316. SELLING STOCKHOLDER As of the date of this Prospectus, the Selling Stockholder owned 2,623,260 shares, or approximately 15.5% of the 16,983,150 shares of Common Stock issued and outstanding. Assuming all Shares offered hereby are actually sold, the Selling Stockholder will no longer hold any shares of Common Stock. Of the 16,983,150 shares of Common Stock issued and outstanding, 1,000,000 shares (the "Escrow Shares") were issued to Phemus Corporation ("Phemus") in connection with the October 1994 acquisition (the "Smith Acquisition") of substantially all the oil and gas assets (the "Smith Assets") of Smith Offshore Exploration Company II ("Smith") and are being held in escrow. Phemus, a Massachusetts corporation that is a subsidiary of the President and Fellows of Harvard College (a Massachusetts non- profit educational corporation) and the successor in interest to Smith, is entitled to notice of all meetings of the Company's stockholders and to vote all Escrow Shares on all matters submitted to the Company's stockholders for a vote. The Escrow Shares, however, are deemed not to be outstanding for financial reporting purposes. The Smith Assets will be valued as of June 30, 1995, unless extended under certain circumstances until December 31, 1995. Following the completion of the valuation process, the Escrow Shares will be released to Phemus or returned to the Company. See "Acquisition of Smith Offshore Exploration Company II" at page 4 of the Company's Annual Report on Form 10-K for the year ended December 31, 1994. Prior to the Merger, Cairn USA was a wholly-owned subsidiary of the Selling Stockholder. From time to time prior to the Merger, Cairn USA obtained funds through borrowings from third parties and borrowings and capital contributions from the Selling Stockholder. Effective December 31, 1991, the Selling Stockholder converted the unpaid principal balance of its loans to Cairn USA, an aggregate of approximately $12,400,000, to additional paid-in capital. The accrued and unpaid interest on the converted principal of these promissory notes was not, however, converted to additional paid-in capital, and as of June 30, 1993, the Company owed the Selling Stockholder approximately $2,600,000 for this interest. In connection with the Merger, PLC received 7,992,260 shares of Common Stock and 200,000 shares of Series A Preferred Stock constituting approximately 95.4% of the issued and outstanding capital stock of the Company. The Company paid the accrued and unpaid interest on the converted principal of the promissory notes to the Selling Stockholder from the proceeds of the Company's July 1993 public offering of Common Stock, which yielded net proceeds to the Company of approximately $17,100,000. The Company also used an additional $3,600,000 of such proceeds to redeem from the Selling Stockholder all of the Company's then outstanding Series A Preferred Stock. In connection with the Smith Acquisition, the Company and the Selling Stockholder entered into a registration rights agreement (the "PLC Registration Rights Agreement") pursuant to which the Selling Stockholder has the right to up to five demand registrations under the Securities Act of the Common Stock it holds. Each demand registration must relate to the offering and sale of at least 1,000,000 shares of Common Stock. The Company is not obligated to effect any Securities Act registration with respect to which the registration request is made within six months of the termination of a prior demand registration of the Selling Stockholder or a piggyback registration in which there was no reduction in the number of securities requested by the Selling Stockholder to be included in such registration. In addition, the Company will not be obligated to register the sale of shares by the Selling Stockholder under the Securities Act that may be sold through an exemption from registration available pursuant to Rule 144(k) promulgated under the Securities Act. The Selling Stockholder also has piggyback registration rights to include shares in certain Securities Act registration statements filed by the Company. The Company shall pay all expenses relating to demand registrations and piggyback registrations (including the reasonable fees and expenses of counsel to the Selling Stockholder), except for underwriting discounts and commissions attributable to the sale of shares of Common Stock by the Selling Stockholder. The Selling Stockholder may assign its registration rights to any one or more transferees; provided, however, that no transferee of the Selling Stockholder may assign or transfer rights under the PLC Registration Rights Agreement without the prior written consent of the Company. See "Registration Rights Relating to Common Stock" at page 18 of the Company's Proxy Statement relating to its 1995 annual meeting (the "Proxy Statement"). In connection with the Smith Acquisition, the Company and the Selling Stockholder entered into a participation agreement (the "Participation Agreement"). Pursuant to the Participation Agreement, the Selling Stockholder or an affiliate of the Selling Stockholder has the right under certain circumstances to acquire an interest in certain oil and gas prospects to be acquired by the Company in the future in the continental United States or in the Gulf of Mexico. If the Selling Stockholder is entitled under the Participation Agreement to acquire such interest, the Selling Stockholder will be required to purchase such interest at the same price as the Company has determined that it will offer such interest to industry participants. The Participation Agreement became effective upon the consummation of the Smith Acquisition. As of the date of this Prospectus, the Company has entered into no transactions with the Selling Stockholder under the Participation Agreement. Recent Sales of Shares by the Selling Stockholder On July 8, 1994, the Selling Stockholder sold 824,000 shares of Common Stock it held at a price of $7.50 per share pursuant to a registration statement on Form S-3 under the Securities Act, (Registration No. 33-80526). Mr. J. Munro M. Sutherland, a then- Director of the Selling Stockholder and a Director and Senior Vice President of the Company, purchased 12,000 shares of Common Stock from the Selling Stockholder in that offering. On October 10, 1994, in connection with the Smith Acquisition, the Selling Stockholder sold 2,000,000 shares of Common Stock to Phemus at a price of $7.50 per share in cash. On October 18, 1994 the Selling Stockholder sold 1,926,000 shares of Common Stock at a price of $7.00 per share pursuant to a registration statement on Form S-3 under the Securities Act (Registration No. 33-84206). In March 1995, the Selling Stockholder sold 162,000 shares and 7,000 shares of Common Stock at prices of $8 and $8 per share, respectively, in sales pursuant to Rule 144 under the Securities Act. RECENT DEVELOPMENTS East Cameron Blocks 331/332 At the end of May, gross production from the Company's largest recent development project on East Cameron Blocks 331/332 had reached 103 MMcf of gas and 9,400 barrels of oil and condensate with eight of the nine wells on production. The remaining well is expected to be on production prior to the end of the month. Company owns a 40% interest in the shallower zone of Block 331 and a 20% interest in the deeper zone of both blocks. Approximately 80% of the proved reserves are located in the deeper zone. East Cameron Block 356 The Company has recently participated in a successful exploration well on East Cameron Block 356. The well has been suspended after encountering hydrocarbon-bearing sands based on wireline log analysis and formation test information. Additional drilling is expected on this block later in the year. The Company owns a 37.5% working interest in this block. Smith Assets On the Smith Assets, there is currently, or has been recently, drilling activity on three blocks, Eugene Island Block 59, Mustang Island Block 858 and Vermilion Block 203. Eugene Island Block 59 An exploration well drilled on Eugene Island Block 59 was unsuccessful and has been plugged and abandoned. The Company will seek to clarify the prospectivity of the block with the aid of a 3-D survey. The Company owns a 25% working interest in this block. Mustang Island Block 858 On Mustang Island Block 858, the second well drilled by the Company, the A-3, has been suspended pending completion operations The original well drilled on the block, which was drilled before the Company acquired its interest in this block, Mustang Island 858 A-1, has been tied back. It is expected that testing operations on the Mustang Island 858 A-2 well will commence prior to the end of the month. The Company owns a 17.5% working interest in this block. Vermilion Block 203 The first of the exploration wells drilled by the Company to target certain shallow formations on Vermilion Block 203 encountered several productive sand intervals as indicated by wireline log analysis. The well has been suspended pending completion operations. A second exploratory well targeting shallow horizons is currently drilling. It is expected that a well to target deeper formations on the block will be spud in the third quarter of this year. The Company owns a 50% working interest in this block. Lease Sale The Company, together with partners, bid on eighteen blocks at the Gulf of Mexico Central Area lease sale which was held on May 10, 1995. Of these bids, thirteen were high bids and to date five of the blocks have been awarded to the Company and its partners. The decisions by the MMS on the awarding of the remaining eight blocks is expected to be made in the next two months. If all of the leases in which the Company or its bidding group was high bid are awarded, the Company's net share of the lease bonuses will be $2.5 million. This amount is consistent with the Company's expected expenditures for the lease sale. The expenditures for the lease sale will be funded from cash flow from operations and from amounts available under the Company's existing credit facility. Property Sales On June 6, 1995 the Company entered into an agreement to sell most of the properties which it owns in Texas and Oklahoma with effect from April 1, 1995, for a consideration of $1.77 million. At January 1, 1995, the properties had reserves of approximately 123 MBbl barrels of oil and 2.1 Bcf of gas and had a Discounted Present Value of $2.03 million. Completion of the sale, which is still subject to due diligence and certain customary conditions, is expected before the end of June. UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the Selling Stockholder, acting through its agent, Societe Generale Strauss Turnbull Securities Limited, has agreed to sell to each of the Underwriters named below, and each such Underwriter has severally agreed to purchase from the Selling Stockholder, the respective number of shares of Common Stock set forth opposite its name below: Number of Shares Underwriter of Common Stock Morgan Keegan & Company, Inc. . . . . . . 1,511,630 Southcoast Capital Corporation . . . . . . 1,111,630 Total . . . . . . . . . . . . . . . . . 2,623,260 The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters are committed to take and pay for all the Shares offered hereby, if any are taken. The Underwriters propose to offer the Shares directly to the public at the public offering price set forth on the cover page of this Prospectus. After the Shares of Common Stock are released for sale to the public, the offering price and other selling terms may, from time to time, be varied by the Underwriters. For acting as agent on behalf of the Selling Stockholder, Societe Generale Strauss Turnbull Securities Limited will receive from the Selling Stockholder a commission of 1% of the net proceeds to the Selling Stockholder. Each of the Underwriters makes a market in the Common Stock. During the two business days immediately prior to the offer and sale of the Common Stock, however, regulations under the Exchange Act impose restrictions on the market-making activities of the Underwriters. The Company and the Selling Stockholder have agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Underwriters may be required to make in respect thereof. LEGAL MATTERS The validity of the Common Stock offered hereby is being passed upon for the Company by Jenkens & Gilchrist, a Professional Corporation, Dallas, Texas. Certain legal matters relating to the offering will be passed on for the Selling Stockholder by Cox & Smith Incorporated, San Antonio, Texas. Certain matters of Scottish law relating to the offering will be passed on for the Selling Stockholder by Shepherd & Wedderburn W.S., Edinburgh, Scotland. Certain legal matters relating to the offering will be passed on for the Underwriters by Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., New Orleans, Louisiana. EXPERTS The consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon, included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The audited financial statements of Smith that are included in the Company's Prospectus dated October 11, 1994 and in the Company's Proxy Statement relating to a special meeting of stockholders held on October 10, 1994 have been audited by Arthur Andersen, LLP, independent public accountants, as set forth in their report thereon, included therein and incorporated herein by reference in reliance upon the authority of said firm as experts in giving said reports. The estimated reserve review of Ryder Scott included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated by reference in this Prospectus has been included herein in reliance upon the authority of that firm as an expert in petroleum engineering. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: The Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and the New York Regional Office, 7 World Trade Center, 12th Floor, New York, New York 10007, at prescribed rates. Such reports, proxy statements and other information concerning the Company can also be inspected at the offices of the National Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. ADDITIONAL INFORMATION The Company has filed with the Commission a Registration Statement on Form S-3 under the Securities Act with respect to the Common Stock offered hereby (the "Registration Statement"). This Prospectus does not contain all the information set forth in the Registration Statement and the exhibits and schedules thereto. Such additional information can be obtained from the Commission's principal office in Washington, D.C. Statements in this Prospectus concerning provisions of documents filed with the Registration Statement as exhibits are necessarily summaries of such documents, and each statement is qualified in its entirety by reference to the copy of the applicable document filed with the Commission. DOCUMENTS INCORPORATED BY REFERENCE The following documents or portions thereof filed by the Company are hereby incorporated by reference in this Prospectus: (i) the Company's Annual Report on Form 10-K for the year ended December 31, 1994, filed with the Commission on March 15, 1995, and Amendment Number 1 thereto on Form 10-K/A, filed with the Commission on April 10, 1995; (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, filed with the Commission on May 2, 1995; (iii) the Company's Proxy Statement for its 1995 Annual Meeting, filed with the Commission on April 4, 1995; (iv) the Financial Statements of Smith Offshore Exploration Company II and the Pro Forma Combined Financial Statements contained in the Company's Proxy Statement for its Special Meeting of Stockholders held October 10, 1994, filed with the Commission on September 19, 1994; (v) the Financial Statements of Smith Offshore Exploration Company II contained in the Prospectus dated October 11, 1994, filed with the Commission on October 13, 1994 pursuant to Rule 424(b) and included in the Company's Registration Statement on Form S-3 (Registration No. 33- 84206); and (vi) the description of the Common Stock set forth in the Registration Statement on Form 8-A, filed with the Commission on January 29, 1982, including any amendment or report filed for the purpose of updating such description. In addition, all documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of Common Stock made hereby shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom a copy of this Prospectus is delivered, upon oral or written request of such person, a copy of any and all of the documents incorporated by reference herein (other than exhibits and schedules to such documents, unless such exhibits or schedules are specifically incorporated by reference into such documents). Such requests should be directed to A. Allen Paul, Vice President-Finance, Cairn Energy USA, Inc., 8235 Douglas Avenue, Suite 1221, Dallas, Texas 75225 or by telephone at (214) 369- 0316. No dealer, salesperson or any other person has been authorized to give any information or to make any representation in connection with this Offering other than those contained in this Prospectus, and, if given or made, such information or representation must not be relied upon as having been authorized by the Company. This Prospectus does not constitute an offer to sell or solicitation of any offer to buy by anyone in any jurisdiction in which such offers or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale hereunder shall, under any circumstances create any implication that there has been no change in the affairs of the Company since the date hereof or that the information contained herein is correct as of any time subsequent to its date. TABLE OF CONTENTS Page The Company . . . . . . . . . . . . . . . . . . . . . . . . . 2 Selling Stockholder . . . . . . . . . . . . . . . . . . . . . 2 Recent Developments . . . . . . . . . . . . . . . . . . . . . 4 Underwriting . . . . . . . . . . . . . . . . . . . . . . . . 5 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . 6 Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Available Information . . . . . . . . . . . . . . . . . . . . 6 Additional Information . . . . . . . . . . . . . . . . . . . 6 Documents Incorporated By Reference . . . . . . . . . . . . . 7 2,623,260 Shares CAIRN ENERGY USA, INC. Common Stock PROSPECTUS Morgan Keegan & Company, Inc. SOUTHCOAST CAPITALC o r p o r a t i o n June 19, 1995 -----END PRIVACY-ENHANCED MESSAGE-----