sv3asr
As filed with the Securities and Exchange Commission on April 25, 2007
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CARRIZO OIL & GAS, INC.
(Exact name of Registrant as specified in its charter)
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Texas
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1311
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76-0415919 |
(State or other jurisdiction of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.) |
1000 Louisiana, Suite 1500
Houston, Texas 77002
(713) 328-1000
(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)
S.P. Johnson IV
President and Chief Executive Officer
Carrizo Oil & Gas, Inc.
1000 Louisiana, Suite 1500
Houston, Texas 77002
(713) 328-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Gene J. Oshman
James H. Mayor
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana Street
Houston, Texas 77002
(713) 229-1234
Approximate date of commencement of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
If the only securities being registered on this Form are to be offered pursuant to dividend or
interest reinvestment plans, please check the following box. o
If any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check the following box.
þ
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same offering. o
If this Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following box. þ
If this Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities Act, check the following box. o
CALCULATION OF REGISTRATION FEE
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PROPOSED |
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PROPOSED |
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MAXIMUM |
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MAXIMUM |
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AMOUNT TO |
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OFFERING |
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AGGREGATE |
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AMOUNT OF |
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TITLE OF EACH CLASS OF SECURITIES TO |
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BE |
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PRICE PER |
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OFFERING |
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REGISTRATION |
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BE REGISTERED |
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REGISTERED (1) |
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SHARE (2) |
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PRICE(2) |
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FEE (3) |
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Common Stock, par value $0.01 per share |
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4,226,171 |
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$35.83 |
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$151,423,707 |
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$4,649 |
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(1) |
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Consists of 3,674,169 shares of common stock issued and outstanding and 552,002 shares of
common stock issuable upon exercise of stock options held by certain of our directors and
officers. |
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(2) |
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Estimated solely for purposes of calculating the registration fee and, pursuant to Rule
457(c), based on the average high and low reported sales price of the common stock on the
Nasdaq Global Select Market on April 19, 2007. |
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(3) |
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Pursuant to Rule 457(p) of the Securities Act of 1933, the Registrant hereby offsets the
registration fee required in connection with this registration statement by $4,649 of $12,759,
representing the amount of the registration fee associated with unsold securities, which
registration fee was previously paid in connection with the filing of the Registration
Statement on Form S-1 originally filed by the Registrant on August 21, 2006 (Registration No.
333-136778). Accordingly, no registration fee is being paid with this registration statement. |
PROSPECTUS
4,226,171
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
3,674,169 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 listed on the Nasdaq Global Select Market under the symbol CRZO.
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 April 25, 2007.
Table of Contents
This prospectus generally describes us and the shares of common stock that may be offered
by the selling shareholders. In connection with any offer or sale of shares of common stock by the
selling shareholders under this prospectus, the selling shareholders are required to provide this
prospectus and, in certain cases, a prospectus supplement that will contain specific information
about the selling shareholders and the terms of the applicable offering. The prospectus supplement
also may add to, update or change information in this prospectus. If there is any inconsistency
between the information in this prospectus and the prospectus supplement, you should rely on the
information in the prospectus supplement. You should carefully read both this prospectus and the
prospectus supplement and the additional information described under the heading Where You Can
Find More Information.
You should rely only on the information contained in or incorporated by reference into this
prospectus and the prospectus supplement. 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 and any prospectus supplement is accurate only as of the date on its
cover page and that any information we have incorporated by reference is accurate only as of the
date of the document incorporated by reference. Our business, financial condition, results of
operations and prospects may have changed since such dates.
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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, the U.K. North Sea, and acreage in shale
plays in the Barnett/Woodford in West Texas/New Mexico, Floyd/Neal in Mississippi, the western New
Albany in Kentucky/Illinois and the Fayetteville in Arkansas. We also have a coalbed methane
investment in the Rocky Mountains. 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,
any prospectus supplement and the documents incorporated by reference in this prospectus or in any
prospectus supplement. 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, any prospectus supplement or
in the Risk Factors section in our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q
that we file 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.net, is not part of this prospectus.
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The Offering
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Common stock offered: |
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By us
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No shares. |
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By the selling shareholders
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3,674,169 shares issued and outstanding.
552,002 shares issuable upon exercise of stock options. |
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Common stock outstanding
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26,001,692 shares. |
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Use of proceeds
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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. |
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Nasdaq Global Select Market
symbol
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CRZO |
The number of shares of our common stock to be outstanding is based on the number of shares
outstanding as of April 13, 2007.
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Risk Factors
An investment in our common stock involves risks. You should carefully consider all of
the information contained in or incorporated by reference in this prospectus and other information
which may be incorporated by reference in this prospectus or any prospectus supplement as provided
under Where You Can Find More Information, including our Annual Reports on Form 10-K and our
Quarterly Reports on Form 10-Q. This prospectus also contains forward-looking statements that
involve risks and uncertainties. Please read Forward-Looking Statements. Our actual results could
differ materially from those anticipated in the forward-looking statements as a result of certain
factors, including the risks described elsewhere in this prospectus or any prospectus supplement
and in the documents incorporated by reference into this prospectus or any prospectus supplement.
If any of these risks occur, our business, financial condition or results of operations could be
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 effect 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:
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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, any prospectus supplement and 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:
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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; |
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the approval of the prospects by the other participants after additional data
has been compiled; |
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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 |
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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
incorporated by reference in this prospectus 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, 2006, approximately 75% 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, 2006 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
increased 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 fields
development.
The discounted future net cash flows incorporated by reference in this prospectus 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:
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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 Financial Accounting Standards Board 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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weather conditions; |
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domestic and foreign governmental relations, regulations and taxes; |
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the price and availability of alternative fuels; |
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political conditions; |
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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 production constraints and 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.
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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.
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:
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well blowouts; |
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mechanical failures; |
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explosions; |
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uncontrollable flows of oil, natural gas or well fluids; |
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fires; |
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geologic formations with abnormal pressures; |
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pipeline ruptures or spills; |
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releases of toxic gases; and |
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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.
Offshore operations are subject to a variety of operating risks, such as capsizing, collisions
and damage or loss from hurricanes or other adverse weather conditions. These conditions can and
have caused substantial damage to facilities and interrupt production. Our operations in the U.K.
North Sea are dependent upon the availability, proximity and capacity of pipelines, natural gas
gathering systems and processing facilities. Any significant change affecting these infrastructure
facilities could materially harm our business. We deliver crude oil and natural gas through
gathering systems and pipelines that we do not own. These facilities may be temporarily unavailable
due to adverse weather conditions or may not be available to us in the future. As a result, we
could incur substantial liabilities or experience reductions in revenue that could reduce or
eliminate the funds available for our exploration and development programs and acquisitions, or
result in the loss of properties.
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.
We may not have enough insurance to cover all of the risks we face.
We maintain insurance against losses and liabilities in accordance with customary industry
practices and in amounts that management believes to be prudent; however, insurance against all
operational risks is not available to us. We do not carry business interruption insurance. We may
elect not to carry insurance if 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
operators breach of the applicable agreements or an operators failure to act in ways that are in
our best interests could reduce our production and revenues. The success
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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 operators:
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timing and amount of capital expenditures; |
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expertise and financial resources; |
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inclusion of other participants in drilling wells; and |
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use of technology. |
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 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 Vice President and Chief Financial
Officer, J. Bradley Fisher, our Vice President and Chief Operating Officer, Gregory E. Evans, our
Vice President of Exploration and Richard H. Smith, our Vice President of Land. We do not maintain
key-man life insurance with respect to any of our 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:
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our ability to obtain leases or options on properties, including those for
which we have 3-D seismic data; |
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our ability to acquire additional 3-D seismic data; |
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our ability to identify and acquire new exploratory prospects; |
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our ability to develop existing prospects; |
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our ability to continue to retain and attract skilled personnel; |
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our ability to maintain or enter into new relationships with project partners
and independent contractors; |
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the results of our drilling program; |
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hydrocarbon prices; and |
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our access to capital. |
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. Our derivative transactions may result in our making cash payments or prevent us from
benefiting 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 field services and equipment 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
overuse of equipment and inexperienced personnel.
9
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 CCBM, Inc. and CLLR, Inc. 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 the restrictions of our credit facilities 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:
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our ability to obtain financing for working capital, capital expenditures, our
drilling program, purchases of new technology or other purposes may be impaired; |
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the covenants in our credit facilities that limit our ability to borrow
additional funds and dispose of assets may affect our flexibility in planning for, and
reacting to, changes in business conditions; |
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because our indebtedness is subject to variable interest rates, we are
vulnerable to increases in interest rates; |
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any additional financing we obtain may be on unfavorable terms; |
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we may be required to use 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; |
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a substantial decrease in our operating cash flow or an increase in our
expenses could make it difficult for us to meet debt service requirements and could
require us to modify our operations, including by 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 |
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we may become more vulnerable 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 quarterly 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 on 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
10
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 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.
We participate in oil and natural gas 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.
We have risks associated with our foreign operations.
We currently have international activities and we continue to evaluate and pursue new
opportunities for international expansion in select areas. Ownership of property interests and
production operations in areas outside the United States is subject to the various risks inherent
in foreign operations. These risks may include:
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currency restrictions and exchange rate fluctuations; |
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loss of revenue, property and equipment as a result of expropriation,
nationalization, war or insurrection; |
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increases in taxes and governmental royalties; |
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renegotiation of contracts with governmental entities and quasi-governmental agencies; |
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changes in laws and policies governing operations of foreign-based companies; |
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labor problems; and |
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other uncertainties arising out of foreign government sovereignty over our international operations. |
Our international operations also may be adversely affected by the laws and policies of the
United States affecting foreign trade, taxation and investment. In addition, if a dispute arises
with respect to our foreign operations, we may be subject to the exclusive jurisdiction of foreign
courts or may not be successful in subjecting foreign persons to the jurisdiction of the courts of
the United States.
11
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.
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:
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limited trading volume in our common stock; |
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quarterly variations in operating results; |
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general financial market conditions; |
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the prices of natural gas and oil; |
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announcements by us and our competitors; |
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our liquidity; |
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our ability to raise additional funds; |
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our involvement in litigation; |
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changes in government regulations; and |
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other events. |
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
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.
12
Forward-Looking Statements
This prospectus and the documents 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:
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our growth strategies; |
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our ability to explore for and develop natural gas and oil resources successfully and economically; |
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our estimates of the timing and number of wells we expect to drill and other exploration activities; |
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anticipated trends in our business; |
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our future results of operations; |
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our liquidity and our ability to finance our exploration and development activities; |
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our capital expenditure program; |
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future market conditions in the oil and gas industry; |
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our ability to make and integrate acquisitions; and |
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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 2007 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 managements 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
13
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 in any
prospectus supplement and in the Risk Factors and other sections of the documents that we
incorporate by reference into this prospectus, including our Annual Reports on Form 10-K and our
Quarterly Reports on Form 10-Q and in our other 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.
14
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 4,226,171 shares of our common stock.
These shares of common stock include 3,674,169 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 April 13, 2007 and the shares included in the
offering.
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Shares of Common Stock |
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Beneficially |
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Beneficially |
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As a Percent of |
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Owned Prior to |
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Offered |
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Owned After |
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Total Outstanding |
Name |
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the Offering (1) |
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Hereby (2) |
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the Offering |
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After the Offering (3) |
Deephaven Relative Value Equity
Trading Ltd. (4) |
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125,000 |
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125,000 |
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* |
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Deephaven Event Trading Ltd. (5) |
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347,500 |
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347,500 |
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* |
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Deephaven Distressed
Opportunities Trading Ltd. (6) |
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125,000 |
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125,000 |
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* |
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MA Deep Event Ltd. (5) |
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27,500 |
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27,500 |
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* |
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BBT Fund, L.P. (7) |
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15,104 |
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15,104 |
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* |
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CAP Fund, L.P. (8) |
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7,712 |
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7,712 |
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* |
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SRI Fund, L.P. (9) |
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2,784 |
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2,784 |
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* |
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Glacier Partners (10) |
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30,000 |
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30,000 |
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* |
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Paul B. Loyd, Jr. |
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172,490 |
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173,990 |
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* |
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Steven A. Webster |
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2,586,046 |
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2,590,490 |
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* |
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S.P. Johnson IV |
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775,535 |
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781,091 |
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* |
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Total |
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4,214,671 |
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4,226,171 |
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* |
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* |
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Represents less than 1% |
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(1) |
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The table includes shares of common stock that can be acquired through the exercise of stock
options within 60 days of April 13, 2007 as follows: Mr. Loyd 28,000, Mr. Webster 281,390
and Mr. Johnson 231,112. |
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(2) |
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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 (281,390 of which are vested) and Mr. Johnson 236,668 (231,112 of which
are vested). |
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(3) |
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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. |
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(4) |
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Thomas Rectenwald, Portfolio Manager, may be deemed to have sole voting and investment power
over these shares. |
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(5) |
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Matthew Halbower, Portfolio Manager, may be deemed to have sole voting and investment power
of these shares. |
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(6) |
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Jeffrey Golbus, Portfolio Manager, may be deemed to have sole voting and investment power of
these shares. |
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(7) |
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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. |
15
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(8) |
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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. |
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(9) |
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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. |
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(10) |
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Peter Castellanos, partner of Glacier Partners, may be deemed to have sole voting and
investment power over these shares. |
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 OConnor 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
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 84,210 warrants sold to Mr. Webster. In
June 2004, Mr. Webster converted all of his Series B preferred stock (approximately 25,195 shares)
into 442,026 shares of common stock. Currently, no shares of Series B preferred stock remain
outstanding. In March 2005, Mr. Webster converted on a cashless basis all of his 2002 warrants
into 54,669 shares of common stock. Each of our series of warrants was exercisable on a cashless
basis at the option of the holder. Currently, no 2002 warrants remain outstanding. 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
16
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, U.S. Energy) later
succeeded to RMGs 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 Pinnacles 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 Pinnacles 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 Pinnacles
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 Pinnacles 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 Pinnacles 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. As of December 31, 2006, Pinnacle owned natural
gas and oil leasehold interests in approximately 454,000 gross (306,000 net) acres and had
estimated net proved reserves of 20.3 Bcf.
Our Chairman, Steven A. Webster, served 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 Pinnacles common stock
to the CSFB Parties.
17
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. Websters 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. Websters purchase price or, on the 90th day,
pay a non-refundable 10% option extension fee to add a second 90-day option period. 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 December 31, 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.
18
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 5,981 acres) for $2,186,186, and we have paid approximately $1,696,844 to acquire
leases from Deephaven MCF Acquisition LLC (totaling approximately 4,308 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.
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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. |
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
20
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.
21
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 26,001,692 shares of our common stock and no shares of preferred stock were
outstanding as of April 13, 2007.
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.
22
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. |
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. |
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
shareholders 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 corporations outstanding voting shares not
beneficially owned by the affiliated shareholder or its affiliates or associates. |
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 corporations 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 shareholders 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. |
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
directors 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 indemnitees 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. |
24
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
Our consolidated financial statements and managements assessment of the effectiveness of
internal control over financial reporting (which is included in Managements Report on Internal
Control of Financial Reporting) for the years ended December 31, 2004, 2005 and 2006, 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
managements 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 LaRoche Petroleum
Consultants, Ltd., each independent consulting petroleum engineers, and certain information with
respect to our oil and gas reserves derived from such reports and certain information with respect
to our oil and gas reserves derived from the reports of DeGolyer and MacNaughton, independent
consulting petroleum engineers, have 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 SECs 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 SECs Internet site at http://www.sec.gov and our
website at http://www.carrizo.net under LinksSEC 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, as permitted by SEC rules, does not
contain all of the information included in the registration statement. Whenever a reference is
made in this prospectus or any prospectus supplement 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 or incorporated by reference into 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. 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 and future filings
we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until the offering
under this prospectus is complete (excluding
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any information furnished but not filed, unless we specifically provide that such
furnished information is to be incorporated by reference):
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our Annual Report on Form 10-K for the year ended December 31, 2006; |
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our Current Report on Form 8-K filed on January 5, 2007; and |
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the description of our common stock in our 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. Other Expenses of Issuance and Distribution
All expenses (other than fees and expenses of legal or other advisors to the selling
shareholders) in connection with the offering described in this registration statement will be paid
by us. Such expenses are estimated as follows:*
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SEC registration fee |
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0 |
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Printing expenses |
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3,000 |
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Accounting fees and expenses |
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5,000 |
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Legal fees and expenses |
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45,000 |
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Miscellaneous |
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7,000 |
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Total |
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60,000 |
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* |
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Pursuant to Rule 457(p) of the Securities Act of 1933, the registration fee required in
connection with this registration statement is offset by $4,649 of $12,759, representing the amount
of the registration fee associated with unsold securities, which registration fee was previously
paid in connection with the filing of the Registration Statement on Form S-1 originally filed by
the Registrant on August 21, 2006 (Registration No. 333-136778). Accordingly, no registration fee
is being paid with this registration statement. |
ITEM 14. Indemnification of Directors and Officers.
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
directors 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 indemnitees receipt of
such benefits.
We have purchased directors and officers liability insurance policies for our directors and
officers. In addition, 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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in respect of these types of insurance policies that are available, were
available or become available to us or which are generally available to companies
comparable to us but which our officers or directors determine is inadvisable for us to
purchase, given the cost involved. |
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This type of indemnification relating to directors and officers insurance may be made even
though directors and officers would not otherwise be entitled to indemnification under other
provisions of our bylaws or these agreements.
ITEM 16. Exhibits and Financial Statements
Exhibits
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Exhibit |
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Number |
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Description |
2.1
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Combination Agreement by and among the Company,
Carrizo Production, Inc., Encinitas Partners Ltd., La
Rosa Partners Ltd., Carrizo Partners Ltd., Paul B.
Loyd, Jr., Steven A. Webster, S.P. Johnson IV, Douglas
A.P. Hamilton and Frank A. Wojtek dated as of
September 6, 1997 (incorporated herein by reference to
Exhibit 2.1 to the Companys Registration Statement on
Form S-1 (Registration No. 333-29187)). |
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3.1
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Amended and Restated Articles of Incorporation of the
Company (incorporated herein by reference to Exhibit
3.1 to the Companys Annual Report on Form 10-K for
the year ended December 31, 1998). |
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3.2
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Amended and Restated Bylaws of the Company, as amended
by Amendment No. 1 (incorporated herein by reference
to Exhibit 3.2 to the Companys Registration Statement
on Form 8-A (Registration No. 000-22915) Amendment No.
2 (incorporated herein by reference to Exhibit 3.2 to
the Companys Current Report on Form 8-K dated
December 15, 1999) and Amendment No. 3 (incorporated
herein by reference to Exhibit 3.1 to the Companys
Current Report on Form 8-K dated February 20, 2002). |
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5.1
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Opinion of Baker Botts L.L.P. |
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23.1
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Consent of Pannell Kerr Forster of Texas, P.C. |
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23.2
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Consent of Ryder Scott Company Petroleum Engineers. |
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23.3
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Consent of Fairchild & Wells, Inc. |
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23.4
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Consent of LaRoche Petroleum Consultants, Ltd. |
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23.5
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Consent of DeGolyer and MacNaughton. |
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23.6
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Consent of Baker Botts L.L.P. (included in Exhibit 5.1) |
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24.1
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Power of Attorney (included in signature page) |
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Incorporated by reference as indicated. |
Item 17. Undertakings
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that which was registered) and
any deviation from the low or high end of the estimated maximum
28
offering range may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the Calculation of Registration Fee
table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to such information in
the registration statement;
Provided, however, that: paragraphs (i), (ii), and (iii) above do not apply if the information
required to be included in a post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement, or is contained in a form of prospectus files pursuant to Rule 424(b) that
is part of this registration statement.
2. That, for the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the offering.
4. That, for the purpose of determining liability under the Securities Act of 1933 to any
purchaser:
(A) Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be
part of the registration statement as of the date the filed prospectus was deemed part of and
included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part
of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule
415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a)
of the Securities Act of 1933 shall be deemed to be part of and included in the registration
statement as of the earlier of the date such form of prospectus is first used after effectiveness
or the date of the first contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is
at that date an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement to which that
prospectus relates, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement or prospectus that
is part of the registration statement will, as to a purchaser with a time of contract of sale prior
to such effective date, supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or made in any such document
immediately prior to such effective date; or
5. That, for purposes of determining any liability under the Securities Act of 1933, each
filing of the registrants annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plans
annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
6. That, insofar as indemnification for liabilities arising under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of any registrant pursuant to the
provisions described above, or otherwise, the registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in connection with the
securities being registered, the
29
registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and
has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on April 25, 2007.
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CARRIZO OIL & GAS, INC.
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By: |
/s/ S.P. Johnson IV
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Name: |
S.P. Johnson IV |
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Title: |
President and Chief Executive
Officer |
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Each person whose signature appears below appoints Paul F. Boling and S.P. Johnson IV and each
of them, each of whom may act without the joinder of the others, as his true and lawful attorneys
in fact and agents, with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities to sign any and all amendments (including post effective
amendments) to this registration statement, and to file the same, with all exhibits thereto and all
other documents in connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys in fact and agents full power and authority to do and perform each and every act and
thing requisite and necessary to be done, as fully and for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys in fact and agents or
their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities indicated on April 25, 2007.
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Signature |
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Title |
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/s/ S.P. Johnson IV
(S.P. Johnson IV)
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President, Chief Executive Officer and
Director (Principal Executive Officer) |
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/s/ Paul F. Boling
(Paul F. Boling)
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Chief Financial Officer, Vice
President, Secretary and
Treasurer (Principal Financial and
Accounting Officer) |
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/s/ Steven A. Webster
(Steven A. Webster)
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Chairman |
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/s/ Thomas L. Carter, Jr.
(Thomas L. Carter, Jr.)
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Director |
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/s/ Paul B. Loyd, Jr.
(Paul B. Loyd, Jr.)
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Director |
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/s/ F. Gardner Parker
(F. Gardner Parker)
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Director |
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/s/ Roger A. Ramsey
(Roger A. Ramsey)
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Director |
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/s/ Frank A. Wojtek
(Frank A. Wojtek)
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Director |
31
EXHIBIT INDEX
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Exhibit |
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Number |
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|
|
Description |
2.1
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Combination Agreement by and among the Company,
Carrizo Production, Inc., Encinitas Partners Ltd., La
Rosa Partners Ltd., Carrizo Partners Ltd., Paul B.
Loyd, Jr., Steven A. Webster, S.P. Johnson IV, Douglas
A.P. Hamilton and Frank A. Wojtek dated as of
September 6, 1997 (incorporated herein by reference to
Exhibit 2.1 to the Companys Registration Statement on
Form S-1 (Registration No. 333-29187)). |
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3.1
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|
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|
Amended and Restated Articles of Incorporation of the
Company (incorporated herein by reference to Exhibit
3.1 to the Companys Annual Report on Form 10-K for
the year ended December 31, 1998). |
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3.2
|
|
|
|
Amended and Restated Bylaws of the Company, as amended
by Amendment No. 1 (incorporated herein by reference
to Exhibit 3.2 to the Companys Registration Statement
on Form 8-A (Registration No. 000-22915) Amendment No.
2 (incorporated herein by reference to Exhibit 3.2 to
the Companys Current Report on Form 8-K dated
December 15, 1999) and Amendment No. 3 (incorporated
herein by reference to Exhibit 3.1 to the Companys
Current Report on Form 8-K dated February 20, 2002). |
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5.1
|
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Opinion of Baker Botts L.L.P. |
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23.1
|
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|
Consent of Pannell Kerr Forster of Texas, P.C. |
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|
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23.2
|
|
|
|
Consent of Ryder Scott Company Petroleum Engineers. |
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|
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|
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23.3
|
|
|
|
Consent of Fairchild & Wells, Inc. |
|
|
|
|
|
23.4
|
|
|
|
Consent of LaRoche Petroleum Consultants, Ltd. |
|
|
|
|
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23.5
|
|
|
|
Consent of DeGolyer and MacNaughton. |
|
|
|
|
|
23.6
|
|
|
|
Consent of Baker Botts L.L.P. (included in Exhibit 5.1) |
|
|
|
|
|
24.1
|
|
|
|
Power of Attorney (included in signature page) |
|
|
|
|
|
Incorporated by reference as indicated. |
32