As filed with the Securities and Exchange Commission on October 1, 2002
Registration Statement No.
----------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SWIFT ENERGY COMPANY
(Exact name of Registrant as specified in its charter)
Texas 74-2073055
(State of incorporation) (I.R.S. Employer
Identification No.)
Terry E. Swift, Chief Executive Officer
Swift Energy Company
16825 Northchase Drive, Suite 400
Houston, Texas 77060
(281) 874-2700
(Name, address and telephone number of Registrant's
principal executive offices and agent for service)
Copies to:
Judy G. Gechman
Jenkens & Gilchrist, A Professional Corporation
1100 Louisiana Street, Suite 1800
Houston, Texas 77002
(713) 951-3300
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are being offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.g. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
======================================== ================== ==================== ==================== ==============
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount being Offering Price Aggregate Offering Registration
Securities to be Registered Registered Per Share (1) Price (1)(2) Fee
- ---------------------------------------- ------------------ -------------------- -------------------- --------------
Common Stock, $0.01 par value (3) 300,000 shares $10.60 $3,180,000.00 $293.00
======================================== ================== ==================== ==================== ==============
</table>
(1) Calculated pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, and based upon the average of the high and low prices reported on
the New York Stock Exchange, Inc. on September 30, 2002.
(2) This registration statement shall also cover any additional shares of
common stock which become issuable by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of the
outstanding shares of common stock.
(3) Attached to each share of common stock is a preferred share purchase right
pursuant to the Rights Agreement (as Amended and Restated as of March 31,
1999) between Swift Energy Company and American Stock Transfer & Trust
Company, as Rights Agent. Until the occurrence of certain prescribed
events, none of which has occurred, the rights are not detachable from the
common stock nor exercisable and will be transferred along with, and only
with, the common stock. Accordingly, no separate registration fee is
payable with respect thereto.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. Antrim
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities, in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED OCTOBER 1, 2002
PROSPECTUS
Swift Energy Company
300,000 Shares
To be offered by Marabella Enterprises Limited, a shareholder of
Swift Energy Company
This prospectus relates to the offer and sale by Marabella Enterprises
Limited, a wholly-owned subsidiary of Bligh Oil & Minerals N.L., and by any
pledgees of its shares of up to 300,000 presently issued and outstanding shares
of common stock, par value $0.01 per share. We will receive none of the proceeds
from the sale of the shares by Marabella. For a description of our common stock
and related rights, see "Description of Capital Stock."
Under an asset purchase agreement with Marabella and its affiliates, we are
obligated to register these 300,000 shares, and to maintain the effectiveness of
this registration statement until September 30, 2003. The sale of the shares by
Marabella is not currently subject to any underwriting agreement. See "Plan of
Distribution."
The shares may be sold by Marabella and by any pledgees of its shares from
time to time on the New York Stock Exchange or such other national securities
exchange or automated interdealer quotation system on which our common stock is
then listed, through negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. Under our asset purchase
agreement with Marabella and its affiliates, Marabella together with any of its
pledgees may not sell more than a total of 60,000 of these shares in any one
week until September 30, 2003. See "Plan of Distribution."
Our common stock is traded on the New York Stock Exchange and the Pacific
Exchange under the symbol "SFY." The last reported sale price of our common
stock on September 30, 2002 on the New York Stock Exchange was $10.40 per share.
Marabella, any of its pledgees of the 300,000 shares and any broker
executing selling orders on their behalf may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933. Commissions received by any
broker may be deemed to be underwriting commissions under the Securities Act.
-------------------------------
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 2.
-------------------------------
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 _______________, 2002
You should rely only on the information contained in or incorporated by
reference in this prospectus and in any prospectus supplement. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information contained in or incorporated by reference
in this prospectus is accurate as of any date other than the date on the front
of this prospectus.
TABLE OF CONTENTS
Page
About This Prospectus.............................................1
Where You Can Find More Information...............................1
Risk Factors......................................................2
Forward-Looking Statements........................................6
The Company.......................................................6
Use Of Proceeds...................................................8
Description Of Capital Stock......................................8
Selling Shareholders.............................................12
Plan Of Distribution.............................................12
Legal Matters....................................................14
Experts..........................................................14
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or "SEC," using a "shelf" registration
process. Under the shelf process, Marabella and other selling shareholders using
this registration statement may sell up to a total of 300,000 shares of the
common stock described in this prospectus in one or more offerings until
September 30, 2003. You should read this prospectus, together with additional
information described under the heading "Where You Can Find More Information."
As used in this prospectus, "Swift," "we," "us," and "our" refer to Swift
Energy Company and, where applicable, its subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
Available Information
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended, or "Exchange Act," which requires us to file annual,
quarterly and special reports, proxy statements and other information with the
SEC. You may read and copy any document that we file at the public reference
rooms of the SEC in Washington, D.C., New York and Chicago, Illinois. Please
call the SEC at 1-800-SEC-0330 for further information on the operation of its
public reference rooms. You may also access our filings over the Internet at the
SEC's web site at http://www.sec.gov, or at our own website at
http://www.swiftenergy.com.
This prospectus constitutes part of a registration statement on Form S-3
filed with the SEC under the Securities Act of 1933, as amended, or "Securities
Act." It omits some of the information contained in the registration statement,
and reference is made to the registration statement for further information with
respect to us and the securities being offered hereunder. Any statement
contained in this prospectus concerning the provisions of any document filed as
an exhibit to the registration statement or otherwise filed with the SEC is not
necessarily complete, and in each instance reference is made to the copy of the
filed document.
Incorporation by Reference
The SEC allows us to "incorporate by reference" certain information we file
with them into this prospectus, which means that we can disclose important
information to you by referring you to other documents filed with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, and later information that we file with the SEC will automatically
update and supersede this information and the information in the prospectus. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until
the earlier of the sale by the selling shareholders of all the securities
covered by this prospectus or September 30, 2003:
1. Our Annual Report on Form 10-K for the year ended December 31, 2001;
2. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2002 and June 30, 2002;
3. The description of our common stock contained in our registration statement
on Form 8-A filed on July 24, 1981, as amended through June 24, 1991,
including any amendment or report filed before or after the date of this
prospectus for the purpose of updating the description;
<page>
4. Our Current Reports on Form 8-K filed on April 10, 2002, April 15, 2002,
April 16, 2002 and June 18, 2002; and
5. The description of our preferred share purchase rights contained in our
registration statement on Form 8-A filed on August 11, 1997, as amended on
April 7, 1999, including any amendment or report filed before or after the
date of this prospectus for the purpose of updating the description.
You may request a copy of these filings (other than an exhibit to a filing,
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing or telephoning Alton D. Heckaman, Jr., Senior Vice
President - Finance and Chief Financial Officer, Swift Energy Company, Suite
400, 16825 Northchase Drive, Houston, Texas 77060, phone: (281) 874-2700.
RISK FACTORS
An investment in our stock involves significant risks. You should carefully
consider the following risk factors before you decide to purchase Swift stock.
You should also carefully read and consider all of the information we have
included or incorporated by reference in this prospectus before you decide to
purchase Swift stock.
Oil and natural gas prices are volatile. A substantial decrease in oil and
natural gas prices would adversely affect our financial results.
Our future financial condition, results of operations and the value of our
oil and natural gas properties depend primarily upon market prices for oil and
natural gas. Oil and natural gas prices historically have been volatile and will
likely continue to be volatile in the future. The prices for oil and natural gas
are subject to wide fluctuation in response to relatively minor changes in the
supply of and demand for oil and natural gas, market uncertainty, worldwide
economic conditions, weather conditions, import prices, political conditions in
major oil producing regions, especially the Middle East, and actions taken by
OPEC. A significant decrease in price levels for an extended period would
negatively affect us in several ways:
o our cash flow would be reduced, decreasing funds available for capital
expenditures employed to replace reserves or increase production;
o certain reserves would no longer be economic to produce, leading to
both lower proved reserves and cash flow;
o our lenders could reduce the borrowing base under our credit facility
because of lower oil and gas reserve values, reducing our liquidity
and possibly requiring mandatory loan repayments; and
o access to other sources of capital, such as equity or long-term debt
markets, could be severely limited or unavailable in a low price
environment.
Consequently, our revenues and profitability would suffer.
Our debt reduces our financial flexibility, and our debt levels may increase.
At August 31, 2002, our long term debt comprised approximately 48% of our
total capitalization. Increased debt:
2
o would require us to dedicate a significant portion of our cash flow to
the payment of interest;
o would subject us to a higher financial risk in an economic downturn
due to substantial debt service costs;
o would limit our ability to obtain financing or raise equity capital in
the future; and
o may place us at a competitive disadvantage to the extent that we are
more highly leveraged than some of our peers.
Subject to restrictions in our credit facility and the indentures for our
senior subordinated notes due 2009 and 2012, as of August 31, 2002, we had a
$300.0 million credit facility with a borrowing base of $195.0 million of which
$190.3 million was available for borrowing. If we increase our debt levels
further, the risks discussed above would become greater.
If we cannot replace our reserves, our revenues and financial condition will
suffer.
Unless we successfully replace our reserves, our production will decline,
resulting in lower revenues and cash flow. When oil and gas prices decrease, our
cash flow decreases, resulting in less available cash to drill and replace our
reserves and an increased need to draw on our bank line of credit.
Drilling wells is speculative and capital intensive.
Developing and exploring for oil and gas properties requires significant
capital expenditures and involves a high degree of financial risk. The budgeted
costs of drilling, completing and operating wells are often exceeded and can
increase significantly when drilling costs rise. Drilling may be unsuccessful
for many reasons, including geological or title problems, weather, cost
overruns, equipment shortages and mechanical difficulties. Moreover, the
successful drilling of an oil or gas well does not ensure a profit on
investment. Exploratory wells bear a much greater risk of loss than development
wells. A variety of factors, both geological and market-related, can cause a
well to become uneconomical or only marginally economic. In addition to their
cost, unsuccessful wells can hurt our efforts to replace reserves.
Estimates of proved reserves are uncertain, and revenues from production may
vary from expectations significantly.
The quantities and values of our proved reserves included in this
prospectus and the documents we have incorporated by reference are only
estimates and subject to numerous uncertainties. Estimates by other engineers
might differ materially. The accuracy of any reserve estimate is a function of
the quality of available data and of engineering and geological interpretation.
These estimates depend on assumptions regarding quantities and production rates
of recoverable oil and gas reserves, future prices for oil and gas, and timing
and amounts of development expenditures and operating expenses, all of which
will vary from those assumed in our estimates. These variances may be
significant. For example, in 2001 the net reduction in our estimate of proved
reserves in New Zealand was approximately 37 Bcfe.
Any significant variance from the assumptions used could result in the
actual amounts of oil and gas ultimately recovered and future net cash flows
being materially different from the estimates in our reserve reports. In
addition, results of drilling, testing, production and changes in prices after
the date of the estimate may result in substantial downward revisions. These
estimates may not accurately predict the present value of net cash flows from
oil and gas reserves.
3
At December 31, 2001, approximately 50% of our estimated proved reserves
were undeveloped. Recovery of undeveloped reserves generally requires
significant capital expenditures and successful drilling operations. The reserve
data assumes that we can and will make these expenditures and conduct these
operations successfully, which may not occur.
We incurred a write down of the carrying values of our properties in the fourth
quarter of 2001 and could incur additional write downs in the future.
Under the full cost method of accounting, SEC accounting rules require that
on a quarterly basis we review the carrying value of our oil and gas properties
on a country by country basis for possible write down or impairment. Under these
rules, capitalized costs of proved reserves may not exceed a ceiling calculated
at the present value of estimated future net revenues from those proved
reserves, determined using a 10% per year discount and unescalated prices in
effect as of the end of each fiscal quarter. Capital costs in excess of the
ceiling must be permanently written down.
We recorded an after-tax, non-cash charge during the fourth quarter of 2001
of $63.5 million. This type of write down results in a charge to earnings and a
reduction of shareholders' equity, but does not impact our cash flow from
operating activities. Once incurred, write downs are not reversible at a later
date. If commodity prices continue to decline or if we have downward oil and gas
reserve revisions, we could incur additional write downs in the future. See "The
Company."
Reserves on properties we buy may not meet our expectations and could change the
nature of our business.
Property acquisition decisions are based on various assumptions and
subjective judgments that are speculative. Although available geological and
geophysical information can provide information about the potential of a
property, it is impossible to predict accurately a property's production and
profitability. Furthermore, future acquisitions may change the nature of our
operations and business.
In addition, we may have difficulty integrating future acquisitions into
our operations, and they may not achieve our desired profitability objectives.
Likewise, as is customary in the industry, we generally acquire oil and gas
acreage without any warranty of title except through the transferor. In many
instances, title opinions are not obtained if, in our judgment, it would be
uneconomical or impractical to do so. Losses may result from title defects or
from defects in the assignment of leasehold rights. While our current operations
are primarily in Texas, Louisiana and New Zealand, we may pursue acquisitions of
properties located in other geographic areas, which would decrease our
geographical concentration, and could also be in areas in which we have no or
limited experience.
We may have difficulty competing for oil and gas properties or supplies.
We operate in a highly competitive environment, competing with major
integrated and independent energy companies for desirable oil and gas
properties, as well as for the equipment, labor and materials required to
develop and operate such properties. Many of these competitors have financial
and technological resources substantially greater than ours. The market for oil
and gas properties is highly competitive and we may lack technological
information or expertise available to other bidders. We may incur higher costs
or be unable to acquire and develop desirable properties at costs we consider
reasonable because of this competition.
4
Governmental regulations are costly and complex, especially regulations relating
to environmental protection.
Our exploration, production and marketing operations are regulated
extensively at the international, federal, state and local levels. These laws
and regulations affect the costs, manner and feasibility of our operations. As
an owner and operator of oil and gas properties, we are subject to
international, federal, state and local laws and regulations relating to
discharge of materials into, and protection of, the environment. We have made
and will continue to make significant expenditures in our efforts to comply with
the requirements of these environmental laws and regulations, which may impose
liability on us for the cost of pollution clean-up resulting from operations,
subject us to liability for pollution damages and require suspension or
cessation of operations in affected areas. Changes in or additions to laws and
regulations regarding the protection of the environment could increase our
compliance costs and might hurt our business.
We are subject to state and local regulations domestically and are subject
to New Zealand regulations that impose permitting, reclamation, land use,
conservation and other restrictions on our ability to drill and produce. These
laws and regulations can require well and facility sites to be closed and
reclaimed. We frequently buy and sell interests in properties that have been
operated in the past, and as a result of these transactions we may retain or
assume clean-up or reclamation obligations for our own operations or those of
third parties.
We may be exposed to financial and other liabilities as the general partner in
71 limited partnerships.
We currently serve as the managing general partner of 71 limited
partnerships, all but six of which are in the process of liquidating and
terminating their operations. We are contingently liable for our obligations as
a general partner, including any liabilities that cannot be repaid from
partnership assets or insurance proceeds. In the future, we may be exposed to
litigation in connection with the partnerships.
We are exposed to the risk of financial non-performance by customers.
Our ability to collect on sales to our customers is dependent on the
liquidity of our customer base.
5
FORWARD-LOOKING STATEMENTS
Some of the information included in this prospectus and the documents we
have incorporated by reference contain forward-looking statements.
Forward-looking statements use forward-looking terms such as "believe,"
"expect," "may," "intend," "will," "project," "budget," "should" or "anticipate"
or other similar words. These statements discuss "forward-looking" information
such as:
o anticipated capital expenditures and budgets;
o future cash flows and borrowings;
o pursuit of potential future acquisition or drilling opportunities; and
o sources of funding for exploration and development.
These forward-looking statements are based on assumptions that we believe
are reasonable, but they are open to a wide range of uncertainties and business
risks, including the following:
o fluctuations of the prices received or demand for oil and natural gas;
o uncertainty of drilling results, reserve estimates and reserve
replacement;
o operating hazards;
o acquisition risks;
o unexpected substantial variances in capital requirements;
o environmental matters;
o acts of war or terrorism; and
o general economic conditions.
Other factors that could cause actual results to differ materially from
those anticipated are discussed in our periodic filings with the SEC, including
our Annual Report on Form 10-K for the year ended December 31, 2001.
When considering these forward-looking statements, you should keep in mind
the risk factors and other cautionary statements in this prospectus and the
documents we have incorporated by reference. We will not update these
forward-looking statements unless the securities laws require us to do so.
THE COMPANY
Swift Energy Company, a Texas corporation, engages in developing,
exploring, acquiring, and operating oil and gas properties, with a focus on
onshore oil and natural gas reserves in Texas and Louisiana and onshore oil and
natural gas reserves in New Zealand.
6
Year-end 2001 reserves quantities increased approximately 3% from 629.4
Bcfe at year-end 2000 to 645.8 Bcfe, with a reserve replacement rate of 137% of
2001 production. The 62.1 Bcfe of proved developed reserves as estimated at
December 31, 2001, associated with the TAWN assets we acquired in New Zealand in
January 2002 were not included in our 2001 year-end reserve report. The reserves
associated with the acquisition of assets from Antrim Energy Inc. in March 2002
were also not reflected in our 2001 year-end reserve report.
We focus our business in the following core areas:
Net Proved Reserves and Production as of Year-End 2001
-----------------------------------------------------------------
Area Location Reserves Percent Production
of
Quantities Proved
(Bcfe) Reserves (Bcfe)
- --------------------- --------------------- ------------------ -------------------- ------------------
AWP Olmos South Texas 207.5 32% 13.0
Masters Creek Western Louisiana 104.7 16% 15.3
Lake Washington Southern Louisiana 72.5 11% 1.2
Brookeland East Texas 59.1 9% 6.5
Rimu/Kauri New Zealand 101.9 16% 0.5
Other 100.1 16% 8.3
------------------ -------------------- ------------------
Total 645.8 100% 44.8
================== ==================== ==================
We have a well-balanced portfolio of oil and gas properties and prospects.
The AWP Olmos and Lake Washington areas are characterized by long-lived reserves
that we expect to produce steadily over a long period of time. The Masters Creek
and Brookeland areas are characterized by shorter-lived reserves with high
initial rates of production that decline more rapidly.
Swift's philosophy is to pursue a balanced growth strategy that includes an
active drilling program, strategic acquisitions, and the utilization of advanced
technologies. Over the past five fiscal years we have spent an average of 11% of
our capital expenditure budget on exploration drilling, 51% on development
activities, 19% on proved property acquisitions and 14% on lease acquisitions.
Our strategy is to grow through drilling on our core properties and in emerging
growth areas when oil and gas prices are strong, with a shift toward
acquisitions when prices weaken. We believe this balanced approach has resulted
in our ability to grow reserves in a relatively low cost manner, while
participating in the upside potential of exploration. Over the five-year period
ended December 31, 2001, we replaced 302% of our production at an average cost
of $1.26 per Mcfe.
Capital expenditures for development and exploration drilling were $44
million in 1999 and $115.5 million in 2000, while the amounts spent for
acquisitions were $20.6 million in 1999 and $33.4 million in 2000. In 2001
drilling expenditures totaled $183.2 million, while $40.5 million was spent to
acquire producing properties. For 2002, our capital expenditures, excluding the
net effect of acquisitions and dispositions, are currently expected to range
from approximately $90.0 million to $106.0 million.
We recorded a domestic, non-cash, full cost ceiling adjustment during the
fourth quarter of 2001. This domestic $98.9 million pre-tax charge ($63.5
million after-tax) resulted from the application of ceiling test rules as
prescribed by the SEC for companies that follow the full cost method of
accounting. Under the full cost method of accounting, a company's net book value
of its oil and gas properties, less related deferred income taxes, may not
exceed a calculated "ceiling." If the capitalized costs exceed this ceiling, the
excess capitalized costs must be written down and expensed. Full cost companies
must use the prices in effect at the end of each quarter to calculate the
ceiling value of reserves.
7
Our credit facility of $190.0 million, with a borrowing base of $275.0
million expires on October 1, 2005.
Our principal executive offices are located at 16825 Northchase Drive,
Suite 400, Houston, Texas 77060 and our telephone number is (281) 874-2700.
USE OF PROCEEDS
Marabella and other selling shareholders, if any, will receive all of the
proceeds from the sale of the shares being offered by this prospectus. We will
not receive any of the proceeds from the sale of the shares.
DESCRIPTION OF CAPITAL STOCK
General
As of the date of this prospectus, we are authorized to issue up to
90,000,000 shares of stock, including up to 85,000,000 shares of common stock
and up to 5,000,000 shares of preferred stock. As of the close of business on
August 31, 2002, we had 26,893,069 shares of common stock and no shares of
preferred stock outstanding. As of August 31, 2002, we had approximately
2,753,909 shares of common stock subject to issuance upon exercise of
outstanding options.
The following is a summary of the key terms and provisions of our equity
securities. You should refer to the applicable provisions of our articles of
incorporation, bylaws, the Texas Business Corporation Act and the documents we
have incorporated by reference for a complete statement of the terms and rights
of our capital stock.
Common Stock
Voting Rights. Each holder of common stock is entitled to one vote per
share. Subject to the rights, if any, of the holders of any series of preferred
stock pursuant to applicable law or the provision of the certificate of
designation creating that series, all voting rights are vested in the holders of
shares of common stock. Holders of shares of common stock have noncumulative
voting rights, which means that the holders of more than 50% of the shares
voting for the election of directors can elect 100% of the directors, and the
holders of the remaining shares voting for the election of directors will not be
able to elect any directors.
Dividends. Dividends may be paid to the holders of common stock when, as
and if declared by the board of directors out of funds legally available for
their payment, subject to the rights of holders of any preferred stock. Swift
has never declared a cash dividend and intends to continue its policy of using
retained earnings for expansion of its business.
Rights upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share, in proportion to the number of shares of common stock held by
them, in any of our assets available for distribution after the payment in full
of all debts and distributions and after the holders of all series of
outstanding preferred stock, if any, have received their liquidation preferences
in full.
Non-Assessable. All outstanding shares of common stock are fully paid and
non-assessable, including the common stock being offered under this prospectus.
8
No Preemptive Rights. Holders of common stock are not entitled to
preemptive purchase rights in future issuances of our common stock.
Listing. Our outstanding shares of common stock, including the shares being
offered using this prospectus, are listed on the New York Stock Exchange under
the symbol "SFY."
Preferred Stock
Our board of directors can, without approval of our shareholders, issue one
or more series of preferred stock and determine the terms of the preferred
stock, including the following terms:
o the series, the number of shares offered and the liquidation value of
the preferred stock;
o the price at which the preferred stock will be issued;
o the dividend rate, the dates on which the dividends will be payable
and other terms relating to the payment of dividends on the preferred
stock;
o the liquidation preference of the preferred stock;
o the voting rights of the preferred stock;
o whether the preferred stock is redeemable or subject to a sinking
fund, and the terms of any such redemption or sinking fund;
o whether the preferred stock is convertible or exchangeable for any
other securities, and the terms of any such conversion; and
o any additional rights, preferences, qualifications, limitations and
restrictions of the preferred stock.
Undesignated preferred stock may enable our board of directors to render
more difficult or to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise, and to thereby protect the
continuity of our management. The issuance of shares of preferred stock may
adversely affect the rights of the holders of our common stock. For example, any
preferred stock issued may rank prior to our common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
be convertible into shares of common stock. As a result, the issuance of shares
of preferred stock may discourage bids for our common stock or may otherwise
adversely affect the market price of our common stock or any existing preferred
stock.
Anti-takeover Provisions
Certain provisions in our articles of incorporation, bylaws and our
shareholders' rights plan may encourage persons considering unsolicited tender
offers or other unilateral takeover proposals to negotiate with our board of
directors rather than pursue non-negotiated takeover attempts.
Our Classified Board of Directors. Our bylaws provide that our board of
directors is divided into three classes as nearly equal in number as possible.
The directors of each class are elected for three-year terms, and the terms of
the three classes are staggered so that directors from a single class are
elected at
9
each annual meeting of shareholders. A staggered board makes it more
difficult for shareholders to change the majority of the directors and instead
promotes continuity of existing management.
Our Ability to Issue Preferred Stock. As discussed above, our board of
directors can set the voting rights, redemption rights, conversion rights and
other rights relating to authorized but unissued shares of preferred stock and
could issue that stock in either private or public transactions. Preferred stock
could be issued for the purpose of preventing a merger, tender offer or other
takeover attempt which the board of directors opposes.
Our Rights Plan. Our board of directors has adopted a shareholders' rights
plan. The rights attach to all common stock certificates representing
outstanding shares. One right is issued for each share of common stock
outstanding. Each right entitles the registered holder, under the circumstances
described below, to purchase from us one one-thousandth of a share of our Series
A Junior Participating Preferred Stock, a "Series A" share, at a price of
$150.00 per one one-thousandth of a Series A share, subject to adjustment. The
dividend and liquidation rights and the non-redemption feature of the Series A
shares are designed so that the value of one one-thousandth of a Series A share
purchasable upon exercise of each right will approximate the value of one share
of common stock. The following is a summary of the terms of the rights plan. You
should refer to the applicable provisions of the rights plan which we have
incorporated by reference as an exhibit to the registration statement of which
this prospectus is a part.
The rights will separate from the common stock and rights certificates will
be distributed to the holders of common stock as of the earlier of:
o 10 business days following a public announcement that a person or
group of affiliated persons has acquired beneficial ownership of 15%
or more of our outstanding voting shares, or
o 10 business days following the commencement or announcement of an
intention to commence a tender offer or exchange offer which would
result in a person or group beneficially owning 15% or more of our
outstanding voting shares.
The rights are not exercisable until rights certificates are distributed.
The rights will expire on July 31, 2007 unless that date is extended or the
rights are earlier redeemed or exchanged.
If a person or group (with certain exceptions for investment advisers)
acquires 15% or more of our voting shares, each right then outstanding, other
than rights beneficially owned by such person or group, becomes a right to buy
that number of shares of common stock or other securities or assets having a
market value of two times the exercise price of the right. The rights belonging
to the acquiring person or group become null and void.
If Swift is acquired in a merger or other business combination, or 50% of
its consolidated assets or assets producing more than 50% of its earning power
or cash flow are sold, each holder of a right will have the right to receive
that number of shares of common stock of the acquiring company which at the time
of such transaction has a market value of two times the purchase price of the
right.
At any time after a person or group acquires beneficial ownership of 15% or
more of our outstanding voting shares and before the earlier of the two events
described in the prior paragraph or acquisition by a person or group of
beneficial ownership of 50% or more of our outstanding voting shares, our board
of directors may, at its option, exchange the rights, other than those owned by
such person or group, in whole or in part, at an exchange ratio of one share of
common stock or a fractional share of Series A stock or other preferred stock
equivalent in value thereto, per right.
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The Series A shares issuable upon exercise of the rights will be
non-redeemable and rank junior to all other series of our preferred stock. Each
whole Series A share will be entitled to receive a quarterly preferential
dividend in an amount per share equal to the greater of $1.00 in cash, or in the
aggregate, 1,000 times the dividend declared on the common stock, subject to
adjustment. In the event of liquidation, the holders of Series A shares may
receive a preferential liquidation payment equal to the greater of $1,000 per
share, or in the aggregate, 1,000 times the payment made on the shares of common
stock. In the event of any merger, consolidation or other transaction in which
the shares of common stock are exchanged for or changed into other stock or
securities, cash or other property, each whole Series A share will be entitled
to receive 1,000 times the amount received per share of common stock. Each whole
Series A share will be entitled to 1,000 votes on all matters submitted to a
vote of our shareholders and Series A shares will generally vote together as one
class with the common stock and any other capital stock on all matters submitted
to a vote of our shareholders.
Prior to the earlier of the date it is determined that rights certificates
are to be distributed or the expiration date of the rights, our board of
directors may redeem all, but not less than all, of the then outstanding rights
at a price of $0.01 per right. Our board of directors in its sole discretion may
establish the effective date and other terms and conditions of the redemption.
Upon redemption, the ability to exercise the rights will terminate and the
holders of rights will only be entitled to receive the redemption price.
As long as the rights are redeemable, we may amend the rights agreement in
any manner except to change the redemption price. After the rights are no longer
redeemable, we may, except with respect to the redemption price, amend the
rights agreement in any manner that does not adversely affect the interests of
holders of the rights.
Business Combinations Under Texas Law. Swift is a Texas corporation subject
to Part Thirteen of the Texas Business Corporation Act known as the "Business
Combination Law." In general, the Business Combination Law prevents an
affiliated shareholder, or the affiliated shareholder's affiliates or
associates, from entering into a business combination with an issuing public
corporation during the three-year period immediately following the date on which
the affiliated shareholder became an affiliated shareholder, unless:
o before the date such person became an affiliated shareholder, the
board of directors of the issuing public corporation approves the
business combination or the acquisition of shares that caused the
affiliated shareholder to become an affiliated shareholder; or
o not less than six months after the date such person became an
affiliated shareholder, the business combination is approved by the
affirmative vote of holders of at least two-thirds of the issuing
public corporation's outstanding voting shares not beneficially owned
by the affiliated shareholder, or its affiliates or associates.
An affiliated shareholder is a person that is or was within the preceding
three-year period the beneficial owner of 20% or more of a corporation's
outstanding voting shares. An issuing public corporation includes most publicly
held Texas corporations, including Swift. The term business combination
includes:
o mergers, share exchanges or conversions involving the affiliated
shareholder;
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o dispositions of assets involving the affiliated shareholder having an
aggregate value of 10% or more of the market value of the assets or of
the outstanding common stock or representing 10% or more of the
earning power or net income of the corporation;
o issuances or transfers of securities by the corporation to the
affiliated shareholder other than on a pro rata basis;
o plans or agreements relating to a liquidation or dissolution of the
corporation involving an affiliated shareholder;
o reclassifications, recapitalizations, distributions or other
transactions that would have the effect of increasing the affiliated
shareholder's percentage ownership of the corporation; and
o the receipt of tax, guarantee, loan or other financial benefits by an
affiliated shareholder other than proportionately as a shareholder of
the corporation.
SELLING SHAREHOLDERS
The selling shareholders are Marabella Enterprises Limited, c/o Bligh Oil &
Minerals N.L., Level 10, Suite 1, 100 William Street, Sydney, NSW 2011,
Australia, and any pledgees of Marabella under bona fide arm's length loan
transactions with third party banks or financial institutions or a broker or a
dealer. Based on information available to us as of September 30, 2002, Marabella
beneficially owns 300,000 shares of common stock, which may be offered by the
selling shareholders, and assuming the sale of all of the common stock which may
be offered and sold hereunder, Marabella would not, to our knowledge, own any
shares of Swift common stock after this offering. The total number of shares
being offered hereunder represents approximately 1.1% of our outstanding shares
of common stock as of September 30, 2002. Marabella and its affiliates have not
had any relationship with Swift that is material to Swift within the past three
years other than their joint ownership of certain oil and gas interests in New
Zealand. Under an asset purchase agreement between Swift and Marabella and its
affiliates relating to Swift's acquisition from them of these interests, until
September 30, 2003, the selling shareholders are permitted to sell no more than
a total of 60,000 shares of Swift common stock in any calendar week. See "Plan
of Distribution."
PLAN OF DISTRIBUTION
Swift is registering, under the Securities Act of 1933, the 300,000 shares
of its common stock being offered hereby by Marabella and its pledgees, if any.
Swift will pay the expenses of registration of the shares. Marabella will pay
any brokerage commissions and similar selling expenses attributable to the sale
of the shares. Swift will receive no part of the proceeds from the sale of the
shares by the selling shareholders. Marabella has agreed to indemnify Swift
against certain losses, claims, damages and liabilities incident to the sale of
the shares, including liabilities under the Securities Act.
Marabella has informed Swift that it may effect sales of shares from time
to time in:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers,
o block trades, in which the broker-dealer will attempt to sell shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction,
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o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account,
o an exchange distribution or special offering in accordance with the
rules of the applicable exchange,
o privately negotiated transactions,
o short sales,
o sales by broker-dealers of a specified number of shares at a
stipulated price per share,
o a combination of any such methods of sale, and
o any other method permitted pursuant to applicable law,
at market prices prevailing at the time of sale, or at negotiated prices. These
sales may or may not involve brokers or dealers. Marabella may also pledge the
shares to a broker or dealer and upon a default, the broker or dealer may effect
sales of the pledged shares. Marabella has advised Swift that Marabella has not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of the shares, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by Marabella.
Swift originally issued the shares offered hereunder to Marabella under the
terms of an asset purchase agreement attached as an exhibit to the registration
statement of which this prospectus is a part. The asset purchase agreement
governed the purchase by Swift from Marabella and an affiliated entity of their
participating interest in certain New Zealand oil and gas interests. Under that
agreement, until September 30, 2003, Marabella and any pledgees of the shares,
together with parties who acquire shares from pledgees, may not sell more than a
total of 60,000 shares in any calendar week. Swift has placed a stop transfer
notation to this effect in its stock transfer book with regard to the shares
offered hereunder.
Marabella and any other selling shareholders, and any broker, dealer or
other agent that acts on their behalf in connection with the sale of these
shares, may be deemed to be "underwriters" within the meaning of the Securities
Act, in which event compensation received by any such broker, dealer or agent
and profit on any resale of the shares may be deemed to be underwriting
discounts or commissions under the Securities Act. Commissions received by a
broker, dealer or agent may be in excess of customary compensation.
The shares offered hereunder may also be sold by the selling shareholders
in the future in accordance with Rule 144 under the Securities Act by complying
with the requirements of that rule.
Because Marabella and any other selling shareholder may be an "underwriter"
within the meaning of Section 2(11) of the Securities Act, they will be subject
to the prospectus delivery requirements of the Securities Act for offers and
sales of the shares, including delivery through the facilities of the New York
Stock Exchange or the Pacific Exchange as provided in Rule 153 under the
Securities Act. Swift has informed Marabella that the anti-manipulative
provisions of Regulation M promulgated under the Exchange Act may apply to sales
of shares in the market by Marabella.
If Marabella notifies Swift that Marabella has entered into any material
arrangement with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, Swift will file a supplement to this prospectus, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing:
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o the name of the participating broker-dealer(s),
o the number of shares involved,
o the price at which such shares were sold,
o the commission paid or discounts or concessions allowed to the
broker-dealer(s), where applicable,
o whether the broker-dealer(s) conducted any investigation to verify the
information in or incorporated by reference in this prospectus, and
o other material facts of the transaction.
LEGAL MATTERS
Jenkens & Gilchrist, A Professional Corporation, Houston, Texas, will issue
an opinion for Swift regarding the legality of the securities offered by this
prospectus.
EXPERTS
On June 12, 2002, our board of directors, acting upon the recommendation of
our audit committee, approved the appointment of Ernst & Young LLP as our
independent auditors for the fiscal year ending December 31, 2002 to replace
Arthur Andersen LLP as our independent auditors. The audit partner and manager
primarily responsible for our audit of financial statements for the years 1999,
2000 and 2001 which have been incorporated by reference into this prospectus, as
well as other personnel of Arthur Andersen LLP have left Arthur Andersen. As a
result of these events and the revocation of Arthur Andersen's license in Texas,
Arthur Andersen is no longer in a position to consent to the inclusion or
incorporation by reference in any prospectus or registration statement of its
report on such financial statements. Therefore, we would not have been able to
obtain, and have not filed, Arthur Andersen's consent in reliance on Rule 437a
under the Securities Act of 1933.
Due to the lack of Arthur Andersen's written consent to the incorporation
by reference of its reports in this prospectus, Arthur Andersen may not have any
liability under Section 11 of the Securities Act of 1933 for false and
misleading statements or omissions contained in this prospectus, including the
financial statements. Any other claims against Arthur Andersen related to any
such false or misleading statements or omissions will be limited, particularly
in the event that Arthur Andersen ceases to exist or becomes insolvent.
Information referenced or incorporated by reference in this prospectus
regarding our estimated quantities of oil and gas reserves and the discounted
present value of future net cash flows therefrom is based upon estimates of such
reserves and present values audited by H.J. Gruy and Associates, Inc.,
independent petroleum engineers.
14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses in connection with
the sale of securities being registered hereby. All amounts are estimates,
except the registration fee.
Item Amount
---- ----------
SEC registration fee...................... $ 293
Legal fees and expenses................... $ 12,000
Miscellaneous expenses.................... $ 1,500
----------
Total..................................... $ 13,793
==========
Item 15. Indemnification of Officers and Directors
Swift has the authority under Articles 2.02(A)(16) and 2.02-1 of the Texas
Business Corporation Act to indemnify its directors and officers to the extent
provided for in such statute. Swift's bylaws, as amended, provide for
indemnification of its officers, directors and employees to the fullest extent
permitted by Article 2.02-1 of the Texas Business Corporation Act. With
shareholder approval, Swift amended its articles of incorporation to confirm
that Swift has the power to indemnify certain persons in such circumstances as
are provided in its Bylaws. The amendment allows Swift to enter into additional
insurance and indemnity arrangements at the discretion of Swift's board of
directors. Swift has entered into indemnification agreements with certain of its
officers and directors which indemnify the individual to the fullest extent
permitted by law.
Article 7.06 of the Texas Miscellaneous Corporation Laws Act provides that
a corporation's articles of incorporation may provide for the elimination or
limitation of a director's liability. Swift's Articles of Incorporation
eliminate the liability of directors to Swift or its shareholders for monetary
damages for an act or omission in his capacity as a director, with certain
specified exceptions to the fullest extent permitted by Article 7.06 of the
Texas Miscellaneous Corporation Laws Act.
Swift maintains insurance which will cover amounts that it is required to
pay certain of its officers and directors under the indemnity provisions
described above and coverage for its officers and directors against certain
liabilities, including certain liabilities under the federal securities law.
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Item 16. Exhibits
Exhibit No. Document Description
----------- --------------------
4.1 Asset Purchase Agreement among Swift Energy Company,
Swift Energy New Zealand Limited, Bligh Oil & Minerals
N.L., Marabella Enterprises Limited and Bligh Oil &
Minerals (NL)Limited, dated as of August 30, 2002
4.2 Rights Agreement, including exhibits, as amended and
restated as of March 31, 1999, between Swift Energy
Company and American Stock Transfer & Trust Company, as
Rights Agent (incorporated by reference to Exhibit 1 to
Swift Energy Company's Registration Statement on Form
8-A/A filed April 7, 1999)
5 Opinion of Jenkens & Gilchrist, A Professional
Corporation, as to the validity of the Securities being
registered hereunder
23.1 Consent of H.J. Gruy and Associates, Inc.
23.2 Form of Consent of Jenkens & Gilchrist, A Professional
Corporation (included in Exhibit 5)
17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
securities registered hereby, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
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) may be reflected in the form of prospectus
filed with the Securities and Exchange Commission pursuant to Rule 424(b) under
the Securities Act if, in the aggregate, the changes in volume 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;
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 the undertakings set forth in paragraph (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to section 13 or section 15(d) of the Exchange
Act that are incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, 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.
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(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.
(b) The undersigned registrant hereby understands that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this 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.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act, 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 September 30, 2002.
SWIFT ENERGY COMPANY
By: /s/ Alton D. Heckaman, Jr.
--------------------------------
Alton D. Heckaman, Jr.
Senior Vice President and
Chief Financial Officer
Each person whose signature appears below as a signatory to this
registration statement constitutes and appoints Terry E. Swift, Alton D.
Heckaman, Jr., and David W. Wesson, or any of them, his true and lawful
attorney-in-fact and agent 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 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 attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated, in multiple counterparts with the effect
of one original.
Signatures Title Date
---------- ----- ----
/s/ A. Earl Swift
- ------------------------------------------- Chairman of the Board September 30, 2002
A. Earl Swift
/s/ Terry E. Swift
- ------------------------------------------- President, Chief Executive Officer (Principal September 30, 2002
Terry E. Swift Executive Officer) and Director
/s/ Alton D. Heckaman, Jr.
- ------------------------------------------- Senior Vice President September 30, 2002
Alton D. Heckaman, Jr. Chief Financial Officer
(Principal Financial Officer)
/s/ David W. Wesson
- ------------------------------------------- Controller September 30, 2002
David W. Wesson (Principal Accounting Officer)
/s/ Virgil N. Swift
- ------------------------------------------- Director September 30, 2002
Virgil N. Swift
/s/ G. Robert Evans
- ------------------------------------------- Director September 30, 2002
G. Robert Evans
/s/ Henry C. Montgomery
- ------------------------------------------- Director September 30, 2002
Henry C. Montgomery
/s/ Clyde W. Smith, Jr.
- ------------------------------------------ Director September 30, 2002
Clyde W. Smith, Jr.
/s/ Harold J. Withrow
- ------------------------------------------- Director September 30, 2002
Harold J. Withrow
/s/ Raymond E. Galvin
- ------------------------------------------- Director September 30, 2002
Raymond E. Galvin