As filed with the Securities and Exchange Commission on March 21, 2016
Registration No. 333-
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
REGISTRATION STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
Concho Resources Inc.
(Exact name of Registrant as specified in its charter)
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| Delaware |
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76-0818600 |
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of incorporation or organization) |
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(I.R.S. Employer
Identification Number) |
One Concho Center
600
W. Illinois Avenue
Midland, Texas 79701
(432) 683-7443
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Travis L. Counts
Vice
President and General Counsel
One Concho Center
600 W. Illinois Avenue
Midland, Texas 79701
(432) 683-7443
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
W.
Matthew Strock
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2500
Houston, Texas 77002
(713) 758-2222
Approximate
date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement.
If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the
following box. ¨
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If 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: x
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: ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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| Large accelerated filer |
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x |
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Accelerated filer |
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| Non-accelerated filer |
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¨ (Do not check if a smaller reporting company) |
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Smaller reporting company |
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CALCULATION OF REGISTRATION FEE
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| Title of Each Class of
Securities to be Registered |
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Amount
to be
Registered(1) |
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Proposed
Maximum Offering
Price Per unit(2) |
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Proposed
Maximum Aggregate
Offering Price(2) |
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Amount of
Registration Fee |
| Common stock |
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2,213,895 |
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$101.40 |
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$224,488,953.00 |
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$22,606.04 |
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| (1) |
Pursuant to Rule 416(a) under the Securities Act, this registration statement shall be deemed to cover any additional shares of the registrant that may be offered or issued in connection with any stock split, stock
dividend or similar transaction. |
| (2) |
Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) and Rule 457(r) under the Securities Act, based on the average of the high and low prices of the
registrant’s shares as reported by The New York Stock Exchange on March 14, 2016. |
PROSPECTUS
Concho Resources Inc.
2,213,895 Shares
Common Stock
This prospectus
relates to 2,213,895 shares of common stock of Concho Resources Inc. that may be offered and sold from time to time by the selling stockholder named in this prospectus. The 2,213,895 shares were sold to the selling stockholder through a private
transaction that was consummated on March 21, 2016. The selling stockholder may sell none, some or all of the shares offered by this prospectus. Sales may be at fixed prices, which may be changed, at prices related to the prevailing market
prices at the time of sale or at negotiated prices. Such sales may occur in transactions on the New York Stock Exchange (the “NYSE”), in the over-the-counter market or through negotiated transactions or in a combination of these methods.
We will not receive any of the proceeds from the sale of the shares covered by this prospectus.
The selling stockholder expects to enter
into one or more derivative agreements with Goldman Sachs International or Goldman Sachs Financial Markets, L.P. (together, the “derivative counterparties”) on or shortly after the date of this prospectus relating to up to all or a portion
of the shares covered by this prospectus. Goldman, Sachs & Co., as agent for the derivative counterparties, in connection with the derivative agreements may offer the common stock from time to time after the date of this prospectus.
Goldman, Sachs & Co. may offer the common stock in transactions on the NYSE, in the over-the-counter market or through negotiated transactions or in a combination of these methods at market prices or at negotiated prices. We will not
receive any of the proceeds from the derivative agreements, and neither we nor the selling stockholder will receive proceeds from such sale of shares of common stock by Goldman, Sachs & Co. under this prospectus.
Our common stock is listed on the NYSE under the symbol “CXO.” On March 16, 2016, the last reported sale price of our shares on
the NYSE was $105.37 per share.
Investing in any of our securities involves risk. Please read carefully the information included and incorporated by reference in this
prospectus and in any applicable prospectus supplement for a discussion of the factors you should consider before deciding to purchase our securities. See “Risk Factors” beginning on page 5 of this prospectus.
Our principal executive offices are located at One Concho Center, 600 W. Illinois Avenue, Midland, Texas 79701, and our phone number
is (432) 683-7443.
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 March 21, 2016.
TABLE OF CONTENTS
You should rely only on the information contained in or incorporated by reference into this prospectus and any
accompanying prospectus supplement. We have not authorized any dealer, salesman or other person to provide you with additional or different information. If anyone provides you with different or inconsistent information, you should not rely on it.
This prospectus and any accompanying prospectus supplement are not an offer to sell or the solicitation of an offer to buy any securities other than the securities to which they relate and are not an offer to sell or the solicitation or an offer to
buy securities in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation in that jurisdiction. You should not assume that the information contained in this prospectus or any accompanying prospectus supplement is
accurate as of any date other than the date on the front cover of this prospectus or any accompanying prospectus supplement, or that the information contained in any document incorporated by reference is accurate as of any date other than the date
of the document incorporated by reference, regardless of the time of delivery of this prospectus or any sale of a security.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”) utilizing
a “shelf” registration process. Under this shelf registration process, the selling stockholder may, from time to time, sell the securities described in this prospectus in one or more offerings. This prospectus provides you with a general
description of the securities that may be offered, from time to time, by the selling stockholder. Each time the selling stockholder sells securities, the selling stockholder may be required to provide you with this prospectus and, in certain cases,
an accompanying prospectus supplement containing specific information about the selling stockholder and the terms of the securities being offered. That prospectus supplement may include additional risk factors or other special considerations
applicable to those securities. Any accompanying prospectus supplement may also add, update or change information in this prospectus. If there is any inconsistency between the information in this prospectus and any accompanying prospectus
supplement, you should rely on the information in that prospectus supplement.
Additional information, including our consolidated
financial statements and the notes thereto, is incorporated in this prospectus by reference to our reports filed with the SEC. Please read “Where You Can Find More Information” below. You are urged to read this prospectus carefully,
including the “Risk Factors,” any prospectus supplement and the documents incorporated by reference herein in their entirety before investing in our securities.
Unless the context requires otherwise or unless otherwise noted, all references in this prospectus or any accompanying prospectus supplement
to “Concho,” the “Company,” “we,” “us” or “our” are to Concho Resources Inc. and its subsidiaries.
THE COMPANY
We are an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas
properties. Our core operations are focused in the Permian Basin of Southeast New Mexico and West Texas, a large onshore oil and natural gas basin in the United States. The Permian Basin is one of the most prolific oil and natural gas producing
regions in the United States and is characterized by an extensive production history, long reserve life, multiple producing horizons and enhanced recovery potential. Currently, the majority of the rigs running in the Permian Basin are drilling
horizontal wells. Our legacy in the Permian Basin provides us a deep understanding of operating and geological trends. We are also at the forefront of applying new technologies, such as horizontal drilling and enhanced completion techniques,
throughout our three core operating areas: the New Mexico Shelf, the Delaware Basin and the Midland Basin. On the New Mexico Shelf, we primarily target the Yeso formation with horizontal drilling; in the Delaware Basin, we use horizontal drilling to
target the Bone Spring formation (including the Avalon shale and the Bone Spring sands) and the Wolfcamp shale formation; and in the Midland Basin, we target the Wolfcamp and Spraberry formations primarily with horizontal drilling. Our strategy
remains focused on drilling and exploration activities on our multi-year project inventory and pursuing acquisitions that meet our strategic and financial objectives.
We are a Delaware corporation formed in February 2006. Our principal executive offices are located at One Concho Center, 600 W. Illinois
Avenue, Midland, Texas 79701. Our common stock is listed on the NYSE under the symbol “CXO.”
WHERE
YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with the SEC (File
No. 001-33615) pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”). You may read and copy any documents that are filed at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may
also obtain copies of these documents at prescribed rates from the public reference section of the SEC at its Washington address. Please call the SEC at 1-800-SEC-0330 for further information.
Our filings are also available to the public through the SEC’s website at http://www.sec.gov.
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The SEC allows us to “incorporate by reference” information that we file with it, which
means that we can disclose important information to you by referring you to documents previously filed with the SEC. The information incorporated by reference is an important part of this prospectus, and the information that we later file with the
SEC will automatically update and supersede this information. The following documents we filed with the SEC pursuant to the Exchange Act are incorporated herein by reference:
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our Annual Report on Form 10-K for the year ended December 31, 2015; |
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our Current Reports on Form 8-K filed on January 5, 2016 and January 19, 2016 (excluding any information furnished pursuant to Item 2.02 or Item 7.01 of any such Current Reports on
Form 8-K); and |
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the description of our common stock contained in our registration statement on Form 8-A filed on July 23, 2007, including any amendment to that form that we may file in the future for the purpose of updating the
description of our common stock. |
These reports contain important information about us, our financial condition and our
results of operations.
All documents subsequently filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (excluding
any information furnished pursuant to Item 2.02 or Item 7.01 on any Current Report on Form 8-K) before the termination of each offering under this prospectus shall be deemed to be incorporated in this prospectus by reference and to be
a part hereof from the date of filing of such documents. Any statement contained herein, or in a document incorporated or deemed to be incorporated by reference herein, shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained herein or in any subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this prospectus.
You may request a copy of these filings at no cost
by writing or telephoning us at the following address and telephone number:
Concho Resources Inc.
One Concho Center
600 West
Illinois Avenue
Midland, Texas 79701
Attention: General Counsel
(432) 683-7443
We maintain
a web site at http://www.concho.com. However, the information on our website is not part of this prospectus.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Various statements and information contained in or incorporated by reference into this prospectus that express a belief, expectation, or
intention, or that are not statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), and Section 21E of the Exchange Act. These
forward-looking statements include statements, projections and estimates concerning our future financial position, operations, performance, business strategy, oil and natural gas reserves, drilling program, capital expenditures, liquidity and
capital resources, the timing and success of specific projects, outcomes and effects of litigation, claims and disputes, derivative activities and potential financing. Forward-looking statements are generally accompanied by words such as
“estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “could,” “may,” “foresee,” “plan,” “goal” or
other words that convey the uncertainty of future events or outcomes. Forward-looking statements are not guarantees of performance. We have based these forward-looking statements on our current expectations and assumptions about future events and
their potential effect on us. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors
we believe are appropriate under the circumstances. Actual results may differ materially from those implied or expressed by any forward-looking statements. These forward-looking statements speak only as of the date of this prospectus, or if earlier,
as of the date they were made. We disclaim any obligation to update or revise these statements unless required by law, and we caution you not to rely on them unduly. While our management considers these expectations and assumptions to be reasonable,
they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties relating to, among other matters, the risks discussed in our Annual Report on Form 10-K for the year ended
December 31, 2015, and in this prospectus, as well as those factors summarized below:
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declines in the prices we receive, or sustained depressed prices we receive, for our oil and natural gas; |
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uncertainties about the estimated quantities of oil and natural gas reserves; |
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drilling and operating risks; |
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the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing capacity under our credit facility; |
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the effects of government regulation, permitting and other legal requirements, including new legislation or regulation of hydraulic fracturing and the export of oil and natural gas; |
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the impact of potential changes in our credit ratings; |
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environmental hazards, such as uncontrollable flows of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater contamination; |
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difficult and adverse conditions in the domestic and global capital and credit markets; |
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risks related to the concentration of our operations in the Permian Basin of Southeast New Mexico and West Texas; |
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disruptions to, capacity constraints in or other limitations on the pipeline systems that deliver our oil, natural gas liquids and natural gas and other processing and transportation considerations; |
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the costs and availability of equipment, resources, services and personnel required to perform our drilling and operating activities; |
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potential financial losses or earnings reductions from our commodity price risk-management program; |
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risks and liabilities associated with acquired properties or businesses; |
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uncertainties about our ability to successfully execute our business and financial plans and strategies; |
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uncertainties about our ability to replace reserves and economically develop our current reserves; |
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general economic and business conditions, either internationally or domestically; |
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competition in the oil and natural gas industry; and |
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uncertainty concerning our assumed or possible future results of operations. |
Reserve
engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price
and cost assumptions made by our reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any
further production and development drilling. Accordingly, reserve estimates may differ from the quantities of oil and natural gas that are ultimately recovered.
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RISK FACTORS
An investment in our securities involves a significant degree of risk. Before you invest in our securities you should carefully consider the
risk factor below and those risk factors included in our most recent Annual Report on Form 10-K, any subsequently filed Quarterly Reports on Form 10-Q and any subsequently filed Current Reports on Form 8-K, which are incorporated herein by
reference, and those risk factors that may be included in any applicable prospectus supplement, together with all of the other information included in this prospectus, any prospectus supplement and the documents we incorporate by reference, in
evaluating an investment in our securities. If any of the risks discussed in the foregoing documents were to occur, our business, financial condition, results of operations and cash flows could be materially adversely affected. Please read
“Cautionary Statement Regarding Forward-Looking Statements.”
Risks Related to the Offering
The derivatives transactions, including the sales of our shares by Goldman, Sachs & Co. as agent for the derivative counterparties
and other sales effected by the derivative counterparties or their affiliates to establish, modify or, in some cases, unwind the derivative counterparties’ hedge positions in connection with the derivative transactions, may have a positive,
negative or neutral impact on the market price of our shares.
We have been advised that the derivative counterparties or their
affiliates intend to establish their initial hedge position in respect of the derivative transactions by establishing short positions in our shares through sales of shares by Goldman, Sachs & Co. under this prospectus, as agent, that one or
both of the derivative counterparties have borrowed from stock lenders. During the same period, Goldman, Sachs & Co. may purchase shares in the open market equal to a portion of the shares sold. The establishment of such short positions
could have the effect of decreasing, or limiting an increase in, the market price of our shares.
We have also been advised that the
derivative counterparties and their affiliates expect to modify their hedge positions by buying or selling our shares or engaging in derivatives or other transactions with respect to our shares from time to time during the term of the derivative
transactions. The purchases and sales of our shares or other hedging transactions by the derivative counterparties or their affiliates or agents to modify the derivative counterparties’ hedge position from time to time during the term of the
derivatives transactions may variously have a positive, negative or neutral impact on the market price of our shares, depending on market conditions at such times.
The derivative counterparties may use shares received from the selling stockholder on physical settlement of the derivative agreements entered
into with that derivatives counterparty to settle or close out open borrowings created to hedge their exposure under the derivative agreements. At its election, the selling stockholder may pay the cash value of any shares to be delivered at
settlement. In the event of such an election, the derivative counterparties expect to purchase shares of common stock in the open market to close out their hedge positions and may use those shares to settle or close out any open borrowings created
to hedge its exposure under the derivative agreements.
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USE OF PROCEEDS
We will incur all of the costs associated with the registration of the shares offered by this prospectus other than underwriting discounts and
selling commissions, if any. Please read “Plan of Distribution.”
The shares offered by this prospectus are being registered for
the account of the selling stockholder named in this prospectus. Therefore, any proceeds from the sale of our shares will be received by the selling stockholder for its own account, or, in the case of sales effected by Goldman, Sachs & Co.
as agent for the derivative counterparties in connection with the derivative agreements, by one or both of the derivative counterparties.
We will not receive any of the proceeds from any sale of our shares offered by this prospectus or from the derivative agreements, and neither
we nor the selling stockholder will receive proceeds from the sale of shares of common stock by Goldman, Sachs & Co. as agent for the derivative counterparties in connection with the derivative agreements.
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DESCRIPTION OF CAPITAL STOCK
The following summary of our capital stock, Restated Certificate of Incorporation (the “Certificate of Incorporation”) and Second
Amended and Restated Bylaws (the “Bylaws”) does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our Certificate of Incorporation and Bylaws.
Our authorized capital stock consists of 300,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of preferred
stock, $0.001 par value per share.
Common Stock
As of March 16, 2016, we had 129,350,249 shares of common stock outstanding, including 1,211,428 shares of restricted stock. The shares of
restricted stock have voting rights and rights to receive dividends and are subject to certain forfeiture restrictions.
Our common stock
commenced trading on the NYSE under the symbol “CXO” on August 3, 2007, in connection with our initial public offering. As of March 16, 2016, there were approximately 1,084 holders of record of our common stock.
Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of our common stock entitled to vote in any election of directors may elect all of the directors standing for election.
Holders of our common stock are entitled to receive proportionately any dividends if and when such dividends are declared by our board of
directors, subject to any preferential dividend rights of preferred stock that may be outstanding at the time such dividends are declared. Upon the liquidation, dissolution or winding up of our company, the holders of our common stock are entitled
to receive ratably our net assets available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred stock. Holders of our common stock have no preemptive, subscription, redemption or
conversion rights. The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the
future.
We have not paid, and do not intend to pay in the foreseeable future, cash dividends on our common stock. Covenants contained in
our credit facility and the indentures governing our senior notes limit the payment of dividends on our common stock. We currently intend to retain all future earnings to fund the development and growth of our business. Any payment of future
dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of
dividends and other considerations that our board of directors deems relevant.
There are no redemption or sinking fund provisions
applicable to our common stock. All outstanding shares of our common stock are fully paid and non-assessable.
Preferred Stock
Under the terms of our Certificate of Incorporation, our board of directors is authorized to designate and issue shares of preferred stock in
one or more series without further vote or action by our stockholders. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, of each series of preferred stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of the common stock until the board of
directors determines the specific rights of the holders of the preferred stock. However, these effects might include:
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restricting dividends on the common stock; |
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diluting the voting power of the common stock; |
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impairing the liquidation rights of the common stock; and |
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delaying or preventing a change in control of our company. |
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We currently have no shares of preferred stock outstanding, and we have no present plans to issue
any shares of preferred stock.
Anti-takeover Provisions of our Certificate of Incorporation and Bylaws
Our Certificate of Incorporation and Bylaws contain several provisions that could delay or make more difficult the acquisition of us through a
hostile tender offer, open market purchases, proxy contest, merger or other takeover attempt that a stockholder might consider to be in in its best interest, including those attempts that might result in a premium over the market price of our common
stock.
Written Consent of Stockholders
Our Certificate of Incorporation and Bylaws provide that any action required or permitted to be taken by our stockholders must be taken at a
duly called meeting of stockholders and not by written consent.
Special Meetings of Stockholders
Subject to the rights of the holders of any series of preferred stock, our Bylaws provide that special meetings of the stockholders may only be
called by the chairman of the board of directors or by the resolution of our board of directors approved by a majority of the total number of authorized directors. No business other than that stated in a notice may be transacted at any special
meeting.
Advance Notice Procedure for Director Nominations and Stockholder Proposals
Our Bylaws provide that adequate notice must be given to nominate candidates for election as directors or to make proposals for consideration
at annual meetings of our stockholders. For nominations or other business to be properly brought before an annual meeting by a stockholder, the stockholder must have delivered a written notice to the Secretary of our company at our principal
executive offices not less than 90 calendar days nor more than 120 calendar days prior to the first anniversary of the date on which we first mailed our proxy materials for the preceding year’s annual meeting; provided, however, that in the
event that the date of the annual meeting is more than 30 calendar days before or more than 30 calendar days after the first anniversary of the date of the preceding year’s annual meeting, notice by the stockholder, to be timely, must be so
delivered not later than the close of business on the later of the 90th calendar day prior to such annual meeting or the 10th calendar day following the calendar day on which public announcement, if any, of the date of such meeting is first made by
us.
Nominations of persons for election to our board of directors may be made at a special meeting of stockholders at which directors are
to be elected pursuant to our notice of meeting (i) by or at the direction of our board of directors, or (ii) by any stockholder of our company who is a stockholder of record at the time of the giving of notice of the meeting who is
entitled to vote at the meeting and who complies with the notice procedures set forth in our Bylaws. In the event we call a special meeting of stockholders for the purpose of electing one or more directors to our board of directors, any stockholder
may nominate a person or persons (as the case may be) for election to such position(s) if the stockholder provides written notice to the Secretary of our company at our principal executive offices not earlier than the close of business on the 90th
calendar day prior to such special meeting, nor later than the close of business on the later of the 70th calendar day prior to such special meeting or the 10th calendar day following the day on which public announcement, if any, is first made of
the date of the special meeting and of the nominees proposed by our board of directors to be elected at such meeting.
These procedures
may operate to limit the ability of stockholders to bring business before a stockholders’ meeting, including the nomination of directors and the consideration of any transaction that could result in a change in control and that may result in a
premium to our stockholders.
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Classified Board
Our Certificate of Incorporation divides our directors into three classes serving staggered three-year terms. As a result, stockholders will
elect approximately one-third of the board of directors each year. This provision, when coupled with provisions of our Certificate of Incorporation authorizing only the board of directors to fill vacant or newly created directorships or increase the
size of the board of directors and provisions providing that directors may only be removed for cause and then only by the holders of not less than 66 2/3 percent of the voting power of all outstanding voting stock, may deter a stockholder from
gaining control of our board of directors by removing incumbent directors or increasing the number of directorships and simultaneously filling the vacancies or newly created directorships with its own nominees.
Authorized Capital Stock
Our Certificate
of Incorporation contains provisions stating that the authorized but unissued shares of common stock and preferred stock are available for future issuance, subject to various limitations imposed by the NYSE. These additional shares may be utilized
for a variety of corporate purposes, including public offerings to raise capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could make it more difficult or
discourage an attempt to obtain control of our company by means of a proxy contest, tender offer, merger or otherwise.
Amendment of Bylaws
Under Delaware law, the power to adopt, amend or repeal bylaws is conferred upon the stockholders. A corporation may, however, in its
certificate of incorporation, also confer upon the board of directors the power to adopt, amend or repeal its bylaws. Our Certificate of Incorporation and Bylaws grant our board of directors the power to adopt, amend and repeal our Bylaws on the
affirmative vote of a majority of the directors then in office. Our stockholders may adopt, amend or repeal our Bylaws, but only at any regular meeting of stockholders, or at a special meeting of stockholders called for that purpose, by the holders
of not less than 66 2/3 percent of the voting power of all outstanding voting stock.
Certain Oil and Natural Gas Opportunities
Certain of our stockholders who received shares of common stock in connection with our formation and our non-employee directors may from time
to time have investments in other exploration and production companies that may compete with us. Our Certificate of Incorporation and our Business Opportunities Agreement provide a safe harbor under which these entities and directors may participate
in the oil and gas exploration, exploitation, development and production business without breaching their fiduciary duties as controlling stockholders or directors. No participation is allowed with respect to:
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any business opportunity that is brought to the attention of a covered individual or entity solely in such person’s capacity as a director or officer of our company and with respect to which, at the time of such
presentment, no other covered individual or entity has independently received notice or otherwise identified such opportunity; or |
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any business opportunity that is identified by a covered individual or entity solely through the disclosure of information by or on behalf of us. |
The covered individuals and entities have no obligation to offer such opportunities to us, but interested directors are required to disclose
conflicts of interest. We are not prohibited from pursuing any business opportunity with respect to which we have renounced any interest.
Limitation
of Liability of Directors
Our Certificate of Incorporation provides that no director shall be personally liable to us or our
stockholders for monetary damages for breach of fiduciary duty as a director, except for liability as follows:
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for any breach of the director’s duty of loyalty to us or our stockholders; |
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of laws; |
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for unlawful payment of a dividend or unlawful stock purchase or stock redemption; and |
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for any transaction from which the director derived an improper personal benefit. |
The effect
of these provisions is to eliminate our rights and our stockholders’ rights, through stockholders’ derivative suits on our behalf, to recover monetary damages against a director for a breach of fiduciary duty as a director, including
breaches resulting from grossly negligent behavior, except in the situations described above.
Delaware Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law (“DGCL”), which prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder for a period of three years after the date that such stockholder became an interested stockholder, with the following exceptions:
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before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; |
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upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85 percent of the voting stock of the corporation outstanding at the time
the transaction began, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned (1) by persons who are directors and also officers and
(2) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
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on or after such date, the business combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least
66 2/3 percent of the outstanding voting stock that is not owned by the interested stockholder. |
In general,
Section 203 of the DGCL defines a “business combination” to include the following:
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any merger or consolidation involving the corporation and the interested stockholder; |
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any sale, transfer, pledge or other disposition (in one transaction or a series of transactions) of 10 percent or more of the assets of the corporation involving the interested stockholder; |
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subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
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any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or
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the receipt by the interested stockholder of the benefit of any loss, advances, guarantees, pledges or other financial benefits by or through the corporation. |
In general, Section 203 of the DGCL defines an “interested stockholder” as an entity or person who, together with the
person’s affiliates and associates, beneficially owns, or within three years prior to the time of determination of interested stockholder status did own, 15 percent or more of the outstanding voting stock of the corporation.
Transfer Agent and Registrar
The
transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.
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SELLING STOCKHOLDER
This prospectus covers the offering for resale from time to time of up to 2,213,895 shares owned by the selling stockholder, Jetta Energy
Resources III, LLC, as of March 21, 2016. No offer or sale under this prospectus may be made by a stockholder other than the selling stockholder named herein, in a supplement to this prospectus or in an amendment to the related registration
statement that has become effective under the Securities Act. As used herein, “selling stockholder” includes donees and pledgees selling shares received from the named selling stockholder after the date of this prospectus.
We may supplement or amend this prospectus to include additional selling stockholders upon request and upon provision of all required
information to us. Other than the acquisition by our wholly owned subsidiary of certain oil and gas properties and assets of the selling stockholder in the ordinary course of business and the related transactions entered into between the parties in
connection with that acquisition, the selling stockholder has had no material relationship with us or our affiliates within the last three years.
As of March 21, 2016, the selling stockholder owned 2,213,895 shares of our common stock, representing approximately 1.7% percent of our
outstanding common stock as of that date (based on 131,564,144 shares outstanding as of March 16, 2016, as adjusted to give effect to the sale of 2,213,895 shares pursuant to the private transaction between the parties described above). The
selling stockholder exercises sole voting and investment power with respect to all 2,213,895 shares of our common stock. Assuming the selling stockholder sells all of the shares subject to this prospectus and does not acquire beneficial ownership of
any additional shares of our common stock, the selling stockholder would not own any other shares of our common stock after completion of any offerings pursuant to this prospectus or physical settlement of the derivative agreements, as applicable.
We do not know when or in what amounts the selling stockholder may offer its shares for sale. Because the selling stockholder may offer
all, some or none of its shares pursuant to this prospectus, no definitive estimate can be provided as to the number of shares that will be held, or percentage of shares beneficially owned, by the selling stockholder after completion of any
offerings pursuant to this prospectus.
The information set forth above with respect to the number of shares of our common stock owned by
the selling stockholder and its voting and investment power was supplied to us by the selling stockholder. We have not sought to verify such information. Additionally, the selling stockholder may have sold or transferred some or all of its shares in
exempt or non-exempt transactions since the date of this prospectus. Other information about the selling stockholder may also change over time.
11
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS
The following is a summary of the material U.S. federal income tax considerations related to the purchase, ownership and disposition
of our common stock by a non-U.S. holder (as defined below) that holds our common stock as a “capital asset” (generally property held for investment). This summary is based on the provisions of the Internal Revenue Code of 1986, as amended
(the “Code”), U.S. Treasury regulations, administrative rulings and judicial decisions, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. We have not sought any ruling from the
Internal Revenue Service (“IRS”) with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS or a court will agree with such statements and conclusions.
This summary does not address all aspects of U.S. federal income taxation that may be relevant to non-U.S. holders in light of their personal
circumstances. In addition, this summary does not address the Medicare tax on certain investment income, U.S. federal estate or gift tax laws, any state, local or non-U.S. tax laws or any tax treaties. This summary also does not address tax
considerations applicable to investors that may be subject to special treatment under the U.S. federal income tax laws, such as:
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banks, insurance companies or other financial institutions; |
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tax-exempt or governmental organizations; |
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qualified foreign pension funds; |
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dealers in securities or foreign currencies; |
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traders in securities that use the mark-to-market method of accounting for U.S. federal income tax purposes; |
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persons subject to the alternative minimum tax; |
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partnerships or other pass-through entities for U.S. federal income tax purposes or holders of interests therein; |
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persons deemed to sell our common stock under the constructive sale provisions of the Code; |
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persons that acquired our common stock through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan; |
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certain former citizens or long-term residents of the United States; and |
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persons that hold our common stock as part of a straddle, appreciated financial position, synthetic security, hedge, conversion transaction or other integrated investment or risk reduction transaction.
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PROSPECTIVE INVESTORS ARE ENCOURAGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL
INCOME TAX LAWS TO THEIR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, NON-U.S. OR
OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.
Non-U.S. Holder Defined
For purposes of this discussion, a “non-U.S. holder” is a beneficial owner of our common stock that is not for U.S. federal income
tax purposes a partnership or any of the following:
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an individual who is a citizen or resident of the United States; |
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a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal income tax regardless of its source; or |
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a trust (i) whose administration is subject to the primary supervision of a U.S. court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or
(ii) which has made a valid election under applicable U.S. Treasury regulations to be treated as a United States person. |
If a partnership (including an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock,
the tax treatment of a partner in the partnership generally will depend upon the status of the partner, upon the activities of the partnership and upon certain determinations made at the partner level. Accordingly, we urge partners in partnerships
(including entities or arrangements treated as partnerships for U.S. federal income tax purposes) considering the purchase of our common stock to consult their tax advisors regarding the U.S. federal income tax considerations of the purchase,
ownership and disposition of our common stock by such partnership.
Distributions
We do not expect to pay any distributions on our common stock in the foreseeable future. However, in the event we do make distributions of cash
or other property on our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.
To the extent those distributions exceed our current and accumulated earnings and profits, the distributions will be treated as a non-taxable return of capital to the extent of the non-U.S. holder’s tax basis in our common stock and thereafter
as capital gain from the sale or exchange of such common stock. See “—Gain on Disposition of Common Stock.” Subject to the withholding requirements under FATCA (as defined below) and with respect to effectively connected dividends,
each of which is discussed below, any distribution (regardless of whether classified as a dividend for U.S. federal income tax purposes) made to a non-U.S. holder on our common stock generally will be subject to U.S. withholding tax at a rate of 30
percent of the gross amount of the distribution unless an applicable income tax treaty provides for a lower rate. To receive the benefit of a reduced treaty rate, a non-U.S. holder must provide the applicable withholding agent with an IRS
Form W-8BEN or IRS Form W-8BEN-E (or other applicable or successor form) certifying qualification for the reduced rate. If, after the end of a given year, it is established that a distribution made to a non-U.S. holder qualified as a
return of capital rather than a dividend for U.S. federal income tax purposes, such non-U.S. holder generally can obtain a refund of any amounts withheld by timely filing an appropriate claim for a refund with the IRS.
Dividends paid to a non-U.S. holder that are effectively connected with a trade or business conducted by the non-U.S. holder in the United
States (and, if required by an applicable income tax treaty, are treated as attributable to a permanent establishment maintained by the non-U.S. holder in the United States) generally will be taxed on a net income basis at the rates and in the
manner generally applicable to United States persons (as defined under the Code). Such effectively connected dividends will not be subject to U.S. withholding tax if the non-U.S. holder satisfies certain certification requirements by providing the
applicable withholding agent a properly executed IRS Form W-8ECI certifying eligibility for exemption. If the non-U.S. holder is a non-U.S. corporation, it may also be subject to a branch profits tax (at a 30 percent rate or such lower rate as
specified by an applicable income tax treaty) on its effectively connected earnings and profits (as adjusted for certain items), which will include effectively connected dividends.
Gain on Disposition of Common Stock
Subject to the discussion below under “—Additional Withholding Requirements under FATCA,” a non-U.S. holder generally will not
be subject to U.S. federal income tax on any gain realized upon the sale or other disposition of our common stock unless:
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the non-U.S. holder is an individual who is present in the United States for a period or periods aggregating 183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions
are met; |
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the gain is effectively connected with a trade or business conducted by the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment
maintained by the non-U.S. holder in the United States); or |
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our common stock constitutes a United States real property interest by reason of our status as a United States real property holding corporation (“USRPHC”) for U.S. federal income tax purposes.
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A non-U.S. holder described in the first bullet point above will be subject to U.S. federal income tax at a rate of 30
percent (or such lower rate as specified by an applicable income tax treaty) on the amount of such gain, which generally may be offset by U.S. source capital losses.
A non-U.S. holder whose gain is described in the second bullet point above or, subject to the exceptions described in the next paragraph, to
whom the third bullet point above applies, generally will be taxed on a net income basis at the rates and in the manner generally applicable to United States persons (as defined under the Code) unless an applicable income tax treaty provides
otherwise. If the non-U.S. holder is a corporation, it may also be subject to a branch profits tax (at a 30 percent rate or such lower rate as specified by an applicable income tax treaty) on its effectively connected earnings and profits (as
adjusted for certain items), which will include such gain.
Generally, a corporation is a USRPHC if the fair market value of its U.S. real
property interests equals or exceeds 50 percent of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. Because of the oil and natural gas properties and other
real property assets we own, we believe that we currently are, and expect to remain for the foreseeable future, a USRPHC for U.S. federal income tax purposes. However, as long as our common stock continues to be regularly traded on an established
securities market, only a non-U.S. holder that actually or constructively owns, or owned at any time during the shorter of the five-year period ending on the date of the disposition or the non-U.S. holder’s holding period for the common stock,
more than five percent of our common stock will be taxable on gain recognized on the disposition of our common stock as a result of our status as a USRPHC. If our common stock is not regularly traded on an established securities market at any time
during the calendar year in which the relevant disposition by a non-U.S. holder occurs, then regardless of the percentage of our common stock held by such holder, such holder will be subject to U.S. federal income tax on a taxable disposition of our
common stock (as described in the preceding paragraph), and a 15 percent withholding tax will apply to the gross proceeds from such disposition.
Non-U.S. holders should consult their tax advisors with respect to the application of the foregoing rules to their ownership and disposition
of our common stock.
Backup Withholding and Information Reporting
Any dividends paid to a non-U.S. holder must be reported annually to the IRS and to the non-U.S. holder. Copies of these information returns
may be made available to the tax authorities in the country in which the non-U.S. holder resides or is established. Payments of dividends to a non-U.S. holder generally will not be subject to backup withholding if the non-U.S. holder establishes an
exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E or other appropriate version of IRS Form W-8.
Payments of the proceeds from a sale or other disposition by a non-U.S. holder of our common stock effected by or through a U.S. office of a
broker generally will be subject to information reporting and backup withholding (at the applicable rate) unless the non-U.S. holder establishes an exemption by properly certifying its non-U.S. status on an IRS Form W-8BEN, IRS Form W-8BEN-E or
other appropriate version of IRS Form W-8 and certain other conditions are met. Information reporting and backup withholding generally will not apply to any payment of the proceeds from a sale or other disposition of our common stock effected
outside the United States by a non-U.S. office of a broker. However, unless such broker has documentary evidence in its records that the holder is not a United States person and certain other conditions are met, or the non-U.S. holder otherwise
establishes an exemption, information reporting will apply to a payment of the proceeds of the disposition of our common stock effected outside the United States by such a broker if it has certain relationships within the United States.
Backup withholding is not an additional tax. Rather, the U.S. income tax liability (if any) of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely furnished to the IRS.
14
Additional Withholding Requirements under FATCA
Sections 1471 through 1474 of the Code, and the Treasury regulations and administrative guidance issued thereunder (“FATCA”), impose
a 30 percent withholding tax on any dividends paid on our common stock and on the gross proceeds from a disposition of our common stock (if such disposition occurs after December 31, 2018), in each case if paid to a “foreign financial
institution” or a “non-financial foreign entity” (each as defined in the Code) (including, in some cases, when such foreign financial institution or non-financial foreign entity is acting as an intermediary), unless (i) in the
case of a foreign financial institution, such institution enters into an agreement with the U.S. government to withhold on certain payments, and to collect and provide to the U.S. tax authorities substantial information regarding U.S. account
holders of such institution (which includes certain equity and debt holders of such institution, as well as certain account holders that are non-U.S. entities with U.S. owners), (ii) in the case of a non-financial foreign entity, such entity
certifies that it does not have any “substantial United States owners” (as defined in the Code) or provides the applicable withholding agent with a certification identifying the direct and indirect substantial United States owners of the
entity (in either case, generally on an IRS Form W-8BEN-E), or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules and provides appropriate documentation (such as an IRS
Form W-8BEN-E). Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing these rules may be subject to different rules. Under certain circumstances, a holder might be eligible
for refunds or credits of such taxes. For example, if a dividend payment on our common stock is both subject to withholding under FATCA and subject to the withholding tax discussed above under “—Distributions,” the withholding under
FATCA may be credited against, and therefore reduce, such other withholding tax.
INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE APPLICABILITY AND EFFECT OF U.S. FEDERAL ESTATE AND GIFT TAX LAWS AND ANY STATE, LOCAL OR NON-U.S. TAX
LAWS AND TAX TREATIES.
15
PLAN OF DISTRIBUTION (CONFLICTS OF INTEREST)
We are registering shares of common stock to permit the resale of such shares by the selling stockholder from time to time after the date of
this prospectus, and by Goldman, Sachs & Co. as agent for the derivative counterparties in connection with the derivative agreements that the selling stockholder expects to enter into shortly after the date of this prospectus. We will not
receive any of the proceeds from the sale of the shares of common stock by the selling stockholder or by Goldman, Sachs & Co. as agent for the derivative counterparties in connection with the derivative agreements.
General
The selling stockholder may sell
all or a portion of the shares beneficially owned and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares are sold through underwriters or broker-dealers, the selling stockholder
will be responsible for underwriting discounts or commissions or agent’s commissions. The shares may be sold in one or more transactions at fixed prices, at the prevailing market price at the time of the sale, at varying prices determined at
the time of sale, or at negotiated prices. These sales may be effected in transactions that involve one or more of the following methods (which may include block transactions or crosses):
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on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
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in the over-the-counter market; |
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in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
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through the writing of options, whether such options are listed on an options exchange or otherwise; |
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ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
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block trades in which the broker-dealer will attempt to sell the shares 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-dealer as principal and resale by the broker-dealer for its account; |
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an exchange distribution in accordance with the rules of the applicable exchange; |
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privately negotiated transactions; |
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sales pursuant to Rule 144; |
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broker-dealers may agree with the selling stockholder to sell a specified number of such shares at a stipulated price per share; |
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a combination of any such methods of sale; or |
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any other method permitted pursuant to applicable law. |
If the selling stockholder effects
such transactions by selling shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholder or
commissions from purchasers of the shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary
in the types of transactions involved). In connection with sales of the shares or otherwise, the selling stockholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares in the course of
hedging in
16
positions they assume. The selling stockholder may also sell shares short and deliver shares covered by this prospectus to close out short positions and to return borrowed shares in connection
with such short sales. The selling stockholder may also loan or pledge shares to broker-dealers that in turn may sell such shares.
The
selling stockholder may pledge or grant a security interest in some or all of the shares owned by it and, if it defaults in the performance of its secured obligations, the pledgees or secured parties may offer and sell the shares from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, and we will amend, if necessary, the name of the selling stockholder to include the pledgee, transferee or
other successors in interest as selling stockholder(s) under this prospectus. The selling stockholder also may transfer and donate the shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will
be the selling beneficial owners for purposes of this prospectus.
The selling stockholder and any broker-dealer participating in the
distribution of the shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular offering of the shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of shares being offered and the terms of
the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling stockholder and any discounts, commissions or concessions allowed or reallowed or paid
to broker-dealers.
Under the securities laws of some states, the shares may be sold in such states only through registered or licensed
brokers or dealers. In addition, in some states the shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that the selling stockholder will sell any or all of the shares registered pursuant to the registration statement of
which this prospectus forms a part.
The selling stockholder and any other person participating in such distribution will be subject to
applicable provisions of the Exchange Act or the Securities Act, and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares by the
selling stockholder and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the shares to engage in market-making activities with respect to the shares. All of the foregoing may
affect the marketability of the shares and the ability of any person or entity to engage in market-making activities with respect to the shares.
We will pay all expenses of the registration of the shares, including, without limitation, SEC filing fees and expenses of compliance with
state securities or “blue sky” laws; provided, however, that the selling stockholder will pay all underwriting discounts and selling commissions, if any.
Once sold under the registration statement of which this prospectus forms a part, the shares will be freely tradable in the hands of persons
other than our affiliates.
Derivative Agreements
The selling stockholder expects to enter into one or more derivative agreements with one or both of the derivative counterparties on or shortly
after the date of this prospectus relating to up to all of the shares covered by this prospectus.
Subject to certain conditions,
following the execution of each derivative agreement, Goldman, Sachs & Co. would sell from time to time a number of shares, equal to the number of shares underlying the relevant derivative agreement, as agent for the relevant derivative
counterparty pursuant to this prospectus, for which it may receive a normal brokerage commission. Goldman, Sachs & Co. may also receive from purchasers of the shares normal brokerage commissions in amounts agreed with such purchasers.
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In connection with such sales, Goldman, Sachs & Co. would offer the shares from time to
time for sale in one or more transactions on the NYSE, in the over-the-counter market, through negotiated transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated
prices. During the same period, Goldman, Sachs & Co. may purchase shares in the open market equal to a portion of the shares sold.
Any shares offered by Goldman, Sachs & Co. under this prospectus as agent for the derivative counterparties may be borrowed by or on
behalf of one or both of the derivative counterparties from stock lenders. The derivative counterparties may use shares received from the selling stockholder on physical settlement of the derivative agreements entered into with that derivatives
counterparty to settle or close out open borrowings created to hedge their exposure under the derivative agreements. The selling stockholder would retain beneficial ownership of its shares prior to physical settlement of the derivative agreements.
At its election, the selling stockholder may pay the cash value of any shares to be delivered at settlement. In the event of such an election, the derivative counterparties would expect to purchase shares of common stock in the open market to close
out their hedge positions and may use those shares to settle or close out any open borrowings created to hedge its exposure under the derivative agreements.
The derivative counterparties and their affiliates would be expected to modify their hedge positions by buying or selling our shares or
engaging in derivatives or other transactions with respect to our shares from time to time during the term of the derivative transactions. The purchases and sales of our shares or other hedging transactions by the derivative counterparties or their
affiliates or agents to modify the derivative counterparties’ hedge position from time to time during the term of the derivatives transactions may variously have a positive, negative or neutral impact on the market price of our shares,
depending on market conditions at such times.
The selling stockholder expects that it will enter into an agreement whereby it will
indemnify Goldman, Sachs & Co. and the derivative counterparties against certain liabilities, including liabilities under the Securities Act.
None of the shares sold by Goldman, Sachs & Co. pursuant to this prospectus will be shares acquired directly from us. No additional
prospectuses or prospectus supplements will be filed in connection with the entry into specific derivative transactions by the selling stockholder with the derivative counterparties as described herein.
Conflicts of Interest
The offering will
be conducted in accordance with FINRA Rule 5121. A bona fide public market exists in the shares, as that term is defined in that rule. Goldman, Sachs & Co. will not confirm sales of the securities to any account over which they exercise
discretionary authority without the prior written approval of the customer.
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LEGAL MATTERS
Certain legal matters in connection with the securities offered hereby will be passed upon by Vinson & Elkins L.L.P., Houston, Texas,
as our counsel. Any underwriter or agent will be advised about other issues relating to any offering by its own legal counsel.
EXPERTS
The audited consolidated financial statements and management’s assessment of the effectiveness of internal control
over financial reporting incorporated by reference in this prospectus and elsewhere in the registration statement have been so incorporated by reference in reliance upon the reports of Grant Thornton LLP, independent registered public accountants,
upon the authority of said firm as experts in accounting and auditing.
Certain estimates of our net oil and natural gas reserves and
related information incorporated by reference in this prospectus have been derived from reports prepared by Cawley, Gillespie & Associates, Inc. and Netherland, Sewell & Associates, Inc. All such information has been so
incorporated by reference on the authority of such firms as experts regarding the matters contained in their reports.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below are the expenses, other than underwriting discounts and commissions, expected to be incurred in connection with the issuance
and distribution of the securities registered hereby. All such expenses will be incurred by us and not by the selling stockholder. With the exception of the SEC registration fee, the amounts set forth below are estimates.
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| SEC registration fee |
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$ |
22,606 |
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| Printing expenses |
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15,000 |
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| Accounting fees and expenses |
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25,000 |
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| Legal fees and expenses |
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75,000 |
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| Miscellaneous |
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10,000 |
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| Total |
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$ |
147,606 |
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Item 15. Indemnification of Directors and Officers
The general effect of the following provisions is to provide indemnification to officers, directors and control persons for liabilities that
may arise by reason of their status as officers, directors or control persons, other than liabilities arising from willful or intentional misconduct, acts or omissions not in good faith, unlawful distributions of corporate assets or transactions
from which the officers, directors or control persons derived an improper personal benefit.
Section 145 of the DGCL provides that a
corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action,
suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. Section 145 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or such other court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court
shall deem proper.
Delaware law provides that directors of a corporation will not be personally liable to the corporation or its
stockholders for monetary damages for breach of their fiduciary duties as directors, except for liability:
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• |
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for any breach of their duty of loyalty to the corporation or its stockholders; |
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• |
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for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
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• |
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under Section 174 of the DGCL relating to unlawful payments of dividends or unlawful stock repurchases or redemptions; or |
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• |
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for any transaction from which the director derived an improper personal benefit. |
II-1
Our Certificate of Incorporation provides that we shall indemnify our officers and directors to
the extent provided in our Bylaws. In turn, our Bylaws provide that we will indemnify and hold harmless, to the fullest extent permitted by the DGCL, any of our officers or directors (including those persons serving as an officer or director of
another entity at our request) who is party to a suit or other proceeding by reason of his or her position as an officer or director against all reasonably incurred expense, liability or loss. We may only indemnify an officer or director who brought
the suit or proceeding if our board of directors had previously authorized such suit or proceeding. The rights to indemnification provided by our Bylaws include the right to advancement of expenses to the fullest extent permitted by the DGCL. In
addition, our Bylaws allow us to indemnify our non-officer employees and agents to the extent (i) permitted by the DGCL and (ii) authorized by our Chief Executive Officer and at least one other authorized officer.
We have also entered into indemnification agreements with all of our directors and executive officers. These indemnification agreements are
intended to permit indemnification to the fullest extent now or hereafter permitted by the DGCL. It is possible that the applicable law could change the degree to which indemnification is expressly permitted.
The indemnification agreements cover expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement incurred as a
result of the fact that such person, in his or her capacity as a director or officer, is made or threatened to be made a party to any suit or proceeding. The indemnification agreements generally cover claims relating to the fact that the indemnified
party is or was an officer, director, employee or agent of us or any of our affiliates, or is or was serving at our request in such a position for another entity. The indemnification agreements also obligate us to promptly advance all reasonable
expenses incurred in connection with any claim. The indemnitee is, in turn, obligated to reimburse us for all amounts so advanced if it is later determined that the indemnitee is not entitled to indemnification. The indemnification provided under
the indemnification agreements is not exclusive of any other indemnity rights; however, double payment to the indemnitee is prohibited.
We are not
obligated to indemnify the indemnitee with respect to claims brought by the indemnitee against:
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• |
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claims regarding the indemnitee’s rights under the indemnification agreement; |
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• |
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claims to enforce a right to indemnification under any statute or law; and |
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• |
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counter-claims against us in a proceeding brought by us against the indemnitee; or |
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• |
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any other person, except for claims approved by our board of directors. |
We have obtained
director and officer liability insurance for the benefit of each of the indemnitees. These policies include coverage for losses for wrongful acts and omissions and to ensure our performance under the indemnification agreements. Each of the
indemnitees are insured under such policies and provided with the same rights and benefits as are accorded to the most favorably insured of our directors and officers.
Item 16. Exhibits.
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(a) |
The following documents are filed as exhibits to this registration statement: |
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| Exhibit
Number |
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Description |
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| 3.1 |
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Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on August 8, 2007, and incorporated herein by reference). |
II-2
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| Exhibit
Number |
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Description |
| 3.2 |
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Second Amended and Restated Bylaws of Concho Resources Inc., as amended November 7, 2012 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on November 8, 2012, and incorporated herein by
reference). |
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| 4.1 |
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Specimen Common Stock Certificate (filed as Exhibit 4.1 to the Company’s Annual Report on Form 10-K on February 22, 2013, and incorporated herein by reference). |
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| 5.1† |
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Opinion of Vinson & Elkins L.L.P. as to the legality of the securities being registered. |
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| 23.1† |
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Consent of Grant Thornton LLP. |
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| 23.2† |
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Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1 hereto). |
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| 23.3† |
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Consent of Netherland, Sewell & Associates, Inc. |
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| 23.4† |
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Consent of Cawley, Gillespie & Associates, Inc. |
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| 24.1† |
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Powers of Attorney (included on the signature page to this registration statement). |
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 this 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 and of the estimated maximum offering price 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 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of distribution
not previously disclosed in this registration statement or any material change to such information in this registration statement;
Provided, however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in 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 filed pursuant to Rule 424(b) that is a part of the 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.
(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.
II-3
(4) That, for the purpose of determining liability under the Securities Act to
any purchaser:
(i) 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
(ii) 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 a part of the registration statement or made in any such document immediately prior to such effective date.
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of
the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to directors, officers and controlling persons of the registrant pursuant to existing provisions or arrangements whereby the registrant may indemnify a trustee, officer or controlling person of the registrant against liabilities arising under the
Securities Act, or otherwise, the registrant has been advised that in the opinion of Commission such indemnification is against public policy as expressed in the 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 trustee, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee,
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 Act and will be governed by the final adjudication of such issue.
II-4
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 Midland, State of Texas, on March 21, 2016.
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| CONCHO RESOURCES INC. |
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| By: |
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/s/ Timothy A. Leach |
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| Name: |
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Timothy A. Leach |
| Title: |
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Director, Chairman of the Board of Directors, |
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Chief Executive Officer and President |
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Timothy A. Leach, Darin G. Holderness,
C. William Giraud and Travis L. Counts, and each of them severally, his true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute in
his name, place and stead, in any and all capacities, any or all amendments (including pre-effective and post-effective amendments) to this registration statement and any registration statement for the same offering filed pursuant to Rule 462 under
the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full
power and authority to do and perform in the name of on behalf of the undersigned, in any and all capacities, each and every act and thing necessary or desirable to be done in connection herewith, to all intents and purposes and as fully as they
might or could do in person, hereby ratifying, approving and confirming all that said attorneys-in-fact and agents or their 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 and on the dates indicated.
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| Name |
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Title |
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Date |
| /s/ Timothy A.
Leach |
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Director, Chairman of the Board of |
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March 21, 2016 |
| Timothy A. Leach |
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Directors, Chief Executive Officer and |
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President (Principal Executive Officer) |
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| /s/ Darin G. Holderness |
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Senior Vice President, Chief Financial |
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March 21, 2016 |
| Darin G. Holderness |
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Officer and Treasurer |
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(Principal Financial Officer) |
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| /s/ Brenda R. Schroer |
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Vice President and Chief Accounting Officer |
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March 21, 2016 |
| Brenda R. Schroer |
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(Principal Accounting Officer) |
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| /s/ Steven L. Beal |
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Director |
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March 21, 2016 |
| Steven L. Beal |
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| /s/ Tucker S. Bridwell |
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Director |
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March 21, 2016 |
| Tucker S. Bridwell |
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| /s/ William H. Easter III |
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Director |
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March 21, 2016 |
| William H. Easter III |
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II-5
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| Name |
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Title |
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Date |
| /s/ Gary A.
Merriman |
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Director |
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March 21, 2016 |
| Gary A. Merriman |
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| /s/ Ray M. Poage |
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Director |
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March 21, 2016 |
| Ray M. Poage |
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| /s/ Mark B. Puckett |
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Director |
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March 21, 2016 |
| Mark B. Puckett |
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| /s/ John P. Surma |
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Director |
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March 21, 2016 |
| John P. Surma |
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II-6
Exhibit Index
|
|
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| Exhibit
Number |
|
Description |
| 3.1 |
|
Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on August 8, 2007, and incorporated herein by reference). |
|
|
| 3.2 |
|
Second Amended and Restated Bylaws of Concho Resources Inc., as amended November 7, 2012 (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K on November 8, 2012, and incorporated herein by
reference). |
|
|
| 4.1 |
|
Specimen Common Stock Certificate (filed as Exhibit 4.1 to the Company’s Annual Report on Form 10-K on February 22, 2013, and incorporated herein by reference). |
|
|
| 5.1† |
|
Opinion of Vinson & Elkins L.L.P. as to the legality of the securities being registered. |
|
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| 23.1† |
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Consent of Grant Thornton LLP. |
|
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| 23.2† |
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Consent of Vinson & Elkins L.L.P. (contained in Exhibit 5.1 hereto). |
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| 23.3† |
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Consent of Netherland, Sewell & Associates, Inc. |
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| 23.4† |
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Consent of Cawley, Gillespie & Associates, Inc. |
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| 24.1† |
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Powers of Attorney (included on the signature page to this registration statement). |
II-7
Exhibit 5.1
March 21, 2016
Concho
Resources Inc.
One Concho Center
600 W. Illinois Avenue
Midland, Texas 79701
Re: Registration
Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Concho Resources Inc., a Delaware corporation (the “Company”), in connection with the preparation
and filing of a registration statement on Form S-3 (the “Registration Statement”) filed on the date hereof with the Securities and Exchange Commission (the “Commission”) in connection with the registration
under the Securities Act of 1933, as amended (the “Securities Act”), relating to the proposed offer and sale (the “Offering”) by the selling stockholder (the “Selling Stockholder”) of up to
2,213,895 shares of common stock, par value $0.001 per share, of the Company (the “Common Shares”).
In connection with
this opinion, we have assumed that (i) the Registration Statement, and any amendments thereto (including post-effective amendments), will have become effective and (ii) the Common Shares will be sold in the manner described in the
Registration Statement.
In connection with the opinion expressed herein, we have examined, among other things, (i) the Restated
Certificate of Incorporation and the Amended and Restated Bylaws of the Company, (ii) the records of corporate proceedings that have occurred prior to the date hereof with respect to the Offering, (iii) the Registration Statement and
(iv) such other certificates, instruments and documents as we considered appropriate for purposes of the opinion hereafter expressed. We have also reviewed such questions of law as we have deemed necessary or appropriate. As to matters of fact
relevant to the opinion expressed herein, and as to factual matters arising in connection with our examination of corporate documents, records and other documents and writings, we relied upon certificates and other communications of corporate
officers of the Company, without further investigation as to the facts set forth therein. We have also assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents submitted to us as copies.
Based upon the foregoing, we are of the
opinion that the Common Shares proposed to be sold by the Selling Stockholder are duly authorized, validly issued, fully paid and nonassessable.
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| Vinson & Elkins LLP Attorneys at Law
Abu Dhabi Austin Beijing Dallas Dubai Hong Kong Houston London
Moscow New York Palo Alto Riyadh San Francisco Tokyo Washington |
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1001 Fannin Street, Suite 2500 Houston, TX
77002-6760 Tel +1.713.758.2222 Fax +1.713.758.2346 www.velaw.com |
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March 21, 2016 Page
2
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The foregoing opinions are limited in all respects to the General Corporation Law of the
State of Delaware (including the applicable provisions of the Delaware Constitution and the reported judicial decisions interpreting these laws) and the federal laws of the United States of America, and we do not express any opinions as to the laws
of any other jurisdiction.
We hereby consent to the references to this firm under the caption “Legal Matters” in the prospectus
forming a part of the Registration Statement and to the filing of this opinion as an exhibit to the Registration Statement, but we do not thereby admit that we are within the category of persons whose consent is required under the provisions of the
Securities Act.
Very truly yours,
/s/ Vinson & Elkins L.L.P.
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated February 25, 2016 with respect to the consolidated financial statements and internal control over financial reporting of
Concho Resources Inc. included in the Annual Report on Form 10-K for the year ended December 31, 2015, which are incorporated by reference in this Registration Statement. We consent to the incorporation by reference of the aforementioned
reports in this Registration Statement, and to the use of our name as it appears under the caption “Experts.”
/s/ GRANT THORNTON LLP
Tulsa, Oklahoma
March 21, 2016
Exhibit 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
The undersigned hereby consents to the references to our firm in the form and context in which they appear in this Registration Statement on Form S-3 of
Concho Resources Inc. and the related prospectus that is a part thereof. We hereby further consent to the use in such Registration Statement and prospectus of information contained in our report setting forth the estimates of revenues from Concho
Resources Inc.’s oil and gas reserves as of December 31, 2015. We further consent to the reference to this firm under the heading “Experts”.
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| NETHERLAND, SEWELL & ASSOCIATES, INC. |
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| By: |
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/s/ C.H. (Scott) Rees III |
|
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C.H. (Scott) Rees III, P.E. |
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Chairman and Chief Executive Officer |
Dallas, Texas
March 21, 2016
Exhibit 23.4
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
The undersigned hereby consents to the references to our firm in the form and context in which they appear in this Registration Statement on
Form S-3 of Concho Resources Inc. and the related prospectus that is a part thereof. We hereby further consent to the use in such Registration Statement and prospectus of information contained in our report setting forth the estimates of revenues
from Concho Resources Inc.’s oil and gas reserves as of December 31, 2015. We further consent to the reference to this firm under the heading “Experts”.
CAWLEY, GILLESPIE & ASSOCIATES, INC.
/s/ J. Zane Meekins,
P.E.
J. Zane Meekins, P.E.
Executive Vice President
Fort
Worth, Texas
March 21, 2016
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