SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 15, 1999
GREKA Energy Corporation
(Exact name of registrant as specified in its charter)
Colorado 0-20760 84-1091986
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
630 Fifth Avenue, Suite 1501
New York, NY 10111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 218-4680
Horizontal Ventures, Inc.
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
This amendment includes the required proforma financial information for the
acquisition of Saba Petroleum Company at Item 7(b).
Item 7. Financial Statements and Exhibits.
(b) The pro forma financial statements of the registrant giving
effect to the acquisition of Saba are included in this report.
The following unaudited proforma consolidated statements of operations for the
year ended December 31, 1998, and for the three months ended March 31, 1999,
are derived from the historical statements of Greka Energy Corporation
("Company") and Saba Petroleum Company ("Saba"). Each statement of operations
reflects the Company's acquisition of Saba, which became effective on March
24, 1999, as if the transaction took place at the beginning of 1998.
The unaudited proforma financial information should be read in conjunction
with the notes thereto and the Consolidated Financial Statements of the
Company previously filed with the Securities and Exchange Commission. The
proforma consolidated statements of operations do not purport to be indicative
of the results of operations that would actually have been reported if the
acquisition had been in effect for the periods presented. In addition, future
results may vary significantly from the results reflected in the proforma
statements due to the Company's assumption of the marketing and distribution
operations of Saba's asphalt refinery in Santa Maria, California, hydrocarbon
production declines, changes in prices received for the sale of produced
hydrocarbons, future acquisitions and dispositions of producing oil and gas
properties, changes in estimates of proved reserves and other factors.
The unaudited proforma consolidated statements of operations reflect the
application of the purchase method of accounting. Under this method of
accounting, the purchase price of the acquisition, measured by the closing
price of the Company's Common Stock on March 24, 1999, was allocated to the
assets acquired and liabilities assumed based on their estimated fair value at
the time of closing of the merger. See the Company's March 31, 1999 Form
10-QSB for further information. Changes to the adjustments included in the
proforma consolidated statements of operations may occur as additional
information becomes available during the year 1999.
GREKA ENERGY CORPORATION
<TABLE>
<CAPTION>
Pro-Forma Consolidated Statement of Operations
For the Year Ended December 31, 1998
(Unaudited)
HVI Saba Proforma
Historical Historical adjustments Proforma
<S> <C> <C> <C> <C>
Revenues
Oil and gas sales $87,663 $19,706,232 $19,793,895
Other 58,150 3,625,099 3,683,249
___________________________________ __________
Total revenues 145,813 23,331,331 23,477,144
___________________________________ __________
Expenses:
Production cost 121,016 13,608,466 13,729,482
General and
administrative 1,541,789 6,529,961 8,071,750
Depletion, depreciation
and amortization 333,468 7,124,269 (2,615,640) 1 4,842,097
Writedown of oil
and gas properties 3,171,485 20,092,850 (20,092,850) 1 3,171,485
____________________________________ __________
Total expenses 5,167,758 47,355,546 (22,708,490) 29,814,814
____________________________________ __________
Operating loss (5,021,945) (24,024,215) 22,708,490 (6,337,670)
____________________________________________________
Other income (expense)
Interest income 83,242 137,842 221,084
Other 9,223 (402,495) (393,272)
Interest expense (32,145) (3,589,332) (118,250) 3 (3,739,727)
Equity in loss of Saba (586,020) 0 586,020 2 0
_____________________________________ _________
Total other
income (expense) (525,700) (3,853,985) 467,770 (3,911,915)
_____________________________________ _________
Loss before
income taxes (5,547,645) (27,878,200) 23,176,260 (10,249,585)
Provision for taxes on
income 0 (887,050) (31,150) 4 (918,200)
Minority interest in
loss of consolidated
subsidiary 114,427 114,427
____________________________________ ___________
Net loss (5,547,645) (28,650,823) 23,145,110 (11,053,358)
Other comprehensive
loss-net of tax
Foreign currency
translation adjustments 0 (151,720) (151,720)
____________________________________ ___________
Comprehensive
loss $(5,547,645)$(28,802,543)$23,145,110 $(11,205,078)
==================================== ===========
Net loss per Common Share $(3.42) $(2.67)
Basic and diluted ========= =======
Weighted average Common Shares
outstanding
Basic and diluted 1,621,483 4,200,988
========== =========
</TABLE>
See accompanying notes to proforma consolidated statement of operations.
a. record depreciation on stepped-up value of refinery:
(31,119,000-2,123,016)/25/4=289,960
b. record depletion change on decrease in oil and gas properties (in
total): (29,444,658-32,238,022) * .02 = (55,870)
c. reverse equity loss from investment in Saba
Pro-forma P&L
For the Three Months Ended March 31, 1998
<TABLE>
P/F
HVI Saba adj's Proforma
<S> <C> <C> <C> <C>
Revenues 34,689 6,473,469 6,508,158
___________________________ __________
Production costs 34,172 3,704,877 3,739,049
G&A 354,547 1,622,802 1,977,349
DD&A 38,868 2,019,409 (27,930) a, b 2,030,347
Ceiling test writedown 10,700,000 (10,700,000) c
______________________________ __________
Total 427,587 18,047,088 (10,727,930) 7,746,745
______________________________ __________
Operating loss (392,898)(11,573,619) 10,727,930 (1,238,587)
Other income/(expense) 34,594 (671,200) (636,606)
_______________________________ __________
Pre-tax loss (358,304)(12,244,819) 10,727,930 (1,875,193)
Tax (provision) benefit 0 221,618 0 221,618
Minority interest 0 6,701 6,701
________________________________ __________
Net loss (358,304)(12,016,500) 10,727,930 (1,646,874)
================================= ===========
Per share (0.3932)
==========
Weighted average shares o/s
at 12-31-97 1,558,843
issued for Saba acq. 2,630,000 4,188,843
==========
</TABLE>
a. record depreciation on stepped-up value of refinery:
(31,119,000-2,084,041)/25/4=290,350
b. record depletion change on decrease in oil and gas properties (in
total): (29,444,658-45,358,568) * .02 = (318,280)
c. reverse Saba writedown as properties would be restated via merger
Saba NBV at 3/31/98:
Refinery, excluding land 2,084,041
Oil and gas properties 79,205,396
(33,846,828) 45,358,568
GREKA ENERGY CORPORATION
NOTES TO UNAUDITED PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The accompanying unaudited proforma statements of operations have been
prepared to reflect the following adjustments to the historical statements of
the Company and Saba Petroleum Company ("Saba").
Unaudited Proforma Consolidated Statement of Operations for the Year Ended
December 31, 1998:
1. Adjustments to 1) remove cost depletion ($6,379,835) and ceiling test
impairment ($20,092,850) amounts reported by Saba during the year, 2) to
record cost depletion ($2,605,000) for Saba's oil and gas properties
applied to the adjusted basis of Saba's properties using the purchase
method of accounting and 3) to record additional depreciation expense
($1,159,195) attributable to increase in basis of Saba's asphalt refinery
using the purchase method of accounting.
2. Adjustment to remove the Company's reported equity loss in Saba ($586,020)
in 1998.
3. Adjustments to record 1) additional interest expense ($82,500) due to
issuance of IPH note payable in the amount of $1.5 million, with interest
at 6%, as if such note had been issued on January 1, 1998, and 2)
accretion of debt discount ($35,750) attributable to $286,000 discount of
Saba debentures that have been -------------at fair value using the
purchase method of accounting.
4. Adjustment to record additional income tax provision ($31,150)
attributable to Colombia operations as a result of proforma adjustments
that decreased the historical depletion and therefore increased the pre-
tax income of such operations.
Proforma Consolidated Statement of Operations for the Three Months Ended March
31, 1999:
1. Adjustments to 1) remove cost depletion ($1,315,618) reported by Saba
during the period, 2) to record cost depletion ($1,259,748) for Saba's oil
and gas properties applied to the adjusted basis of Saba's properties
using the purchase method of accounting and 3) to record additional
depreciation expense ($289,960) attributable to increase in basis of
Saba's asphalt refinery using the purchase method of accounting.
2. Adjustment to remove the Company's reported equity loss in Saba ($553,483)
during the period.
3. Adjustment to record accretion of debt discount ($8,940) attributable to
$286,000 discount of Saba debentures that have been ------------at fair
value using the purchase method of accounting.
(c) The following exhibits are furnished as part of this report:
* Exhibit 3.1 Articles of Amendment to Articles of Incorporation
effective March 22, 1999.
* Exhibit 99.1 Press release of GREKA Energy Corporation and
Saba dated March 22, 1999.
*Previously filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 7, 1999 GREKA ENERGY CORPORATION
/s/ Randeep S. Grewal
By: ___________________________________
Randeep S. Grewal, Chairman, Chief
Executive Officer and President
