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As filed with the Securities and Exchange Commission on November 1, 2000
Securities Act File No. 333- ___________; Exchange Act File No. 0-20760
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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GREKA ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
COLORADO 84-1091986
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
630 Fifth Avenue, Suite 1501
New York, New York 10111
(212) 218-4680
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(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Randeep S. Grewal
Greka Energy Corporation
630 Fifth Avenue, Suite 1501
New York, New York 10111
(212) 218-4680
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of Communications to:
ROGER V. DAVIDSON, ESQ.
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
1225 17TH STREET, SUITE 2300
DENVER, COLORADO 80202
(303) 292-2400
Approximate date of commencement of proposed sale to public: As soon as
practicable after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest investment 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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED PER SHARE(1) PRICE REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, no par value, held by a
Selling Security Holder 490,000 $14.1565 $6,936,685 $1,831.28(2)
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(1) The proposed maximum offering price is estimated solely for
the purpose of determining the registration fee and calculated
pursuant to Rule 457(c). The average of the high and low
prices of our common stock reported by the Nasdaq National
Market on October 31, 2000 was used for the estimate with
respect to the 490,000 shares.
(2) Calculated pursuant to Section 6(b) of the Securities Act of
1933 as .000264 of $6,936,685.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933
or until the Registration Statement shall become effective on such date
as the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE> 3
The information in this prospectus is not complete and may be changed. The
selling security holder may not sell these securities until the registration
statement filed with the SEC is effective. This prospectus is not an offer to
sell these securities and is not a solicitation of an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED NOVEMBER __, 2000
PROSPECTUS
GREKA ENERGY CORPORATION
490,000 SHARES OF COMMON STOCK
This prospectus may be used in connection with the offer and sale from
time to time of up to a total of 490,000 shares of Greka Energy Corporation
common stock for the account of Capco Resources, Ltd. The selling security
holder previously received its shares of common stock from us. We will not
receive any of the proceeds from the sales of the shares of common stock by the
selling security holder.
Our common stock is traded in the Nasdaq National Market under the
trading symbol "GRKA." The shares offered under this prospectus may be offered
and sold by the selling security holder in one or more transactions in the
Nasdaq National Market, in privately negotiated transactions or otherwise.
There are certain risks involved with the ownership of our common
stock, including risks related to our business and the markets for our common
stock. (See "Risk Factors" beginning on page 6.)
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is November __, 2000
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TABLE OF CONTENTS
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Page
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About this Prospectus ...................................................................................2
Information Made Available to You........................................................................2
Incorporation of Documents by Reference..................................................................3
Prospectus Summary ......................................................................................4
Risk Factors.............................................................................................6
Use of Proceeds.........................................................................................12
Selling Security Holder ................................................................................12
Plan of Distribution ...................................................................................12
Legal Matters ..........................................................................................13
Experts ................................................................................................13
Securities and Exchange Commission Position
on Certain Indemnification ........................................................................14
</TABLE>
ABOUT THIS PROSPECTUS
You should only rely on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The selling security holder is offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted.
INFORMATION MADE AVAILABLE TO YOU
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission. Certain information in the
registration statement has been omitted from this prospectus in accordance with
the rules of the SEC.
We file annual reports, quarterly reports and current reports, proxy
statements and other information with the SEC. Our file number is 0-20760.
You may read and copy materials that we have filed with the SEC,
including the registration statement, at the following SEC public reference
rooms:
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450 Fifth Street, N.W. Northwest Atrium Center 7 World Trade Center
Room 1024 500 West Madison Street Suite 1300
Washington, D.C. 20549 Suite 1400 New York, New York 10048
Chicago, Illinois 60661
</TABLE>
You can call the SEC at 1-800-732-0330 for further information about
the public reference room.
We are required to file electronic versions of these documents with the
SEC. Those documents may be accessed through the SEC's Internet site at
http://www.sec.gov.
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INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are deemed to be incorporated by reference in
this registration statement and to be a part of this prospectus.
1. Our annual report on Form 10-K/A and all amendments thereto for the
year ended December 31, 1999.
2. Our quarterly reports on Form 10-Q for the quarters ended March 31,
2000 and June 30, 2000.
3. Our current reports on Form 8-K and all amendments thereto reporting
events dated each of February 18, 2000, July 7, 2000 and September 7, 2000.
4. Our proxy statement for our annual meeting of shareholders held
December 22, 1999.
5. The description of our no par value common stock which is contained
in our amendment to the registration statement on Form 8-A filed with the SEC on
September 12, 1997.
All documents subsequently filed by us with the SEC pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 prior
to the termination of the offering shall be deemed to be incorporated by
reference into this prospectus.
We will provide, without charge, to each person to whom a copy of this
prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents incorporated into this prospectus by reference.
Written or telephone requests for such copies should be directed to our office:
Greka Energy Corporation, 630 Fifth Avenue, Suite 1501, New York, New York
10111, (212) 218-4680.
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PROSPECTUS SUMMARY
This is only a summary and does not contain all the information that
may be important to you. You should read the more detailed information contained
in and incorporated by reference into this prospectus, including but not limited
to, the risk factors beginning on page 6. "We" as used in this prospectus
includes our subsidiaries unless the context requires otherwise.
THE OFFERING
The shares of our common stock covered by this prospectus are being
sold by the security holder listed under the heading "Selling Security Holder."
The selling security holder previously received its shares of common stock from
us. We will not receive any of the proceeds from the sales of the shares of
common stock by the selling security holder.
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Shares of common stock outstanding
as of October 26, 2000 (prior to this offering) 3,561,801 (1)
Shares of common stock offered by a selling security holder under this prospectus 490,000
Nasdaq National Market symbol for our common stock GRKA
</TABLE>
(1) Adjusted to eliminate 723,077 shares repurchased by Greka from
Capco and includes 21,861 shares issued through October 31,
2000, in exchange for Greka's 9% convertible debentures.
ABOUT US
We are an independent integrated energy company focused on exploiting
E&P opportunities and penetrating new niche markets utilizing proprietary
technology with emphasis on short radius horizontal drilling technology patented
by BP Amoco and licensed to us. In addition to owning and operating an asphalt
refinery in California, we have oil and gas production, exploration and
development activities in North America and the Far East, with primary areas of
activity in California, Louisiana and China.
Our principal business office is located at 630 Fifth Avenue, Suite
1501, New York, New York 10111. The telephone number at that address is (212)
218-4680.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements that concern our business. All
statements, other than statements of historical facts, included in or
incorporated by reference into this prospectus that address activities, events
or developments that we expect, believe or anticipate will or may occur in the
future, including the following matters are forward looking statements:
o the benefits we expect to result from our acquisition of Saba
Petroleum Company, including the following:
o synergies in the form of increased revenues,
o decreased expenses and avoided expenses and
expenditures that we expect to realize as a
result of the transaction, and
o the complementary nature of our horizontal
drilling technology and certain oil reserves
acquired with the acquisition of Saba,
o future capital,
o development and exploration expenditures,
o drilling of wells,
o reserve estimates,
o future production of oil and gas,
o repayment of debt,
o business strategies, and
o expansion and growth of business operations.
These statements are based on certain assumptions and analyses made by us in
light of our experience and our perception of the following:
o historical trends,
o current conditions,
o expected future developments, and
o other factors we believe are appropriate in the circumstances.
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Such statements are subject to a number of assumptions including the following:
o risks and uncertainties, including the risk factors in this
prospectus,
o general economic and business conditions,
o the business opportunities that may be presented to and
pursued by us,
o changes in laws or regulations and other factors, many of
which are beyond our control, and
o our ability to obtain project financing on favorable
conditions.
Significant factors that could prevent us from achieving our stated goals
include:
o our failure to integrate our operations and Saba or to achieve
the synergies expected from the acquisition of Saba,
o our failure to obtain additional capital on attractive terms,
o declines in the market prices for oil and gas, and
o adverse changes in the regulatory environment affecting us.
You are cautioned that any such statements are not guarantees of future
performance and that actual results or developments may differ materially from
those projected in the forward-looking statements.
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RISK FACTORS
Prior to making an investment decision, you should carefully consider,
together with the other information contained in and incorporated by reference
into this prospectus, the following risk factors.
WE CANNOT ENSURE CONTINUED PROFITABILITY IN THE FUTURE.
While we were profitable during 1999 and have continued profitability
through the first half of 2000, we incurred losses for the years ended December
31, 1998 and 1997. We may experience fluctuations in future operating results
due to a variety of factors including the following:
o general economic conditions,
o specific economic conditions in the asphalt and oil and gas
industry, and
o capital and other costs relating to the expansion of
operations.
Many of those factors are out of our control. There can be no assurance that our
operations will continue to be profitable.
WE HAVE SUBSTANTIAL CAPITAL REQUIREMENTS.
We make, and will continue to make, substantial capital expenditures
for the exploitation, production and acquisition of oil and gas reserves. We
have financed these expenditures primarily from borrowings from banks and
private placements of our common stock. If revenues or our ability to borrow
decreases as a result of lower oil and gas prices, operating difficulties or
declines in reserves, we may have limited ability to fund the capital
requirements to undertake or complete future exploitation, production and
acquisition programs. We cannot assure you that additional debt or equity
financing or cash generated by operations will be available to meet these
requirements.
WE MAY INADVERTENTLY ACQUIRE PROPERTIES WITH ENVIRONMENTAL PROBLEMS OR
STRUCTURAL CONTAMINATION.
We intend to acquire additional oil and gas properties. Although we
perform a review of the acquired properties that we believe is consistent with
industry practices, such reviews are inherently incomplete. It generally is not
feasible to review in depth every individual property involved in each
acquisition. Ordinarily, we will focus our due diligence efforts on the higher
valued properties and will sample the remainder. However, even an in-depth
review of all properties and records may not necessarily reveal existing or
potential problems nor will it permit us to become sufficiently familiar with
the properties to assess fully their deficiencies and capabilities. We may not
inspect every well. Additionally, structural or environmental problems, such as
ground water contamination, are not necessarily observable even when we
undertake an inspection. We may be required to assume preclosing liabilities,
including environmental liabilities, and may acquire interests in properties on
an "as is" basis. We cannot assure you that our acquisitions will not have
environmental problems or structural contamination.
WE COMPETE WITH COMPANIES WITH GREATER MARKET SHARE AND RESOURCES.
We compete with other companies which have substantially greater market
share, greater financial and other resources, better name recognition and longer
operating histories. We may therefore not be able to acquire desirable oil and
gas properties to develop.
WE HAVE ENVIRONMENTAL RISKS ASSOCIATED WITH ONE OF OUR MINERAL PROPERTIES IN
CALIFORNIA.
In 1993, our predecessor acquired a producing mineral interest in
California from a major oil company. At the time of acquisition, our
predecessor's investigation revealed that a discharge of diluent, a light,
oil-based fluid which is often mixed with heavier grades of crude had occurred
on the acquired property. The purchase agreement required the seller to
remediate the area of the diluent spill. After we assumed operation of the
property, we became aware of additional diluent contamination and believe the
major oil company is responsible to remediate those areas as well. We have
notified the seller of its obligation to remediate. Notwithstanding our
compliance in proceeding with any required remediation on seller's account, we
are committed to hold the seller accountable for the required remediation. Since
the investigation is ongoing, we are unable to accurately estimate the cost.
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WE HAVE ENVIRONMENTAL RISKS ASSOCIATED WITH ONE OF OUR OIL AND GAS PROPERTIES IN
CALIFORNIA.
In 1995, our predecessor agreed to acquire an oil and gas interest in
California on which a number of out of production oil wells had been drilled by
the seller. The acquisition agreement required that our predecessor assume the
obligation to abandon any wells that it did not return to production,
irrespective of whether certain consents of third parties necessary to transfer
the property to us were obtained. A third party whose consent was required to
transfer the property did not consent to the transfer and is holding the seller
responsible for all remediation. We believe we have no financial obligation to
remediate this property because we believe the seller did not give our
predecessor any consideration to enter into the contract for the property. Since
May 2000, we commenced remediation on the subject property as directed by the
regulatory agency. Notwithstanding our compliance in proceeding with any
required remediation on seller's account, we are committed to hold the seller
accountable for the required obligations of the property. Since the
investigation is not complete we cannot make an accurate estimation of the final
cost.
WE HAVE ENVIRONMENTAL RISKS ASSOCIATED WITH OUR ASPHALT REFINERY.
We own an asphalt refinery in Santa Maria, California, with which
environmental remediation obligations are associated. The party who sold the
asphalt refinery to us is performing all environmental obligations that arose
during and as a result of its operations of the refinery prior to the
acquisition. There could be additional environmental issues which may require
material remediation efforts in the future.
WE COULD INCUR COSTS TO COMPLY WITH ENVIRONMENTAL LAWS AND REGULATIONS.
Most of the properties that have been purchased by us have been in
production for a number of years and should be expected to have environmental
problems typical of oil field operations generally, and may contain other areas
of greater environmental concern. We have identified a number of areas in which
contamination exists on properties acquired by us.
We have agreed to indemnify some sellers from various environmental
liabilities, including those that are associated with the seller's prior
obligations. Many of these properties were in production during years in which
environmental controls were significantly more lax than they are presently. At
the time of an acquisition, there may be unknown conditions which subsequently
may give rise to an environmental liability. Consequently, it is difficult to
assess the extent of our obligation under these indemnities.
OUR FOREIGN OPERATIONS HAVE CURRENCY EXCHANGE AND ASSET REPATRIATION RISKS.
We are undertaking exploration and exploitation operations in Indonesia
and China. Risks inherent in international operations generally include the
following:
o local currency instability,
o inflation,
o the risk of realizing economic currency exchange losses when
transactions are completed in currencies other than United
States dollars, and
o the ability to repatriate earnings under existing exchange
control laws.
Changes in domestic and foreign import and export laws and tariffs can
also materially impact international operations. In addition, foreign operations
involve political, as well as economic, risks such as:
o nationalization,
o expropriation,
o contract renegotiations, and
o changes in laws resulting from governmental changes.
In addition, many licenses and agreements with foreign governments are
for a fixed term and may not be held by production. In the event of a dispute,
we may be subject to the exclusive jurisdiction of foreign courts or may not be
successful in subjecting foreign persons to the jurisdiction of courts in the
United States. We may also be hindered or prevented from enforcing our rights
with respect to a governmental instrumentality because of the doctrine of
sovereign immunity.
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OUR ASPHALT HEDGING STRATEGY DOES NOT ELIMINATE FLUCTUATIONS TO OUR QUARTERLY
RESULTS DUE TO VOLATILITY OF OIL AND GAS PRICES AND MARKETS.
Our revenues, cash flow, profitability and future rate of growth are
dependent upon prevailing prices for oil, gas and asphalt. Our ability to
maintain or increase our borrowing capacity and to obtain additional capital on
attractive terms is also to some extent dependent on these commodities prices.
Historically, oil and gas prices and markets have been volatile and are likely
to continue to be volatile in the future. Prices for oil and gas are subject to
wide fluctuations in response to relatively minor changes in supply of and
demand for oil and gas, market uncertainty and a variety of additional factors
that are beyond our control. Those factors include:
o international political conditions,
o the domestic and foreign supply of oil and gas,
o the level of consumer demand,
o weather conditions,
o domestic and foreign governmental regulations,
o the price and availability of alternative fuels, and
o overall economic conditions.
Significant declines in the price of oil or gas, such as the declines
in oil prices during 1998, would adversely affect our revenues, operating income
and borrowing capacity and may require a reduction in the carrying value of our
oil and gas properties.
REPLACEMENT OF OUR OIL AND GAS RESERVES IS UNCERTAIN.
Our future success depends upon our ability to find, develop or acquire
additional oil and gas reserves that are economically recoverable. Except to the
extent that we conduct successful exploitation and production activities or
acquire properties containing proved reserves, our estimated net proved reserves
will generally decline as reserves are produced. We cannot assure you that our
planned exploitation and production projects and acquisition activities will
result in significant additional reserves or that we will have continuing
success drilling productive wells economically. If prevailing oil and gas prices
were to increase significantly, our costs to add new reserves could increase.
The drilling of oil and gas wells involves a high degree of risk,
especially the risk of dry holes or of wells that are not sufficiently
productive to provide an economic return on the capital expended to drill the
wells. In addition, our drilling operations, including our contract services,
may be curtailed, delayed or canceled as a result of numerous factors, including
the following:
o title problems,
o weather conditions,
o compliance with governmental requirements, and
o shortages or delays in the delivery of equipment.
OUR ATTEMPTS TO ENFORCE OUR RIGHT TO REACQUIRE THE COLOMBIAN ASSETS FROM OMIMEX
MAY BE UNSUCCESSFUL.
As reported in our 10-K/A filed for the year ended December 31, 1999,
which is incorporated herein by reference, during March of this year we
exercised our option to repurchase the Colombian assets from Omimex for an
estimated cost of $12,000,000. Our attempt to rescind the agreement or close our
option resulted in a lawsuit being filed to enforce those rights, which lawsuit
is presently pending. While we have projected a substantial value for the
Colombian assets, there can be no guaranty that we will be successful in our
efforts to force the transfer of the Colombian assets to us, nor that the
out-of-pocket expense and manpower costs of the litigation will not also have a
negative impact on the results of our other core operations.
OUR ESTIMATES OF OIL AND GAS RESERVES AND FUTURE NET REVENUES ARE UNCERTAIN.
The documents incorporated by reference into this prospectus include
estimates of net proved oil and gas reserves and the future net revenues from
those reserves which have been prepared by us and our independent petroleum
engineers. There are numerous uncertainties inherent in estimating quantities of
proved oil and gas reserves, including many factors beyond our control. Reserve
engineering is a subjective process of estimating the underground accumulations
of oil and gas that cannot be measured in an exact manner. The estimates
incorporated by reference into this prospectus are based on various assumptions
required by the SEC including the following:
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o constant oil and gas prices,
o operating expenses, and
o capital expenditures.
Those estimates therefore, are inherently imprecise indications of
future net revenues. The following actual amounts may vary substantially from
the estimated amounts:
o amount of production,
o revenues,
o taxes,
o development expenditures,
o operating expenses, and
o quantities of recoverable oil and gas reserves to be
encountered.
Any significant variance in the assumptions used for the estimates of
reserves could materially affect the estimated quantity and value of reserves
incorporated by reference into this prospectus. In addition, our reserves may be
subject to downward or upward revision based upon the following:
o production history,
o results of future development,
o availability of funds to acquire additional reserves,
o prevailing oil and gas prices, and
o other factors.
In addition, the calculation of the estimated present value of the
future net revenue using a 10% discount rate as required by the SEC is not
necessarily the most appropriate discount factor based on interest rates in
effect from time to time and risks associated with our reserves or the oil and
gas industry in general.
It is also possible that independent petroleum engineers may make
estimates of reserves and future net revenues from the same available data that
are different than our estimates or the estimates of different independent
petroleum engineers. Should this occur, management would adopt the estimates of
its independent engineers.
In calculating reserves on a barrels of oil equivalent basis, gas was
converted to oil at a certain ratio. While this convention approximates the
energy equivalent of oil and gas on a British thermal unit basis, it may not
represent the relative prices received by us on the sale of our oil and gas
production.
The estimated future net revenues attributable to net proved reserves
are prepared in accordance with SEC guidelines, and are not intended to reflect
the fair market value of reserves. In accordance with the rules of the SEC,
reserve estimates are prepared using period end prices received for oil and gas.
Reductions in prices below those prevailing at December 31, 1999 would result in
the estimated quantities and present values of reserves being reduced.
WE FACE UNINSURED RISKS.
Our oil and gas business involves a variety of operating risks,
including the following:
o fire
o explosions
o blow-outs
o pipe failure
o casing collapse
o abnormally pressured formations, and
o environmental hazards such as
o oil spills,
o gas leaks,
o ruptures, and
o discharges of toxic gases.
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The occurrence of any of those events could result in the following:
o substantial losses due to injury and loss of life,
o severe damage to and destruction of property, natural
resources and equipment,
o pollution and other environmental damage,
o clean-up responsibilities, and
o regulatory investigation and penalties and suspension of
operations
We maintain general liability insurance coverage for our operations but
have not obtained insurance coverage for certain environmental hazards. The
occurrence of a significant unfavorable event not fully covered by insurance
will have a material adverse effect on our financial condition and results of
operations. Furthermore, we cannot predict whether insurance will continue to be
available at a reasonable cost or at all.
WE FACE SUBSTANTIAL GOVERNMENTAL REGULATION AND ENVIRONMENTAL RISKS.
Our business is subject to various laws and regulations which may be
changed from time to time in response to economic or political conditions.
Matters subject to regulation include the following:
o discharge permits for drilling operations,
o drilling bonds,
o reports concerning operations,
o the spacing of wells,
o unitization and pooling of properties,
o taxation, and
o environmental protection.
From time to time, regulatory agencies have imposed price controls and
limitations on production by restricting the rate of flow of oil and gas wells
below actual production capacity in order to conserve supplies of oil and gas.
WE CAN ISSUE SIGNIFICANT AMOUNTS OF STOCK WITHOUT SHAREHOLDER APPROVAL.
The Nasdaq National Market listing requirements provide that we may
issue, without shareholder approval, securities representing the present or
potential issuance of up to 20% of the number of shares of common stock
outstanding prior to the issuance of such securities. We have previously
received shareholder approval for the issuance of up to 2,000,000 shares of our
common stock for use in capital-raising activities and acquisitions. Finally, on
November 3, 1999, we adopted a rights plan with our transfer agent authorizing
the issuance of rights to acquire additional shares of our stock to shareholders
of record at the discretion of the Board of Directors in an effort to discourage
any potential attempted hostile takeovers. Any such issuances could be used as a
method of discouraging, delaying or preventing a change in control of us and
would significantly dilute our public ownership, which could adversely affect
the market value of our common stock. There can be no assurance that we will not
undertake to issue such shares if we deem it appropriate to do so.
WE HAVE NOT PREVIOUSLY PAID DIVIDENDS ON OUR COMMON STOCK.
We have not previously paid any cash or other dividends on our common
stock. We anticipate that any earnings would be retained by us to finance our
operations and future growth and expansion.
THE PRICE OF OUR COMMON STOCK COULD BE VOLATILE.
The trading prices of our common stock could be subject to wide
fluctuations in response to the following:
o quarterly variations in actual or anticipated results of our
operations,
o changes in securities analysts' earnings estimates,
o announcements of technological innovations by us or our
competitors,
o general conditions in the oil and gas industry, or
o other factors.
Further, the trading volume of our stock currently is relatively small,
and the market for our stock may not be able to efficiently accommodate
significant trades on any given day. Consequently, sizable trades of our common
stock have in the past, and may in the future, cause volatility in the market
price of our common stock to a greater extent than in more actively traded
securities. These broad fluctuations may adversely affect the market price of
our common stock.
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OUR ARTICLES OF INCORPORATION ELIMINATE OUR DIRECTORS' LIABILITY.
Our Articles of Incorporation contain a provision eliminating our
directors' liability to us or our shareholders for monetary damages for a breach
of their fiduciary duty. However, a director's liability is not eliminated in
circumstances involving certain wrongful acts, such as the breach of a
director's duty of loyalty or acts or omissions which involve intentional
misconduct or a knowing violation of law. Our Articles of Incorporation also
obligate us to indemnify our directors and officers to the fullest extent
permitted under Colorado law. While we believe that these provisions are very
standard and necessary to assist us in attracting and retaining qualified
individuals to serve as directors, they could also serve to insulate our
directors against liability for actions which damage us or our shareholders.
RECENT DEVELOPMENTS
On August 17, 2000, we and our chief executive officer, Randeep S.
Grewal entered into a Settlement Agreement and Release resolving litigation in
the United States District Court for the District of Colorado between Greka and
Capco Resources, Ltd., Capco Energy, Inc. and Ilyas Chaudhary over disputes
concerning among other things the shares of Greka common stock issued by Greka
to Capco Resources in exchange for shares of Saba Petroleum Company common stock
under the November 23, 1998 Stock Exchange Agreement between Greka and Saba
Acquisub, Inc. Saba Acquisub was controlled by Capco Resources, which is
indirectly controlled by Ilyas Chaudhary. As part of that settlement, among
other things, the parties agreed:
o Greka would purchase 800,000 shares of its common stock from
Capco Resources for a total consideration of $5,200,000 and
Greka would, within five business days of receipt of such
shares from Capco Resources, cancel such shares so that they
become authorized, but unissued shares of common stock,
o 76,923 shares of the 800,000 shares of Greka common stock
would be purchased on August 25, 2000 in exchange for a
payment by Greka of $500,000, which was completed, and the
remaining 723,077 shares would be purchased in exchange for a
payment by Greka of $4,200,000, with the remaining $500,000 to
be offset by the credit from Capco Resources discussed below,
o Capco Resources will pay to Greka the sum of $500,000 as
consideration for Greka releasing certain claims,
o Capco Resources shall satisfy a judgment against it in favor
of Merrill, Lynch, Pierce, Fenner & Smith, Inc. with funds
from Greka's payment to it,
o Capco Resources will retain 490,000 shares of Greka common
stock, which shares are subject to a voting agreement whereby
Capco agrees to vote such shares as directed by Greka's
management and whereby Capco agreed to execute a power of
attorney to appoint Greka's chief executive officer
attorney-in-fact to vote such shares until December 31, 2002.
o Greka will use its reasonable best efforts to file a
registration statement with the Securities and Exchange
Commission for purposes of registering for resale the 490,000
shares of common stock Capco Resources (and no others on that
registration statement) holds by October 30, 2000, but in no
event later than November 30, 2000.
The registration statement, of which this prospectus is a part, is
intended to comply with the registration requirement described above and solely
to register the 490,000 shares Capco Resources owns so that such shares can be
resold pursuant to the Settlement Agreement and Release. We have no control over
the selling security holder's sale of any of the shares of our common stock it
owns.
The closing of the transaction contemplated by the settlement
agreement occurred on October 30, 2000.
11
<PAGE> 14
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock by the selling security holder.
SELLING SECURITY HOLDER
The following table shows, for the selling security holder, the
following information:
o the number shares of common stock beneficially owned by it as of
October 30, 2000,
o the number of shares of common stock covered by this prospectus, and
o the number of shares of common stock to be retained after this
offering, if any.
<TABLE>
<CAPTION>
Number of Shares of Number of Shares of
Common Stock Number of shares Common Stock Percent of Class
Beneficially Owned of Common Stock Beneficially Owned Beneficially Owned
Name Before the Offering to be Sold After the Offering After the Offering
---- ------------------- ----------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Capco Resources, Ltd. 490,000(1) 490,000 0 0
</TABLE>
(1) After giving effect to Capco Resources' transfer to us of 76,923 shares of
common stock on August 25, 2000, in exchange for $500,000 and Capco Resources'
transfer under the settlement agreement of an additional 723,077 shares of our
common stock in exchange for our payment of $4,200,000, which occurred on
October 30, 2000.
Before the transactions under the settlement agreement, Capco Resources
held approximately 30% of the outstanding shares of Greka common stock. After
the transactions under the settlement agreement, Capco Resources holds
approximately 13.8% of the outstanding shares of Greka common stock. Such
shares are subject to a voting agreement whereby Capco has agreed to vote such
shares at the direction of Greka's management until December 31, 2002. See
"Recent Developments" on page 11.
Capco Resources was a significant shareholder and affiliate of Saba
Petroleum Company, which Greka acquired in a series of significant acquisition
transactions completed in March 1999. Capco Resources is indirectly controlled
by Ilyas Chaudhary, who was a director, executive officer and significant
beneficial shareholder of Saba Petroleum before the acquisition by Greka.
PLAN OF DISTRIBUTION
We are registering the shares of our common stock covered by this
prospectus.
As used in this prospectus, the selling security holder includes
donees, pledgees, transferees or other successors in interest who will hold the
selling security holder's shares after the date of this prospectus. We are
paying the costs, expenses and fees of registering the common stock pursuant to
the Settlement Agreement and Release referenced above, but the selling security
holder will pay any underwriting or brokerage commissions and similar selling
expenses relating to the sale of the shares of common stock.
The selling security holder may sell our common stock at market prices
prevailing at the time of the sale, at prices related to the prevailing market
prices, at negotiated prices or such other price as the selling security holder
determines from time to time. The selling security holder may sell from time to
time some or all of its common stock in one or more transactions (which may
involve block transactions):
o on the Nasdaq National Market or on such other market on which
the common stock may from time to time be trading;
o in ordinary brokers' transactions;
o in transactions involving cross or block trades or otherwise;
o in privately negotiated transactions
o short sales
o through purchases by brokers, dealers or underwriters as
principal and resale by those purchasers for their own
accounts under this prospectus;
o through market makers or into an existing market for the
common stock;
o in other ways not involving market makers or established
trading markets, including direct sales to purchasers or sales
effected through agents;
o in transactions in involving the writing of options, swaps or
other derivatives; or
12
<PAGE> 15
o in any combination of the selling options described in this
prospectus, or by any other legally available means.
The selling security holder may enter into hedging transactions with
broker-dealers who may engage in short sales of our common stock in the course
of hedging the positions they assume. The selling security holder also may enter
into option or other transactions with broker-dealers that require the delivery
by those broker-dealers of the common stock. Thereafter, the shares may be
resold under this prospectus.
The selling security holder shall have the sole and absolute discretion
not to accept any purchase offer or make any sale of shares if they deem the
purchase price to be unsatisfactory at any particular time. We cannot assure you
that all or any of the shares offered in this prospectus will be issued to, or
sold by, the selling security holder.
In their selling activities, the selling security holder will be
subject to applicable provisions of the Securities Exchange Act of 1934 and the
Securities Exchange Act's rules and regulations, including Regulation M, which
may limit the activity of the selling security holder and the timing of
purchases and sales of our common stock. Furthermore, under Regulation M,
persons engaged in a distribution of securities are prohibited form
simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distributions, subject to specified exceptions or
exemptions. The foregoing may affect the marketability of the shares of our
common stock. Any selling security holder who may be "affiliated purchasers" of
ours as defined in Regulation M, have been further advised that they must
coordinate their sales under this prospectus with each other and us for purposes
of Regulation M.
The selling security holder and any broker-dealers involved in the sale
or resale of our common stock may qualify as "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933. In addition, the broker-dealers'
commissions, discounts or concessions may qualify as underwriters' compensation
under the Securities Act. If any selling security holder or any broker-dealer
qualifies as an "underwriter," then they will be subject to the prospectus
delivery requirements of Section 153 of the Securities Act, which may include
delivery through the facilities of the NASD.
In conjunction with sales to or through brokers, dealers or agents, the
selling security holders may agree to indemnify them against liabilities arising
under the Securities Act. We know of no existing arrangements between the
selling security holder, any other shareholder, broker, dealer, underwriter or
agent relating to the sale or distribution of our common stock.
In addition, to selling its common stock under this prospectus, the
selling security holder may:
o Transfer its common stock in other ways not involving market
makers or established trading markets, including by gift,
distribution, or other transfer; or
o Sell its common stock under Rule 144 of the Securities Act, if
the transaction meets the requirements of Rule 144.
We will amend or supplement this prospectus if required under the
Securities Act.
LEGAL MATTERS
Ballard Spahr Andrews & Ingersoll, LLP, will pass upon the validity of
common stock offered under this prospectus.
EXPERTS
The financial statements and schedules as of and for the years ending
December 31, 1999 and 1998, incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report dated April
14, 2000 with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The financial statements of Greka Energy Corporation incorporated by
reference in this prospectus to the extent and for the periods indicated in
their reports, have been audited by Bateman & Co., Inc., P.C., independent
public accountants, and are included herein in reliance upon the authority of
said firms as experts in giving said reports.
13
<PAGE> 16
The information incorporated by reference into this prospectus
regarding our total proved reserves of oil and gas was based on reports prepared
by Netherland, Sewell & Associates, Inc., independent engineers. Our reserve
estimates are incorporated by reference into this prospectus in reliance upon
the authority of that firm as experts with respect to the matters covered by
their reports and the giving of their reports to us.
SECURITIES AND EXCHANGE COMMISSION POSITION ON CERTAIN INDEMNIFICATION
The Colorado Business Corporation Act provides for indemnification by a
corporation of costs incurred by directors, employees, and agents in connection
with an action suit, or proceeding brought by reason of their position as a
director, employee, or agent. The person being indemnified must have acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation.
Our Articles of Incorporation obligate us to indemnify our directors
and officers to the fullest extent permitted under Colorado law.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling us pursuant
to the foregoing provisions, we have been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
14
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses of the offering, all of which are to be borne by the
Registrant, are as follows:
<TABLE>
<S> <C>
Total Registration Fee Under Securities Act of 1933 $ 1,988
Printing and Engraving 5,000*
Accounting Fees and Expenses 7,000*
Legal Fees and Expenses 15,000*
Blue Sky Fees and Expenses (including related legal fees) 1,000*
Transfer Agent Fees 2,000*
Miscellaneous 1,000*
----------
Total $ 32,988
==========
</TABLE>
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation eliminate the personal
liability of directors to the Registrant or its shareholders for monetary
damages for breach of fiduciary duty to the extent permitted by Colorado law.
The Registrant's Articles of Incorporation and By-Laws provide that the
Registrant shall indemnify its officers and directors to the extent permitted by
Colorado law, which authorizes a corporation to indemnify directors, officers,
employees or agents of the corporation in non-derivative suits if such party
acted in good faith and in a manner such party reasonably believed to be in or
not opposed to the best interest of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The Colorado Business Corporation Act further provides
that indemnification shall be provided if the party in question is successful on
the merits or otherwise.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Form S-3 Registration
Statement pursuant to Item 601 of Regulation S-K or incorporated by reference to
other filings:
EXHIBIT
NUMBER DESCRIPTION
4.1 Rights Agreement dated November 3, 1999 (incorporated by
reference from Exhibit 10.4 of the Registrant's Form 10-Q for
the quarter ended September 30, 1999).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP concerning
the legality of the common stock offered hereby.*
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
Exhibit 5.1 to this registration statement).*
23.2 Consent of Arthur Andersen LLP, independent public
accountants.*
23.3 Consent of Bateman & Co., Inc., P.C., independent certified
public accountants.*
23.4 Consent of Netherland, Sewell & Associates, Inc.*
99.1 Settlement Agreement and Release dated August 17, 2000
(incorporated by reference from Exhibit 10.8 of the
Registrant's Registration Statement on Form S-2 filed on
October 6, 2000).
* Filed herewith.
15
<PAGE> 18
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
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 director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned Registrant hereby undertakes:
(1) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) To file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(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 thereto) that, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) to include any additional or changed material information on the
plan of distribution.
(5) 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 Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the securities
covered hereby and the offering of such securities at that time shall
be deemed to be the initial bonafide offering thereof.
16
<PAGE> 19
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, on the 26th day of
October 2000.
GREKA ENERGY CORPORATION
By: /s/ RANDEEP S. GREWAL
-------------------------------------
Randeep S. Grewal, Chief Executive
Officer and Chairman of the Board of
Directors
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 stated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ RANDEEP S. GREWAL Chairman of the Board of October 26, 2000
------------------------------------------ Directors and Chief Executive
Randeep S. Grewal Officer (Principal Executive
Officer and Financial Officer and
Accounting Officer)
/s/ DR. JAN F. HOLTROP Director October 26, 2000
-----------------------------------------
Dr. Jan F. Holtrop
/s/ KEN MILLER Director October 26, 2000
-----------------------------------------
Ken Miller
/s/ GEORGE G. ANDREWS Director October 26, 2000
-----------------------------------------
George G. Andrews
/s/ DAI VAUGHAN Director October 26, 2000
------------------------------------------
Dai Vaughan
</TABLE>
<PAGE> 20
GREKA ENERGY CORPORATION
FORM S-3 REGISTRATION STATEMENT
The following Exhibits are filed as part of the Registrant's Form S-3
Registration Statement pursuant to Item 601 of Regulation S-K.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.1 Rights Agreement dated November 3, 1999 (incorporated by
reference from Exhibit 10.4 of the Registrant's Form 10-Q for
the quarter ended September 30, 1999).
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP concerning
the legality of the common stock offered hereby.*
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
Exhibit 5.1 to this registration statement).*
23.2 Consent of Arthur Andersen LLP, independent public
accountants.*
23.3 Consent of Bateman & Co., Inc., P.C., independent certified
public accountants.*
23.4 Consent of Netherland, Sewell & Associates, Inc.*
99.1 Settlement Agreement and Release, dated August 17, 2000
(incorporated by reference from Exhibit 10.8 of the
Registrant's Registration Statement on Form S-2 filed on
October 6, 2000).
</TABLE>
* Filed herewith.
