As filed with the Securities and Exchange Commission, February10, 2000
Securities Act File No. 333-78673; Exchange Act File No. 0-20760
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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GREKA ENERGY CORPORATION
-------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1091986
- ------------------------------- -------------
(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.[ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered (1) Share(2) Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, no par value held by
Selling Security Holders 157,622 Shares $ 7.375 $ 1,162,462 $323 (3)
- --------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value held by a
Selling Security Holder 30,000 Shares $11.0625 $ 331,875 $ 88
-------------- ----
187,622 $1,494,337 $411
===============================================================================================================================
</TABLE>
(1) This registration statement covers an additional indeterminate number of
shares of our common stock which may be issued in accordance with Rule 416.
(2) 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 SmallCap Market on May 11, 1999 were used for the estimate with
respect to the 157,622 shares and by the Nasdaq National Market on February
3, 2000 with respect to the 30,000 shares.
(3) Previously paid.
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>
PROSPECTUS
Greka Energy Corporation
187,622 Shares of Common Stock
The shares of our common stock covered by this prospectus are being
sold by the security holders listed under the heading "Selling Security
Holders." Those selling security holders previously received the 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 holders.
Our common stock is traded in the Nasdaq National Market under the
trading symbol "GRKA." The closing sales price of our common stock was $11.25 on
February 3, 2000.
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 February ___, 2000
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TABLE OF CONTENTS
Page
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About this Prospectus 2
Information Made Available to You 2
Incorporation of Certain Documents by Reference 3
Prospectus Summary 4
Risk Factors 6
Use of Proceeds 12
Selling Security Holders 12
Plan of Distribution 12
Legal Matters 14
Experts 14
Securities And Exchange Commission Position
on Certain Indemnification 14
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 holders are 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:
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
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 CERTAIN 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-KSB and all amendments thereto for the
year ended December 31, 1998.
2. Our quarterly reports on Form 10-Q for the quarters ended March 31,
1999, June 30, 1999 and September 30, 1999.
3. Our current reports on Form 8-K and all amendments thereto reporting
events dated each of February 18, 1999, March 15, 1999 and June 30, 1999.
4. Our proxy statement for our annual meeting of shareholders held
December 22, 1999.
5. The joint proxy statement for our and Saba Petroleum Company's
special meetings of shareholders held March 19, 1999.
6. 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.
About Us
We are an independent integrated company committed to creating
shareholder value by capitalizing on consistent cash flow hedged from oil price
fluctuation within integrated operations, exploiting exploration and production
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. We have oil and gas production, exploration and
development activities in North America and the Far East, with primary areas of
activity in Alberta, California, Louisiana, Texas, New Mexico, Indonesia and
China. In addition, we own and operate an asphalt refinery in California.
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 year 2000 issues,
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 availability 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.
The Offering
Shares of common stock outstanding prior to this offering 4,366,122
Shares of common stock offered by this prospectus 187,622
Nasdaq National Market symbol for our common stock GRKA
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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 have incurred operating losses and we may incur losses in the future.
We incurred losses for the years ended December 31, 1998 and 1997. Saba
incurred losses for the year ended December 31, 1998. We may incur continued
losses for the future even though we had net income during the nine months ended
September 30, 1999. In addition, 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 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 generate sufficient revenues to remain profitable.
We may not be able to successfully integrate our business operations with Saba.
The consolidation of functions and integration of departments, systems
and procedures of Saba and us present significant management challenges and
require special attention. We cannot assure you that such actions will be
successfully accomplished as rapidly as currently expected or that the combined
operations of the companies will realize any of the anticipated benefits of our
acquisition of Saba. We cannot assure you that any benefits will result from our
proprietary horizontal drilling technology being used on our properties or that
other synergies will result from the combination of the business operations of
the two companies.
We have substantial capital requirements.
We make, and will continue to make, substantial capital expenditures
for our operations. We have financed these expenditures primarily from private
placements of our common stock and from debt financing. 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 be successful.
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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.
Some of our oil and gas properties have significant environmental contamination
risks.
We have environmental risks associated with one of our mineral
properties in California.
In 1993, we acquired a producing mineral interest in California from a
major oil company. At the time of acquisition, our 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 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 not complete, an accurate estimate of cost cannot be made.
We have environmental risks associated with one of our oil and gas
properties in California.
In 1995, we 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 we assume the obligation to abandon any
wells that we did not return to production, irrespective of whether certain
consents of third parties necessary to transfer the property to us were
obtained. Management believes we have no obligation to remediate this property
because it believes the seller did not give us any consideration to enter into
the contract for the property. 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, an accurate estimate of cost cannot be made.
We have environmental risks associated with our asphalt refinery.
We own an asphalt refinery in Santa Maria, California, with which
significant environmental remediation obligations are associated. We believe the
party who sold the asphalt refinery to Saba is responsible for all environmental
obligations that arose during and as a result of its operations of the refinery
prior to the acquisition by Saba. A determination as to the extent of such
remediation is ongoing.
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.
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Our foreign operations have currency exchange and asset repatriation risks.
We have producing properties in Canada, are undertaking exploration
operations in Indonesia and planning exploration operations in 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 renegotiation, and
o changes in laws resulting from governmental changes.
In addition, many licenses and agreements with foreign governments are
for a fixed term or may be held only by continuous production of oil and gas
under the license or agreement in reasonably commercial quantities. 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.
Our quarterly results may fluctuate due to volatility of asphalt and 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, 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.
Much of our domestic production is heavy, low gravity, viscous crude
oil from the Central Coast Fields. Often these crudes contain significant
amounts of sulfur and metals, which make it undesirable feedstock for most
refineries. In times of excess supply of competitive crudes and low producer
prices, these crudes are often the first crudes rejected by California crude
purchasers. This means that the demand and price paid for much of our production
from the Central Coast Fields can vary significantly.
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The demand for our asphalt production is seasonal and may be adversely
affected due to bad weather conditions. Significant declines in the demand for
our asphalt production would adversely affect our revenues, operating income and
borrowing capacity.
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 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:
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:
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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 its 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.
Future reductions in prices below those prevailing at December 31, 1998 would
result in the estimated quantities and present values of reserves being reduced.
We face substantial operating hazards and uninsured risks.
Our 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.
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.
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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.
We may, under the Nasdaq National Market listing requirements, 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. Any such issuances could be used as a method
of discouraging, delaying or preventing a change in control of us or could
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 and do not anticipate payment of any dividends for the foreseeable future.
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 analysts' earnings estimates,
o changes in securities analysts' earnings estimates,
o announcements of technological innovations by us or our competitors,
o general conditions in the asphalt and 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.
Greka shareholder rights plan may make it more difficult for a third party to
acquire Greka.
In November 1999 the Greka board of directors adopted a shareholder
rights plan. The plan makes it more difficult for a third party to acquire
control of Greka without approval of the board of directors, even if the
acquisition would be at a premium to the current market price of Greka common
stock. For example, if the Greka board of directors decides in accordance with
its fiduciary obligations that the terms of a potential acquisition do not
reflect the long term value of Greka, under the plan the board of directors
could allow the holder of each outstanding share of Greka common stock other
than those held by the potential acquirer to purchase one additional share of
Greka common stock for an initial exercise price of $60 per share. This
prospective dilution to a potential acquirer would make the acquisition
impracticable unless the terms were improved to the satisfaction of the board of
directors.
RECENT DEVELOPMENTS
The following recent developments have occurred with respect to
litigation matters in which we are involved.
RGC International Investors, LDC v. GREKA Energy Corporation, Saba
Petroleum Company, Randeep S. Grewal, William N. Hagler, Alex S. Cathcart, Dr.
Jan F. Holtrop, and Dr. Charles A. Kohlhaas (C.A. No. 17674NC, Chancery Court of
the State of Delaware, Castle County). In December 1999, RGC filed an action
against us, our subsidiary, Saba, and the former directors of Saba alleging
that, as a preferred stockholder of Saba, RGC had been mistreated in our
acquisition of Saba in March 1999. RGC claims that it is entitled to equitable,
monetary and declaratory relief regarding issues related to the Saba
acquisition. While we and the other named defendants plan to vigorously defend
all claims asserted by RGC and to aggressively pursue all counter and third
party claims, the litigation is in its preliminary, pre-discovery stages.
Sabacol, Inc. v. Omimex Resources, Inc., Omimex de Colombia, Ltd., and
Omimex International Corporation dba Omimex Petroleum, Inc. (C.A. No. BC224339,
Superior Court of State of California, Los Angeles County). In February 2000, a
wholly-owned subsidiary of ours filed an action against Omimex Resources, Inc.
and its subsidiaries for damages and a judgment declaring our right to rescind
the sale of our Colombian assets or to order Omimex, the purchaser of the
Colombian assets, to perform under the terms of the agreement. Our lawsuit
followed the anticipatory breach of the agreement by Omimex when Omimex stated
in its legal petition (Omimex Resources, Inc. v. Greka Energy Corporation and
Sabacol, Inc., Cause No. 06718159500, 67th Judicial District Court of Tarrant
County, Texas) that it had no intention of performing its contractual
obligations required under the terms of the asset sale agreement entered into in
June 1999. While we plan to aggressively pursue this action, we further plan to
vigorously defend all claims asserted by Omimex. The litigation is in its
preliminary, pre- discovery stages.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock by the selling security holders.
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SELLING SECURITY HOLDERS
The following table shows for the selling security holders, the
following information:
o the number shares of common stock beneficially owned by them as of
February 3, 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 Number of Shares
of Common Stock Number of of Common Stock Percent of Class
Beneficially shares of Beneficially Beneficially
Owned Before the Common Stock Owned After the Owned
Name Offering to be Sold Offering After the Offering
---- -------- ---------- -------- ------------------
<S> <C> <C> <C> <C>
Pembrooke Holdings 16,736 16,736 0 0
Corporation
International Publishing 416,979 140,886 276,093 6.3 %
Holding s.a.
Randeep S. Grewal (1) 360,000 30,000 330,000 7.1%
</TABLE>
(1) Mr. Grewal is our Chief Executive Officer. The number of shares of
our common stock shown as being beneficially owned by Mr. Grewal includes
options currently exercisable or exercisable within the next 60 days to acquire
260,000 shares of our common stock and 100,000 shares of our common stock held
individually by Mr. Grewal.
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 holders' shares after the date of this prospectus. We are
paying the costs, expenses and fees of registering the common stock, but the
selling security holders will pay any underwriting or brokerage commissions and
similar selling expenses relating to the sale of the shares of common stock.
The selling security holders 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 holders
determine from time to time. The selling security holders may sell from time to
time some or all of their common stock in one or more transactions (which may
involve block transactions):
o the Nasdaq National Market or on such other market on which the
common stock may from time to time be trading;
o in privately negotiated transactions;
o short sales;
o in ordinary brokers' transactions;
o in transactions involving cross or block trades or otherwise;
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
o in any combination of the selling options described in this
prospectus, or by any other legally available means.
The selling security holders 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 holders 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 holders 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 holders.
In their selling activities, the selling security holders 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 holders 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 holders 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.
13
<PAGE>
The selling security holders 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
holders 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 holders, 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 holders may:
o Transfer their common stock in other ways not involving market
makers or established trading markets, including by gift,
distribution, or other transfer; or
o Sell their 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 by this prospectus.
EXPERTS
The financial statements of Greka Energy Corporation and Saba Petroleum
Company incorporated by reference in this prospectus to the extent and for the
periods indicated in their reports, have been audited by Arthur Andersen LLP,
Bateman & Co., Inc., P.C., and PricewaterhouseCoopers LLP, independent public
accountants, and are included herein in reliance upon the authority of said
firms as experts in giving said reports.
The information incorporated by reference into this prospectus
regarding our total proved reserves of oil and gas was based on reports prepared
by the following independent engineers: Netherland, Sewell & Associates, Inc.
The information incorporated by reference into this prospectus regarding Saba's
total proved reserves of oil and gas was based on reports prepared by the
following independent engineers: Netherland, Sewell & Associates, Inc. and
Sproule Associates Limited. Our reserve estimates are incorporated by reference
into this prospectus in reliance upon the authority of said persons as experts
with respect to the matters covered by their reports and the giving of their
reports to us and Saba.
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.
14
<PAGE>
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.
15
<PAGE>
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:
Total Registration Fee Under Securities Act of 1933 $ 411
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 1,589*
------
Total 32,000
======
*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.*
II-1
<PAGE>
23.4 Consent of PricewaterhouseCoopers LLP, independent certified
public accountants.*
23.5 Consent of Netherland, Sewell & Associates, Inc.**
23.6 Consent of Sproule Associates Limited.**
- --------------------
* Filed herewith.
** Previously filed.
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.
II-2
<PAGE>
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, in the City of New
York, State of New York on the 9th day of February 2000.
GREKA ENERGY CORPORATION
By: /s/ Randeep S. Grewal
--------------------------
Randeep S. Grewal, Chief Executive
Officer and Chairman of the Board of Directors
(Principal Executive Officer and Financial Officer)
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.
Signature Title Date
- --------- ----- ----
/s/ Randeep S. Grewal Chairman of the Board of February 9, 2000
- --------------------------
Randeep S. Grewal Directors
/s/ Dr. Jan F. Holtrop Director February 9, 2000
- --------------------------
Dr. Jan F. Holtrop
/s/ Susan M. Whalen Director February 9, 2000
- --------------------------
Susan M. Whalen
/s/ George G. Andrews Director February 9, 2000
- --------------------------
George G. Andrews
/s/ Dai Vaughan Director February 9, 2000
- --------------------------
Dai Vaughan
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
GREKA ENERGY CORPORATION
------------------------
(Name of Company as specified in charter)
<PAGE>
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.
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 PricewaterhouseCoopers LLP, independent certified
public accountants.*
23.5 Consent of Netherland, Sewell & Associates, Inc.**
23.6 Consent of Sproule Associates Limited.**
- --------------------
* Filed herewith.
** Previously filed.
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our reports dated April 15, 1999 (except for the
matter discussed in Note 14 for which the date is September 16, 1999) included
in the amended Form 10-KSB of Greka Energy Corporation for the year ended
December 31, 1998 in this registration statement on Form S-3 and to all
references to our firm included or made a part of in this registration
statement.
/s/ Arthur Andersen LLP
New York, New York
February 9, 2000
Exhibit 23.3
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion in this Registration Statement of Greka
Energy Corporation on Form S-3 (File No. 333-78673), and any amendment thereto
pursuant to Rule 462 of the Securities Act of 1933, as amended, of our report
dated April 14, 1998, on our audits of the consolidated financial statements of
Greka Energy Corporation, formerly known as Petro Union, Inc. doing business as
Horizontal Ventures, Inc., as of December 31, 1997 and for each of the two years
in the period ended December 31, 1997. We also consent to the reference to our
firm under the caption "Experts" in this Registration Statement and any
amendment thereto pursuant to Rule 462 of the Securities Act.
/s/ Bateman & Co., Inc. P.C.
Houston, Texas
February 8, 2000
Exhibit 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 (File No. 333- 78673), of our report, which contained an
explanatory paragraph regarding Saba Petroleum Company's ability to continue as
a going concern, dated April 15, 1998, relating to the financial statements of
Saba Petroleum Company which appears in the Greka Energy Corporation's Annual
Report on Form 10-KSB for the year ended December 31, 1998. We also consent to
the reference to us under the heading "Experts" in such Registration Statement
and any amendment thereto pursuant to Rule 462 of the Securities Act.
/s/ PricewaterhouseCoopers
Los Angeles, California
February 9, 2000
