U.S. Securities and Exchange Commission
                          Washington, D.C.  20549

                               Form 10-KSB

                               (Mark One)

          [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                    SECURITIES EXCHANGE ACT OF 1934

               For the fiscal year ended December 31, 1998

          [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE 
                      SECURITIES EXCHANGE ACT OF 1934
       For the transition period from ____________ to _______________

                   Commission File No.:  0-20760

                        GREKA Energy Corporation 
             (Name of small business issuer in its charter)

      Colorado                                  84-1091986
(State or other jurisdiction              (I.R.S. Employer  
 incorporation or organization)           Identification Number)

630 Fifth Avenue, Suite 1501  
New York, New York                                             10111
(Address of principal executive offices)                     (Zip Code)

             Issuer's telephone number: (212) 218-4680

    Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:
                       No Par Value Common Stock.

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days. Yes [X]  No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

The issuer's revenues for 1998 were $145,813.

The aggregate market value of 2,472,768 shares of common stock held by non-
affiliates of the issuer, based on the closing bid price of the common stock
on April 14, 1999 of $8.00 as reported on the Nasdaq SmallCap Market System,
was $19,782,144.

                   (ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PAST FIVE YEARS)

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.  Yes [X]  No [ ]

               (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

As of April 14, 1999, the issuer had 4,194,969 shares of common stock
outstanding.

                DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Format (check one).  

Yes [ ]    No [X]


                              TABLE OF CONTENTS
                                                                  Page
PART I
   Item 1.  Description of the Business . . . . . . . . . .  . .    1
   Item 2.  Description of Property . . . . . . . . . . . . .  .
   Item 3.  Legal Proceedings .. . . . . . . . . . . . . . . . . 
   Item 4.  Submission of Matters to a Vote of Security Holders . 

PART II
   Item 5.  Market for Common Equity and Related Stockholder
                 Matters . . . . . . . . . . . . . . . . . . . .. 
   Item 6.  Management's Discussion and Analysis . . . . . . . .. 
   Item 7.  Financial Statements . . . . . . . . . . . . . . . ..
   Item 8.  Changes In and Disagreements With Accountants on
                  Accounting and Financial Disclosure . . . . . .

PART III
   Item 9.  Directors, Executive Officers, Promoters and Control
                  Persons; Compliance With Section 16(a) of the
                  Exchange Act . . . . . .. . . . . . . . . . . 
   Item 10. Executive Compensation . . . . . . . . . . . . . . . . 
   Item 11. Security Ownership of Certain Beneficial Owners and
                  Management . . . . . . . . . . . . . . . . . . .
   Item 12. Certain Relationships and Related Transactions . . . . 
   Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . 
 
Index to Consolidated Financial Statements and Schedules. . . .  .  F-1

SEC Definitions

     The terms below are used in this document and have specific SEC
definitions as follows:

     Proved oil and gas reserves. Proved oil and gas reserves are the
estimated quantities of crude oil, natural gas liquids which geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions, i.e., prices and costs as of the date the estimate is made. 
Prices include consideration of changes in existing prices provided only by
contractual arrangements, but not on escalations based upon future conditions. 

     Proved developed oil and gas reserves. Proved oil and gas reserves are
reserves that can be expected to be recovered through existing wells with
existing equipment and operating methods. Additional oil and gas expected to
be obtained through the application of fluid injection or other improved
recovery techniques for implementing the natural forces and mechanisms of
primary recovery should be included as "proved developed reserves" only after
testing by a pilot project or after the operation of an installed program has
confirmed through production response that increased recovery will be
achieved.

     Proved undeveloped reserves. Proved undeveloped oil and gas reserves are
reserves that are expected to be recovered from new wells on undrilled
acreage, or from existing wells where a relatively major expenditure is
required for recompletion. Reserves on undrilled acreage shall be limited to
those drilling units offsetting productive units that are reasonably certain
of production when drilled. Proved reserves for other undrilled units can be
claimed only where it can be demonstrated with certainty that there is
continuity of production from the existing productive formation. Under no
circumstances should estimates for proved undeveloped reserves be attributable
to any acreage for which an application of fluid injection or other improved
recovery technique is contemplated, unless such techniques have been proved
effective by actual tests in the area and in the same reservoir.   


                                 PART I

Cautionary Information About Forward-Looking Statements

     This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act that
include, among others, statements concerning:

     *   the benefits expected to result from GREKA Energy's recent
         acquisition of Saba Petroleum Company discussed below, including
 
     *   synergies in the form of increased revenues,

     *   decreased expenses and avoided expenses and expenditures that are
         expected to be realized by GREKA Energy and Saba as a result of the
         transaction, and

     *   the complementary nature of GREKA Energy's horizontal drilling
         technology and certain Saba oil reserves, and 

     *   other statements of:

     *   expectations,

     *   anticipations,

     *   beliefs, 

     *   estimations,

     *   projections, and

     *   other similar matters that are not historical facts, including such
         matters as:

     *   future capital,

     *   development and exploration expenditures (including the amount and
         nature thereof),

     *   drilling of wells, reserve estimates(including  estimates of future
         net revenues associated with such reserves and the present value of
         such future net revenues),

     *   future production of oil and gas,

     *   repayment of debt,

     *   business strategies, and

     *   expansion and growth of business operations. 

     These statements are based on certain assumptions and analyses made by
the management of GREKA Energy in light of:

     *   past experience and perception of:

     *   historical trends,

     *   current conditions,

     *   expected future developments, and

     *   other factors that the management of GREKA Energy believes are
         appropriate under the circumstances.

     GREKA Energy cautions the reader that these forward-looking statements
are subject to risks and uncertainties, including those associated with:

     *   the financial environment,

     *   the regulatory environment, and

     *   trend projections,

that could cause actual events or results to differ materially from those
expressed or implied by the statements.  Such risks and uncertainties include 
those risks and uncertainties identified in the Description of the Business
and Management's Discussion and Analysis sections of this document.

     Significant factors that could prevent GREKA Energy from achieving its
stated goals include:

     *   the failure by GREKA Energy to integrate the respective operations of
         GREKA Energy and Saba or to achieve the synergies expected from the
         acquisition of Saba,

     *   the failure by GREKA Energy to obtain refinancing agreements or
         arrange for the payment of Saba obligations, 

     *   declines in the market prices for oil and gas, and

     *   adverse changes in the regulatory environment affecting GREKA Energy.

     In addition, as discussed in Note 1 of the Notes to Consolidated
Financial Statements of GREKA Energy contained elsewhere in this document,
there currently is substantial doubt about GREKA Energy's ability to continue
as a going concern.

     The cautionary statements contained or referred to in this document
should be considered in connection with any subsequent written or oral
forward-looking statements that may be issued by GREKA Energy or persons 
acting on its or their behalf.  GREKA Energy undertakes no obligation to
release publicly any revisions to any forward-looking  statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.


Item 1.  Description of Business.

Overview of GREKA Energy Corporation

     GREKA Energy Corporation, a Colorado corporation formerly known as Petro
Union, Inc. and then Horizontal Ventures, Inc., is an independent energy
company engaged primarily in the business of exploiting proven producing oil
and gas reservoirs by utilizing a low cost proprietary short radius horizontal
drilling technology to increase production rates.  The horizontal drilling
technology was developed and patented by Amoco and is licensed by Amoco to
GREKA Energy.

     During 1997 and 1998, GREKA Energy was operationally dormant.  During
this period management focused substantially all of its efforts on:

     *   the reorganization and emergence by Petro Union, Inc. from
         bankruptcy, which was concluded on March 26 1998, and which involved
         the 1997 acquisition of Horizontal Ventures, Inc., an Oklahoma
         corporation and also a licensee of the Amoco horizontal drilling
         technology,  

     *   raising funds to position GREKA Energy to capitalize on its
         horizontal drilling technology, which resulted in new equity
         financing of approximately $6 million during 1997, and

     *   the acquisition of an operating oil and gas company with substantial
         reserves suited to exploitation by GREKA Energy's horizontal drilling
         technology, which culminated with the acquisition of Saba Petroleum
         Company effective March 24, 1999.

Business Strategy

     GREKA Energy is an integrated company committed to creating shareholder
value by capitalizing on consistent cash flow hedged from oil price
fluctuation within integrated operations, exploiting E&P opportunities and
penetrating new niche markets utilizing proprietary technology with emphasis
on short radius horizontal drilling technology patented by BP Amoco.  GREKA
Energy has oil and gas production and development activities in North and
South America and the Far East, with primary areas of activity in Alberta,
California, Louisiana, Texas, New Mexico, Colombia, Indonesia and China.

     Upon the closing of the acquisition of Saba, GREKA Energy commenced
focusing this strategy on the improvement of production from Saba-owned oil
properties in California.  This production is intended to be used as feedstock
for the Saba asphalt refinery in Santa Maria, California in order to increase
the productivity of the refinery as part of GREKA Energy's hedge strategy
against the volatility of oil prices.

Integrated Hedged Operations

     Hedged operations of GREKA Energy are planned to focus on the integration
of its California assets, including an asphalt refinery and interest in heavy
oil fields located in the Santa Maria Valley.  To date, Saba has only been
able to supply to the asphalt refinery 20% of its heavy oil requirements.  The
hedged operations are targeted to capitalize on the stable asphalt market in
California by providing the feedstock (heavy oil) into the refinery at cost. 
The planned integration of the refinery with the interests in the heavy oil
producing fields should provide a stable hedge to GREKA Energy on each equity
barrel.  GREKA Energy's strategy in these integrated assets is two-fold:

       1.   As the prices of heavy oil are at a historic low in the Santa
            Maria Valley, GREKA Energy intends to aggressively proceed with
            acquisitions that enhance the long-term feedstock supply to the
            refinery.  These low oil prices add direct value to GREKA Energy's
            profitability.

       2.   GREKA Energy intends to implement the proprietary Amoco Horizontal
            Drilling Technology to cost-efficiently boost production rates
            from the 150 potential drilling locations identified in the Santa
            Maria Valley.

     The two actions are targeted to increase the equity barrel throughput
into the refinery from the current 1,750 barrels per day to 10,000 barrels per
day by the year 2001.  It is anticipated that the profitability from these
integrated operations will not be affected by volatile oil prices.  It is also
anticipated that, by using the equity barrels to supply the refinery, working
capital requirements should be lower and cash flow should be enhanced.  The
continued stability of the price of asphalt, coupled with reduced costs for
processing and lifting, should create a substantial value for GREKA Energy's
shareholders.

Exploration & Production

     GREKA Energy plans to pursue domestic and international exploration
projects that are synergistic with GREKA Energy's Amoco Horizontal Drilling
Technology.

Amoco Horizontal Drilling Technology

     GREKA Energy plans to continuously pursue new, emerging opportunities in
the energy business to identify and evaluate niche markets for its proprietary
knowledge.  Two specific niche targets are coal bed methane projects and gas
storage.  These opportunities should provide significant upside from the use
of short horizontal laterals.

Acquisition of Saba Petroleum Company

     During the fourth quarter of 1998 and the first quarter of 1999, GREKA
Energy entered into the following transactions culminating in the acquisition
of Saba Petroleum Company effective March 24, 1999:

     On October 6, 1998, GREKA Energy entered into a Preferred Stock Transfer
Agreement with RGC International Investors, LDC, by which GREKA Energy
acquired on October 6, 1998 690 shares of the 8,000 shares of issued and
outstanding Series A Convertible Preferred Stock of Saba held by RGC in
exchange for cash in the amount of $750,000, of which $500,000 was borrowed 
from  International  Publishing  Holding s.a., then a significant shareholder
of GREKA Energy.  GREKA Energy executed a Promissory Note to repay the 
$500,000 to IPH without interest on or before December 31, 1998, which
maturity date subsequently was extended to May 31, 1999, in the form of cash
or shares of Saba Series A Preferred Stock held by GREKA Energy.  The
Promissory Note is secured by a pledge of two-thirds  of the Saba Series A
Preferred Stock held by GREKA Energy.  Under the Preferred Stock Transfer
Agreement, GREKA Energy was granted the exclusive right until November 6, 1998
to acquire from RGC up to an additional 6,310 shares of Saba Series A 
Preferred Stock held by RGC in exchange for cash in the amount of
approximately $6,859,000, with such exclusive right subject to an extension 
for an additional thirty days by GREKA Energy's payment of $500,000, which is 
nonrefundable.  On November 6, 1998, GREKA Energy paid $500,000 to RGC to
extend the term of the exclusive right until December 6, 1998.  GREKA Energy
did not exercise its right.

     On October 8, 1998 GREKA Energy and Saba entered into a Common Stock
Purchase Agreement by which Saba agreed to issue to GREKA Energy an aggregate 
of 2,500,000 shares of Saba common stock as follows:

     *   333,333 shares of Saba common stock in exchange for $1,000,000 in
         cash by November 6, 1998, and

     *   2,166,667 shares of Saba common stock in exchange for $6,500,000 in
         cash by December 4, 1998.

     IPH in conjunction with GREKA Energy made open market purchases of just
around 5% of the issued and outstanding  shares of Saba common stock.  By an
Option Agreement dated July 22, 1998 between GREKA Energy and IPH, GREKA
Energy acquired a call option to purchase the approximately 518,200 shares of
Saba common stock purchased by IPH at an exercise price equal to the cost to
IPH of acquiring such shares plus twenty percent, which was approximately 
$1,020,000.  Subsequently, GREKA Energy during October and early November 1998
directly acquired 80,000 shares of Saba common stock in open market 
purchases at an aggregate cost of approximately $70,130.

     On November 6, 1998, GREKA Energy paid Saba $1,000,000 for 333,333 shares
of Saba common stock under the Common stock Purchase Agreement and $500,000 to
RGC to extend the term until  December 6, 1998 of GREKA Energy's  exclusive
right to acquire the Saba Series A Preferred Stock from RGC  pursuant to the
Preferred Stock Transfer  Agreement.  These  payments were financed by GREKA
Energy's issuance to IPH on November 4, 1998 of a Promissory Note payable in
the amount of $1,500,000, with 6% interest, by December 31, 1998.  This note
has now been extended to May 31, 1999.  The Promissory Note is secured by
GREKA Energy's pledge of all of the issued and outstanding shares of capital
stock of HVI Cat Canyon, Inc., a wholly owned subsidiary of GREKA Energy.

     On November 23, 1998, as amended at closing on December 18, 1998 GREKA
Energy entered into a Stock Exchange Agreement with Saba Acquisub, Inc., which
owned 2,976,765 shares of Saba common stock.  Saba Acquisub was controlled by
Capco Resources Ltd. which is controlled by Ilyas Chaudhary, a former director
and executive officer of Saba.  Under the Stock Exchange Agreement, GREKA
Energy acquired the Saba common stock owned by Saba Acquisub in exchange for
the issuance by GREKA Energy to the shareholder of Saba Acquisub an aggregate
of 1,340,000 shares of GREKA Energy common stock and Saba Acquisub was merged
with and into GREKA Energy.

     On December 18, 1998, GREKA Energy and Saba entered into an Agreement and
Plan of Merger, which was amended February 16, 1999, whereby GREKA Energy
would acquire all of the remaining shares of Saba common stock and the
shareholders of Saba other than GREKA Energy would receive shares of GREKA
Energy common stock based on a contemplated exchange ratio of one share of
GREKA Energy common stock for each six shares of Saba common stock.  On March
19, 1999, the shareholders of GREKA Energy and Saba approved the acquisition
transactions and on March 24, 1999 Saba became a wholly owned subsidiary of
GREKA Energy.  

     GREKA Energy believes that the acquisition of Saba represents a unique
opportunity to capitalize on Saba's substantial oil and gas properties which
are particularly suited to exploitation by GREKA Energy's horizontal drilling
technology.

     GREKA Energy believes that Saba's Cat Canyon Field in California is an
ideal field to apply horizontal drilling technology for the following reasons:

     *   Mature Fields/Extensive Data. Cat Canyon is a mature field,
         discovered in 1908, that provides numerous abandoned or
         semi-abandoned wells to re-enter, and extensive geological
         information from which to develop an exploitation plan without much
         additional cost;

     *   Hedge Against Oil Prices. Saba's Asphalt Refinery is fed by Saba's
         and GREKA Energy's Cat Canyon properties thus greatly reducing oil
         price risk from GREKA Energy's Cat Canyon development strategy. 
         Since 1996, asphalt sales prices from the Asphalt Refinery have
         varied between $16.09 and $18.41 per barrel, -- while oil prices have
         varied between $7.17 and $17.38 during the same period.  The primary
         objective will be to apply the proprietary cost effective horizontal
         drilling technology to create additional feedstock for the refinery
         and capitalize on the operational hedge per barrel.

     *   Heavy  Oil. Heavy oil, which is common to California fields, is
         typically more difficult to recover because much higher pressure
         differentials are necessary to force the oil up the well. Horizontal
         drilling allows more of the reservoir to be exposed and more oil to
         be recovered.  Furthermore, short radius horizontals allow the pump
         mechanism to be placed much closer to the reservoir resulting in
         substantial productivity;

     *   Abundance  of  Remaining  Reserves.  Because of the difficulty in
         recovering heavy oil from  reservoirs, only about 10% of the original
         oil has been recovered.  However, just a 1%  increase in the oil
         recovered from the field would yield large returns for GREKA Energy;
         and

     *   California Land Use Laws.  Amoco's technology does not require the
         use of a full-size drilling rig and the building of a drilling site,
         which can be made prohibitively expensive by California land use
         laws. Amoco's technology can be applied on a workover rig with no new
         drilling site, eliminating the requirement for a drilling permit. 
         The drilling permit process in California can take over six months 
         to complete while GREKA Energy's rework permits typically take four
         days.

     GREKA Energy owns an asphalt refinery in Santa Barbara County, California
that is fed by production from the central California region.  Generally, the
crude oil produced in these areas is of low gravity and is ideally suited as
feedstock for asphalt. Furthermore, asphalt prices have historically been less
volatile than feedstock prices, providing GREKA Energy with a hedge against
oil price movements.  This refinery was acquired from Conoco Inc. in 1994 and
Conoco agreed to perform certain remediation and other environmental
activities on portions of the refinery property through June, 1999.

     Throughput at the asphalt refinery has ranged between 2,000 to 4,500
barrels of oil per day while production capacity is approximately 10,000 Bopd.
Only approximately 1,750 Bopd of the throughput has come from GREKA Energy's
production.  GREKA Energy believes that the asphalt refinery's margins will
improve  significantly as it increases production from the Cat Canyon  field,
providing additional feedstock and spreading the fixed cost of the refinery
over more units produced. Furthermore, GREKA Energy intends to increase the
throughput to 10,000 Bopd by 2001.  GREKA Energy estimates that each 1,000
Bopd increase in equity throughput could yield approximately $2 million in
additional earnings before interest, taxes, depreciation and amortization
("EBITDA") annually.

     The asphalt refinery is currently  operated through a processing 
agreement with Crown Energy whereby Crown Energy markets the refined product
and maintains the inventory.  The majority of the day-to-day operations of the
asphalt refinery are managed by GREKA Energy employees.  Saba and Crown Energy
each receive approximately 50% of the net income from the asphalt refinery. 
This processing  agreement expires on April 30, 1999.

GREKA Energy's Strategy:

     *   Exploit and Produce Reserves in California. GREKA Energy intends to
         apply the short radius horizontal drilling technology to exploit and
         produce reserves to maximize  cash flow with minimal capital
         expenditures.  GREKA Energy intends to first apply the technology on
         the Cat Canyon field in California,

     *   Capitalize on the Asphalt Refinery to Increase Margins.  GREKA Energy
         intends to increase throughput at the asphalt refinery to take
         advantage of the oil price hedge provided by the asphalt refinery and
         the significant additional cash flow generated by utilizing its
         excess capacity.

     *   Divest Properties Not Consistent with Focus.  GREKA Energy owns
         substantial acreage and exploration concessions in Colombia,
         Indonesia, Louisiana and New Mexico.  GREKA Energy intends to sell or
         farm-out exploration concessions and properties where short radius
         drilling would not add significant value, and

     *   Penetrate New Niche Markets.  GREKA Energy intends to penetrate new
         niche markets in gas storage and coal bed methane where there is
         significant added value for its short radius drilling technology and
         is currently in discussions with companies.

Business of Saba Petroleum Company

     Saba Petroleum Company is an independent energy company engaged in the
acquisition, development and exploration of oil and gas properties in the
United States and internationally. Saba has grown primarily through the
acquisition and exploitation of producing properties in California, Louisiana
and Colombia. Saba has assembled a portfolio of over 200 potential development
drilling locations. 

     Saba currently depends on three material customers.  These customers are
Ecopetrol, Crown Energy and Omimex Resources, Inc. See the discussion
elsewhere in this document of the pending sale of Sabacol's assets.

     At December 31, 1998, Saba had estimated proved reserves of 17.7 MMBOE,
consisting of 13.9 MMBbls of oil and 22.99 Bcf of gas (3.8 MMBOE), with a PV-
10 value of $23.2 million. 

     Saba also owns an asphalt refinery in Santa Maria, California, where it
currently processes approximately 4,000 Bopd.

Recent Saba Developments

Substantial Doubt About Saba's Ability to Continue as a Going Concern

     Saba's independent public accountants have included in their audit report
for Saba's 1998 financial statements an explanatory paragraph which indicates
that there is substantial doubt as to Saba's ability to continue as a going
concern.  This is due to the fact that Saba's current assets may not be
sufficient to satisfy its current liabilities.  Saba has violated certain of
its debt covenants and has negative shareholders equity.  Management's plans
in this regard are discussed in Note 1 of the Notes to Consolidated Financial
Statements of Saba appearing elsewhere in this document.  GREKA Energy cannot
assure you that these plans will be successfully implemented.

Bankruptcy of Sabacol, Inc. and Contract for Sale of Sabacol's Assets

     On December 15, 1998, Saba announced that Sabacol, Inc., a wholly-owned 
subsidiary of Saba, filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code in the Central District of California on December 11,
1998.  Sabacol's assets, located solely in Colombia, consist of a 50% interest
in a 118-mile pipeline and varying interests in heavy oil producing
properties.  At the time of filing, Sabacol had a net book value of
approximately $5.3 million with liabilities of $4.6 million. For the year
ended December 31, 1998, the average daily production of Sabacol's  interest
in the Colombian properties was 2,256 Bopd and gross revenues were 
approximately $7.4 million.  Sabacol filed the  bankruptcy petition to protect
its asset base and to provide adequate time to develop a reorganization plan. 
A new management team was appointed for Sabacol to protect its assets and
develop an effective reorganization plan.  However, GREKA Energy cannot assure
you that a reorganization plan beneficial to Sabacol will be consummated. 
Neither GREKA Energy nor Saba were involved in the bankruptcy proceedings,
guaranteed any of the Sabacol debt, and Sabacol's creditors do not have any
right to proceed against GREKA Energy or Saba.  Therefore, the bankruptcy of
Sabacol is not expected to have any material adverse effect on GREKA Energy.

     On March 17, 1999, Sabacol entered into an agreement with Omimex, a
privately held oil and gas company which operates a substantial portion of
Saba's producing properties, whereby Sabacol is to sell to Omimex
substantially all of its assets in exchange for:

     *   the cancellation by Omimex of Saba Petroleum Company's $4.2 million
         promissory note to Omimex, along with approximately $206,000 in
         accrued interest, related to the loan under the terminated business
         combination agreement discussed below,
 
     *   the cancellation by Omimex of Sabacol's net indebtedness to Omimex 
         of approximately $2 million,

     *   the assumption or payment by Omimex of Sabacol's Colombian tax
         liability of approximately $2.3 million, and 

     *   certain Omimex oil and gas properties and related assets located 
         in California which are valued at approximately $1 million.
  
     The agreement provides that if the excess of the value of Sabacol oil and
gas reserves over the value of the Omimex reserves acquired by Sabacol is
greater as of January 1, 2000 than it was as of January 1, 1999, Sabacol will
be entitled to additional consideration.  If the increased value is $5 million
or less, Omimex will have the option of paying such amount to Sabacol in cash
or reassigning to Sabacol the 50% interest in the Velasquez-Galan pipeline in
Colombia to be sold by Sabacol to Omimex.  If the increase is greater than $5
million, Sabacol will have the option of repurchasing for approximately $12
million the assets sold to Omimex and reassigning to Omimex the California
assets to be purchased from Omimex.  If this option is not exercised, Omimex
will be obligated to either pay Sabacol $5 million in cash or reassign to
Sabacol the Velasquez-Galan pipeline.

     The sale is contingent upon approval by the bankruptcy court, and Sabacol
has filed a motion for an order by the court to approve the sale and upon
completion of the sale to dismiss Sabacol's bankruptcy proceeding.  A
bankruptcy court hearing regarding the approval of the sale has been scheduled
for April 23, 1999.

Loan from Omimex Under Terminated Business Combination Agreement

     As part of a terminated merger agreement between Omimex and Saba, Omimex
lent to Saba approximately $4.2 million.  The proceeds of this loan were used
to redeem $2 million of stated value of Saba's Series A Preferred Stock (for
approximately $2.15 million) and to pay $2 million on Saba's outstanding bank
indebtedness.  The loan by Omimex accrues interest at prime and was due 90
days after the termination of the merger agreement in August 1998.

     In compliance with procedures for securing the loan from Omimex, 
Sabacol's legal representative in Colombia executed, but did not present for
notarial inscription by a Colombian notary public, a public deed or deeds to
transfer to Omimex all of the right, title and interest of Sabacol in and to
the  Velasquez-Galan  pipeline and delivered the deed(s) to Bank One, Texas, 
N.A., which is acting as the escrow agent.  Sabacol also delivered to the 
escrow agent an irrevocable letter of authority authorizing the completion of
the execution of the deed(s) before a Colombian notary public.  The escrow
agent had been instructed, by terms of an escrow agreement entered into
between Sabacol, Omimex and Bank One, Texas, N.A., that in the event full 
payment of the Loan was delivered by December 14, 1998, then the escrow agent
shall have immediately delivered to Omimex the payment and to Sabacol the
deeds and the irrevocable letter of authority relating thereto for
cancellation.  In the event payment of the Loan in full was not delivered by
December 14, 1998, then the escrow agent shall have immediately delivered to
Omimex the deeds and the irrevocable letter of authority relating thereto.
Thereafter, Omimex shall deliver the deeds and the irrevocable letter of
authority to Omimex de Colombia, Ltd., a Delaware corporation and a wholly
owned subsidiary of Omimex, for completion of the execution of the deeds
before a Colombian notary public by Sabacol's legal representative.  Full
payment of the Loan was not delivered by December 14, 1998 to the escrow
agent. On December 11, 1998, Sabacol filed for protection of its assets under
Chapter 11 of the United States Bankruptcy Code.  The deeds and the 
irrevocable letter of authority relating thereto were not delivered to Omimex
on December 14, 1998 under the escrow agreement and the requirement to do so
has been stayed pursuant to the Sabacol's petition for bankruptcy.

Bank Indebtedness

     As indicated above, as part of the terminated merger agreement with
Omimex,  Omimex lent to Saba $4.2  million, of which $2 million was applied 
to  Saba's  existing bank indebtedness with Bank One, Texas, N.A.  The Bank
consented to the borrowing from Omimex described in the preceding section and
the application of the proceeds of the loan, including the redemption of $2
million stated value of Saba's Series A  Preferred  Stock.  As a result of
that payment and a payment of $300,000 which was made in May 1998 and 
continued to be payable each month thereafter by Saba, the Bank and Saba
entered into a written amendment to the existing loan agreement extending the 
maturities of all three short term facilities to July 31, 1998.  Approximately 
$4.5 million in principal amount of bank debt that matured for payment on July
31, 1998, has not been paid nor extended, and the borrowing base deficit of
$______ million on the revolving loan at December 31, 1998, has not been 
satisfied, either by providing additional collateral to the Bank or reducing
the principal balance that was outstanding at December 31, 1998.  Saba's
entire principal indebtedness to the Bank of $20.1 million was classified by
Saba as currently payable at December 31, 1998.  Additionally, Saba was not in
compliance with the loan agreement's financial covenants at December 31, 1998.
Saba and the Bank are in discussions to address such non-compliance.  There is
not any assurance that Saba will be successful in its discussions with the
Bank to address such non-compliance.

     In connection with various borrowings from Bank One, Ilyas Chaudhary, a
former director and executive officer of Saba, has guaranteed payment of
approximately $3 million of Saba's debt to Bank One.

Sale of Certain Assets

     Saba has negotiated, and continues to pursue, the sale of certain
producing oil and gas assets and real estate assets, the proceeds of which
have been and will continue to be applied to reduce bank indebtedness and
provide working capital.  Saba sold its interest in over 150 producing wells
in Michigan in July 1998 for a contract price of $3.7 million and two
producing wells in Alabama in September 1998 for a contract price of $800,000. 
In December 1998, Saba entered into a letter of intent with Capco Development, 
Inc. to sell all of the outstanding stock of its wholly-owned  subsidiary, 
Saba Energy of Texas, Inc., for a contract price of $5 million and a closing 
scheduled for December  31, 1999, subject to certain conditions and
adjustments.  At the closing, those properties of SETI that will be part of
the sale shall include certain interests of SETI located in Michigan, New
Mexico, Oklahoma, Texas, Utah, and Wyoming and excludes interests located in
Louisiana. 

Series A Convertible Preferred Stock

     On March 15, 1999, GREKA Energy entered into a term sheet with RGC
International Investors LDC, the holder of Saba's Series A Convertible
Preferred Stock, for RGC to exchange the balance of the preferred stock for a
secured convertible note to be negotiated and thereafter issued by GREKA
Energy to RGC.

GREKA Energy's Horizontal Drilling Technology

     Horizontal drilling has become widely accepted as a standard option for
exploiting oil & gas resources.  The principle advantage of horizontal 
drilling is that it results in a substantially greater surface area for
drainage, and thus extraction of the oil from the reservoir.  In industry
terms this is referred to as communicating zones of permeability.  The unique
method of reentering a well and horizontal drilling patented by Amoco and
licensed to GREKA Energy allows for turning while drilling, which can cause a
vertical well to be horizontal in as little as 25 feet. Thus this technology
provides considerable flexibility to the geologists and engineers in designing
their well plans around geological formation and reservoir constraints to
achieve maximum performance.  Furthermore, this technique facilitates
multi-laterals off an existing well bore, which avoids costly drilling of new
wells, and has considerable advantages in shallow reservoirs where the
traditional horizontal tools cannot be utilized due to their larger radius
requirements and related economics.

     Drilling horizontal laterals has the potential to:

     *   tap fresh oil by intersecting fractures, penetrating pay
         discontinuities and drain up-dip traps,

     *   correct production problems such as:

     *   water coning,

     *   gas coning, and

     *   excessive water cuts from hydraulic fractures which extend below the
         oil-water contact, and

     *   supplement enhanced secondary and tertiary oil recovery techniques.

     The most common method of drilling a curved borehole utilizes a mud-motor
to rotate the drill bit.  This is often too expensive to be economical for
re-entries in mature  fields with well bore casings less than 5 1/2 inches.  The
lack of a cost-effective method to increase production in mature wells led
Amoco to devote significant resources in research and development in this
area. The result was the development of its patented short radius horizontal
drilling  system.  The primary advantages of the Amoco drilling system are:

     *   its short radius of curvature,

     *   it costs approximately one-fifth of traditional mud motors,

     *   it takes only ten days to drill and yet provides all the benefits of
         a horizontal well.

     The Amoco short radius rotary steerable horizontal drilling system is
capable of drilling a 3.875" inch hole from inside 4.5" inch casing, or a 4.5"
hole from inside 5.5" casing and larger.  The radius of curvature ranges from
30 feet and up, with lateral departures up to 1,000 feet.  Multiple laterals
can be drilled in opposing directions or in the same direction, with kick-off
points spaced a minimum of eight feet apart.  Compatibility with any
circulating medium including mud, foam or air mist allows for a variety of
applications.

     The system consistently drills a predictable radius of curvature in the
desired direction, resulting in a smoother planar well bore, which facilitates
drilling the lateral and completing the well.  Vertical target accuracy is
plus or minus two feet, and azimuth is plus or minus 20 degrees.

     The system is rotary steerable, and there are no mud motors, steering
tools or MWD tools.  The system is purely mechanical and very simple in
design.

     The Amoco bit is an anti-whirl, bi-center, low-friction PDC bit.
Consistent and reliable angle build and improved directional control is a
result of stabilizing the PDC bit to continually point along a curved path.
The design of the bit enables it to cut only in the direction it is pointed. 
The cutters are positioned so that they direct a lateral force toward a smooth
pad on the gauge of the bit, which contracts the bore hole and acts as a
bearing by transmitting a restoring force to the bit.  This force  rotates 
with the bit, continually pushing a side of the bit that does not have gauge
cuter chips against the bore hole wall.  This design minimizes the side 
cutting action that is typically observed with PDC bits and results in
consistent well bore diameter.

     The system drills a curved path by continually pointing the bit along a
tangent to the curved path.  A contact point on the bit and smooth contact
ring at the flexible knuckle joint establishes two contact points and controls
the bit tilt.  Tool design tilt allows the curve assembly to run smoothly, 
drill a hole uniform in diameter, and negates the effects of varying lithology
changes. Various radii of curvatures are easily obtained by increasing or
decreasing the distance between the two contact points.

     Azimuth or target  direction  is  established  by gyro  orientation of
the eccentric deflection sleeve. Once oriented in the desired direction, the
gyro is released and  orientation is monitored by pump  pressures at the
surface.  These signals are monitored throughout the curve drilling process,
as repositioning of the sleeve is required to maintain target direction.

     Lateral drilling is strictly a rotary process.  The lateral drilling
assemblies are not steerable, and there are no deflection sleeves or
orientation signals. At present, there are two lateral drilling assemblies,
and both use the anti-whirl PDC bit to achieve a smooth well bore and obtain
fairly consistent responses.  Of the two lateral assemblies, one is engineered
for gentle rise wit angle build rates of 7 to 11 degrees per 100 feet. The
second is for maintaining inclination, and produces near-neutral responses of
-2 to 2 degrees per 100 feet.  The assemblies work on the same principle as
any directional drilling assembly.  Both have been found to drill with minimal
walk, right or left, but inclination is somewhat sensitive to formation and
weight on the bit.
          
     The  predominate  application of short-radius horizontal drilling is for
re-entries, a procedure that requires the sectional milling of at least 20
feet of casing.  Following sectioning, a cement kick-off plug is set in the
vertical well bore just below the kick-off  depth.  Cement is brought up
through the sectioned interval, and 60 to 100 feet inside the casing.  This 
multi-purpose plug must provide zone isolation from the original completion 
and mechanical strength for the curve assembly to side track.  Open-hole 
completions, either from existing wells or new wells, can be kicked off from
formation or a squeeze cement plug.  Torque, weight of the bit, drill-off
rate, and cuttings are monitored during the kick-off procedure as the bit
makes the transition from drilling 100 percent cement to 100 percent
formation.  This transition usually occurs after drilling a minimum of six
feet, and can be greater depending on the radius of curvature.

     With regard to equipment requirements, many types of workover rigs have 
been used in conjunction with the system, ranging from small pole units to
five and six axle carriers.  Drilling rigs have been used in several
instances, but are not necessary.  A top-drive power swivel, the most
predominate of which is the Bowen 2.5, is used to rotate the drill string and
bit.  A single conductor wireline unit is used for gyro orientation and to run
all electronic and magnetic  surveys.  Circulating and solids control 
equipment vary depending on formation conditions.

     Management of GREKA Energy considers this proprietary technology a
leading edge and a ground floor opportunity  as both a producer  and service 
provider to other producers.  GREKA Energy management believes that through
the utilization of this system GREKA Energy has the ability to 
cost-effectively drill lateral completions  and re-entries in shallow oil and
gas producing zones where existing technology has not been available or
affordable.  As drilling new wells from the surface is not a necessity  and 
current production infrastructures can be utilized, GREKA Energy anticipates
that the economics of this system will be improved.  Management of GREKA
Energy believes that potential zones such as shale gas and coalbed methane
that contain trillions of cubic feet of untapped reserves in the United States
are candidates for short radius horizontal drilling technology. 

Organizational History of GREKA Energy

     GREKA Energy Corporation was formed in 1988 as a Colorado corporation
under the name of Kiwi III, Ltd.  On May 13, 1996, GREKA Energy, then known as
Petro Union, Inc., filed a voluntary petition for relief pursuant to Chapter
11 of the United States Bankruptcy Code.  On August 28, 1997, the Bankruptcy
Court for the Southern District of Indiana issued an order confirming Petro
Union's First Amended Plan of Reorganization.  Under the Plan the unsecured
creditors of Petro Union received an aggregate of 100,000 shares of Petro
Union common stock (for clarity, the no par value  common stock as is
currently authorized for GREKA Energy is sometimes referred to herein as the
"New Common Stock").  The holders of Petro Union's $.125 par value common 
stock ("Old  Common  Stock")  received one share of New Common Stock for each
220 shares of Old Common Stock held, and the Old Common Stock was canceled. 
Accordingly, the 17,537,945 outstanding shares of Old Common stock were
converted into approximately 80,000 shares of New Common stock.

     Petro Union satisfied the claims of its two debtor-in-possession 
financiers, Pembrooke  Holding Corporation and International Publishing
Holding s.a. as follows: Pembrooke received $100,000 in cash and 49,999 shares
of New Common Stock.  IPH received 40,000 shares of New Common Stock and a
call option exercisable for a period of 36 months to acquire ninety percent of
Petro Union's wholly-owned subsidiary, Calox Corporation, which holds as its
only asset a limestone reserve in Monroe County, Indiana.  The exercise price
to acquire such ninety percent interest is $3.5 million.

     The Plan also provided for a share exchange transaction by which the
shareholders of Horizontal Ventures, Inc., an Oklahoma  corporation of which
Randeep S. Grewal was President, acquired 590,000 shares of New Common Stock
in exchange for all of the issued and outstanding capital stock of Horizontal
Ventures.  In addition, under the Plan 70,000 shares of New Common Stock were
issued to Mr. Grewal and 70,000 shares of New Common Stock were issued to
Richard D. Wedel, who was an executive officer of Petro Union, for services
performed by each of them during the bankruptcy proceedings.  Petro Union
subsequently changed its name to Horizontal Ventures, Inc.

     The bankruptcy  court approved  the final accounting and closed the
bankruptcy proceedings on March 26, 1998.

     Effective March 22, 1999, Horizontal Ventures, Inc. changed its name to
GREKA Energy Corporation.  Effective March 24, 1999, GREKA Energy acquired
Saba Petroleum as a wholly owned subsidiary.

Marketing

Marketing of Saba's Asphalt Refinery Production

     GREKA Energy's asphalt refinery in Santa Maria, California produces light
naphtha, kerosene distillate, gas oils and numerous cut-back, paving and
emulsion asphalt products.  Historically, marketing efforts have been focused
on the asphalt products which are sold to various users, primarily in the
Central and Northern California areas.  Distillates are readily marketed to
wholesale purchasers.

     GREKA Energy regards the refinery as a valuable adjunct to its production
of crude oil in the Santa Maria Basin and  surrounding  areas.  Generally, the
crude oil produced in these areas is of low gravity and makes an excellent
asphalt. Recent prices for asphalt exceed market prices for crude and costs of
operating the refinery.  GREKA Energy believes that as road building and
repair increase in California and surrounding western states, the market for
asphalt will expand significantly.

Marketing of GREKA Energy's Oil and Gas Production

     The prices obtained for oil and gas are  dependent on numerous factors
beyond the control of Saba, including domestic and foreign production rates of
oil and gas, market demand and the effect of governmental regulations and
incentives.  Substantially all of Saba's North American crude oil production
is sold at the wellhead at posted prices under short term contracts, as is
customary in the industry.  No one customer accounted for more than ten
percent of the sales of Saba's North American production during 1998 except
Crown Energy which accounted for 47% of such sales.  Saba's Colombian oil
production, which is, and as a practical  matter can only be, sold to
Ecopetrol, accounted for 37% of total oil and gas revenues in 1998.

     The market for heavy crude oil produced by Saba from its Central Coast
Fields in California differs substantially from the remainder of the domestic 
crude oil market, due principally to the transportation and refining
requirements associated with California heavy crude oil.  The prices realized
for heavy crude oil are generally lower than those realized from the sale of
light crude oil.  GREKA Energy's Santa Maria refinery uses essentially all of
its Central Coast Fields' crude oil, in addition to third party crude oil, to
produce asphalt, among other products.  Ownership of the refinery gives GREKA
Energy a steady market for its local crude oil which is not enjoyed by
producers  generally.

Marketing of GREKA Energy's Non-Saba Exploitation & Production

     Significant and lucrative markets exist  for the  application  of the
niche  technology  for  GREKA Energy's  short  radius horizontal  drilling 
know-how.  Mature fields are in abundance  throughout the world where the
operators  are faces with  declining  production,  uncertain oil prices and 
upcoming  costs to abandon  and plug the  uneconomic  wells at their
production rates.  Such an environment  creates a unique market for GREKA
Energy in being able to acquire through a conservative selection process. 
Primary acquisitions candidates will have existing production,  existing
operating infrastructure and facilities,  geological  formations conducive to
the technology,  well bores and pay zones under ten thousand feet with 
sufficient  recoverable oil in place. As an example,  GREKA Energy has found
that  California is a unique  opportunity  due to its stringent new drilling 
regulations.  GREKA Energy's activities are essentially "re-work" negating 
any lengthy  approvals  through the  regulatory  authorities.  Such an
environment has created "pockets" of opportunity whereby significant
recoverable oil has been left in place by the majors and  thereafter 
operators  rather than attempt a costly  endeavor  to drill new wells in urban 
areas.  GREKA Energy  intends to pursue such opportunities.

Competition

     Competition in the oil and gas business is intense, particularly with
respect to the acquisition of producing properties, proved undeveloped acreage
and leases.  Major and independent oil and companies actively bid for
desirable oil and gas properties and for the equipment and labor required for
their operation and development.  GREKA Energy believes that the locations of
its leasehold acreage, its exploration, drilling and production capabilities
and the experience of its management and that of its industry partners
generally enable GREKA Energy to compete effectively.  Many of GREKA Energy's
competitors, however, have financial resources and exploration, development
and acquisition budgets that are substantially greater than those of GREKA
Energy, and these may adversely affect GREKA Energy's ability to compete,
particularly in regions outside of GREKA Energy's principal producing areas. 
Because of this competition, GREKA Energy cannot assure you that GREKA Energy
will be successful in finding and acquiring producing properties and
development and exploration prospects.  

     Management  of GREKA Energy believes  it has an  advantage  over its
horizontal drilling due to its level of field expertise  in applying  the 
patented  Amoco Short  Radius  Horizontal  Drilling technology  and its 
ability to provide  these at a fraction  of the cost of the competition.
Although, Amoco has provided licenses to others, GREKA Energy feels that its
experience  and two prong  global  approach is  sheltered  from any of the
other licensees who are concentrating on services within their respective
geographical area. The  acquisition  criteria is also unique to the 
application of the niche short radius horizontal technology and as to the best
of management's knowledge, none of the other licensees are drilling for their
own account,  GREKA Energy has not felt any competitive pressure relative to
its acquisition strategy to date.

Governmental Regulation

     The  following  discussion  of  regulation  of the oil and gas  industry
is necessarily brief and is not intended to constitute a complete discussion
of the various statutes, rules, regulations or governmental orders to which
operations of GREKA Energy may be subject.

Price Controls on Liquid Hydrocarbons

     Oil sold by GREKA Energy is no longer subject to the Crude Oil Windfall 
Profits Tax Act of 1980, as amended,  which was repealed in 1988. As a result,
GREKA Energy sells oil produced from its properties at unregulated market
prices.

Federal Regulation of First Sales and Transportation of Natural Gas

     The sale and transportation of natural gas production from properties
owned by GREKA Energy may be  subject  to  regulation  under  various  federal 
and state  laws including,  but not  limited to, the Natural Gas Act and the
Natural Gas Policy Act, both of which are  administered  by the  Federal 
Energy Regulatory Commission. The provisions of these acts and regulations are
complex.  Under these acts, producers and marketers have been required to
obtain certificates from FERC to make sales, as well as obtaining  abandonment
approval from FERC to discontinue sales.  Additionally,  first sales have been
subject to maximum lawful price regulation.  However, the NGPA provided for
phased-in  deregulation  of most new gas  production  and,  as a  result  of
the enactment  on July 26, 1989 of the Natural Gas Wellhead  Decontrol  Act of
1989, the remaining regulations imposed by the NGA and the NGPA with respect
to "first sales" were terminated by not later than January 1, 1993. FERC
jurisdiction over transportation and sales other than "first sales" has not
been affected.

     Because of current market  conditions, many producers, including GREKA
Energy, are receiving  contract  prices  substantially  below most remaining 
maximum lawful prices under the NGPA.  Management  believes that most of the
gas to be produced from GREKA Energy's properties is already
price-deregulated.  The price at which such gas may be sold will  continue to
be affected by a number of factors, including the price of alternate fuels
such as oil. At present,  two factors  affecting prices are gas-to-gas
competition among various gas marketers and storage of natural gas.  Moreover,
the actual prices realized under GREKA Energy's  current  gas sales contracts 
also  may  be  affected  by the  nature  of  the  decontrolled  price
provisions  included therein and whether any indefinite price escalation
clauses in such contracts have been triggered by federal decontrol.

     The economic  impact on GREKA Energy and gas producers  generally of
price decontrol is  uncertain,  but it  currently  appears to be  resulting in
lower gas prices. Currently,  there is a surplus  of  deliverable  gas in most
areas of the United States and,  accordingly,  it remains  possible that gas
prices will continue to remain at relatively  depressed levels or decrease
further.  Moreover,  many gas sales contracts  provide for price 
redetermination  upon  decontrol,  and, as a result, it is possible that the
newly redetermined  prices applicable under such contracts  are likely to
reflect the lower prices  prevalent in today's  market. Producers  such as
GREKA Energy or resellers may be required to reduce prices in order to assure 
continued  sales.  It is also possible that gas production  from certain
properties may be shut-in altogether for lack of an available market.

     Commencing in the mid-1980's, FERC promulgated  several orders designed
to correct market distortions and to make gas markets more competitive by
removing the transportation  barriers to market access.  These orders have had
a profound influence  upon natural gas markets in the United  States and have, 
among other things,  fostered the development of a large spot market for gas.
The following is a brief description of the most significant of those orders 
and is not intended to constitute a complete description of those orders or
their impact.

     On April 8, 1992,  FERC issued Order 636,  which is intended to
restructure both the sales and  transportation  services provided by
interstate  natural gas pipelines.  The purpose of Order 636 is to improve the
competitive  structure of the pipeline  industry  and  maximize  consumer 
benefits  from the  competitive wellhead  gas  market.  The major  function 
of Order 636 is to assure  that the services  non-pipeline  companies can
obtain from pipelines is comparable to the services pipeline  companies offer
to their gas sales customers.  One of the key features of the Order is the
"unbundling" of services that pipelines offer their customers.  This  means 
that  pipelines  must  offer transportation  and other services  separately 
from the sale of gas.  The  Order is complex, and faces potential  challenges
in court.  GREKA Energy is not able to predict the effect the Order might have
on its business.

     FERC regulates the rates and services of "natural-gas companies", which
the NGA  defines  as  persons  engaged in the  transportation  of gas in 
interstate commerce for resale. As previously discussed,  the regulation of
producers under the NGA is being gradually phased out. Interstate pipelines, 
however,  continue to be regulated by FERC under the NGA.  Various state 
commissions also regulate the rates and services of pipelines  whose 
operations are purely  intrastate in nature,  although  generally  sales to
and  transportation  on  behalf  of other pipelines or industrial end-users
are not subject to material state regulation.

     There  are  many  legislative  proposals  pending  in  Congress  and in
the legislatures of various states that, if enacted,  might significantly
affect the petroleum  industry.  It is impossible to predict what proposals
will be enacted and what effect, if any, such proposals would have on GREKA
Energy.

State and Local Regulation of Drilling and Production

     State regulatory authorities have established  rules and regulations
requiring   permits for drilling, drilling bonds and reports concerning
operations.  The states in which GREKA Energy operates also have statutes and
regulations governing a number of  environmental  and  conservation  matters, 
including the unitization and pooling of oil and gas properties and  
establishment of maximum rates of production from oil and gas  wells.  A few 
states  also  pro-rate production to the market demand for oil and gas.

Environmental Regulations

     Operations of GREKA Energy are subject to numerous laws and regulations 
governing the discharge of materials into the environment or otherwise 
relating to environmental protection. These laws and regulations may require
the acquisition of a permit before drilling  commences, prohibit drilling
activities on certain lands lying within  wilderness and other protected areas
and impose  substantial liabilities  for pollution  resulting  from drilling 
operations.  Such laws and regulations  may also  restrict  air or other 
pollution  resulting  from  GREKA Energy's operations.  Moreover, many 
commentators  believe  that the state and  federal environmental laws and
regulations will become more stringent in the future. For instance, proposed
legislation  amending the federal Resource Conservation and Recovery  Act
would  reclassify  oil and gas  production  wastes  as  "hazardous waste". If
such legislation were to pass, it could have a significant  impact on the 
operating  costs of GREKA Energy,  as well as the oil and gas  industry  in
general. State  initiatives  to further  regulate  the disposal of oil and gas
wastes are also pending in certain  states,  including  states in which GREKA
Energy has operations, and these various initiative could have a similar
impact on GREKA Energy.

     GREKA Energy has not filed any  reports  with  estimates  of its 
reserves  with any federal authority or agency,  other than the Securities and
Exchange  Commission and the Department of Energy.

Operational Hazards and Insurance

     GREKA Energy's operations are subject to the usual hazards incident 
to the drilling and production  of oil  and  gas,  such  as  blowouts, 
cratering,  explosions, uncontrollable flows of oil, gas or well fluids,
fires,  pollution, releases of toxic gas and other  environmental  hazards and
risks.  These  hazards can cause personal  injury and loss of life, severe
damage to and destruction of property and equipment, pollution or
environmental damage and suspension of operations.

     GREKA Energy has $2,000,000 of general liability insurance. GREKA
Energy's insurance does not cover every  potential risk  associated  with the
drilling and production of oil and  gas.  In  particular,  coverage  is not 
obtainable  for  certain  types of environmental  hazards. The occurrence of a
significant adverse event, the risks of which are not fully  covered by 
insurance,  could  have a  material  adverse effect on GREKA Energy's
financial  condition and results of  operations.  Moreover,  no assurance can
be given that GREKA Energy will be able to maintain  adequate  insurance in
the future at rates it considers reasonable.

Employees

     As of March 31, 1999,  GREKA Energy and its subsidiaries had 95
employees, consisting of 90 full-time employees and 5 part-time employees.
None of GREKA Energy's employees is subject to a collective bargaining
agreement.  GREKA Energy considers its relations with its employees to be
satisfactory.

Item 2.  Description of Property.

GREKA Energy's Properties as of December 31, 1998

California Cat Canyon Field

     In October 1997, GREKA Energy acquired a 200 acre lease  within the Santa
Maria basin in  California. The purchase price was $1.65 million and included
all the formations  along with all the infrastructures that includes two
separate gathering systems and 20 well bores  of which ten are  producing. 

     Following in-depth evaluations,  GREKA Energy believes that significant
enhancements focused  primarily on its niche  short-radius horizontal drilling
know-how can result in sustained increase of oil production.  Based on these 
evaluations, a drilling  program funded by GREKA Energy's  financial 
resources has been activated.

     In view of the acquisition Saba's Cat Canyon properties where all the
gathering systems are already in place, management of GREKA Energy has decided
to focus its activities in California, and thus placed GREKA Energy's program
in Illinois on hold until preferable summer weather conditions exist to
facilitate the commencement of drilling and completion programs.

Limestone Properties

     Indiana - Monroe Field. GREKA Energy owns through its wholly owned
subsidiary, Calox Inc, a 355 acre limestone property located  in Monroe
County, Indiana. GREKA Energy owns the land, timber  and all the mineral
rights  associated with the property.  The limestone deposits are made up of
Salem limestone,  which  produces a high  industrial  grade  calcium  oxide or
calcium carbonate  used in scrubbing  machinery  that cleans the gaseous 
emissions from coal burning generators. 

     As GREKA Energy is focused on its oil and gas activities, this property
has been identified as a non-core unit and thus optioned out. International
Publishing Holding  s.a., a significant shareholder of GREKA Energy, holds a
three year option expiring  on  September  9, 2000 to acquire  90% of the
shares of Calox for $3.5 million. Thus, GREKA Energy will retain a 10%
interest in the reserve, divest itself from its non-oil and gas activity and
obtain $3.5 million of funds to invest in its core industry.  In the event IPH
does not exercise its option, GREKA Energy is confident that it will be able
to divest this lucrative  property  for at least the same value to another
company.

Oil and Gas Reserves

     GREKA Energy's oil and gas properties are primarily based in 
California and Illinois though the area of focus since the acquisitions had
been primarily California.  GREKA Energy engaged Netherland, Sewell &
Associates, Inc. to evaluate the California properties while the Illinois
properties were evaluated by independent engineers and geologists namely Mr. 
John Combs and Joseph  Wilderman.  Estimates are based on a review of
production  histories  and  geologic  reports  provided  to the independent
engineers by GREKA Energy.

     As a part of the decision to acquire Saba, management recently decided
not to continue to pursue the Illinois properties. This effectively eliminates
94,080 bbls of Proven Developed Non-Producing oil and 1,732,305 bbls of Proven
Undeveloped oil from the 1997 reserves set forth below. This has the
additional effect of reducing future net reserves in all categories except
Proven Developed Producing by approximately two-thirds.

     The present values of estimated future net revenues as of December 31,
1998 (discounted at 10% per annum) set forth in the table below are not
intended to represent the current market value of the  estimated  oil and gas
reserves  owned by GREKA Energy.  For further information concerning the
present value of future net revenue from these proved  reserves, see the Notes
to the Consolidated Financial Statements of GREKA Energy located elsewhere
herein.

<TABLE>
                                                              Future Net
                               Reserves                       Revenue $
                             ______________             ___________________   

                           Oil        
                           (bbls)                       Total        PV-10
<S>                      <C>                           <C>         <C>
Proven Developed
Producing                   -                          $   -       $   -

Proven Developed
Non-Producing            127,261                       $105,700    $ 42,500

Proven
Undeveloped              122,960                       $386,100    $218,200

Total Proven             250,221                       $491,800    $260,700

Other                       -                          $   -       $   -

Total Reserves           250,221                       $491,800    $260,700

</TABLE>

     There are  numerous uncertainties  inherent in  estimating  quantities 
of proved  reserves  and in  projecting  future rates of  production  and
timing of development  expenditures,  including  many  factors  beyond the 
control of the producer.  The reserve data set forth above  represents only
estimates.  Reserve engineering is a subjective process of estimating 
underground  accumulations of oil and gas that  cannot be measured  in an
exact way, and the  accuracy of any reserve  estimate  is a  function of the 
quality  of  available data and of engineering  and  geological interpretation 
and judgment and the  existence of development plans. As a result, estimates
of different engineers often vary. For example,  GREKA Energy has
substantially  increased its proved undeveloped  reserves from initial reserve
estimates made at the time of certain acquisitions. In addition, results  of 
drilling,  testing  and  production  subsequent  to the  date of an estimate
may justify revision of such estimates.  Accordingly, reserve estimates are 
often  different  from the  quantities  of oil and gas that are  ultimately
recovered.  Further,  the estimated future net revenues from proved reserves
and the present value thereof are based upon certain assumptions, including
geologic success,  prices, future production levels and costs, that may not
prove correct over time.  Predictions about prices and future production
levels are subject to great uncertainty,  and the meaningfulness of such
estimates is highly dependent upon the  accuracy  of the  assumptions  upon
which they are based.  Oil and gas prices have fluctuated  widely in recent
years. 

Production

     The  following  table  sets  forth the  average  sale  price,  the 
average production  cost (lifting  costs) and net production to GREKA Energy
for each of the last three fiscal years of oil and gas  production in the
Illinois  Basin  (Illinois, Indiana, and Kentucky) per unit of production (oil
barrels, bbl; gas, mcf;):

<TABLE>
                                                    Illinois
                                                   -----------
  
                                    1996              1997              1998
                                    ----              ----              ----
<S>                               <C>               <C>               <C>
Average Sales Price
    Per Unit:
         Oil                       $20.42            $19.21            $  -
       
Lifting Costs Per Unit:
         Oil                       $10.94                $6.80           $  -

Net Production to
    GREKA Energy:
         Oil                         1,252              450               -

                                                   California
                                                   ----------

                                   1996*             1997*              1998
Average Sales Price
    Per Unit:
         Oil                          -              $10.55             $6.33

Lifting Costs Per Unit:
         Oil                          -               $5.31             $7.68

Net Production to
    GREKA Energy:
         Oil (Bbls)                   -               1,832            12,935

</TABLE>

*There was no activity in California prior to 1997.

Acreage

     The  following  table sets forth the gross and net acres of developed and
undeveloped oil and gas leases held by GREKA Energy as of December 31, 1998,
and includes the 150 net acres owned as of year end. Undeveloped acreage
includes leasehold interests which may already  have been  classified as
containing proved undeveloped reserves.

<TABLE>

                         Developed Acreage(1)      Undeveloped Acreage
                         --------------------      -------------------

                           Gross       Net         Gross         Net
<S>                        <C>        <C>          <C>          <C>
California                  185        150           -            -
Illinois                     -          -            -            -

    Total                   185        150           -            -


Drilling Activity

     The following table sets forth the wells drilled or re-entered and
horizontally re-drilled and completed by GREKA Energy during the last three
fiscal years:

                               1996               1997              1998
                               ----               ----              ----
                            Gross   Net        Gross   Net       Gross   Net
Development:
      Oil                      3   .375           2    1.67         1   .795
      Gas                      -     -            -      -          -     -
      Non-Productive           -     -            -      -          1   .795

   Total                       3   .375           2    1.67         2   1.59


</TABLE>

(1)  Developed acreage is acreage  assigned to producing  wells for the
spacing unit of the producing formation.  Developed acreage  in certain of
GREKA Energy's properties that include multiple formations with different well
spacing requirements may be considered undeveloped for certain formations, but
have only been included as developed acreage in the presentation above.

The following table sets forth information relating to the number of oil wells
in which GREKA Energy owned a working interest:

<TABLE>
                                                          Gross     Net
<S>                                                      <C>        <C>
Proven Developed Producing                                  -        -
Proven Developed Non-Producing                              3       2.39
Proven Undeveloped - Re-Entries
 of Existing Wells                                          -        -
Proven Undeveloped - New Wells                              1        .795

</TABLE>

GREKA Energy has a 100% working interest in all of the above wells.

Development Exploitation Acquisition Expenditures

     The following table sets forth certain information regarding the costs
incurred by GREKA Energy in its development, exploration and acquisition
activities during the last three fiscal years:

<TABLE>
                                 1996               1997               1998
                                 -----              ----               ----
<S>                            <C>               <C>                 <C>
Development Costs               $90,000           $132,564           $667,919

Exploration Costs                   -                  -                  -

Acquisition Costs:
   a) Unproved Properties           -                  -                  -
   b) Proved Properties           _______        1,650,000                -

Total Capital Expenditures       $90,000        $1,782,564           $667,919

</TABLE>

Title to Properties

     Substantially  all of GREKA Energy's property  interests are held by
leases from  third  parties.  A  title  opinion  is  typically  obtained 
prior  to the commencement of drilling operations  on  properties.  GREKA
Energy has  obtained  title opinions on substantially  all of its producing 
properties and believes that it has satisfactory title to such properties in
accordance with standards generally accepted in the oil and gas industry. 
GREKA Energy's properties are subject to customary royalty interests,  liens
for current taxes and other burdens which GREKA Energy believes do not
materially interfere  with  the  use of or  affect  the  value  of such
properties. GREKA Energy performs only a minimal title  investigation  before 
acquiring undeveloped properties.

Offices

     GREKA Energy leases  approximately 1,000 square feet of office space at
630 Fifth Avenue,  Suite 1501, New York, New York, for its executive offices
on a one year lease. GREKA Energy's operational and field  offices are located
in Santa Monica, California, Bogata, Colombia, Beijing, China, and Oklahoma
City and Tulsa, Oklahoma.

Saba Petroleum Company's Properties as of December 31, 1998

     Saba owned interests in approximately _____ wells at December 31, 1998.
The majority of these wells are  concentrated  along the central cost of 
California and in the Middle  Magdalena Basin of Colombia.  These regions, 
which primarily produce a low gravity/high viscosity or "heavy" oil, will be
the focus of near-term  development  drilling  activities.  Saba also operates 
wells and has exploration and  development  activities in several states
outside of California and, through a majority-owned  subsidiary,  in western
Canada. Saba's evaluation of international projects resulted in the
acquisition of exploration projects in Indonesia and China.

United States

     California

     Approximately 18% of Saba's  proved  reserves at December  31, 1998 (3.2
MMBOE) were located in four onshore fields in California's  central coast
region.  Daily  production from the Central Coast Fields  averaged _________
BOE for the year ended December 31, 1998, representing _____% of Saba's  total 
production.  Saba  operates all of its wells in the Central Coast Fields. Saba
also holds interests in other California areas,  which represented 3% (0.7
MMBOE) of Saba's proved reserves at December 31, 1998. Daily  production from
these other interests  averaged _____ BOE for the year ended December 31, 
1998,  representing _____% of Saba's  total production.  Further,  Saba has 
interests  in  several  high  risk  exploratory projects.

     Louisiana

     Approximately 20% of Saba's  proved  reserves at December  31, 1998 (3.6
MMBOE)  were  located in two fields in  Louisiana.  An  interest in one of
these fields  was first  acquired  during  1996,  the other in 1997,  with 
additional interests  in both  fields  acquired  in April 1998.  Saba's  share
of daily production from the Louisiana  fields averaged _____ BOE for the year
ended December 31, 1998, representing_________% of the Company's total
production.

     Other States

     In addition to its California and Louisiana properties, Saba owns
producing properties in a number of other states,  primarily New Mexico and
Texas,  which collectively  represented 4% of Saba's proved reserves at
December 31, 1998 (0.8 MMBOE).  Daily production from these properties 
averaged _______ BOE for the year ended December 31, 1998,  representing
______% of Saba's total production.  However, GREKA Energy plans to sell some
of the non-core assets in some of those states. See "Recent Developments -
Sale of Certain Assets."

International

     Colombia

     Approximately 45% of Saba's  proved  reserves at December 31, 1998 (8.1
MMBOE) were located in several  fields in  Colombia's  Middle  Magdalena 
Basin. Daily production from these fields averaged 6,500 Bopd for the year
ended December 31, 1998,  representing ______% of Saba's total  production. 
Saba also holds a 50% interest in the 118-mile  Velasquez-Galan  Pipeline, 
which connects the fields to a 250,000 Bopd government-owned  refinery at
Barrancabermeja.  See "Recent Developments - Terminated Business 
Combination." Saba and Omimex,  the  operator  of the  fields,  have 
formulated  a plan  for  drilling approximately 200 development wells.

     During  1997,  Saba  and  the operator participated in the drilling or
recompletion  of thirteen  wells in the Teca and South Nare  Fields.  All of
the wells drilled were productive and the operator is installing steaming
equipment. Saba and the operator also  reentered a suspended  well acquired
from Texaco and drilled  to an are  under  the  Magdelena River and
recompleted the well as productive of approximately 30 Bopd without artificial
stimulation. Both Saba and the operator believe that another two wells should
be drilled into the area in an effort to establish an additional commercial 
area.  During the year ended December 31, 1998, Saba and the operator
participated in the drilling and completion of seven wells in the Teca and
South Nare Fields.  Three additional wells were recompleted during the year
ended December 31, 1998. Sabacol, a subsidiary of Saba and owner of Saba's
properties in Colombia, has filed a voluntary petition under Chapter 11 of the
United States Bankruptcy Code and has entered into an agreement to sell
substantially all of its assets.  See "Business of Saba Petroleum Company -
Recent Saba Developments - Bankruptcy of Sabacol, Inc. and Contract for Sale
of Sabacol's Assets."

     Canada

     Approximately 7% of Saba's  proved  reserves at  December 31, 1998 (1.3
MMBOE) were located in Canada. Daily production from these properties, which
are owned through an approximately  74%-owned  subsidiary of Saba,  averaged
_____ BOE for the year ended December 31, 1998,  representing ____% of Saba's
total production.

     Other International Properties

     In September  1997,  Saba and  Pertamina,  the Indonesian state-owned oil
company,  signed a production  sharing contract covering 1.7 million 
unexplored acres on the Island of Java near a number of producing oil and gas
fields.  This agreement will require Saba to spend approximately  $17.0
million in a multi year project.  In addition to the  approximate  $_____ 
million expended as of December 31, 1998. GREKA Energy is seeking a joint
venture  partner to share the  costs of this  project;  however,  the  recent
economic turmoil  in Indonesia may affect the timing and terms of such
agreement.

     In July 1997,  Saba  entered into an agreement to become the operator and
a 75% working  interest holder of two  exploration  licenses which cover a
123,000 acre  exploration  area in  southern  Great  Britain.  On March 31, 
1998,  Saba assigned a 3.75%  carried  working  interest  in the first well to
be drilled on this concession as payment of a finder's fee. By agreement dated
April 14, 1998, Saba sold on behalf of its net interest in this  concession 
to Omimex at Saba's cost. A formal  assignment has not been conveyed to Omimex
and Saba continues to hold  Omimex's  interest in the prospect in trust.  Saba
has  incurred  costs of approximately  $__________  as of December 31, 1998, 
in  connection  with  the concession  acquisition  and drilling of an
exploratory  well on the concession. The well did not encounter hydrocarbons
and has been abandoned. Results from the initial well did not condemn the
entire prospect and data obtained from the test well is being  evaluated for
further  interpretation.  Saba has not yet executed the joint operating
agreement for the prospect.  While holding Omimex's interest in trust, Saba
may be liable to Omimex if it were to execute the joint operating agreement 
that provides for  foreclosure  upon a working  interest owner due to
non-payment.

     From January 1, 1992 through  December 31, 1998, Saba completed ____
property acquisitions  with an aggregate  purchase  price of  approximately 
$____ million. These properties,  as improved through Saba's development 
efforts and including associated drilling activities,  represented 
approximately ______ MMBOE of proved reserves  as of  December  31,  1998. 
Saba's  all-in-finding  costs  for  these acquisitions and related activities
have averaged $______ per BOE.

    Exploration and Development Drilling Activities

     Saba has identified a number of drilling locations on its properties 
located  in the  United  States,  primarily  in  California, Louisiana and New
Mexico.  Saba also pursues the  acquisition  of high potential exploration 
prospects  to enhance  its  inventory  of  drilling  opportunities. Beginning
in 1997,  Saba initiated  exploration  activities in Indonesia,  Great Britain
and California.  It has recently completed the analysis of a 3-D seismic
survey  covering some 10,500 acres of land in which it has interests in the
area of the Coalinga oil field in Kern  County,  California,  resulting in
defining a number of drillable  prospects;  has entered into an agreement with
a subsidiary of Chevron  Corp. by which Saba will analyze  Chevron 3-D seismic
data covering  lands  in  Kern  County,  California,  and if  warranted,  will 
drill exploratory  wells on Chevron fee lands. See "Property - California 
Exploration Ventures"  and  "Exploration  and  Development   Drilling  
Activities  -  Other International Properties."

    GREKA Energy's 1999 capital expenditure budget for the Saba properties is
dependent upon the price for which its oil is sold and upon the ability of
Saba to obtain external financing. Subject to these variables, GREKA Energy
has budgeted a minimum of $_____ million and a maximum of $______ million for
capital  expenditures  during 1999, consisting of only absolutely essential
capital expenditures. GREKA Energy currently is budgeting one year at a time
and has deferred any long term capital expenditure  program.  GREKA Energy has
deferred  certain  capital  expenditures  in the following  areas:

      *   Coalinga exploration project in California,

      *   other California projects, where farmouts are actively being sought
          for some properties and where development work has been delayed,

      *   Indonesia, where spending  has  been  significantly reduced, and

      *   Louisiana, where a seismic study and other developmental work has 
          been delayed.

    GREKA Energy may elect to make further deferrals of capital expenditures
if oil prices remain at current levels.  Capital  expenditures  beyond 1999
will depend upon 1999 drilling results, oil price levels and the availability
of external financing.

     Beginning in June 1997, Saba initiated use of another enhanced production
technique known as SAGD. This technique  involves  drilling two horizontal
wells in a parallel  configuration,  one above,  and within a short  distance 
of, the other.  After drilling is complete,  steam is injected into the upper 
wellbore, which  creates a steam  chamber and heats the oil so that it may
flow by gravity to the lower  producing  wellbore  for  extraction.  The SAGD 
process  has been successfully   employed  by  other  companies  in  Canada 
in  thick  reservoirs containing  viscous  oils,  similar to those found in
areas of the Central Coast Fields. Although this technique is initially more
costly than employing a single horizontal  well,  Saba  anticipates  that it
will result in increased  rates of production and recovery and lower per-unit 
production  costs.  Saba has drilled one pair of SAGD wells on its Gato Ridge 
Field and is  awaiting local permits before initiating steaming operations, 
but does not anticipate commencing such operations until oil prices improve.

     California

     Saba's  drilling  operations in California are focused on the Central
Coast Fields,  which  consist  of  four  onshore  fields  that  collectively 
comprise approximately  4,525 gross  (4,487 net)  developed  acres and 1,139
gross (1,138 net)  undeveloped  acres.  Saba intends to  capitalize on the
potential of these properties  through a five year multiwell  drilling 
program.  The Central Coast Fields  consist of the Cat Canyon,  Gato Ridge, 
Santa Maria Valley and Casmalia fields. Saba also has producing  properties in
Ventura,  Solano, Kern and Orange Counties,  California. Of these properties,
Saba regards the Cat Canyon and Gato Ridge fields, both heavy oil properties, 
as the most significant and upon which it  has  focused  its  development 
drilling  efforts.   Aggressive  development activities during 1997, in
contemplation of significantly  increased production, included the
installation of surface  facilities for handling much more oil than Saba
presently  produces from the  properties.  The recent decline in oil prices
coupled with the drilling  results of the 1997 program  render it doubtful
that GREKA Energy will realize its initially  projected  rates of return.  In
addition to the producing properties,  Saba has several exploratory projects
in California.  See "Property-California Exploration Ventures."

     Overall,  Saba during 1998 experienced a ___% increase in annual
production from its California  properties (from 904 MBOE in 1997 to ______
MBOE in 1998). The development costs incurred by Saba in California during
1998 were $_______ million. The economic benefits derived from the program
were  substantially  below Saba's expectations.  Notwithstanding the 1998
results, GREKA Energy believes that the focus on the Central Coast Fields will
ultimately be justified. This belief is based in part on the established 
synergy between production from the Central Coast Fields and the asphalt
refinery located in Santa Maria, in that Saba is able to sell its  production
to the refinery at a price reflecting a premium to market. Generally, the
crude oil produced in the Santa  Maria  Basin is of low  gravity  and makes an 
excellent asphalt. Recent prices for  asphalt exceed  market  prices  for
crude oil and costs of operating the refinery. Saba believes that as road
building and repair increase in California and surrounding western states, the
market for asphalt will expand significantly.

     To date, Saba has drilled and completed 13 horizontal wells in the
Sisquoc  sands of the Cat  Canyon  Field.  Twelve of these  wells are 
currently producing at rates from 40 to 140 Bopd; the thirteenth  well has 
encountered a sand  intrusion problem which Saba is attempting to rectify. 
Saba also drilled one pair of SAGD wells in the Gato Ridge Field,  which is
awaiting local permits and oil price  increases  before  production  will be
attempted.  Two horizontal wells  drilled to test a different  zone in this
field have  encountered  severe sand  production and are presently  planned to
undergo  recompletion  operations during 1999.  During 1998, Saba drilled ___
wells in the Casmalia Field.

     Louisiana

     Saba acquired an 80% working interest in the Potash Field in September
1997 and the remaining 20% working interest in April 1998.  Proved reserves of
Saba's interest in the field were approximately 13.7 Bcf and approximately 1.1
MMBbl at December  31,  1998.  Saba's share of daily  production  from the
Potash  Field, including  the 1998  acquired  interest, averaged ____ Bopd and
_____ MMcfd for the year ended December 31, 1998.  Increases in  productivity 
and possibly reserves are expected to be achieved through completion of a
number of potential zones presently behind pipe in existing wells.  These
potential producing zones range in depth from 1,500 to 15,000 feet. Further
technical programs, including a possible 3-D seismic shoot, are planned to
evaluate the exploration  potential of Saba lands associated with this field.
Saba owned a 40.5% working interest in the Manila Village Field and acquired
an additional  10.2% working  interest in April 1998. Saba may be subject to
certain environmental liabilities with respect to its  interest  in the Manila
Village Field.  Saba's net reserves at December 31, 1998,  including the 1998
acquired interest,  were  approximately 187 MBbl and 73 MMcf.  Saba's  share
of daily production,  including  the 1998 acquired  interest, averaged _______
BOEPD for the year ended December 31, 1998. A 3-D seismic  program is
scheduled for 1999 or beyond to determine additional  opportunities to further
develop this field.

     Colombia

     Saba owns interests in two Association Areas (Cocorna and Nare) and one
fee property (Velasquez)  all of which are located in the Middle  Magdalena 
Basin, some 130 miles northwest of Bogota, Colombia.  The Association  Areas
encompass several  fields,  some of which are partially  developed and some of
which await development.   The Teca, Nare  and  Velasquez   fields  are 
presently  under development. The Association Areas, Nare and Cocorna, are
held under Articles of Association  between  Empresa  Petroleos  Colombiana
and Saba's predecessor  in  interest,  a  subsidiary  of  Texaco,  Inc.  Each
Association Area is large enough to encompass more than one commercial  area
or field.

     Saba and Omimex, the operator of the fields, have formulated a
development program which includes, pending regulatory approval, the drilling 
of approximately 200 development wells through the year 2001 at an average
depth of 2,900  feet.  During  1997,  Saba and its  operator successfully 
completed  or reworked  fourteen  wells of the  development program,  which
wells have met or exceeded initial production  expectations.  The 200 well
program is a refinement of an approximate  600 well program originally 
designed by Texaco.  The Texaco program was not implemented  due to what Saba
believes was  Ecopetrol's  concern with refinery capacity and oil prices. The
ability of Omimex, as operator of the fields, to implement  the  development 
program is dependent on the approval of Ecopetrol and the Colombian  Ministry
of the  Environment.  Saba and Omimex have submitted  an  application  for  an 
omnibus  approval  of the  drilling  of the remainder of the 200 well program; 
failing receipt of the omnibus approval, the companies  would  continue to
seek approval for drilling such wells in segments. In 1997,  approval was
obtained for the drilling of 21 development  wells in the Teca and Nare
Fields,  13 of which were completed  during the year. Also, a well under the 
Magdalena  River was  recompleted  and plans to drill two  additional wells 
which,  if  commercial,  should  establish  a  new  commercial  area  for
development. In the Velasquez Field, the operator recompleted a behind pipe
zone in three  gross  (0.75 net) wells in 1997.  Initial per well production 
rates ranged from 142 Bopd to 223 Bopd.  Studies to date  indicate up to 23
wells with behind  pipe zones  suitable  for  recompletion.  During the year
ended December 31, 1998, ________ wells were drilled and completed in the Teca
and Nare Fields and ________ wells were recompleted in the Velasquez  Field. 
Sabacol, a subsidiary of Saba and owner of Saba's properties in Colombia, has
filed a voluntary petition under Chapter 11 of the United States Bankruptcy
Code and has entered into an agreement to sell substantially all of its assets
to Omimex.  See "Business of Saba Petroleum Company - Recent Saba Developments
- Bankruptcy of Sabacol, Inc. and Contract for Sale of Sabacol's Assets."

     Canada

     Saba's Canadian properties, which are owned through Beaver Lake (Alberta
Stock  Exchange),  represented approximately 23% of Saba's standardized
measure value at December 31, 1998. The Canadian properties produced an
average of ______ BOEPD for the year ended December 31, 1998, from ______
wells covering _______ gross (_______  net)  developed acres, most of which
are located in the  province of Alberta.  These properties had proved reserves
of 1.3 MMBOE at December 31, 1998. The information presented has not been
adjusted for the approximate 26% minority interest in Beaver  Lake held by 
others.  See  "Business  --  Exploration and Development Drilling Activities
-- Other United States and Canadian Properties."

    Other International Properties

     In September  1997,  Saba and  Pertamina, the Indonesian state-owned oil
company,  signed a production  sharing contract covering 1.7 million 
unexplored acres on the Island of Java near a number of producing oil and gas
fields.  Saba is required to spend approximately $17.0  million over a multi
year period on this project, in addition to the  approximate  $______  million 
expended as of December 31, 1998 on  bonus  payments,   data   acquisition 
and  geophysical investigation.  GREKA Energy expects to identify  drilling 
locations  based on geologic trends identified through its review of existing
seismic data,  satellite images and the results of a potential  3-D seismic 
program to be performed in 1998 and 1999. Saba has held  discussions  with
several  potential joint venture partners with a view to negotiate a 
participation  agreement.  In view of this, Saba has slowed its pace of
activity.  The recent civil and economic turmoil in Indonesia may affect the
timing and the terms of such agreement.

     In  July  1997,  Saba  entered  into an  agreement to participate in two
exploration  licenses  which cover a 123,000 acre  exploration  area in
southern Great Britain in which Saba had a right to acquire a 75% working
interest earned upon  drilling  and  payment  of its share of costs.  On March 
31,  1998,  Saba assigned a 3.75%  carried  working  interest  in the first
well to be drilled on this concession as payment of a finder's fee. By
agreement dated April 14, 1998, Saba sold one half of its net  interest in
this  concession  to Omimex at Saba's cost.  A formal  assignment  has not
been  conveyed  to Omimex  and the  Company continues to hold Omimex's 
interest in the prospect in trust. Saba had incurred costs of  approximately 
$__________ at December 31, 1998 in  connection  with the concession 
acquisition  and drilling of an exploratory  well on the concession. The well
did not encounter hydrocarbons and has been abandoned. Results from the
initial well did not condemn the entire prospect and data obtained from the
test well is being  evaluated  for  further  interpretation.  Saba has not yet 
executed the joint operating agreement for the prospect.  While holding
Omimex's interest in trust, Saba may be liable to Omimex if it were to execute
the joint operating  agreement that provides for foreclosure upon a working
interest owner due to non-payment.

    Other United States Properties

     Other than its California and Louisiana  properties,  Saba had interests
in over ____ oil and gas wells at December 31, 1998,  located  principally in
Texas, Michigan,  New  Mexico  and  Oklahoma,  with  other  interests  located
in Utah, Wyoming, and Alabama. Saba seeks to acquire domestic and
international producing properties where it can significantly  increase
reserves through  development or exploitation  activities and control costs by
serving as operator. Saba believes that its substantial experience and
established relationships in the oil and gas industry enable it to identify, 
evaluate and acquire high potential properties 
on favorable  terms. As the market for  acquisitions has become more
competitive in recent years, Saba has taken the initiative  in  creating 
acquisition opportunities,  particularly  with respect to adjacent 
properties,  by directly soliciting fee owners, as well as working and royalty
interest holders, who have not placed  their properties  on the  market.  Saba
also  plans to expand its existing reserve base by acquiring  or  
participating  in  high  potential exploration prospects  in  known 
productive  regions.   Saba  believes  these activities complement its
traditional  development and exploitation  activities. In pursuing these
exploration opportunities, Saba may use advanced technologies, including 3-D
seismic and satellite imaging. In addition, Saba may seek to limit its direct
financial exposure in exploration projects by entering into strategic
partnerships. 

Oil and Gas Properties

     At December 31, 1998, on a standardized measure value basis,
approximately 22% of Saba's proved  reserves were in  California,  primarily
in the Central Coast Fields and approximately 45% were attributable to Saba's
Colombian properties.

     The following table summarizes Saba's estimated proved oil and gas
reserves by geographic  area as of December 31, 1998.  The following  table
includes both proved developed (producing and non-producing) and proved
undeveloped  reserves.  Approximately 42% of the total reserves reflected in
the following table are proved undeveloped.  There can be no assurance that
the timing of drilling, reworking and other operations,  volumes, prices and
costs  employed by the  independent  petroleum  engineers  will prove
accurate.  Since December 31, 1998, oil and gas prices have generally
increased. At such  date, the price of WTI crude oil as quoted on the New York 
Mercantile Exchange  was $________ per Bbl and the  comparable  price at March
31, 1999 was $_______. Quotations for the comparable periods for natural gas
were $______ per Mcf and $_____ per Mcf, respectively.

     The proved developed and proved undeveloped oil and gas reserve figures
are estimates based on reserve reports prepared by Saba's independent
petroleum engineers.  The estimation of reserves requires substantial judgment
on the part of the petroleum engineers, resulting in imprecise determinations, 
particularly with respect to new discoveries.  Estimates of reserves and of
future net revenues prepared by different petroleum engineers may vary
substantially, depending, in part, on the assumptions made, and may be 
subject to  material  adjustment. Estimates of proved  undeveloped  reserves
comprise a substantial  portion of Saba's  reserves and, by definition,  had
not been  developed  at the time of the  engineering  estimate.  The accuracy
of any reserve estimate depends on the quality of available data as well as
engineering and geological  interpretation  and judgment.  Results of
drilling,  testing and production or price changes subsequent to the date of
the estimate may result in changes to such  estimates.  The estimates of
future net revenues in this report reflect oil and gas prices and  production 
costs as of the date of  estimation, without  escalation,  except where 
changes in prices were fixed under  existing contracts.  There can be no
assurance  that such prices will be realized or that the estimated  production 
volumes will be produced during the periods specified in such reports.  The
estimated  reserves and future net revenues may be subject to material
downward or upward revision based upon production  history,  results of future 
development,  prevailing  oil and gas  prices  and other  factors.  A material 
decrease in  estimated  reserves or future net  revenues  could have a
material adverse effect on Saba and its operations.

<TABLE>
                                   December 31, 1998
                                                   
                       Proved Reserves, net                     PV-10 Value
                  Gross        Oil          Gas
 Property        Wells (1)   (MBbls)      (MMcf)  MBOE   Dollar Value   %
 --------       ---------   -------      ------  ----  ------------   -------
                                                        (In thousands)
<S>             <C>         <C>          <C>   <C>       <C>          <C> 
California:
Cat Canyon                     2,339       356   2,398    3,712         16
REDU                             158        -      158       67         -
Santa Maria                     252        351     310      315          1
Bellridge                       349        186     380      872          4
Other                           629        250     671      705          3

  Total 
   California                   3,727     1,144  3,918    5,671         24

Louisiana
Potash Field                   1,083      13,678 3,362     6,148         27
Manila Village                   187          73   199       562          2

  Total 
   Louisiana                   1,269       13,751 3,561    6,710         29

Other United States
Texas                            212        597     311      805          3
New Mexico                       327       946      485    1,769          8
Other                             29       480      109      255          1

  Total Other 
   United States                 568      2,023     905    2,829         12

  Total United 
   States                      5,564      16,918  8,384   15,210         66

Colombia                       8,060         -    8,060    3,700         16
Canada                           281      6,080   1,294    4,241         18

  Total 
   International               8,341      6,080   9,354    7,941         34   
Total                         13,905     22,998  17,738   23,151         100
                 =====      ======      ======   ======   ========     =====

</TABLE>

--------------
(1)  Includes locations  attributed to proved undeveloped reserves and wells
in which Saba holds royalty interests.

     California

     Producing Properties

     Saba operates most of its wells in the Central Coast Fields and maintains
an average  working  interest  in these  wells of ______% and an average  net
revenue interest  of ________%.  These  fields  produced ________ net BOEPD
for the year ended December  31, 1998 and had proved reserves at December 31,
1998 of 3.9 MMBOE.

     Cat Canyon  Field.  The Cat Canyon Field is Saba's principal California
producing  property,  representing  approximately 16% of Saba's standardized
measure value at December 31, 1998. This field, which covers approximately
1,775 acres of land is located in northern  Santa  Barbara  County and was
acquired by Saba in 1993. At the time of acquisition, there were 89 producing
wells and 74 suspended  wells, all of  which  were vertically  drilled  to 
either  the  Sisquoc  or  Monterey Formations (lying between approximately
2,400 feet and 3,400 feet and 4,000 feet and 6,600 feet,  respectively).  At
the time of acquisition,  average production was 425  Bopd  and  for the year
ended December 31,  1998,  average production was approximately _______ Bopd.
Daily production varies depending upon various factors,  including normal
decline in production  levels, the production of newly drilled  wells and
whether  remedial work is being done on wells in the field.  The field 
produces a heavy grade of viscous oil,  which is in demand at Saba's Santa
Maria  Refinery.  The property is considered (as are many heavy oil
properties) a high production cost field and reductions in prices paid for
crude generally  affect such  properties more  dramatically  than higher
gravity lower production cost fields.

     Saba  owns  a  100%  working interest (99.7% net revenue interest) in
approximately 45 producing wells and a number of non-producing wells located
in this field which consists of two major producing  horizons,  the Sisquoc
and the Monterey.  The Sisquoc formation,  which consists of a number of
separate zones, is divided by two major  north-south  trending  faults into
three  separate  and distinct areas.  The area between the faults contains the
bulk of the productive reservoir volume and has the highest  cumulative 
production.  A portion of that area was the subject of a waterflood 
instituted in 1962 by a previous operator. The  waterflood  was not 
economically  successful.  Saba  believes that the two faults are sealing
faults,  thus preventing  communication  with the portions of the field lying
outside of the fault block,  which areas were not the subject of waterflood
operations.

     In  1995,  Saba  drilled its first horizontal well into the Monterey
formation. The well developed mechanical problems and operations were
suspended. Saba has deferred  attempts to correct the problem until such time
as oil prices increase  sufficiently to justify further  efforts.  In 1996,
Saba initiated its present  horizontal  well  drilling  program in the Cat
Canyon Field by drilling five horizontal  wells into the Sisquoc  formation
S1b sand (which is one of the multiple  separate sand bodies  comprising the
Sisquoc  formation).  Of the five wells, three  wells  were  drilled  in the 
central  fault  block,  on  which a waterflood  operation was previously 
conducted,  and one in each of the eastern and western  portions of the field.
The well in the western portion of the field initially produced at rates
approaching 400 Bopd and, as expected,  has declined to a present  rate of 
approximately  130 Bopd.  Wells drilled into the Sisquoc formation may be
expected to produce  varying amounts of formation water as part of the
production process.  The well drilled in the eastern portion of the field has
encountered  mechanical  problems and plans are to rework the well during
1998.  The three wells drilled in the central portion,  or waterflood area of
the field, developed initial production rates of approximately 150 Bopd per
well and have declined to  approximately  40 Bopd per well. In 1997,  Saba 
continued its horizontal drilling program in the Cat Canyon Field by drilling
eight additional wells into the Sisquoc S1b sand. Of the eight wells,  five
were drilled into the waterflood area and the remaining three were drilled
into other areas.  Year end average production  rates for the wells in the
waterflood area were 82 Bopd and 1,100  barrels of water per day per well. 
Production  rates for the other wells were 88 Bopd and 13 barrels of water per
day per well.  The wells drilled into the central waterflood area, as
expected, are producing oil with high volumes of residual water from the prior
waterflood operations. Saba believes that by using high volume pumps and
lifting large volumes of fluid, the ratio of oil to total fluids produced will
gradually  increase.  Production declines have been in line with Saba's
expectations of roughly a 40-50% decline in production during the first 12
months of the wells' operation, followed by a more moderate 10% annual decline
in production.  Results from the horizontal well drilling  program have not
met Saba's expectations and continuing study is being given to the field to
determine how to maximize production. In addition, Saba has implemented
measures designed to ensure that operations are conducted with greater
efficiency.

     In  addition to the Cat Canyon  Field,  Saba has  interests  in a number
of fields in  California,  none of which had a standardized measure value
equal to five percent or more of the standardized measure value of Saba's 
proven reserves at December 31, 1998.  Among such fields are the following:

     Richfield East  Dome Unit (REDU).   The REDU unit, which represented
approximately 0.2% of Saba's standardized measure value at December 31, 1998,
is located in Orange County,  California  and covers  approximately  420 
acres.  Saba is the operator of this unit and owns a working  interest  of
50.6% and a net revenue interest  of 40.8%.  The unit is under waterflood in
the Kraemer and Chapman formations and contains approximately 68 producing
wells, 39 shut-in wells and 54 water injection wells.  Saba conducted 
remedial  operations on this property during 1997 which resulted in increasing 
production by approximately  100 Bopd.  Saba  owns fee interests in lands in
this unit which it believes will be developable for real estate purposes as
oil operations are curtailed.

     Other. Saba also owns other producing  properties located in Santa
Barbara, Ventura, Solano, Kern and Orange counties, California, which in the
aggregate represented approximately ______% of Saba's standardized measure
value at December 31, 1998.

     California Exploration Ventures

     Coalinga Exploratory Prospect, Kern County,  California.  Saba has
acquired leases  covering  approximately 3,600 acres of land  and contractual
rights covering an additional approximate  7,000 acres of land in the region
of the prolific Coalinga oil field in the San Joaquin Valley of  California. 
Saba has participated in a 16 square mile 3-D seismic survey  covering this
area and has partially interpreted the survey. Nineteen anomalies have been
identified in the prospect area, covering five potentially productive zones,
ranging in depth from 6,500 to 12,000 feet.  Saba was  obligated to drill a
test well by December 31, 1998. Because of low oil prices and the poor
economic conditions in the oil industry, GREKA Energy intends to seek an
extension of time to drill such a test well. Under the agreement,  Saba would 
bear 100% of the cost of the wells,  which is estimated at approximately 
$300,000 in the aggregate as a dry hole and $450,000 as a completed well. 
Saba would have an 85% working (68% net revenue) interest 
in the wells.

     Northern California  Exploratory Project. In late 1997, Saba entered into
a joint venture with a large independent company and a company in which Rodney
C. Hill, a former director, has a financial interest, to acquire a
multi-thousand acre block of oil and gas leases and drill an  exploratory 
well for gas on such block.  Saba has a 30% initial  interest in the 
exploratory  well to earn a 20% working  interest in the well and in the block
and any additional wells that may be drilled by the  venture  thereon.  Saba 
regards  the  project as a high risk venture with possible  commensurate
returns. The initial objective was the sands of the Cretaceous Age at a depth
of approximately  8,500 feet. Lease acquisition costs are estimated at
approximately $300,000 to the venture and the cost of the well is estimated at
approximately  $1,250,000.  An exploratory well was drilled on this prospect
during March and April 1998 and has been abandoned. A technical review of the
land block is being performed.

     Louisiana

     Manila  Village is located in Jefferson Parish, Louisiana.  Saba operates
this property and at year end 1998, owned a working  interest of 50.7% (34.5%
net revenue interest).  The property represented  approximately 2% of Saba's
standardized measure value at December 31, 1998. The property covers
approximately 450 gross acres of land covered by shallow waters, and is
located approximately forty miles south of New Orleans.  There are six
producing wells that  produced  an average of approximately ______ BOEPD for
the year ended December 31, 1998.  Saba is participating in a 3-D seismic
program which includes the field and expects that the results of the survey
will assist Saba in its evaluation of additional drilling opportunities in the
field.

     Potash Field, which is located in Plaquemines Parish, Louisiana, was 
acquired by Saba in September 1997.  Saba operates  all of the wells in the
property that represented  approximately 27% of Saba's standardized measure
value at December 31, 1998.  The property is a salt dome feature  originally
discovered by Humble Oil and Refining Company and covers  approximately 3,600
acres. The property is located in a shallow marine  environment southeast of
New Orleans.  At year end 1998, Saba owned a 100% working  interest and a
84.5% net revenue interest in this property,  on which are  located  ten 
active  wells and a number of  shut-in or suspended wells.  Average production
from the property for the year ended December 31, 1998, was _______ BOEPD. 
Saba believes that remedial work on several of the wells will result in
increased  production  levels. The salt dome feature in the field has not been
fully explored. Saba plans on conducting a 3-D seismic survey to delineate the
field.  Production in this field is from multiplay zones, the deepest of which
is 15,000 feet.

     The Louisiana properties in which Saba has producing oil and gas fields
were damaged by the 1998 Hurricane Georges.  Although portions of the
properties were minimally damaged, others were considerably damaged.  Initial
assessments did not indicate environmental problems; however, tanks, piping,
living quarters and other equipment have been heavily  damaged, causing 
delays in resuming operations. Saba's insurance carrier has been contacted to
process a claim.

     Other United States Properties

     In addition to its California and Louisiana properties, Saba owns
producing properties in a number of states, primarily New Mexico, Michigan, 
Texas and Oklahoma, which collectively represented approximately 12% of Saba's
standardized measure value at December 31, 1998.  At such date, these 
properties had proved reserves of 0.9 MMBOE.  Production from the properties
approximated ______ BOEPD for the year ended December 31, 1998.  (see "Saba -
Recent  Developments  - Sale of Certain  Assets") The principal producing
property is:

     Southwest Tatum Field, which is located in Lea  County,  New Mexico was
acquired  by Saba as an exploratory  project in late 1996.  Saba holds leases
covering  approximately  2,000 gross acres of land,  in which Saba has a
working interest of 50% (38.75%  net  revenue  interest).  During the last
part of 1996, Saba, as operator, commenced the drilling of a 14,000 foot
exploratory Devonian test well.  In  addition  to the  deepest  zone,  the 
Devonian  (which has been abandoned  after  having  produced in excess of
20,000  barrels of high  gravity oil), the well has three  other  potential 
oil  producing  zones.  Saba has recompleted the well in the shallower Cisco
zone. A second reentry well to test the  shallower  zones was completed  in 
September  1997.  A gas sales line was completed  in  February  1998, allowing 
for gas sales from the two wells.  Two additional wells were drilled on this
property in 1998 at an approximate cost of $350,000 each to Saba's interest. 
One well was completed in September  1998 in the Cisco zone, and the other was 
drilled in August 1998 and is being tested.  The property produced
approximately ______ BOEPD for the year ended December 31, 1998.

     Colombian Properties

     General

     Saba's Colombian operations are conducted on two Association Areas and
one mineral fee property. These properties are located in the Middle Magdalena
Basin of Colombia,  some 130 miles northwest of Bogota. Saba and Omimex
acquired their interests in the Middle  Magdalena Basin properties from Texaco
in 1994 and 1995 transactions;  each has a 25%  working  (20% net  revenue) 
interest in Nare and Cocorna Association properties, while Ecopetrol, the
Colombian state oil company owns the remaining 50% working interest. The
mineral fee property, Velasquez, is owned 75% by Omimex and 25% by Saba. The
three areas cover 52,894 gross acres of land.  The  Nare  Association  is the 
northernmost  area in  which  Saba has an interest and covers  approximately 
37,164 gross (approximately 9,300 net) acres of land. The exploitation  and
development of the Teca and Nare Fields,  and the adjacent Nare North, 
Chicala and Morichi Fields are governed by the association contract 
originally  entered into between  Ecopetrol and Texaco in 1980.  Under these
contracts,  the cost of exploratory  wells is borne solely by Saba and its
partner,  who are entitled to all revenues from such wells.  Once an area
within an  Association is declared to be a commercial  area by Ecopetrol, 
Saba and its partner  each  receives  20% of the crude oil  produced at these 
fields,  while Ecopetrol receives 40% of production and the Colombian 
government  receives the remaining  20% of  production  in the form of 
royalties.  A commercial  area is roughly  equivalent  to a field.  Each of
Saba and its partner  bears 25% of the production  costs of  commercial  areas
and  Ecopetrol  is  responsible  for the remaining 50%. The exploitation
rights under these contracts expire in September 2008 and are not renewable by
Saba under their current terms.  Saba  understands that  legislation is being 
considered by the Colombian  government  which would permit such  extensions 
to be  obtained.  Saba  intends to seek an extension of these contracts; 
however,  no assurance can be given that any extension will be granted  or
that the  terms on  which  any  extension  may be  obtained  will be
acceptable to Saba. Omimex  anticipates that the costs associated with
preparing the necessary documentation for applying to extend the terms of the
exploitation rights on the North Nare Field through 2030 will cost 
approximately $1 million.  On October 2, 1998, Saba agreed with Omimex that it
will pay up to $500,000 to prepare such documentation if the contract for the
North Nare Field is extended.  The $500,000 will be payable by Saba in January
1999.

     Generally, as in the case of Saba's interests under the Nare and Cocorna
Associations,  the Articles  require that the  contracting oil company 
perform various work obligations (including the drilling of any exploratory 
wells) at its cost on the lands covered by the Articles, and allow production 
of hydrocarbons for a stated period of years.  Upon discovery of a field
capable of commercial production and upon  commencement of production  from
that field, Ecopetrol reimburses the  contracting  party out of Ecopetrol's 
share of production for 50% of the allowable costs.  Thereafter,  costs of
operations and working interest revenues are shared 50% by Ecopetrol and 50%
by the contracting oil company, which in this case is Omimex and Saba, as
successors to Texaco, the original contracting party. The working interest is
subject to a royalty of 20% which is paid to Ecopetrol on behalf of the
Colombian government.  Several of the fields in the contract area owned by
Saba and Omimex have been declared to be commercial areas, but a number of
other areas have not yet been so designated.  Approval of both Ecopetrol and
the Ministry of the Environment is required to implement a development
program.  The Cocorna Concession area, located within the Cocorna 
Association, which was acquired by Saba from Texaco, has reverted to Ecopetrol 
because of the expiration of the term of the Articles governing that field.

     Description of the Properties

     As of the date of this report:

     *   three fields within the Cocorna  Association have been declared
         commercial by Ecopetrol:

     *   Teca (approximately  1938  acres),

     *   Toche (approximately 150 acres), and

     *   South Cocorna (approximately 700 acres), and

     *   four fields within the Nare  Association  have been declared 
         commercial:

     *   South Nare (approximately  660 acres),

     *   North Nare  (approximately  1,700  acres),

     *   Chicala (approximately 830 acres), and

     *   Moriche  (approximately 1085 acres).

   Saba's Teca and Nare Fields, which represented approximately _____% of
Saba's standardized measure value at December 31, 1998,  produced an average
of 1.87 MBopd for the year ended December 31, 1998 and ________MBOPD for the
year ended December 31, 1998, from 309 wells covering 2,598  gross  (649 net)
developed  acres and is the primary producing area.  Saba owns a 25% mineral
fee  interest in the  Velasquez  Field which covers  approximately 3,800 gross
(950 net) acres of land, and produced an average of 505 Bopd for the year
ended  December  31,  1997 and ______ Bopd for the year ended December 31,
1998.

     Saba's Colombian properties in the aggregate represented 8.1 MMBOE at
December 31, 1998 or approximately 46% of Saba's total proved reserves and
approximately 16% of Saba's standardized measure value at that date.  The
following table provides information concerning Saba's interest in the
commercial areas and fee minerals in Colombia.

<TABLE>
                                                   Average Daily Barrels of
                      Proved Reserves    Number        oil produced for the
                      at Dec. 31, 1998     of              year ended     
Field Name                (MMBbls)       Wells          December 31, 1998
-------------------   ----------------   ------      -----------------------
<S>                   <C>               <C>          <C>
Velasquez

North Nare

Magdalena/Cocorna 

Teca & South Nare  
                       ==============    =======         ===============
Total
                       ==============    =======         ===============

</TABLE>

     Production from all of the fields comes from relatively shallow
reservoirs lying at approximate depths of from 1,200 to 3,000 feet. All of the
production (save that produced from the Velasquez  field) is of a relatively
heavy grade of crude oil,  generally in the area of 10(Degree) to 13(Degree)
gravity API. Wells generally  produce small  amounts of formation  water in 
conjunction  with oil.  Because of the viscosity of the oil, wells are 
initially produced without artificial stimulation and thereafter  stimulated
by cyclic steam injection.  Wells cost approximately $250,000 to $300,000 to
the total working interest, depending upon depth.

     During  1997,  Saba  and  the  operator  participated in the drilling or
recompletion  of thirteen  wells in the Teca and South Nare  Fields.  All of
the wells drilled were  productive  and the operator is in the process of
installing steaming  equipment.  During 1998, Saba and the operator 
participated  in the drilling and completion of ____ wells in the Teca and
South Nare Fields.

     Saba and Omimex  reentered a suspended Texaco drilled well to an area
under the Magdalena River and recompleted the well as productive of 
approximately 30 Bopd without  artificial  stimulation.  Both Saba and the
operator believe that another two wells should be drilled  into the area in an
effort to establish an additional  commercial area. Should those efforts be
successful, it is believed that from 15 to 20 additional drilling locations
would be established.  In the Velasquez field, Saba and Omimex  recompleted
three wells in a behind-pipe zone. Initial per well  production  rates range
from 142 Bopd to 223 Bopd.  Studies to date indicate up to 23 additional 
wells with behind pipe reserves  suitable for recompletion. ______ additional 
wells were  recompleted  during 1998.

     During 1997, the operator in conjunction with Saba formulated a plan for
the drilling of approximately 200 development wells in the Nare North, 
Chicala and Moriche  fields.  This  program,  subject to regulatory  approval, 
would be implemented  through  the  year  2001.  Saba is also  considering 
joining in a development program at the Velasquez property.

     Sabacol is not the operator of the Colombian properties in which it has
an interest and has notified the operator of Sabacol's intent to audit all
relevant operating documents and all financial  transactions for 1996, 1997
and 1998. Any potential future action would be based on results of the audit. 
In December 1998, a new management team was appointed for Sabacol to protect
its assets and develop an effective reorganization plan.  Sabacol has filed a
voluntary petition under Chapter 11 of the United States Bankruptcy Code and
has entered into an agreement to sell substantially all of its assets.  See
"Business of Saba Petroleum Company - Recent Saba Developments - Bankruptcy of
Sabacol, Inc. and Contract for Sale of Sabacol's Assets."

     In the event Sabacol's interest in the Colombian pipeline is transferred 
to a third party while Sabacol maintains its interest in the Colombian 
production, Sabacol  may be subject to a tariff in excess of the current rate
charged to Sabacol by the current owner of the  remaining 50% interest in the
pipeline.  In or about July 1998, the pipeline was affected by guerrilla
activity.

     Crude Oil Sales and Pipeline Ownership

     All of Saba's crude oil produced at Saba's  properties in Colombia has
been sold exclusively to Ecopetrol at negotiated prices. See "Business -
Marketing of Production." The contract price for the oil in which Saba has an
interest may be reduced  significantly  as of January 1, 1999.  In 
conjunction  with its purchase  of  interests  in the Nare  Association,  Saba 
also  purchased  a 50% interest in the 118-mile Velasquez-Galan  Pipeline,
which connects the fields to the 250,000 Bopd Colombian  government-owned 
refinery at  Barrancabermeja.  See "Exploration  and  Development  Drilling 
Activities -  Colombia."  The pipeline transports oil from Saba's fields,
together with a lighter crude oil supplied by Ecopetrol  which acts as a
diluent to Saba's heavier  crude,  and crude oil from other adjacent fields. 
The pipeline  generates  revenues through  collection of tariffs for the use
of the  pipeline.  Throughput  on this pipeline in September 1998 averaged
28,900 Bopd of which Saba's share was approximately 2,100 Bopd. In addition to
the operator and Saba,  three other companies  transport their crude oil
through the pipeline at tariff rates  established by Colombian  authorities.
Saba and the  operator  have  considered  expansion  of the  pipeline  system
if additional  production is developed by operators in the area. See "Saba -
Recent Developments - Terminated Business  Combination;  Bankruptcy of
Sabacol, Inc."

     Canadian Properties

     Saba's Canadian properties, which are owned through Beaver Lake,
represented approximately 18% of Saba's standardized measure value at December
31, 1998.  The Canadian properties produced an average of _____ BOEPD for the
year ended December 31, 1998, from wells covering ________ gross (_______ net)
developed acres, most of which are located in the  province of Alberta.  These
wells had proved reserves of 1.3 MMBOE at December 31, 1998.  The information
presented  has not been adjusted for the approximate 26% minority interest in
Beaver Lake held by others.
    
     Other International Properties

     Saba has oil and gas projects in Indonesia and Great Britain as
described in "Exploration and Development Drilling Activities."

Oil and Gas Reserves

     Saba's proved reserves and standardized measure value from proved
developed and undeveloped oil and gas properties in this document have been
estimated by the following independent petroleum engineers.  In 1996, 1997 and
1998, Netherland, Sewell & Associates, Inc. prepared reports on Saba's
reserves in the United States and Colombia and Sproule Associates Limited
prepared a report on Saba's  Canadian  reserves.  The  estimates  of these 
independent  petroleum engineers were based upon review of production 
histories and other  geological, economic, ownership and engineering  data
provided by Saba. In accordance with the SEC's guidelines, Saba's estimates of
future net revenues from Saba's proved  reserves and the present value thereof
are made using oil and gas sales prices  in effect  as of the  dates of such
estimates and are  held  constant throughout the life of the properties,
except where such  guidelines  permit alternate treatment, including, in the
case of gas contracts, the use of fixed and determinable contractual price
escalation.  Future net revenues at December 31, 1998, reflect weighted
average prices of $8.29 per BOE compared to $13.13 per BOE and $17.05 per BOE
as of December 31, 1997 and 1996, respectively.  There have been no reserve 
estimates  filed with any other United States  federal authority or agency,
except that Saba  participates in a Department of Energy annual survey, which
includes furnishing reserve estimates of certain of Saba's properties.  The
estimates furnished are identical to those included  herein with respect to
the properties covered by the survey.

     The following tables present total estimated proved developed producing,
proved developed non-producing and proved undeveloped reserve volumes as of
December 31, 1996, 1997 and 1998, and the estimated present value of future
net revenues ("PV 10") (based on current prices and costs at the respective
years end, using a discount factor of 10 percent per annum). As used herein,
the term "proved  undeveloped reserves" are those which can be expected to be
recovered from new wells on undrilled acreage, or from existing wells where a
relatively  major expenditure is required for recompletion.  Reserves on
undrilled acreage shall be  limited to those drilling units offsetting 
productive  units that are  reasonably  certain of  production  when drilled. 
Proved reserves for other undrilled units can be claimed only where it can be 
demonstrated  with certainty that there is continuity of production from the
existing productive  formation.  Under no circumstances should estimates for
proved  undeveloped  reserves be attributable  to any  acreage for which an
application of fluid injection or other  improved recovery technique  is
contemplated,  unless such techniques have been proved effective by actual
tests in the area and in the same  reservoir.  There can be no  assurance 
that these estimates  are accurate  predictions  of reserves or of future net
revenues from oil and gas reserves or their present value. As indicated
elsewhere, the prices received for oil and gas have increased since the
preparation of the 1998 year end engineering estimates.

<TABLE>
                                     Estimated Proved Oil and Gas Reserves

                                                   At December 31,
                                         ---------------------------------
                                          1996          1997         1998
                                         ------        ------       ------
<S>                                     <C>          <C>           <C>
Net oil reserves (MBbl)
   Proved developed producing........    12,029       13,977         6,661
   Proved developed non-producing....     1,367        2,639         1,775
   Proved undeveloped................    13,283        7,309         5,469
                                         ------        ------       ------
    Total proved oil reserves (MBbl)..   26,679       23,925        13,770
                                         ======        ======       ======
Net natural gas reserves (MMcf)
   Proved developed producing.........   12,659       11,995         5,252
   Proved developed non-producing.....    1,516        5,407         5,865
   Proved undeveloped.................    9,490       13,894        11,880
                                         ------        ------       ------
    Total proved natural gas
      reserves (MMcf) ................   23,665       31,296        22,997
                                         ======        ======       ======

Total proved reserves (MBOE)..........   30,623       29,141        17,738
                                         ======       ======        ======

</TABLE>

     Estimates of proved reserves may vary from year to year reflecting 
changes in the  price of oil and gas and  results  of  drilling  activities 
during  the intervening period.  Reserves previously classified as proved
undeveloped may be completely removed from the proved reserves  classification
in a subsequent year as a consequence of negative  results from additional 
drilling or product price declines which make such undeveloped reserves  
non-economic to develop.  Conversely, successful development and/or increases
in product prices may result in additions to proved undeveloped reserves. 

<TABLE>

                                              Estimated Present Value of
                                                 Future Net Revenue

                                                    At December 31,
                                        -------------------------------------
                                          1996             1997        1998
                                          ----             ----        ----
<S>                                    <C>              <C>          <C>
PV-10 Value                                           (In thousands)
   Proved developed producing.......... $ 84,916        $ 62,215      $ 9,406
   Proved developed non-producing......    9,227          16,097       7,369
   Proved undeveloped..................   61,796          40,317       6,376
                                        --------         --------    --------

      Total..........................   $155,939        $118,629      $23,125
                                        ========         ========    ========

</TABLE>

As used herein, the terms "proved oil and gas reserves," "proved developed oil
and gas reserves," and "proved undeveloped reserves" have the meanings defined
by the SEC as set forth in the Table of Contents to this document.  Reservoir
engineering is a subjective process of estimating the sizes of underground
accumulations of oil and gas that cannot be measured in an exact way.  The
accuracy of any reserve estimate is a function of the quality of available
data and of engineering and geological interpretation and judgment.  Reserve
reports of other engineers  might differ from the reports contained herein. 
Results of drilling, testing and production subsequent to the date of the
estimate may justify revision of such estimate.  Future prices received for
the sale of oil and gas may be  different from those used in  preparing these
reports.  The amounts and timing of future operating and development costs may
also differ from those used.  Accordingly, reserve estimates are often
different from the quantities of oil and gas that are ultimately recovered. 

    Colombia

     Oil produced from Saba's Middle Magdelena Basin Fields, after being sold
to Ecopetrol,  is  processed  in  a  250,000  Bopd  government  owned 
refinery  in Barrancabermeja, Colombia. Saba believes that the refinery has
sufficient unused throughput capacity to satisfy any reasonably foreseeable
increase in production that  might be  achieved  from  Saba's  Colombian 
exploration  and  development program.  The  refinery is  connected  to Saba's 
Colombian  fields  through the 118-mile Velasquez-Galan Pipeline owned by Saba
and its partner. The pipeline is currently operating at approximately  12,000
Bopd (together with 18,000 Bbls of diluent per  day) and has the  capacity  to
carry  approximately  20,000  Bopd (together with 30,000 Bbls of diluent  per 
day).  Accordingly,  significant capacity  exists for additional throughput. 
Saba owns a 50%  interest  in the Velasquez-Galan  Pipeline and is working
with Omimex, the owner of the remaining 50% interest,  to explore the 
feasibility of extending it to an export terminal on the Colombian coast. The
pipeline currently generates tariff revenue from the transportation  of oil
produced for Ecopetrol's  interest and by other producers in the area.  The
tariff  revenue  is  sufficient to cover the direct expenses associated  with 
the  operation  of the  pipeline.  See "The Company - Recent Developments -
Terminated Business Combination." See also the discussion elsewhere herein of
the pending sale of assets by Sabacol.

     The  formula  for  determining  the  price  paid  for oil  produced  at
the Teca-Nare  Fields is based upon the average of two price baskets of fuel: 
(A) a crude fuel oil basket (1% sulphur  United States Gulf Coast and 
Ecopetrol  fuel oil for exportation) and (B) an international  crude basket
(Maya, Mandji and Isthmus)  adjusted for gravity API and sulphur content. The 
average  of Baskets A and B is then  discounted based on the price of West
Texas Intermediate ("WTI") crude oil,  an  industry  posted price  generally
indicative of prices for sweeter, lighter crude oil. If WTI is less than
$16.00 per Bbl, the average of Baskets A and B is discounted  by $1.65 per
Bbl; if WTI is  between  $16.00  and  $20.00 per Bbl, the average of Baskets A
and B is discounted  by $2.05 per Bbl;  and if WTI is greater than $20.00 per
Bbl, the average of Baskets A and B is discounted by $2.45 per Bbl.  The
formula may be adjusted by  Ecopetrol  in February  1999.  Ecopetrol is
required to pay for oil produced at the Teca-Nare  Field in the following
denominations: 75% in United States dollars paid in the United States and 25%
in Colombian pesos paid in Colombia.

     For production from its Velasquez  Field,  Saba receives a contracted
price of between  $6.00 and $7.00 per Bbl for basic  production  of up to 34
MBbl per month. For incremental production above such amount, Saba receives a
price equal to the average of (a) the prior quarter average of the prices of
Baskets A and B and (b) the  average  international  price of crude oil from
the  Velasquez  and Tisquirama Fields in Colombia, which average is then
discounted by approximately 47%.

     The average sales price of Saba's Colombia production was $______ per Bbl
for the year ended December 31, 1998, and $12.04 per Bbl in 1997, representing
approximately _____% and 64.6%, respectively, of the average posted price per
Bbl for WTI crude oil during those periods.

     The following  table  summarizes  sales volume, sales price and
production cost information for Saba's net oil and gas production for each of
the years in the three-year period ended December 31, 1998.

<TABLE>
                                                           
                            Year Ended December 31,
                       --------------------------------     
                        1996         1997         1998   
                       ------       ------       ------
<S>                    <C>         <C>          <C>
Production Data:  
  Oil (MBbls)           1,968        2,107       
  Gas (MMcf)            1,651        2,408
    Total (MBOE)        2,243        2,508

Average Sales 
  Price Data 
  (Per Unit):
  Oil (Bbls)            14.43      $  13.73
  Gas (Mcf)              1.88          2.09
  BOE                   14.05         13.54

Selected Data 
 per BOE:
  Production costs (1)$  6.51      $   6.62
  General and 
    administrative       1.72          1.93
  Depletion, 
    depreciation and
    amortization         2.43          2.84

</TABLE>
--------------------
(1)   Production costs include production taxes.


Drilling Activity

     The following tables sets forth certain information for each of the years
in the  three-year  period  ended  December  31, 1998,  relating  to  Saba's 
participation  in the  drilling of exploratory and development wells in:

     United States

<TABLE>
                                    Year Ended December 31, 
                         ------------------------------------------------- 
                             1996              1997           1998
                         ---------------  --------------   ---------------    
                        Gross(1) Net(2)  Gross(1) Net(2)  Gross(1) Net(2) 
                         -------- ------  -------- ------  -------- ------
<S>                     <C>      <C>     <C>      <C>     <C>      <C>
Exploratory Wells
  Oil                       -       -        2       -
  Gas                       3     1.35       -       -
  Dry (3)                   3     1.28       -       -
Development Wells
  Oil                      10     6.59      10     10.00
  Gas                       3      .64       -       -     
  Dry (3)                   1      .35       1      1.00   
Total Wells
  Oil                      10     6.59      12     11.00   
  Gas                       6     1.99       -       -     
  Dry (3)                   4     1.63       1      1.00   

</TABLE>
----------------------
(1)  A gross well is a well in which a working  interest is owned. The number
of gross wells is the total  number of wells in which a working  interest is
owned.
(2)  A net well is deemed to exist when the sum of fractional ownership
working interest in gross wells  equals one.  The number of net wells is the
sum of fractional working interests owned in gross wells expressed as whole
numbers and fractions thereof.
(3)  A dry hole is an exploratory or development well that is not a producing
well.

     Colombia and Great Britain

<TABLE>
                                    Year Ended December 31, 
                        ------------------------------------------------- 
                             1996              1997           1998
                        ---------------  --------------   ---------------    
                       Gross(1) Net(2)  Gross(1) Net(2)  Gross(1) Net(2) 
                       -------- ------  -------- ------  -------- ------
<S>                   <C>      <C>     <C>      <C>      <C>      <C>
Exploratory Wells
   Oil                    -        -        -      -
   Gas                    -        -        -      -      
   Dry (3)                -        -        -      -
Development Wells
   Oil                    -        -       13     3.25   
   Gas                    -        -        -       -
   Dry (3)                -        -        -       -     
 Total Wells
   Oil                    -        -       13     3.25
   Gas                    -        -        -        -     
   Dry (3)                -        -        -        - 

</TABLE>
------------
(1)  A gross well is a well in which a working interest is owned. The number
of gross wells is the total number of wells in which a working interest is
owned.
(2)  A net well is deemed to exist when the sum of fractional ownership
working interest in gross wells equals one.  The number of net wells is the
sum of fractional working interests owned in gross wells expressed as whole
numbers and fractions thereof.
(3)  A dry hole is an exploratory or development well that is not a producing
well.

     Canada

<TABLE>
                                    Year Ended December 31, 
                      ------------------------------------------------- 
                           1996              1997           1998
                      ---------------  --------------   ---------------    
                      Gross(1) Net(2)  Gross(1) Net(2)  Gross(1) Net(2) 
                      -------- ------  -------- ------  -------- ------
<S>                   <C>      <C>     <C>      <C>     <C>     <C>
Exploratory Wells
  Oil                    -       -        -       -
  Gas                    -       -        -       -     
  Dry (3)                1      .01       1      1.00
Development Wells
  Oil                    -       -        -       -
  Gas                    -       -        -       -
  Dry (3)                -       -        -       -
Total Wells
  Oil                    -       -        -       -
  Gas                    1      .01       -       -
  Dry (3)                -       -        1      1.00

</TABLE>
------------ 
(1)  A gross well is a well in which a working  interest is owned. The number
of gross wells is the total  number of wells in which a working  interest is
owned.
(2)  A net well is deemed to exist when the sum of fractional ownership
working interest in gross wells equals one. The number of net wells is the sum
of fractional working interests owned in gross wells expressed as whole
numbers and fractions thereof.  No reduction is made for the minority interest
in Beaver Lake.
(3)  A dry hole is an exploratory or development well that is not a producing
well.

Productive Oil and Gas Wells

     The following table sets forth information at December 31, 1998, relating
to the number of productive oil and gas wells (producing  wells and wells
capable of production, including wells that are shut in) in which Saba owned a
working interest:

<TABLE>

                         Oil                     Gas                 Total
                 Gross           Net      Gross         Net     Gross     Net
<S>          <C>             <C>          <C>         <C>       <C>    <C>
United States
Canada (1)
Colombia
              ---------      ---------    --------    -------   ------ -------

              =========      ==========   ========    =======   ====== =======
</TABLE>
------------
(1)  No reduction is made for the minority interest in Beaver Lake.

     In addition to its working interests, Saba held royalty interests in
approximately 82 productive wells in the United States and Canada at December
31, 1998.  Saba does not own any royalty interests in Colombia.

Oil and Gas Acreage

    The following table sets forth certain information at December 31, 1998
relating to oil and gas acreage in which Saba owned a working interest:

<TABLE>

                             Developed (1)                      Undeveloped
                             -------------                      -----------
                       Gross               Net           Gross           Net
<S>               <C>                <C>              <C>          <C>
United States
Canada (2)
Colombia
                  ------------        -----------      ----------  -----------
    Total
                   ============        ===========      ============ =========
</TABLE>
---------------
(1)  Developed acreage is acreage assigned to productive wells.
(2)  No reduction is made for the minority interest in Beaver Lake.

Title to Properties

     Many of Saba's oil and gas properties are held in the form of mineral
leases, licenses, reservations, concession agreements and similar agreements.
In general, these agreements do not convey a fee simple title to Saba, but
rather, depending upon the jurisdiction in which the apposite property is
situated, create lesser interests,  varying from a profit a prendre  to a 
determinable interest in the minerals.  In some jurisdictions,  notably
non-U.S. jurisdictions, Saba's interest is only a contractual relationship 
and bestows no interest in the oil or gas in  place.  As is customary in the
oil and gas industry, a preliminary investigation of title is made at the 
time  of  acquisition  of undeveloped properties.  Title investigations are
generally completed,  however, before  commencement  of drilling  operations 
or the  acquisition  of producing properties.  Saba  believes  that its 
methods of investigating title to, and acquisition  of,  its oil and  gas 
properties  are  consistent  with  practices customary in the industry and
that it has  generally  satisfactory  title to the leases covering its proved 
reserves.  Because most of Saba's oil and gas leases require continuous 
production beyond the primary  term, it is always possible that a cessation of
producing or operating  activities  could result in the loss of a lease. 
Assignments of interest to and/or from Saba may not be publicly recorded.

     Substantially all of Saba's properties, including its stock in its
subsidiaries  are  hypothecated  to secure Saba's current and future
indebtedness to its bank.  Saba's working interest in properties may be
subject to lienholders by non-payment.  Saba expects liens to be filed 
against its assets and to be subject to lawsuits arising  out of Saba's 
non-payment or untimely payment of its obligations.  The Santa Maria Refinery
and the associated  real property owned by Saba is encumbered by a first trust
deed in the amount of $1.0  million in favor of the seller of the refinery and
is in place to secure Saba's performance of obligations as provided under the
terms of the purchase and sale agreement.  Oil and gas leases in which Saba
has an interest may be deficient and subject to action by Saba.

     Saba may require ratifications for various leases for Vacca Tar Sand in
California.  Maintenance of Saba's interest is subject to fulfillment of
drilling and other obligations contained in its agreements with the operator
of the property.  Maintenance of the leases is dependent  upon  fulfillment 
of various drilling and producing operations over which Saba has little if any
control.  Consequently, it is possible for Saba to lose its interests in  such 
leases  through  action or inaction of the  operator.  Saba understands  that
the leases have been essentially  non-productive  for various periods of time,
which fact may result in termination of the leases.  Saba does not follow
operations on the leases and consequently is not aware of whether the leases
are in good standing or may be subject to termination.

Average Sales Price and Production Cost

     The following table sets forth information concerning average per unit
sales price and production cost for Saba's oil and gas production for the
periods indicated:
                                                                  
<TABLE>
                                                               
                     Year Ended December 31,
                    --------------------------
                    1996       1997       1998        
                    ----       ----       ----
<S>             <C>        <C>          <C>
Average sales 
 price per BOE
  California    $  15.10    $  13.49    
  Colombia         12.49       11.96
  Canada           13.26       10.52
  Other            17.39       17.68
  Combined         14.05       13.54

Average production 
 cost per BOE
  California     $  8.50     $  7.48
  Colombia          5.11        5.71
  Canada            5.15        4.87
  Other             7.88        7.47
  Combined          6.51        6.62


</TABLE>

     Asphalt Refinery

     In June  1994,  in an  effort to  increase  margins  on the heavy  crude
oil produced from Saba's oil and gas properties in Santa Barbara County,
California, Saba acquired from Conoco Inc. and Douglas Oil Company of
California an asphalt refinery in Santa Maria, California, which had been
inoperative since 1992. Saba refurbished the refinery and, in May 1995, 
completed a re-permitting environmental  impact  review  process with Santa 
Barbara County, receiving a Conditional Use Permit to operate the  refinery.  

     Pursuant to the refinery purchase agreement, Conoco is required to 
perform certain remediation and other environmental activities on the refinery 
property June 1999.  Recently, evidence of current contamination  of ground
water by hydrocarbons has been brought to the attention of Saba. 

     Prior  to the  acquisition of the  refinery,  Saba  had an independent 
consultant  perform  an  environmental  compliance  survey  for the refinery.  
The survey did not disclose required  remediation in areas other than those
where the seller is responsible for remediation,  but did disclose that it was
possible that all of the required remediation may not be completed in the
five-year  period.  Saba has asked Conoco to provide their revised timeline to
complete the remediation.

     During June 1998, Saba was advised by the seller's consulting engineers
that groundwater monitoring conducted in May 1998  had revealed levels of
benzene in all four  monitoring  wells which exceeds allowable limits.  Prior
to that time, groundwater monitoring wells have not shown evidence of
groundwater contamination.  In addition, detectable amounts of toluene,
ethylbenzene and xylenes were reported. Historically,  BTEX  compounds  have
not been  detected in  groundwater  samples obtained since 1992. At the
request of the Regional Water Quality  Control Board, the wells were resampled
in July 1998. Consistent with the historical analytical  results,  petroleum
hydrocarbons were not detected in the July 1998 samples. The environmental 
contractor,  who has used the same sampling protocol since  1992, could not
identify any specific reason for the apparent inconsistency found in the May
1998 samples.  The RWQCB has requested additional monitoring  wells to be 
placed  on site and on  property  directly  west of the refinery perimeter. 
Four additional  monitoring wells were installed in October 1998 within or
immediately  downgradient of areas of known soil contamination on and adjacent
to the refinery. Preliminary sampling results indicate the presence of heavy 
hydrocarbons  in the  groundwater  samples  from two of the wells,  at
concentrations 2 to 4 times above typical regulatory action levels.  Benzene
was also detected in these same wells at  concentrations  equal to or slightly
above drinking water limits.  At the  hydrocarbon  concentrations  detected in
the two groundwater samples, Saba expects that continued monitoring will be
required but that  active groundwater remediation will not be  necessary.  
Additional groundwater sampling to confirm the  preliminary results were
conducted in December 1998.  Saba believes that the  contamination  is 
attributable to the previous refinery owner's operations, since contaminates
at the refinery were produced by the previous owner of the refinery and were
identified prior to purchase.  Appropriate  authorities  have been  notified
of this condition.  In November  1998,  the RWQCB  advised  Saba  that it is 
preparing a Cleanup or Abandonment Order to establish  soil and  groundwater 
investigation,  cleanup, monitoring and a time  schedule at the refinery 
required to address pollution resulting from post refinery operations.  In its
notification, the RWQCB stated that its perspective of the site has changed
and its water quality concerns are increased since the groundwater table
elevation has risen to be proximate to the base of the hydrocarbon
contaminated soil.

     Further, the owner of land adjoining the refinery, and the seller in
August 1998 of said adjoining property to an affiliate of Saba, had advised
Saba that his adjoining property had been contaminated by underground 
emissions from the  refinery.  Saba asserts remediation is the  responsibility
of Conoco.  Should the foregoing matters not be resolved satisfactorily, they
may result in litigation. It is also possible  that a failure to resolve the
matters could result in significant liability to Saba. While the  seller of
the adjoining property retains a mortgaged interest in the adjoining property,
Saba's subsidiary that operates  the  refinery  has agreed to toll the statute
of limitations for any claims by the seller against the subsidiary and to
obtain the seller's consent prior to entering into any agreement with respect
to hazardous materials on the adjoining property.

     Saba entered into a processing  agreement with Crown Energy (formerly 
PetroSource) in May 1995, and commenced  operations  of the  refinery  in 
June  1995.  Under  the  processing agreement, Crown Energy purchases  crude
oil  (including  crude oil produced by Saba), delivers it to the refinery, 
reimburses Saba's  out-of-pocket  refining costs, markets the asphalt and
other products and generally  shares any profits equally with Saba.  The 
processing  agreement was renewed for an additional year through December 31,
1999 with a ninety day termination provision.  Saba terminated the agreement
in January 1999 and announced on February 9, 1999 that it will be taking over
the marketing and sale of its refinery products on April 30, 1999.

     The refinery is a fully self-contained plant with steam generation,
mechanical shops, control rooms, office, laboratory,  emulsion plant and
related facilities, and is staffed with a total of 23 operating, maintenance,
laboratory and administrative  personnel.  Crude oil is delivered to the
refinery by truck to crude oil storage consisting of one 27,000 Bbl tank and
two 40,000 Bbl tanks. Crude oil processing  equipment  consists of a
conventional  pre-flash tower, an atmospheric  distillation tower, strippers
and a vacuum fractionation tower. The refinery has truck and rail loading 
facilities,  including  some  capability of tank car unloading. Throughput at
the refinery has ranged between 2,000 to 6,000 Bopd, while production capacity
is approximately 8,000 Bopd.  Permitted capacity for the refinery is 10,000
Bopd.

Real Estate Activities

     Saba from time to time purchased real estate in conjunction with its
acquisition of oil and gas and refining properties in California and plans to
continue this practice.  In  connection with the acquisition of oil and gas
producing properties in Santa Maria, California in June 1993, Saba purchased
approximately 1,707 acres in Santa  Barbara  County for an  aggregate purchase
price of $465,000. In addition,  Saba acquired  approximately 370 acres in
Santa Maria, California in June 1994 in connection  with the acquisition of
its Santa Maria refinery.  In addition, Saba  entered into an agreement to
acquire approximately 385 acres in Santa Barbara County in connection with  an
acquisition of producing oil and gas properties at a contract purchase price
of $400,000, the closing of which took place in June 1995.  In addition,  Saba
acquired approximately 1 acre in October 1997 for $50,000 and approximately 4
acres in February  1998,  for $500,000 located in Yorba Linda, Orange County,
California. Saba has used a portion of its real estate holdings for
agricultural purposes.  Saba plans to retain some of these real estate
holdings for asset appreciation which may include developmental activities at
a future date.

Item 3.  Legal Proceedings.

     In re  Sabacol,  Inc.,  Debtor (BK Case No. ND  98-15858-RR United States
Bankruptcy Court,  Central District of California,  Northern Division, 
December 1998) On December 11, 1998,  Sabacol,  Inc., a  wholly-owned 
subsidiary  of the Company  ("Sabacol"),  filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code in the Central District of
California.  Sabacol has filed a motion with the bankruptcy court for an order
authorizing the sale of substantially all of its real and personal property to
Omimex pursuant to an asset purchase agreement entered into on March 17, 1999
and, upon completion of the sale, termination of Sabacol's bankruptcy
proceedings.  A bankruptcy court hearing regarding the approval of the
contract has been scheduled for April 23, 1999.

     Gitte-Ten  v. Saba  Petroleum  Company  (Case No. CV 980202 Superior and
Municipal  Courts of the State of California, County of San Luis Obispo, March
1998).  In December 1997, Saba contracted with Gitte-Ten, Inc. to purchase 
from GTI all of its surface fee and leasehold interests in certain property
located in Santa Barbara County, California.  A portion of the purchase price
was paid at closing on December 31, 1997, at which time GTI's interests were
conveyed to Saba.  The remaining purchase price of $350,000 was to be paid
through overriding royalty payments of Saba's gross income from the leases
until the balance was retired but no later than January 1, 2003, on which date
any unpaid balance was to be immediately due and payable.  To provide GTI with
an assurance of Saba's payment  obligation,  Saba executed a promissory note
in the principal amount of $350,000  which provided that said amount (less the
total amount of overriding royalties paid to GTI) was all due and payable on
February 27, 1998, unless Saba replaced the note by February 24, 1998, with an
irrevocable and non-cancelable surety bond or letter of credit in the amount
of the then unpaid balance.  Saba was unable to procure either instrument and
the note became all due and payable on February 27, 1998.  Notwithstanding
attempted settlement conferences by Saba with GTI, GTI filed a claim against
Saba in March 1998, for breach of contract, seeking damages of $350,000 plus
interest at the rate of 13.5% per annum and attorney fees.  The court has
granted but not entered summary judgement in favor of GTI.  Saba plans to
appeal.

     Orleans Levee Board v. Saba Energy of Texas,  Inc.,  et al.  (Docket No.
98-14233 Civil District  Court,  Parish of Orleans,  State of Louisiana, 
August 1998).  With  respect to its  interest in the Potash  Field, 
Louisiana,  Saba's subsidiary  had  suspended   approximately  $380,000 
through  January  1998  of royalties for unknown royalty owners who have since
been identified.  One of the parties,  Orleans Levee Board, had instituted
legal proceedings against Saba for all of the  royalties  suspended  and
double said amount for damages and for the dissolution  of the subject 
leases.  The Levee Board has agreed to an extension for Saba to respond 
pending a resolution  with all  identified  royalty  owners and/or  their 
geologists  in an attempt to reach an agreement  regarding  their respective 
allocations  of said  suspended royalties and to create a voluntary unit. The
approximate amount of the suspended  royalties upon Saba's acquisition of the
subject property was approximately $372,000 which Saba had applied as an
adjustment to the purchase price.  Saba  and/or  its  subsidiary  bears the
obligation to pay the  royalties  upon  resolution.  Failure to pay timely or
a judgement for the Levee  Board may result in Saba  losing its  interest  in
the leases and  incurring  a  payment  obligation  for  the  royalties,  
interest, attorney's fees, and damages sought at double the amount of
royalties.

     Chase v. Saba  Petroleum,  Inc. (Case No.  SM108977,  Superior Court of
the State of California, County of Santa Barbara-Cook Division, July 1998). In
July, 1998,  Saba was served with a lawsuit filed by an individual  alleging 
personal injury in the amount of $515,000  resulting  from  general 
negligence  premises liability  on one of the oil  leases  that  Saba 
operates  and  which he claims occurred while  supervising  the  installation
of a pump into a well operated by Saba and on a  drilling  rig owned by a 
co-defendant.  Saba is  represented  by counsel  appointed by Saba's 
insurance  carrier  by a claim  submitted under Saba's general liability
policy.  Trial is scheduled to commence May 25, 1999.

     Saba Energy of Texas,  Inc. v. Marks & Garner Production Ltd. Co., et al.
(Case No.  CV-97-106 FR District  Court Lea County,  State of New Mexico, 
March 1997).  Saba instituted an action for  declaratory  judgment for the
validity of Saba's oil, gas and mineral lease as being  superior to the prior
lease covering the subject lands, said prior lease, as Saba asserts, having
expired by cessation  of  production.  If  Saba  prevails,  it  will  be 
obligated  to pay consideration of approximately $55,000 to the lessors.  Saba
moved for summary judgment on April 6, 1999 and the court has taken the matter
under advisement.
 
     Statutory  Liens.  Statutory liens have been recorded against the
Louisiana and New  Mexico  properties  owned  by Saba  for  Saba's  failure 
to pay  trade payables.  Actions have been taken to proceed with  foreclosure
on some of these liens. Further, lawsuits have been filed and served upon
Saba's subsidiaries for the payment of trade payables.  Saba has contacted 
certain of these claims with respect to Louisiana  and New Mexico known by it 
to propose and agree upon a payment plan with the vendors in exchange for
their  forbearance on any further  action. Saba has entered,  is entering or
plans to enter into payment  plans agreed upon with such vendors and any
additional  vendors so required. 

     In March 1998,  the Louisiana Department of Natural  Resources claimed to
Saba an audit  exception for royalties paid on lease use gas in the 
approximate amount of $7,000 that was unpaid at September 30, 1998.

     Saba may be subject to resolving property matters, including claims
related to  mineral  interests,  working  interests,  and/or  surface  use 
and  rights, including without limitation  relocations of gas transfer lines, 
abandonment of wells or failure to abandon  giving rise to claims of lost 
profits from surface owners and/or a third parties in interest, and errors in
disclosure of location, production and/or rights may have occurred by Saba
with respect to its operating activities. 

     Internal  Revenue  Service.  In its review of Saba's payroll tax and
information returns for the years ended 1993-1995, the Internal Revenue
Service proposed adjustments based upon the assertions that Saba 
misclassified as independent contractors various persons who were employees of
Saba, that Saba did not withhold income taxes from payments made to such
persons, and that Saba failed to file its information returns timely. This
matter was settled in 1998 through payments and audits resulting in an
associated liability of $10,000 recorded by Saba at December 31, 1998.
          
     From time to time, Saba is a party to certain litigation that has arisen
in the normal course of its business and that of its  subsidiaries.  In the
opinion of  management,  none of this  litigation  is likely to have a
material  adverse effect on Saba's  financial  condition  or  results of 
operations.  Saba may be subject to legal actions that have been threatened
without Saba's knowledge.

Item 4.  Submission of Matters to a Vote of Security Holders.

     No matters were submitted to a vote of security holders of GREKA Energy
during the quarter ended December 31, 1998. 


                                PART II

Item 5.   Market for Common Equity and Related Stockholder Matters.

     GREKA Energy common stock is listed for trading on the Nasdaq 
SmallCap Market under the symbol "GRKA".  Prior to March 25, 1999, the trading
symbol was "HVNV". Except for a period from August to December of 1997, GREKA
Energy's common stock has been quoted on NASDAQ since February 19, 1993.  The
following table sets forth, for the periods  indicated, the high and low
closing bid quotations per share of GREKA Energy common stock as reported on
the Nasdaq SmallCap Market.  GREKA Energy common stock quotations represent
inter-dealer  quotations,  without retail markup,  markdown or commissions, 
and  may  not  represent  actual  transactions.  There  can  be no assurance 
that a public  market for GREKA Energy's common stock will be sustained in the
future.

<TABLE>
                                                        Bid*
            Quarter Ended                         Low        High  
           <S>                                 <C>         <C>
            March 31, 1996 . . . . . .  . . .   $ .19       $  .22
            June 30, 1996 . . . . . . . . . .     .13          .13
            September 30, 1996 . . . . . . . .    .25          .31
            December 31, 1996 . . . . . . . .     .19          .25
            March 31, 1997 . . . . . . . . . .    .19          .25
            June 30, 1997 . . . . . . . . . .     .03          .09
            September 30, 1997 . . . . . . . .    .03          .03
            December 31, 1997 . . . . . . . .    6.82        19.00
            March 31, 1998 . . . . . . . . . .  12.00        14.75
            June 30, 1998 . . . . . . . . . .    8.0625      10.00
            September 30, 1998 . . . . . . . .   7.25         9.25
            December 31, 1998 . . . . . . . .    8.813       14.938
            March 31, 1999 . . . . . . . . .     5.875       10.50

</TABLE>


*Effective November 8, 1997, a 1 share for 220 share reverse split approved by
the U.S. Bankruptcy court was effected thus dramatically affecting the per
share price of GREKA Energy's stock. 

     On March 31, 1999, there were approximately 3,275 registered holders of
GREKA Energy's common stock.  Based on a broker count, GREKA Energy believes
at least an additional 5,861 persons are shareholders with street name
positions.

     Holders of GREKA Energy common stock are  entitled to receive  such 
dividends as may be declared by GREKA Energy board of directors.  GREKA Energy
has not yet paid any  dividends, and the board of directors of GREKA Energy
presently intends to pursue a policy of retaining earnings,  if any, for use
in GREKA Energy's  operations and to finance expansion of its business.  With 
respect to GREKA Energy common stock, the declaration and payment of dividends
in the future, of which there can be no assurance, will be determined by the
GREKA Energy board of directors in light of conditions then existing,
including GREKA Energy's earnings, financial condition, capital requirements
and other factors.

Item 6.   Management's Discussion and Analysis.

     The following information should be read in conjunction with the
consolidated financial statements of GREKA Energy and Saba appearing elsewhere
in this document.  As discussed in Note 1 of the Notes to Consolidated
Financial Statements of GREKA Energy and Note 1 of the Notes to Consolidated
Financial Statements of Saba, there currently is substantial doubt about the
ability of GREKA Energy and Saba to continue as going concerns.

Overview

     In view of significant material changes to GREKA Energy during 1998 and
the acquisition of Saba in March 1999, management believes that the financial
condition and results of operations of GREKA Energy reported herein are not
indicative of the future financial condition and results of operations of
GREKA Energy.  Saba's 1998 financial statements, which appear separately in
this document, are not consolidated with GREKA Energy's 1998 financial
statements since the acquisition had not been consummated by December 31,
1998.  Furthermore, in accordance with the accounting rules for reverse
mergers, the GREKA Energy statements of operations are not reflective of the
combined revenues from the September 1997 merger of Petro Union and Horizontal
Ventures on an annualized basis but rather reflect the combined income from
the merger date.

     Current management was appointed during the latter part of the third 
quarter of 1997 and spent the balance of the year re-structuring,
re-capitalizing, and completing mergers and acquisitions that all were part of
a specific and focused strategy.  Management has established a clear 
directive to focus on capitalizing on its experience with the low cost
horizontal drilling technology developed and patented by Amoco and thereafter 
licensed to GREKA Energy.  It is the intent of management to become a leader
in applying this horizontal drilling technology and exploiting declining 
production wells on properties such as Saba's which have been acquired by
GREKA Energy or on a service basis for major oil and gas companies.

     During 1998, GREKA Energy focused on its corporate restructuring and
acquisition efforts and its investment in a horizontal  drilling  pilot
program in the Cat Canyon field in  California.  During the first nine months
of 1998,  GREKA Energy drilled three  horizontal wells in the Cat  Canyon 
field,  namely  UCB-09,  UCB-38 and UCB-28.  Each well was drilled utilizing
GREKA Energy's Short Radius horizontal drilling technology, and resulted in a
47 foot radius with a 435 foot lateral on UCB-09, a 60 foot radius  with a 414
foot  lateral on UCB-38 and a 50 foot radius with a 252 foot lateral on
UCB-28.  In view of GREKA Energy's long-term strategy and the known sand
problem in the Cat Canyon basin,  GREKA Energy's completed  each well with a
different technique  to  establish a standard.  UCB-09 was  completed  with a
standard Ace down-hole  pump and a KD system, UCB-38 was completed  with a
KUDU pump, and UCB-28  was  completed  with a Ace  Teflon-Luber Plunger 
down-hole pump.  The kick-off point for each well was at a depth of
2,940-3,000 feet.

     The variances in the completions  allowed GREKA Energy's to obtain direct
experience on the production  capability  from  each  of the  techniques. 
UCB-09  net  production stabilized at 20 barrels of oil per day,  UCB-38
sanded up following a few weeks of  production,  while UCB-28 has net 
production  of 65 barrels of oil per day. Each of these wells were  re-entries 
into an abandoned well bore in the Sisquoc formation,  which  is one of the
two pay  zones  within  GREKA Energy's  lease in the Cat Canyon  basin. 
Following this drilling operation and completion technique definition,  GREKA
Energy's proceeded with its discussions with Saba with the intent of applying
this technique on Saba's reserves.

     During the latter of part of 1998 and early 1999, GREKA Energy was
primarily focused on the acquisition of Saba and considerable expenses were
incurred in connection with the Saba transactions in the fourth quarter of
1998 and the first quarter of 1999.  Due to the significance to GREKA Energy
of the Saba acquisition, GREKA Energy's management and staff devoted a
substantial  amount of time and effort to the acquisition. Accordingly, 
levels  of other operational activities such as prior contract drilling
programs were suspended.  In connection with the Saba transactions, GREKA
Energy plans to establish and develop an extensive drilling program on  Saba's
properties in California and commence such program in the second quarter of
1999.

     In view of the significant differences between GREKA Energy's corporate 
structure before the March 1999 acquisition of Saba and during 1997 and 1998,
comparisons of GREKA Energy's results of operations for  those  periods are
considered by management not to be either relevant or representative of GREKA
Energy's long-term potential.

Results of Operations

     Revenues decreased from $211,696 for 1997 to $145,813 for 1998.  Revenues
for 1998 were from oil production  at the Cat Canyon field.  The decline in
oil prices of over 50% coupled with the El Nino storms in California that
essentially shut the field down during February 1998 caused revenues to be
lower than initially expected.

     Operating costs decreased from $247,979 for 1997 to $121,016 for 1998. 
Planned pilot program drilling operations in the Cat Canyon field account for
most of the expenses during 1998, and such expenses are not proportional to
revenues since the three wells  drilled in the Cat Canyon field were not in
production during the entire period. In addition, GREKA Energy's incurred
significant  repair  expenses  resulting  from the El Nino storms in 
California during February 1998.

     Salaries and wages increased from $213,213 for 1997 to $455,510 for 1998. 
The increase was primarily attributable to ___________________________.

     Depreciation, depletion and amortization increased from $24,016 for 1997
to $333,468 for 1998.  The increase was primarily attributable to __________.

     The writedown of oil and gas properties of $3,171,485 in 1998 was
primarily attributable to the dramatic decrease in oil prices during the
fourth quarter of 1998.

     Other administrative expenses increased from $495,823 for 1997 to
$933,244 for 1998.  The increase was primarily attributable to legal and
consulting fees resulting from GREKA Energy's acquisition and financing
efforts related to the 1998 Saba transactions, the completion of GREKA
Energy's bankruptcy reorganization, and related SEC reporting requirements. 

     The equity in loss of Saba of $586,020 for 1998 was a result of the
application of a separate oil and gas reserve ceiling test with respect to
GREKA Energy's equity method investment in Saba as of December 31, 1998. 

     Interest income increased from $11,873 for 1997 to $83,242 for 1998. The
increase was primarily attributable to the significant amount of cash which
GREKA Energy had at the beginning of 1998 as a result of the private
placements of its common stock in the fourth quarter of 1997. 

Liquidity and Capital Resources

     Working capital decreased approximately $5.1 million from $3.1 million at
December 31, 1997 to a deficit of $2.0 million at December 31, 1998.  Current
liabilities increased from $820,327 as of December 31, 1997 to $2,249,661 as
of December 31, 1998.  The $1,429,334 increase in current liabilities was
primarily due to the issuance of a total of $2 million in short-term notes to
a shareholder in connection with the Saba acquisition, which was partially
offset by the decrease in accounts payable and accrued expenses from December
31, 1997 to December 31, 1998. 

     During the fourth quarter of 1997, GREKA Energy successfully concluded 
three private placements to re-capitalize the reorganized company.  The first
two placements were done at $10 per share while the third was  concluded  at
$13 7/8 per share. GREKA Energy issued a total of 552,470 shares with gross
proceeds of approximately $5,801,518 that resulted in net proceeds of
approximately $5,627,472.

     On December 31, 1998 GREKA Energy's cash and cash equivalents totaled 
$250,212.  The decrease in cash and cash equivalents from December 31, 1997 to
December 31, 1998 was primarily attributable to GREKA Energy's final payment
on the Cat Canyon field and the drilling program expenditures related thereto,
and legal and consulting  fees resulting from GREKA Energy's acquisition and
financing efforts during 1998.  The $2 million in proceeds from the issuance
of short-term notes in 1998 were immediately used for the acquisition of Saba
capital stock.

     GREKA Energy obtained bridge financing for the Saba business in the form
of a $1 million 15% debenture secured by GREKA Energy's limestone reserves.

     GREKA Energy's net cash used in operating activities increased from 
$449,052 for 1997 to $2,326,640 for 1998.  This increase was primarily  
attributable to the Saba acquisition, Cat Canyon drilling program
expenditures, and increased legal and consulting payments resulting from GREKA
Energy's acquisition and financing efforts during 1998.

     GREKA Energy's net cash used in investing activities decreased from 
$3,059,690 for 1997 to $1,819,046 for 1998.  This decrease was primarily
attributable to the decrease in investments in time deposits and funds held in
escrow from 1997 to 1998, which was partially offset by the cash used to
invest in shares of Saba common and preferred stock during 1998.

     GREKA Energy's net cash provided by financing activities decreased from
$6,476,094 for 1997 to $2,076,946 for 1998.  Net cash provided by financing 
activities for 1997 included the issuance of common stock for cash in the net
amount of $5.9 million, while the only significant financing activity during
1998 was the issuance of short-term notes in the amount of $2 million.

Liquidity

     Under the direction of GREKA Energy's management and strategy, GREKA
Energy is expected to have improved liquidity and low capital requirements as
a result of the acquisition of Saba.  Specifically, GREKA Energy intends to
achieve the following:

     *   Sell non-core assets to offset approximately $22,000,000 in Saba
         debt.

     *   Recapitalize the merged company with $20,000,000 through financings. 
         GREKA Energy has concluded discussions with a financial institution
         that could provide such finances.  The finances are subject to
         customary due diligence.

     *   Management expects to conclude its recapitalization plan by the end
         of the second quarter of 1999.

     *   The utilization of the in-house proprietary and cost effective     
         horizontal drilling technology, self operated fields, wholly-owned
         asphalt refinery collectively provide for low cost of operating
         expenses and high cash flow.  GREKA Energy expects to have an annual
         copex of $5,000,000 funded by its cash flow.


     GREKA Energy's management also believes that the acquisition of Saba
brings opportunities for cost savings, economies of scale and other synergies,
resulting in improved  cash flow potential for the long-term growth of GREKA
Energy and of shareholder value.  Further, the acquisition of Saba gives GREKA
Energy a stronger consolidated asset base upon which it can rely in securing
future financings, both equity and debt.  However, there is no assurance that
any specific level of cost savings or other synergies will be achieved or that
such cost savings or other synergies will be achieved within the time periods
contemplated, or that GREKA Energy will be able to secure future financings.

Recent Accounting Pronouncements

     The following new accounting pronouncements have been issued which may
affect GREKA Energy upon their adoption in future accounting periods. 

     Statement Of Position Number 98 - 5, issued by the Accounting Standards
Executive Committee of the American Institute of CPAs, entitled Reporting On
The Cost Of Start-Up Activities, became effective January 1, 1999.  This
pronouncement requires that costs of start-up activities, including
organization costs, be expensed as incurred. Initial application of this SOP
will be reported by GREKA Energy as the cumulative effect of a change in
accounting principle, as described in Accounting Principles Board Opinion No.
20, Accounting Changes. When adopting this SOP, entities are not required to
report the pro forma effects of retroactive application.  GREKA Energy will
expense approximately $25,000 in 1999 as a result of the implementation of
this pronouncement.

     Statement of Financial Accounting Standards No. 132, Employers
Disclosures about Pensions and Other Postretirement Benefits, becomes
effective in 1999 and revises employers' disclosures about pension and other
postretirement benefit plans, but does not change the measurement or
recognition of those plans.  Because GREKA Energy does not currently have in
effect any pension or postretirement plans, this pronouncement is not expected
to affect GREKA Energy.

     SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, becomes effective for all fiscal quarters beginning after June 15,
1999, and prescribes accounting and disclosure requirements for derivative
instruments and hedging activities.  This pronouncement is not expected to
affect GREKA Energy because it has no such investments.

Year 2000

     Computer programs or other embedded  technology that have been written
using two digits (rather than four) to  define  the  applicable year and that
have time-sensitive  logic may  recognize  a date using "00" as the Year 1900
rather than the Year 2000, which could result in widespread  miscalculations 
or system failures.  Both information technology  ("IT") systems and non-IT
systems using embedded  technology may be affected by the Year 2000. GREKA
Energy's drilling and other equipment does not make use of embedded chips, and
GREKA Energy believes that its equipment will not be affected by the Year
2000. GREKA Energy does not utilize any proprietary computer software, but
uses commercially available accounting and drilling plan software programs
such as Excel from vendors such as Microsoft  Corporation and Peachtree. 
GREKA Energy has been advised that the software it uses is Year 2000
compliant.
                               
     GREKA Energy has not completed its assessment of Year 2000 issues, in
particular the process of verification of whether vendors, suppliers and
significant customers with which GREKA Energy has material relationships are
Year 2000 compliant.  Under a worst-case scenario, if GREKA Energy and such
third parties are unable to address Year 2000 issues in a timely manner, it
could result in material  financial risk to GREKA Energy, including supplier
and service customer delays resulting in short-term delay of revenue and
substantial unanticipated costs. Accordingly,  GREKA Energy plans to 
devote all resources necessary to resolve  significant Year  2000 issues in a
timely manner.  GREKA Energy does not expect that costs of remediating its
Year 2000 issues will be material. GREKA Energy does not currently have a Year
2000  contingency  plan. GREKA Energy is currently not able to determine
whether the Year 2000 will have a material effect on GREKA Energy's financial
condition, results of operations or cash flows.

Inflation

     GREKA Energy does not believe that inflation will have a material impact
on GREKA Energy's future operations.

Item 7.  Financial Statements.

     Please see accompanying Index to Financial Statements commencing on page
F-1.


Item 8.   Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.

     On February 18, 1999, GREKA Energy engaged Arthur Andersen LLP to replace
Bateman & Co., Inc., P.C. as GREKA Energy's independent accountant to audit
GREKA Energy's consolidated financial statements for the year ended December
31, 1998.  Bateman & Co., Inc., P.C. was dismissed as GREKA Energy's
independent accountant on the same date.  GREKA Energy's Board of Directors
approved the change in GREKA Energy's independent accountant.      

     The independent auditor's report of Bateman & Co., Inc., P.C. for GREKA
Energy's financial statements for the year ended December 31, 1997 did not
contain an adverse opinion or a disclaimer of opinion, and was not modified as
to uncertainty, audit scope, or accounting principles.  

     During GREKA Energy's two most recent fiscal years and through the date
of the dismissal of Bateman & Co., Inc., P.C., GREKA Energy did not have any
disagreements with Bateman & Co., Inc., P.C. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.


                             PART III


Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act

     The directors and executive officer of GREKA Energy are as follows:

<TABLE>

        Name                   Age           Positions
        ----                   ---           ---------
 <S>                           <C>     <C>
  Randeep S. Grewal (A)         33      Chairman and President & Chief   
  Executive Officer                     and a Director(1)
  Dr. Jan F. Holtrop (B)        62      Director(1)
  George G. Andrews (B)         72      Director(1)
  Dirk Van Keulen(C)            39      Director(1)
  Dai Vaughan (C)               60      Director(1)

</TABLE>

(1)  The directors are divided into three classes, Class A, Class B, and Class
C, with each director serving for three years and rotating the class up for
election at each annual meeting.
(A)  Class A Director.
(B)  Class B Director.
(C)  Class C Director.

     Randeep S. Grewal - Chairman, President & Chief Executive  Officer and
Director.  Mr. Grewal most recently  served as Chairman and CEO for Horizontal
Ventures, Inc.  He assumed this responsibility in April 1997 and established
the Company's strategies and business plan resulting in consistent growth year
after year. He has been involved in various joint ventures, acquisitions, 
mergers and  reorganizations  since 1986 in the United  States,  Europe and
the Far East within diversified businesses.  Mr. Grewal has a Bachelor of
Science degree in Mechanical Engineering from Northrop University.

     Dr. Jan Fokke Holtrop - Director.  Mr. Holtrop has been a senior
Production Technology professor at the Delft University of Technology within
the Faculty of Petroleum Engineering and Mining in The Hague,  Netherlands
since 1989. Prior to the Delft  University,  he  served in  various  positions 
within  the Shell Oil Company where he started his career in 1962.  Mr. 
Holtrop has almost forty (40) years of experience within the oil and gas
exploration,  drilling and production industry with a global hands-on
background. In January 1999, Mr. Holtrop was appointed to the Board of
directors of Saba.  Mr. Holtrop has a Ph.D. and a MSC in Mining Engineering
from the Delft University of Technology.

     George G. Andrews - Director. Mr. Andrews has been a consultant and
private investor since his retirement  from the oil and gas industry in 1987. 
From 1982 until 1987 he was  employed as  corporate  Vice  President  of 
Intercontinental Energy Corporation  of  Englewood,   Colorado  directing  the 
company's  land acquisition,  lease and  management  operations.  Between June
1981 and November 1982 Mr.  Andrews was Vice  President of Shelter 
Hydrocarbons,  Inc. of Denver, Colorado  where  he  directed  all  land 
management  and  operation  procedures including contract systems and
negotiations of acquisition agreements. From 1979 to June of 1981 Mr.  Andrews 
was Senior  Landman for the  National  Cooperative Refinery   Association  in 
Denver,   Colorado  where  he  was  responsible  for negotiation and
acquisition of oil and gas leases, certifying title requirements and ongoing
daily operations in his office. Mr. Andrews obtained his B.S. degree from the 
University  of Tulsa,  Tulsa,  Oklahoma  in 1947  where he  majored in
Economics.

     Dirk Van Keulen - Director.  Mr. Van Keulen has served since January 1996
as a Director of Horizontal Ventures, Inc., which was one of the first
licensees of the Amoco technology and is currently GREKA Energy's core
business.  He served as a tax official in the Dutch  Ministry of Finance from
1979 through 1987 and then as a tax consultant  with Koolman & Co.,  until
1989.  Since 1984 Mr. Van Keulen has been actively involved in various
investment  activities.  He studied higher education in fiscal law and
accounting under the Dutch Ministry of Finance.

     Dai Vaughan - Director. A director since March 1999, Mr. Vaughan has been
an independent airline consultant since he left Continental Airlines in 1984. 
His last position with Continental Airlines was Manager of Aircraft
Acquisition.  Mr. Vaughan has served in numerous positions in his 44 year
career in the airline industry with British Airlines, El Al and finally
Continental Airlines, including Systems Engineering, Aircraft Maintenance and
Aircraft Acquisition.  Mr. Vaughan received a HNC degree (B.S. equivalent) in
Electrical Engineering at an El Al sponsored program.

     There are no family relationships among the directors. There are no
arrangements or understandings  between  any  director  and any  other person
by which that director was elected.

     During  the past five  years,  there  have  been no  petitions under the
Bankruptcy Act or any state  insolvency law filed by or against,  nor have
there been any receivers,  fiscal agents,  or similar officers  appointed by
any court for the business or property of any of GREKA Energy's directors or
executive officers, or any  partnership in which any such person was a general
partner within two years before the time of such filing,  or any  corporation
or business  association of which any such director or executive officer was
an executive officer within two years before the time of such filing.  During
the past five years,  no incumbent director or executive  officer  of GREKA
Energy has  been  convicted  of any  criminal proceeding  (excluding  traffic
violations and other minor offenses) and no such person is the subject of a
criminal prosecution which is presently pending.

Item 10. Executive Compensation

     The following summary  compensation  table sets forth in summary form the
compensation  received  during each of GREKA Energy's last two completed 
fiscal years by GREKA Energy's  Executive Officers.


<TABLE>
<CAPTION>

     (a) Summary Compensation Table

                       Annual                          Long Term
                      Compensation                     Compensation
                     ------------                     ------------

                    Year     Salary   Bonus(1)              Awards
                                                   Stock Awards     Options
Name/Position
<S>                <C>     <C>          <C>        <C>             <C>
Randeep S. Grewal   1998    $_______      0         __________       _______
 Chairman and Chief 1997    $120,000      0          70,000(2)       150,000
 Executive Officer  1996         -        -              -               -

</TABLE>
-------------

(1)   During the period covered by the Table, GREKA Energy did not pay its  
      executive officers any bonuses or other compensation.
(2)   Stock grants approved as part of GREKA Energy's bankruptcy
      reorganization plan.

     No other officer,  director or employee of Horizontal Ventures or its
subsidiaries received total compensation in excess of $100,000 during the last 
two fiscal years.  The Company has an employment agreement with Randeep S. 
Grewal. No other form of compensation was paid during 1998.

<TABLE>
<CAPTION>

     (b) Option and Long-Term Compensation Tables

                             Long Term Compensation

                          Awards                     Payouts
                         ------                     -------

                              Restricted      Securities         LTIP
                            Stock award(s)     Underlying        Payouts
                              ($)            Options/SARS (#)     ($)
                             -------------     ----------------    ------
<S>                         <C>                <C>               <C>
Name/Position
-------------
Randeep S. Grewal   1998        ________          _________       _________
Chairman and Chief
Executive Officer

</TABLE>


     (c) Options and Stock Appreciation Rights

<TABLE>
<CAPTION>       
                             Option/SAR Grants in Last Fiscal Year

                                      (Individual Grants)
        Number of Securities       Percent of total        Exercise
             Underlying          options/SARS granted      or base
            Options/SARS         granted(#) to employees    price   Expiration
Name           granted #             in fiscal year           ($/Sh)    date
----          ---------             --------------           ------     ----
<S>          <C>                   <C>                      <C>        <C>
Randeep S.    __________              _____________           ____      _____
Grewal       

</TABLE>

       Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values

<TABLE>
                                                               Value of
                                          Number of        unexercised in-the-
                                       unexercised options  money options/SARS
              Shares                   SARS at FY-end (#)     at FY-end (4)
           acquired on        Value      exercisable/        exercisable/
Name       exercise (#)   realized ($)  un-exercisable       un-exercisable
----       ------------   ------------   --------------
<S>        <C>            <C>           <C>                <C>
Randeep S. 
Grewal    ____________     ___________    ___________          _____________   

</TABLE>

     GREKA Energy has not granted any other options or stock appreciation
rights to any of its directors or executive officers.

     (d) Employment Contracts and Termination Agreements

     On September 9, 1997, GREKA Energy entered into a five-year employment
agreement with Randeep S. Grewal.  This agreement was amended on October 14,
1998 as discussed below.  His salary under the original agreement was $120,000
per year.  Compensation is reviewed annually.  Mr. Grewal participates in
GREKA Energy's benefit plans and is entitled to bonuses and incentive
compensation as determined by the board of directors of GREKA Energy.  The
agreement is terminable for cause or by the death or disability of Mr. Grewal. 
In addition, the agreement may be terminated by Mr. Grewal in the event of any
diminution by the Company in Mr. Grewal's position, authority, duties or
responsibilities.  Upon termination of the agreement by the Company for any
reason other than for cause, death or disability, or upon termination of the
agreement by Mr. Grewal in the event of any diminution by the Company in Mr.
Grewal's position, authority, duties or responsibilities, the Company is
obligated to pay within 30 days after the date of termination (1) Mr. Grewal's
Base Salary through the date of the Severance Period, (2) Mr.  Grewal's base
salary for the balance of the term of the  agreement if the Date of
Termination is within the first three years of the Employment Agreement (Base
Salary is the rate in effect at the Date of  Termination), (3) the  Annual
Bonus paid to Mr. Grewal for the last full fiscal year during the Employment
Period and (4) all amounts of deferred  compensation,  if any.  The agreement
allows Mr. Grewal to receive an assignment of 2% overriding royalty of all oil
and gas production received by Horizontal Ventures.

     On October 14, 1998, GREKA Energy amended Mr. Grewal's employment
agreement contingent upon the closing of the acquisition of Saba Petroleum
Company by GREKA Energy.  Under the amendments, on March 24, 1999, the
effective date of the merger of Saba with and into a subsidiary of GREKA
Energy, (i) Mr. Grewal's annual salary was increased to $250,000, (ii) 30,000
shares of GREKA Energy common stock were issued to Mr. Grewal, (iii) Mr.
Grewal's fringe benefits were increased to included an automobile allowance of
$1,000 per month and (iv) the employment agreement was extended through the
fifth anniversary of March 24, 1999.

     On March  12, 1998, GREKA Energy entered into a Confidential Termination
and Settlement Agreement and Complete Release with Richard Wedel relating to
his resignation as an executive of GREKA Energy and as a member of the Board
of  Directors.  Under the agreement, Mr. Wedel received a $50,000 severance
payment.  In addition, GREKA Energy agreed to maintain Mr. Wedel's medical
insurance coverage as currently in effect through July 31, 1998. In exchange
for the above consideration, Mr. Wedel agreed not to compete with GREKA Energy
and specifically with GREKA Energy's horizontal drilling business for a period
of three years after his date of termination.  Mr. Wedel also agreed not to
disclose any confidential information of GREKA Energy which he acquired as a
result of his employment.  GREKA Energy and Mr. Wedel agreed to mutually
release the other from any claim or action arising from Mr. Wedel's Executive
Employment Agreement with GREKA Energy.

     (e) Director Compensation

     Each director who is not an employee of GREKA Energy (the "Outside 
Directors") will be  reimbursed  for  expenses  incurred  in  attending 
meetings of the board of directors  and  related  committees.   As  of  the 
date of this report, GREKA Energy has three Outside Directors. No compensation
was paid to any  Outside  Director  during  fiscal  1998 and is none is 
planned  for the immediate future.

     GREKA Energy has no  knowledge  of any  arrangement or understanding  in
existence between any executive officer named above and any other person by
which any such executive  officer  was or is to be elected to such office or
offices. All officers of GREKA Energy serve at the pleasure of the board of
directors.  No family relationship  exists  among the  directors  or 
executive  officers of GREKA Energy.  All officers  of GREKA Energy will  hold 
office  until  the  next annual meeting  of the shareholders  of GREKA Energy.
There is no person who is not a designated  Officer who is expected  to make
any  significant  contribution  to the  business  of GREKA Energy.  The
executive officers of GREKA Energy serve at the pleasure of the board of
directors and do not have fixed terms.  Any officer or agent elected or
appointed by the board of directors  may be  removed  by the board  whenever 
in its  judgment  the  best interests  of  GREKA Energy will  be  served 
thereby  without  prejudice,  however, to contractual rights, if any, of the
person so removed.

Working Interests

     There are no  agreements  in which any  employee of Horizontal Ventures 
receives a working interest in GREKA Energy's oil and gas properties.

Overriding Royalty Income

     GREKA Energy has historically assigned overriding royalty interests 
to certain of its employees.  Employees own overriding royalty interests on
oil and gas wells invested in by GREKA Energy.  Conflicts of interest may 
arise between employees owning overriding royalty interests in GREKA
Energy-operated locations and GREKA Energy.

     As  part of Mr.  Grewal's  employment  agreement, he is to receive a two
percent (2%) overriding  royalty of all oil and gas production  received by
GREKA Energy. Josh Stark,  Vice  President of  Exploitation  and  Exploration 
will receive 2% override on the Ohio and Reo oil prospects should they be
developed.

Future Transactions

     All transactions between GREKA Energy and an officer, director, principal
stockholder or affiliate of GREKA Energy will be approved by a majority of the
uninterested directors,  only if they have  determined  that the transaction
is fair to GREKA Energy and its  stockholders  and that the terms of such
transaction are no less favorable to GREKA Energy than could be obtained from
unaffiliated parties.

Section 16(a) Beneficial Ownership Reporting Compliance

     Under U.S. securities laws, directors, certain executive officers and
persons holding more than 10% of GREKA Energy common stock must report their
initial ownership of the common stock and any changes in that ownership to the
SEC.  The SEC has designated specific due dates for these reports and GREKA
Energy must identify in this document those persons who did not file these
reports when due.  Based solely on its review of copies of the reports filed
with the SEC and written representations of its directors and executive
officers, GREKA Energy believes that all persons subject to reporting filed
the required reports on time in 1998.

Item 11. Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth, as of April __, 1999, the common stock
ownership of each person known by GREKA Energy to be the beneficial  
owner of 5% or more of GREKA Energy common stock, all directors and 
the executive officer individually and all directors and the executive officer
of GREKA Energy as a group.  Except as noted, each person has sole voting and
investment power with respect to the shares shown.  There are no contractual
arrangements or pledges of the Company's securities, known to GREKA Energy, 
which may at a subsequent date result in a change of control of GREKA Energy.
As of April __, 1999, there were _________ shares of GREKA Energy common stock
issued and outstanding.

<TABLE>
                              Amount of Beneficial
                                    Ownership
                                    ---------

      Name and Address                      Common            Percent of
      of Beneficial Owner                  Stock(1)             Class
      -------------------                  --------            --------
     <S>                                   <C>                 <C>
      International Publishing             276,093               _____%
      Holding s.a. 
      Postbus 84019
      2508 AA The Hague
      The Netherlands

      Capco Resources Ltd.(2)            1,340,000                ____%
      3201 Airpark Drive, Suite 201
      Santa Maria, CA  93455

      Randeep S. Grewal                  1,560,000 (3)            ____%
      Chairman and
      Chief Executive Officer
      10815 Briar Forest Drive
      Houston,  TX 77042/
      630 Fifth Avenue,  Suite 1501
      New York, NY 10111

      Dr. Jan F. Holtrop                      6,108               < 1%
      Director
      Van Alkemadelaan
      2596 AS The Hague
      The Netherlands

     Dirk Van Keulen                         -0-             -0-%
     Director
     Heemraadslag 14
     2805 DP Gauda
     The Netherlands

      George G. Andrews                           0               -0-%
      Director
      7899 West Frost Drive
      Littleton, CO 80123

      Dai Vaughan                               _____        _____________
      _____________________
      _____________________
      ______________________


      All directors and the
      executive officer                          _______          ____%
      as a group (5 persons) 

</TABLE>
--------------- 

(1)  Rule 13d-3 under the Securities Exchange Act of 1934, as amended,      
involving the determination  of beneficial owners of securities, includes      
as beneficial owners of securities, among others, any person who directly      
or indirectly, through any contract, arrangement, understanding,      
relationship or otherwise has, or shares, voting power  and/or       
investment power with respect to such  securities; and, any person who      
has the right to acquire beneficial  ownership of such  security within      
sixty days through  means, including  but not  limited  to, the  exercise      
of any option, warrant or conversion of a security.

(2)  Capco Resources Ltd. is controlled by Ilyas Chaudhary, a former executive
officer, director and principal  shareholder of Saba. By a Stock Exchange
Agreement dated November 23, 1998, among Horizontal Ventures and the           
former shareholders of Saba Aquisub, Inc., including Capco, Capco has          
delivered a proxy to Randeep S. Grewal conferring on Mr. Grewal voting         
power with respect to the GREKA Energy common stock owned by Capco.

(3)  Includes presently exercisable  options to acquire  150,000 shares of
GREKA Energy common stock and 1,340,000  shares as to which Mr. Grewal has
voting power under a proxy from Capco.

Item 12. Certain Relationships and Related Transactions

     During the last two fiscal years, there have been no transactions between
GREKA Energy and any officer, director, nominee for election as director,  or
any shareholder owning greater than five percent (5%) of GREKA Energy's
outstanding  shares, nor any member of the above referenced individuals'
immediate family, except as set forth below.

     Randeep S. Grewal, GREKA Energy's Chairman and Chief Executive Officer, 
also receives an overriding royalty of 2 percent of all oil and gas 
production received by GREKA Energy during the term of his employment.  GREKA
Energy issued previously quoted 30,000 shares of GREKA Energy common stock to
Mr. Grewal upon the effective date of the acquisition of Saba.

     On March 12, 1998, Richard Wedel, then an executive officer and director
of GREKA Energy, resigned and entered into an agreement providing for certain 
severance benefits and mutual covenants.

     It is GREKA Energy's policy that any future material transactions 
between it and members of its management or their affiliates shall be on 
terms no less favorable than those available from unaffiliated third parties.
                                

Item 13.  Exhibits and Reports on Form 8-K.

     (a) Exhibits.  The following exhibits are furnished as part of this
report:

Exhibit No.       Exhibit Description

3.1               Restated  Articles  of  Incorporation of Horizontal
                  Ventures (filed as Exhibit 3A to Horizontal Ventures' 
                  Quarterly  Report on Form 10-QSB for the quarter ended
                  June 30, 1998 (File No. 0-20760) and incorporated herein by
                  reference)
3.2               Articles of Amendment to Articles of Incorporation effective
                  March 22, 1999 (filed as Exhibit 3.1 to the Company's
                  Current Report on Form 8-K dated March 15, 1999 and
                  incorporated herein by reference)
3.3               By-Laws of Horizontal Ventures (incorporated by reference to
                  Exhibit No. 3 to the Horizontal Ventures' Registration
                  Statement (#33-24265-LA)
10.1              Post-Petition Loan Agreement (incorporated by reference to
                  Exhibit 10E to Horizontal Ventures' Annual Report on Form
                  10-KSB for the year ended December 31, 1996).
10.2              Amended  Post-Petition  Loan Agreement  (incorporated  by
                  reference to Exhibit 10-F to Horizontal Ventures' Annual
                  Report on Form 10-KSB for the year ended December 31, 1996).
10.3              Horizontal Drilling Services Letter Agreement (incorporated
                  by reference to Exhibit  10-G to Horizontal Ventures' 
                  Annual Report on Form 10-KSB for the year ended December 
                  31, 1996).
10.4              Agreement  and  Plan of  Acquisition  (incorporated  by 
                  reference to Exhibit 10.1 to Horizontal Ventures'  Current 
                  Report on Form 8-K for event dated August 11, 1997).
10.5              Randeep S. Grewal Employment Agreement (incorporated by
                  reference to Exhibit 10.1 to Horizontal Ventures' Current
                  Report on Form 8-K for event dated August 28, 1997).
10.6              Post Petition  Loan Agreement  (incorporated  by reference
                  to Exhibit 10.1 to Horizontal Ventures' Current Report on
                  Form 8-K for event dated August 28, 1997.
10.7              Cat Canyon  Lease Purchase  Agreement  (filed as Exhibit 10K
                  to Horizontal Ventures' Annual Report on Form 10-KSB for the
                  year ended December  31, 1997 (File No. 0-20760) and
                  incorporated herein by reference).
10.8              Employment Agreement with Ilyas Chaudhary (filed as Exhibit
                  10.3 to Saba's  Registration  Statement on Form SB-2 (File
                  No. 33-94678) and incorporated herein by reference)
10.9              Employment Agreement with Walton C. Vance (filed as Exhibit
                  10.31 to Saba's annual report on Form 10-KSB for the year
                  ended  December 31, 1996 (File No. 001-13880) and
                  incorporated herein by reference)
10.10             First  Amendment,  Letter  Agreement with Bradley T. Katzung
                  (filed as Exhibit 10.33 to Saba's  annual report on Form 
                  10-KSB for the year ended December 31, 1996 (File No.
                  001-13880) and incorporated herein by reference)
10.11             Second  Amendment  to  Employment  Agreement with Bradley T.
                  Katzung (Filed as Exhibit  10.5 to Saba's  annual  report 
                  on Form 10-K for the year ended December 31, 1997 (File No. 
                  001-13880) and incorporated herein by reference)
10.12             Employment  Agreement  with Burt  Cormany  (filed as Exhibit
                  10.1 to Saba's quarterly  report on Form 10-QSB for the
                  quarter  ending March 31, 1997 (File No. 001-13880) and
                  incorporated herein by reference)
10.13             Employment Agreement with Alex Cathcart, dated March 1,
                  1997, (filed as Exhibit 10.38 to Saba's  Quarterly Report
                  Form 10-Q for the quarter ended June 30, 1997 (file 
                  No.001-13880)  and incorporated  herein by reference)
10.14             Retainer  Agreement with Rodney C. Hill, A  Professional
                  Corporation, dated March 16, 1997 (filed as Exhibit 10.39 to
                  Saba's Quarterly Report Form 10-Q for the quarter ended June 
                  30, 1997(File No. 001-13880) and incorporated herein by
                  reference)
10.15             Amendment to Retainer Agreement with Rodney C. Hill, A
                  Professional Corporation dated  March 13, 1998 (Filed as
                  Exhibit 10.9 to Saba's annual report on Form 10-K for the
                  year ended December 31, 1997 (File No. 001-13880) and
                  incorporated herein by reference)
10.16             Saba Petroleum Company 1996 Equity  Incentive Plan (filed as
                  Exhibit 4.4 to Saba's Registration  Statement  on Form S-8, 
                  dated August 21, 1997 (File No. 333-34035) and incorporated
                  herein by reference)
10.17             Saba  Petroleum  Company  1997  Stock Option Plan for
                  Non-Employee Directors (filed as Exhibit 4.5 to Saba's 
                  Registration Statement on Form S-8, dated August 21, 1997
                  (File No. 333-34035) and incorporated herein by reference)
10.18             First Amended and Restated Loan  Agreement  between Saba and
                  Bank One, Texas, N.A. (filed as Exhibit 10.1 to Saba's
                  quarterly report on Form 10-QSB for the quarter ended
                  September 30, 1996 (File No. 001-13880) and incorporated
                  herein by reference)
10.19             Amendment Number One to First Amended and Restated Loan
                  Agreement between Saba and Bank One, Texas, N.A. (filed as
                  Exhibit 10.20 to Saba's annual report on Form 10-KSB for the
                  year ended December 31, 1996 (File No. 1-12322) and
                  incorporated herein by reference)
10.20             Amendment  Number Two to First  Amended and  Restated Loan
                  Agreement between Saba and Bank One, Texas, N.A. (filed as
                  Exhibit 10.1 to Saba's quarterly report on Form 10-Q for the
                  quarter ended September 30, 1997 (File No. 001-13880) and
                  incorporated herein by reference)
10.21             Amendment  Number Three to First Amended and Restated Loan
                  Agreement between Saba and Bank One,  Texas,  N.A.  (filed
                  as  Exhibit  10.2 to Saba's quarterly report on Form 10-Q
                  for the quarter ended September 30, 1997 (File No.
                  001-13880) and incorporated herein by reference)
10.22             Amendment Number Four to First Amended and Restated Loan
                  Agreement between Saba and Bank One, Texas,  N.A. (filed as
                  Exhibit 10 to Saba's Current Report on Form 8-K filed
                  September 24, 1997 (File No. 001-13880) and incorporated
                  herein by reference)
10.23             Corrections relating to Second Amendment dated August 28,
                  1997, and Fourth Amendment dated September 9, 1997 to the
                  First Amended and Restated Loan Agreement  between Saba and
                  Bank One, Texas, N.A. (filed as Exhibit 10.4 to Saba's 
                  quarterly  report  on Form  10-Q for the quarter ended
                  September 30, 1997 (File No. 001-13880) and incorporated
                  herein by reference)
10.24     Amendment  Number Five to First  Amended and Restated  Loan
          Agreement between Saba and Bank One,  Texas,  N.A.  (filed as 
          Exhibit  10.4 to Saba's Current Report on Form 8-K filed  January 
          15, 1998 (File No. 001-13880) and incorporated herein by reference)
10.25     Consent Letter to Preferred Stock Transaction by Bank One, Texas,
          N.A. dated December 31, 1997 (filed as Exhibit 10.2 to Saba's
          Current Report on Form 8-K filed January  15, 1998 (File No. 
          001-13880) and incorporated herein by reference)
10.26     Amendment of the First Amended and Restated  Loan  Agreement 
between Saba and Bank One,  Texas,  N.A.,  dated  December  31, 1997 (filed as
Exhibit 10.3 to Saba's  Report Form 8-K filed  January 15, 1998 (File No.
001-13880) and incorporated herein by reference)
10.27     Amendment  Number Seven to First Amended and Restated Loan Agreement
between Saba and Bank One,  Texas,  N.A.  (Filed as Exhibit  10.21 to Saba's
annual report on Form 10-K for the year ended December 31, 1997 (File No.
001-13880) and incorporated herein by reference)
10.28     Stock Purchase Agreement (filed as an exhibit to Saba's Current
Report on Form 8-K dated January 10, 1995 (File No. 1-12322) and incorporated
herein by reference)
10.29     Processing  Agreement  between Santa Maria Refining  Company and
Petro Source Refining Corporation (filed as Exhibit 10.6 to Saba's
Registration Statement on Form SB-2 (File  No. 33-94678) and incorporated
herein by reference)
10.30     Agreement among Saba Petroleum Company,  Omimex de Colombia,  Ltd.
and Texas Petroleum  Company to acquire  Teca and Nare  fields (filed as
Exhibit 10.7 to Saba's Registration Statement on Form SB-2 (File No.33-94678)
and incorporated herein by reference)
10.31     Agreement among Saba Petroleum Company,  Omimex de Colombia,  Ltd.
and Texas Petroleum  Company to acquire  Cocorna  Field (filed as Exhibit 10.8
to Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.32     Agreement among Saba Petroleum Company and Cabot Oil and Gas
Corporation to acquire Cabot Properties (filed as Exhibit 10.9 to Saba's
Registration Statement on Form SB-2 (File No. 33-94678) and incorporated
herein by reference)
10.33     Agreement among Saba Petroleum Company, Beaver Lake Resources
Corporation and Capco Resource Properties Ltd. (filed as Exhibit 10.10 to
Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.34     Amendment to Agreement among Saba, Omimex de Colombia, Ltd. and
Texas Petroleum Company to acquire the Teca and Nare fields (filed as Exhibit
2.2 to  Saba's Current Report on Form 8-K dated  September 14, 1995 (File No.
1-12322) and incorporated herein by reference)
10.35     Promissory Notes of Saba (filed as Exhibit 10.13 to Saba's
Registration Statement on Form SB-2 (File No. 33-94678) and incorporated
herein by reference)
10.36     CRI Stock Purchase Termination Agreement (filed as Exhibit 10.14 to
Saba's Registration Statement on Form SB-2 (File No. 33-94678) and
incorporated herein by reference)
10.37     Form of Common Stock Conversion  Agreement  between Capco and Saba
(filed as Exhibit 10.15 to Saba's Registration Statement on Form SB-2 (File
No. 33-94678) and incorporated herein by reference)
10.38     Form of Agreement regarding  exercise of  preemptive  rights between
Capco and Saba  (filed  as  Exhibit  10.16  to  Saba's  Registration Statement
on Form SB-2 (File No. 33-94678) and incorporated  herein by reference)
10.39     Letter  Agreement,  as amended,  between Omimex de Colombia, Ltd.
and Saba (filed as Exhibit 10.17 to Saba's Registration Statement on Form SB-2
(File No. 33-94678) and incorporated herein by reference)
10.40     Promissory Note of Mr.  Chaudhary  (filed as Exhibit 10.2 to Saba's
quarterly report on Form 10-QSB for the quarter ended June 30, 1996 (File No.
001-13880) and incorporated herein by reference)
10.41     Form of Stock Option Agreements  between Mr. Chaudhary  and Messrs.
Hickey and Barker (filed as Exhibit 10.3 to Saba's quarterly report on Form
10-QSB for the quarter ended June 30, 1996 (File No.  001-13880) and
incorporated herein by reference)
10.42     Form of Stock Option  Termination  Agreements between Saba and
Messrs. Hagler and Richards (filed as Exhibit 10.4 to Saba's quarterly report
on Form 10-QSB for the quarter ended June 30, 1996 (File No.001-13880) and
incorporated by reference)
10.43     Agreement Minutes concerning Colombia oil sales contract between
Omimex as operator and Ecopetrol (filed as Exhibit 10.21 to Saba's annual
report on Form 10-KSB for the year ended  December  31, 1996 (File No.
001-13880) and incorporated herein by reference)
10.44     Operating Agreement  between  Omimex and  Sabacol-Velasquez property
(filed as Exhibit 10.22 to Saba's annual report on Form 10-KSB for the year
ended December 31, 1996 (File No.  001-13880) and incorporated herein by
reference)
10.45     Operating Agreement  between  Omimex  and  Sabacol-Cocorna and Nare
properties (filed as Exhibit  10.23 to Saba's  annual  report on Form10-KSB
for the year ended December 31, 1996 (File No. 001-13880) and incorporated
herein by  reference)
10.46     Operating Agreement between Omimex and Sabacol-Velasquez-Galan
Pipeline (filed as Exhibit 10.24 to Saba's annual report on Form 10-KSB for
the year ended December 31, 1996 (File No.  001-13880) and incorporated herein
by reference)
10.47     Operating  Agreement  between Omimex and Sabacol-Cocorna Concession
property (filed  as  Exhibit  10.25 to Saba's annual report on Form 10-KSB for
the year ended December 31, 1996 (File No. 001-13880) and incorporated herein
by reference)
10.48     Life insurance contract on life of Ilyas Chaudhary  (filed as
Exhibit 10.26 to Saba's  annual  report  on Form  10-KSB  for the year ended
December  31, 1996 (File No. 001-13880) and incorporated herein by
reference)
10.49     Life insurance  contract on life of Ilyas Chaudhary (filed as
Exhibit 10.27 to  Saba's annual report on Form 10-KSB for the year ended
December 31, 1996 (File  No.  001-13880)  and  incorporated  herein by
reference)
10.50     Agreement  for  Assignment of Leases  between Saba and Geo
Petroleum, Inc. (filed as an exhibit  to Saba's  amended  annual  report on
Form 10-KSB/A for the year ended December 31, 1996 (File No. 001-13880) and
incorporated herein by reference)
10.51     Amendment to Agreement for  Assignment of Leases  between Saba and
Geo Petroleum, Inc. (Filed as Exhibit  10.45 to Saba's annual report on Form
10-K for the year ended  December  31, 1997 (File No.  001-13880) and
incorporated herein by reference)
10.52     Agreement to Provide  Collateral  between  Capco and Saba Petroleum
Company (filed as Exhibit 10.29 to Saba's annual report on Form 10-KSB for the
year ended December 31, 1996 (File  No. 001-13880) and incorporated herein by
reference)
10.53     Purchase and Sale Agreement between DuBose Ventures, Inc.,
Rockbridge Oil &  Gas, Inc., Saba Energy of Texas,  Incorporated  and Energy
Asset Management Corporation to acquire  properties in Jefferson Parish, LA
(filed as Exhibit 10.30 to Saba's annual report on Form 10-KSB for the year
ended December 31, 1996 (File No.  001-13880)  and incorporated herein by
reference)
10.54     Beaver Lake Resources  Corporation March 1997 Re-Financing Agreement
(filed as Exhibit 10.3 to Saba's quarterly report on Form 10-QSB for the
quarter ending March 31, 1997 (File No. 001-13880) and incorporated herein by
reference)
10.55     Production Sharing Contract between Perusahaan Pertambangan Minyak
Dan Gas Bumi Nagara (Pertamina) and Saba Jatiluhur Limited (filed as Exhibit
10.5 to  Saba's quarterly  report on Form 10-Q for the quarter ended September
30, 1997 (File No. 001-13880) and incorporated  herein by reference)
10.56     Agreements  among Saba,  Amerada Hess Corporation and Hamar
Associates II, LLC dated  November 1, 1997  (Filed as  Exhibit  10.50 to
Saba's annual report on Form 10-K for the year ended December 31,1997 (File
No. 001-13880) and incorporated herein by reference)
10.57     Agreements among Saba, Chevron U.S.A. Production Company and Nahama
Natural Gas (Filed as Exhibit  10.51 to Saba's annual report on Form 10-K for
the year ended  December 31, 1997 (File No. 001-13880) and incorporated herein
by reference)
10.58     Exchange Agreement between Saba and Energy Asset Management 
Company, L.L.C. dated March 6, 1998 (Filed as Exhibit  10.52 to Saba's annual
report on Form 10-K for the year  ended  December  31,  1997 (File No.
001-13880) and incorporated herein by reference)
10.59     Office Lease Agreement, 3201 Airpark Drive,  Santa Maria, California
(filed as Exhibit 10.2 to Saba's quarterly  report on Form 10-QSB for the
quarter ending March 31, 1997 (File No. 001-13880) and incorporated herein by
reference)
10.60     Office Lease Agreement, 17526 Von Karman Avenue, Irvine, California
(Filed as Exhibit  10.54 to Saba's  annual report on Form 10-K for the year
ended December 31, 1997 (File No. 001-13880)  and  incorporated herein by
reference)
10.61     Purchase and Sale Agreement between Saba and Statoil Exploration
(US) Inc. dated August 19,  1997  (filed as an exhibit to Saba's Current
Report on Form 8-K dated  September 24,1997 (File No. 001-13880) and
incorporated herein by reference)
10.62     Securities  Purchase  Agreement dated December 31, 1997 (filed as
Exhibit 10.1 to Saba's  Report Form 8-K filed  January 15, 1998 (File No.
001-13880) and incorporated herein by reference)
10.63     Registration  Rights Agreement dated as of December 31,  1997(filed
as Exhibit 3(I).1(a) to Saba's Registration Statement on Form S-1, dated
January 27, 1998 (File No. 333-45023)  and incorporated herein by reference)
10.64     Stock Purchase Warrant (Closing Warrant) dated December
31,1997(filed as Exhibit 3(I).1(a)to Saba's  Registration  Statement on Form
S-1, dated January 27, 1998 (File No. 333-45023) and incorporated herein by
reference)
10.65     Stock  Purchase  Warrant (Redemption  Warrant) dated December 31,
1997 (filed as Exhibit 3(I).1(a) to Saba's Registration Statement on Form S-1,
dated January 27, 1998 (File No. 333-45023) and incorporated herein by
reference)
10.66     Finder Agreement dated as of December 31, 1997 (Filed as Exhibit
10.60 to Saba's annual report on Form 10-K for the year ended  December 31,
1997 (File No. 001-13880) and incorporated herein by reference)
10.67     Stock Purchase Warrant (Finder Warrant) dated as of December 31,
1997 (Filed as Exhibit  10.61 to Saba's  annual report on Form 10-K for the
year ended December 31, 1997 (File No.  001-13880) and incorporated herein by
reference)
10.68     Preliminary Agreement To Enter Into A Business Combination dated
March 18, 1998 by and among Saba and  Omimex  Resources, Inc. (filed as
Exhibit 10.1 to Saba's Current Report on Form 8-K dated March 30, 1998 (File
No. 001-13880) and incorporated herein by reference)
10.69     Press Release  announcing the Proposed  Combination  between Saba
and Omimex  Resources,  Inc. dated March 18, 1998 (filed as Exhibit 10.2 to
Saba's Current Report on Form 8-K dated March 30, 1998 (File No. 001-13880)
and incorporated herein by reference) 10.70 Preferred Stock Transfer Agreement
dated October 7, 1998 between Horizontal Ventures and RGC (filed as Exhibit
10.1 to Horizontal Ventures' Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1998 and incorporated herein by reference).
10.71     Common stock Purchase  Agreement dated October 8, 1998 between
Horizontal  Ventures and Saba (filed as Exhibit 10.2 to Horizontal Ventures'
Quarterly Report on Form 10-QSB for the quarter ended September 30, 1998 and
incorporated herein by reference).
10.72     Option Agreement dated July 22, 1998 between Horizontal Ventures and
IPH (filed as Exhibit 10.3 to Horizontal Ventures' Quarterly Report on Form
10-QSB for the quarter ended September 30, 1998 and incorporated herein by
reference).
10.73     Promissory  Note dated October 6, 1998 payable by Horizontal
Ventures to IPH (filed as Exhibit 10.4 to Horizontal Ventures' Quarterly
Report on Form 10-QSB for the quarter ended September 30, 1998 and
incorporated herein by reference).
10.74     Pledge  Agreement dated October 6, 1998 between Horizontal Ventures
and IPH (filed as Exhibit 10.5 to Horizontal Ventures' Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein
by reference).
10.75     Promissory Note dated November 4, 1998 payable by Horizontal
Ventures to IPH (filed as Exhibit 10.6 to Horizontal Ventures' Quarterly
Report on Form 10-QSB for the quarter ended September 30, 1998 and
incorporated herein by reference).
10.76     Pledge  Agreement dated November 4, 1998 between Horizontal Ventures
and IPH (filed as Exhibit 10.7 to Horizontal Ventures' Quarterly Report on
Form 10-QSB for the quarter ended September 30, 1998 and incorporated herein
by reference).
10.77     Agreement and Plan of  Reorganization  dated as of June 1, 1998 by
and among Saba and Ominex Resources, Inc. et al. (filed as Exhibit 10.1 to
Saba's  Current Report  on Form 8-K  dated  June 16, 1998 (File No. 001-13880)
and incorporated herein by reference).
10.78     Consent  letter to provisions of Section 1.7 of the Agreement and
Plan of Reorganization by Bank One, Texas, NA, dated June 2, 1998 (filed as
Exhibit 10.2 to Saba's  Current Report on Form 8-K dated June 16, 1998 (File
No. 001-13880) and incorporated herein by reference).
10.79     Amendment to First Amended and Restated Loan Agreement dated
September 23, 1996, as amended among Saba et al. And Bank One,  Texas, NA
dated June 9,(filed as Exhibit 10.3 to Saba's  Current  Report on Form 8-K
dated June 16, 1998 (File No.  001-13880) and incorporated  herein by
reference).
10.80     Mutual Termination and Release Agreement dated September 15, 1998 by
and among  Saba, Saba Acquisition,  Inc.,  Omimex Resources,  Inc., the Omimex
Resources, Inc.  stockholders  and Ilyas Chaudhary (filed as Exhibit 10.67 to
Amendment No. 2 to Saba's  Registration Statement on Form  S-1 dated December
22, 1998 (File  No. 333-45023) and incorporated  herein  by  reference).
10.81     Letter  Agreement dated October 8, 1998 between Saba and Horizontal
Ventures (filed as Exhibit 10.3 to Saba's Current  Report on Form 8-K dated
October 6, 1998 (File No. 001-138807) and incorporated herein by reference).
10.82     Employment  Agreement with Imran Jattala dated July 23, 1998 (filed
as Exhibit 10.71 to Amendment No. 2 to Saba's  Registration  Statement on Form
S-1 dated December 22, 1998 (File No. 333-45023) and incorporated herein by 
reference).
10.83     Stock  Exchange  Agreement  dated  November 23, 1998 among
Horizontal Ventures and the Shareholders of Saba Acquisub, Inc.*
10.84     Agreement to Amend Common stock Purchase Agreement dated  December
3, 1998 between Saba and Horizontal Ventures (filed as Exhibit 10.85 Amendment
No. 1 dated December 15, 1998 to Stock Exchange Agreement dated November 23,
1998 among Horizontal Ventures and the shareholders of Saba Acquisub, Inc.*
10.1 to Saba's Current  Report on Form 8-K dated December 18, 1998 File No.
001-13880) and incorporated herein by reference).
10.86     Amendment to $1,500,000 Promissory Note (filed as Exhibit 10.86 to
the Amendment No. 2 to the Company's Registration Statement filed on Form S-4
dated February 19, 1999 and incorporated herein by reference)
10.87     Exchange Agreement between GREKA Energy and RGC International
          Investors*
10.88     Secured Convertible Promissory Note*
10.89     Asset Purchase Agreement entered into March 17, 1999 among Sabacol,
          Inc. and the Omimex Group*
10.90     First Amendment to Employment Agreement of Randeep S. Grewal
          effective October 14, 1998*
16.1      Letter by PricewaterhouseCoopers, LLP dated February 15, 1999
          regarding change in accountants (filed as Exhibit 16.1 to Amendment
          No. 2 to the Company's Registration Statement on Form S-4 dated
          February 16, 1999 and incorporated herein by reference)
16.2      Letter by Bateman & Co., Inc., P.C., dated February 19, 1999
          regarding change in accountants.
21.1      Subsidiaries of Horizontal Ventures Acquisition Corporation (filed
          as Exhibit 21.1 to Horizontal Ventures' Registration Statement on
          Form S-4 dated December 22, 1998 and incorporated herein by
          reference).
21.2      Subsidiaries of Saba (filed as Exhibit 21.1 to Saba's Registration
          Statement on Form S-1 dated January 21, 1998 and  incorporated
          herein by reference).
23.1      Consent of Arthur Andersen LLP, Independent Certified Public
          Accountants, related to the financial statements for GREKA Energy
          Corporation*
23.2      Consent of Bateman & Co., Inc.,  P.C.,  Independent Certified Public
          Accountants, related to the financial statements for GREKA Energy
          Corporation*
23.3      Consent of Netherland, Sewell & Associates, Inc.* 
23.4      Consent of Sproule Associates Limited *
27.1      Financial Data Schedule*
99.1      Consolidated Financial Statements of Saba Petroleum Company**

     *   Filed herewith.
     **  To be filed by amendment.

     (b) Reports on Form 8-K.  No reports on Form 8-K were filed during the
fourth quarter of 1998.

                        GREKA ENERGY CORPORATION
                   INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
                       REQUIRED BY ITEM 8 AND ITEM 14


                                                                      Page
Financial Statements of GREKA Energy Corporation

Report of Independent Public Accountants . . . . . . . . . . . . . . . .  F-2
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . .  F-3
Consolidated Balance Sheet as of December 31, 1998 . . . . . . . . . . .  F-4
Consolidated Statements of Operations for each of the
   two years ended December 31, 1998 . . . . . . . . . . . . . . . . . .  F-5
Consolidated Statements of Stockholders' Equity for each
   of the two years ended December 31, 1998 . . . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for each of the two
   years ended December 31, 1997 . . . . . . . . . . . . . . . . . . . .  F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .  F-8


Financial Statements of Saba Petroleum Company

Reports of Independent Public Accountants . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 1998 and 1997 . . . . . . 
Consolidated Statements of Operations for each of the
   three years ended December 31, 1998 . . . . . . . . . . . . . . . . . 
Consolidated Statements of Stockholders' Equity (deficit) for each
   of the three years ended December 31, 1998 . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for each of the three
   years ended December 31, 1998 . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . .
Supplemental Information About Oil and Gas Producing Activities . . .


                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                        PAGE

Reports of Independent Public Accountants                                F-2

Consolidated Balance Sheet as of December 31, 1998                       F-3

Consolidated Statements of Operations for the Two Years Ended

     December 31, 1998 and 1997                                          F-4

Consolidated Statements of Stockholders' Equity for the Two Years

     Ended December 31, 1998 and 1997                                    F-5

Consolidated Statements of Cash Flows for the Two Years Ended

     December 31, 1998 and 1997                                          F-7

Notes to Consolidated Financial Statements                               F-9


Financial statement schedules have been omitted since they are either not
required, are not applicable or the required information is included in the
consolidated financial statements or the notes thereto.



Bateman & Co., Inc. P.C.                      5 Briardale Court
Certified Public Accountants                  Houston, TX 77027-2904
                                              (713) 552-9800
                                              Fax (713) 552-9700
                                              www.batemanhouston.com


                        INDEPENDENT AUDITORS' REPORT

To The Stockholders and Board of Directors
GREKA Energy Corporation, Inc.

     We have audited the consolidated balance sheet of GREKA Energy
Corporation formerly known as Petro Union, Inc. (a Colorado corporation), dba
Horizontal Ventures, Inc., as of December 31, 1997, and the related
consolidated statements of operations, owners' equity, and cash flows for the
years ended December 31, 1997 and 1996. These financial statements are the
responsibility of the Company's  management. Our responsibility is to express
an opinion on these financial  statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of GREKA Energy
Corporation, as of December 31, 1997, and the results of its operations and
its cash flows for the years ended December 31, 1997 and 1996 in conformity
with generally accepted accounting principles.


/S/ BATEMAN & CO., INC., P.C.
Houston, Texas
April 14, 1998



                  Report of Independent Public Accountants


To the Shareholders of GREKA Energy Corporation:

We have audited the accompanying consolidated balance sheet of GREKA Energy
Corporation (a Colorado corporation) and subsidiaries as of December 31, 1998,
and the related consolidated statements of operations, owners' equity and cash
flows for the year then ended.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these financial statements based on our audit.  

We conducted our audit in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.  An audit
also includes, assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of GREKA
Energy Corporation and subsidiaries as of December 31, 1998, and the results
of their operations and their cash flows for the year then ended in conformity
with generally accepted accounting principles.  

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 1 to
the financial statements, the Company has suffered recurring losses from
operations and has a significant equity method investment that has also
experienced financial difficulties which raises substantial doubt about the
Company's ability to continue as a going concern.  Management's plans with
regard to these matters are also described in Note 1.  The consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable
to continue as a going concern.



Arthur Andersen LLP

New York, New York
April 15, 1999


<TABLE>

                     GREKA ENERGY CORPORATION (Note 2)
                        Consolidated Balance Sheet
                             December 31, 1998

                                  ASSETS
<S>                                                          <C>
Current assets:
  Cash and cash equivalents                                    $      250,212

Accounts Receivable
  Trade, net of allowance for doubtful accounts of $74,092             20,807
  Other                                                               150,788
                                                               _______________
Total Current Assets                                                  421,807

Investment in Saba Petroleum Company                               15,804,110
Investment in limestone property, at cost                           3,500,000
Properties and Equipment, at cost, net of accumulated 
  depreciation and depletion of $4,081,340                            925,951
Deposits, prepayments and deferred charges                            154,937
                                                               _______________

Total Assets                                                      $20,806,805
                                                               ===============

                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Current maturities of long term notes and notes payable      $    2,013,338
  Accounts payable and accrued expenses                               236,323
                                                               _______________
Total Current Liabilities                                           2,249,661

Long term notes payable                                                52,634

Commitments and contingencies

Stockholders' equity
  Common Stock, no par value, 50,000,000 shares authorized, 
    2,910,988 shares issued and outstanding                        25,735,019
  Accumulated deficit                                              (7,230,509)
                                                               _______________

Total Stockholders' Equity                                         18,504,510
                                                               _______________

Total Liabilities And Stockholders' Equity                        $20,806,805
                                                               ===============

</TABLE>

  The accompanying notes are an integral part of these financial statements.



                     GREKA ENERGY CORPORATION (Note 2)
                  Consolidated Statements of Operations
            For The Years Ended December 31, 1998 and 1997


<TABLE>
                                               1998                 1997
<S>                                   <C>                  <C>                
Revenues                               $         145,813    $         211,696
                                       __________________   __________________

Costs and Expenses
  Operating costs                                121,016              247,979
  Salaries and wages                             455,510              213,213
  Depreciation, depletion and 
   amortization                                  333,468               24,016
  Writedown of oil and gas properties          3,171,485                    -
  Rentals                                         94,828               31,262
  Taxes, other than on income                     58,207               16,059
  Other administrative expenses                  933,244              495,823
                                       __________________   __________________
Total costs and expenses                       5,167,758            1,028,352
                                       __________________   __________________
Loss from operations                          (5,021,945)            (816,656)


Other income (expense)
  Equity in loss of Saba                        (586,020)                   -
  Gain (loss) on sale of assets                    9,223              (21,062)
  Interest income                                 83,242               11,873
  Interest expense                               (32,145)             (25,271)
                                       __________________   __________________
Net other income (expense)                      (525,700)             (34,460)
                                       __________________   __________________


Loss before income taxes                      (5,547,645)            (851,116)
Provision for income tax                               -                    -
                                       __________________   __________________
Net loss                               $      (5,547,645)   $        (851,116)
                                       ==================   ==================
Loss per share of common stock         $           (3.42)   $           (1.44)
                                       ==================   ==================
Weighted average number of shares 
  outstanding                                  1,621,483              591,053
                                       ==================   ==================

</TABLE>

  The accompanying notes are an integral part of these financial statements.



                     GREKA ENERGY CORPORATION (Note 2)
                Consolidated Statements of Owners' Equity
             For The Years Ended December 31, 1998 and 1997

<TABLE>

                                 Common Stock        Series A Preferred Stock

                              Shares     Amount          Shares     Amount

<S>                         <C>        <C>     <C>        <C>    <C>
Balance, December 31, 1996    3,690      $        37           -  $         -

Stock issued for services    30,000              300           -            -

Stock issued in exchange 
  for subordinated 
  convertible debentures, 
  and net assets of 
  limited partnership       725,770            7,258           -            -

Stock issued for cash             -                -   3,000,000       30,000
                         __________      ____________ ___________ ____________

Balance prior to reverse 
  merger with Petro 
  Union, Inc.               759,460            7,595   3,000,000       30,000

Effect of reverse merger 
  with Petro Union, Inc.    240,805        6,174,675  (3,000,000)     (30,000)

Stock issued for cash in 
  Reg "S" offerings         552,470        5,801,518           -            -

Less, related offering 
  costs                           -         (454,837)          -            -

Issuance of stock to 
  retire note payable to 
  related party               6,108           59,122           -            -

Net loss                          -                -           -            -
                         __________      ____________ ___________ ____________

Balance, December 31, 
  1997                    1,558,843       11,588,073           -            -
                         __________      ____________ ___________ ____________

Stock issued for cash 
  in Reg. "S" offering, 
  net                        12,145           84,446           -            -

Issuance of stock to 
  purchase shares of 
  Saba Petroleum 
  Company                 1,340,000       14,062,500           -            -

Net loss                          -                -           -            -
                         __________      ____________ ___________ ____________

Balance, December 31, 
  1998                    2,910,988      $25,735,019           -  $         -
                         ==========      ============ =========== ============


</TABLE>
                     GREKA ENERGY CORPORATION (Note 2)
                Consolidated Statements of Owners' Equity
            For The Years Ended December 31, 1998 and 1997
                               (Continued)


<TABLE>
                                                        Capital
                          Capital In                   Contributed
                        Excess of Par    Accumulated    by Limited
                            Value          Deficit       Partners      Total

<S>                    <C>             <C>           <C>         <C>
Balance, December 31, 
  1996                   $    3,445      $  (831,748) $  818,000  $   (10,266)

Stock issued for services         -                -           -          300

Stock issued in exchange 
  for subordinated 
  convertible debentures, 
  and net assets of 
  limited partnership     1,398,831                -    (818,000)     588,089

Stock issued for cash       570,000                -           -      600,000
                         __________      ____________ ___________ ____________

Balance prior to reverse 
  merger with Petro 
  Union, Inc.             1,972,276         (831,748)          -    1,178,123

Effect of reverse merger 
  with Petro Union, Inc. (1,972,276)               -           -    4,172,399

Stock issued for cash in 
  Reg "S" offerings               -                -           -    5,801,518

Less, related offering 
  costs                           -                -           -     (454,837)

Issuance of stock to 
  retire note payable to 
  related party                   -                -           -       59,122

Net loss                          -         (851,116)          -     (851,116)
                         __________      ____________ ___________ ____________

Balance, December 31, 
  1997                            -       (1,682,864)          -    9,905,209
                         __________      ____________ ___________ ____________

Stock issued for cash 
  in Reg. "S" offering, 
  net                             -                -           -       84,446

Issuance of stock to 
  purchase shares of 
  Saba Petroleum 
  Company                         -                -           -   14,062,500

Net loss                          -       (5,547,645)          -   (5,547,645)
                         __________      ____________ ___________ ____________

Balance, December 31, 
  1998                   $        -      $(7,230,509) $        -  $18,504,510  

                         ==========      ============ =========== ============

</TABLE>

                     GREKA ENERGY CORPORATION (Note 2)
                  Consolidated Statements of Cash Flows
            For The Years Ended December 31, 1998 and 1997

<TABLE>

                                               1998                 1997
<S>                                  <C>                  <C>               
Cash flow operating activities:
  Net loss                             $      (5,547,645)   $        (851,116)
  Adjustments to reconcile net loss 
    to net cash used in operations:
  Depreciation, depletion, and 
    amortization                                 333,468              177,426
  Writedown of oil and gas properties          3,171,485                    -
  (Gain) loss on sale of assets                   (9,223)              21,062
  Equity in net loss of Saba                     586,020                    -
  Stock and partners' capital issued 
    for services                                       -                  300
  (Increase) decrease in accounts 
    receivable                                    (3,626)              66,040
  (Increase) in accounts receivable, 
    other                                       (147,355)                 520
  (Increase) in net other assets                (114,646)                   -
  Increase (decrease) in accounts 
    payable and accrued expenses                (562,222)             136,716
                                       __________________   __________________
Net cash used in operating activities         (2,293,744)            (449,052)
                                       __________________   __________________


Cash flow from investing activities:
  Decrease (increase) in time deposits 
    and funds held in escrow                   1,613,695           (1,613,695)
  Purchases of property and equipment         (1,168,519)          (1,502,462)
  Proceeds from sale of property and 
    equipment                                     55,908               55,181
  (Increase) decrease in deposits and 
    prepayments                                        -                1,286
  Acquisition of Saba common and 
    preferred shares                          (2,327,630)                   -
                                       __________________   __________________
Net cash (used) in investing activities       (1,826,546)          (3,059,690)
Cash flows from financing activities:
  Repayments of Notes Payable                    (32,896)            (206,084)
  Proceeds of loans from affiliates            2,000,000               59,122
  Decrease in customer payments 
    received in advance                                -              (30,000)

Proceeds from sale of stock, net of 
  expenses                                        84,446            5,946,681
Other                                                  -               51,517
                                       __________________   __________________



Net cash provided by financing 
  activities                                   2,051,550            5,821,236
                                       __________________   __________________

Net increase (decrease) in cash and 
  cash equivalents                            (2,068,740)           2,312,494
Cash and cash equivalents:
  Beginning of period                          2,318,952                6,458
                                       __________________   __________________
End of period                          $         250,212    $       2,318,952
                                       ==================   ==================


Non-cash financing and investing 
  activities:
  Stock issued for services            $               -    $             300
  Stock issued for subordinated 
    convertible debentures                             -              433,231
  Stock issued for net assets of 
    limited partnership                                -              972,858
  Stock issued in satisfaction of 
    note payable                                       -               59,122
  Stock issued for investment in 
    Saba Petroleum Co.                        14,062,500                    -
  Property and equipment acquired by 
    issuance of notes payable                          -              500,000
  Property and equipment acquired in 
    reverse merger with Petro Union, 
    Inc., net of debt assumed                          -            4,120,882


Supplementary cash flow data:
  Interest paid                                   20,562               26,324
  Income taxes paid                                    -                    -

</TABLE>

  The accompanying notes are an integral part of these financial statements.



                     GREKA Energy Corporation (Note 2)
               Notes to Consolidated Financial Statements
                            December 31, 1998



NOTE 1 - FINANCIAL CONDITION AND MANAGMENT'S PLANS

The accompanying consolidated financial statements represent the financial
position and results of operations of Horizontal Ventures, Inc., which
subsequent to December 31, 1998 changed its name to GREKA Energy Corporation
(see Note 2).  The Company's financial statements have been prepared on a
going-concern basis which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of business.

During 1998, due to decreased prices for natural gas and crude oil in all
locations in which the Company does business (including the locations of its
equity method investment), the Company incurred significant losses, due
primarily to reduced production and related oil and gas sales and a $3.2
million non-cash ceiling writedown of its oil and gas assets without any
reduction for tax benefits.  As a result of these factors, the reported net
loss was $5.5 million, or $3.42 per share.  The Company has also not made
payments on two loans from one of its primary stockholders, but has requested
extensions in the due dates for such repayments.  In addition, the Company
made a substantial investment in Saba Petroleum Company ("Saba") during the
year and subsequently merged with such company in March 1999.  Saba is not in
compliance with certain requirements, restrictions and other covenants in its
9% convertible senior subordinated debentures ($3.6 million), its revolving
($15.6 million) and term ($4.5 million) bank loan agreements, its loan from
the operator of properties owned by the Company in Colombia ($4.2 million) and
its Series A Convertible Preferred Stock (with a stated value of $8.0
million).  As a consequence, it cannot borrow under its revolving bank loan
agreement. In addition, Saba's exploratory prospect in Indonesia requires a
multi-year commitment of $17.0 million, which period began in October, 1997. 
Saba also received a notice of default from the Colombian tax authorities for
the payment of income taxes for 1997 and 1998.  In addition, the Company's
independent public accountants issued a modified report with respect to the
ability of the Company to continue as a going concern, which also constitutes
a default under the revolving bank credit agreements.  Due to the Company and
Saba not being in compliance with the above mentioned requirements,
restrictions and other covenants, combined with other normal maturities of
long term debt, approximately $2.0 and $28.8 million, of such long term debt
is classified as currently payable by the Company and Saba, respectively, and,
as a result, the Company and Saba have working capital deficiencies of
approximately $1.8 million and $35.4 million, respectively.  

To improve its financial situation, management is in the process of
renegotiating the terms of Saba's 9% convertible senior subordinated
debentures and Saba's Series A Convertible Preferred Stock and is negotiating
a term and revolving credit agreement with a new bank.  In addition, the
Company is negotiating to sell certain non-core assets, including its
Colombian subsidiary.  In addition, the Company will begin operating Saba's
refinery in California on a 100% basis beginning May 1, 1999, which is
expected to significantly increase operating cash flows from this asset.  The
above mentioned transactions are in various stages of completion, and
management believes that they will all be closed by June 30, 1999.  As a
result of the above factors and the pending nature of negotiations, there is
substantial doubt about the Company's ability to continue as a going concern
if management is not successful in its recapitalization plan. Management
believes that the completion of the refinancing and sale transactions
discussed above will remove any uncertainty as to its ability to
continue as a going concern.  The accompanying financial statements do not
include any adjustments relating to the recoverability and classification of
the asset carrying amounts or the amounts and classifications of liabilities
that might result should the Company be unable to continue as a going concern. 
See Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Nature of business and organization - GREKA Energy Corporation ("GREKA"),
which was named Horizontal Ventures, Inc. prior to changing its name in March
1999, was engaged in contract drilling of oil and gas wells and in development
of oil and gas properties for its own account.  All of the Company's
operations are in one industry segment.  Its executive offices are located in
New York, New York, and a field office in Tulsa, Oklahoma. It offers its
services primarily in the western, Midwestern, and southwestern United States.
It has oil and gas properties in California and oil, gas, and limestone
properties in the Midwestern United States. As of December 31, 1998, GREKA
Energy Corporation also held an approximate 30% ownership interest in Saba
Petroleum Company ("Saba").  Subsequent to year end, the company acquired all
of the remaining common shares of Saba through the issuance of 1.3 million
shares of GREKA common stock.  The merged company changed its name to GREKA
Energy Corporation. Saba is an international oil and gas producer with
principal producing properties in the continental United States, Canada, and
Columbia and an asphalt refinery in California.

     Petro Union was a debtor in possession under Chapter 11 of the U.S.
Bankruptcy Code until August 28, 1997, at which time the Bankruptcy Court
approved its plan of reorganization.  As a part of its plan of reorganization,
PUI agreed to acquire all the outstanding stock of Horizontal Ventures, Inc.
("HVI").  The acquisition of HVI was completed on September 9, 1997, and after
the acquisition, HVI shareholders owned more than 50% of the outstanding
shares of PUI.  Therefore, pursuant to the rules of the Securities and
Exchange Commission, the transaction has been accounted for as a "reverse
merger." Accordingly, the accompanying consolidated statements of operations
and consolidated statements of cash flows reflect the historical operations
and cash flows HVI (including those of PUI after September 9, 1997, the
effective date of the merger), whereas previous reports filed by the Company
reflected operations and cash flows of PUI.  HVI and Petro Union, Inc.
completed a  statutory merger under the laws of the  State of Colorado
effective December 31, 1997.

     Basis of presentation  - The consolidated financial statements include
the accounts of the company and wholly owned subsidiaries.  The investment in
Saba was acquired through share purchases during the 1998 fourth quarter.  As
of December 31, 1998, GREKA owns approximately 30% of Saba's common shares
and, accordingly, has accounted for this investment using the equity  method
of accounting.

     The consolidated financial statements also include the accounts and
transactions of Calox, Inc. a subsidiary of GREKA , whose principal asset is
nonproducing limestone reserves, and HVI Cat Canyon, Inc. All significant
intercompany accounts and transactions have been eliminated in the
accompanying consolidated financial statements.

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

     Cash and cash equivalents  - The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.

     Fair value of financial instruments - The carrying amounts of cash and
cash equivalents, accounts receivable, accounts payable and accrued expenses,
other current liabilities and notes payable, approximate fair value because of
the short maturity of these items.  These fair value estimates are subjective
in nature and involve uncertainties and matters of significant judgment, and,
therefore, cannot be determined with precision.  Changes in assumptions could
significantly affect these estimates.

     Accounts receivable - The Company provides an allowance for
uncollectible receivables when it is determined that collection is doubtful. 
Substantially all of the Company's trade receivables are from its directional
drilling services.

     Concentrations of credit risk - Substantially all of the Company's
accounts receivable are from companies engaged in the oil and gas business,
and concentrated in the Southwestern United States.  Generally, the Company
does not require collateral for its accounts receivable. The Company has
performed services for only a limited number of customers each period;
therefore, each customer may be considered a major customer.

     Properties and equipment - Properties and equipment are stated at cost.
The Company follows the  "full-cost" method of accounting for oil and gas
property and equipment costs. Under this method, all productive and
nonproductive costs incurred in the acquisition, exploration, and development
of oil and gas reserves are capitalized. Such costs include lease
acquisitions, geological and geophysical services, drilling, completion,
equipment, and certain general and administrative costs directly associated
with acquisition, exploration, and development activities. General and
administrative costs related to production and general overhead are expensed
as incurred. No gains or losses are recognized upon the sale or disposition of
oil and gas properties, except in transactions that involve a significant
amount of reserves. The proceeds from the sale of oil and gas properties are
generally treated as a reduction of oil and gas property costs. Fees from
associated oil and gas exploration and development partnerships, if any, will
be credited to oil and gas property costs to the extent they do not represent
reimbursement of general and administrative expenses currently charged to
expense. Internal costs capitalized as intangible development costs include
direct wages paid to drilling crews, related payroll taxes, and travel
expenses while on drilling sites; such costs approximated $0 and $10,900 in
1998 and 1997, respectively. Such costs can be directly identified with
acquisition, exploration and development activities and do not include any
costs related to production, general corporate overhead, or similar
activities.

     Future development, site restoration, and dismantlement and abandonment
costs, net of salvage values, are estimated on a property-by-property basis
based on current economic conditions and are amortized to expense as the
Company's capitalized oil and gas property costs are amortized. The Company's
properties are all onshore, and the Company expects that the salvage value of
the tangible equipment offsets any site restoration and dismantlement and
abandonment costs.

     The provision for depreciation, depletion, and amortization of oil and
gas properties is computed on the unit-of-production method. Under this
method, the Company computes the provision by multiplying the total
unamortized costs of oil and gas properties - including future development,
site restoration, and dismantlement and abandonment costs, but excluding costs
of unproved properties - by an overall rate determined by dividing the
physical units of oil and gas produced during the period by the total
estimated units of proved oil and gas reserves. This calculation is done on a
country by country basis for those countries with oil and gas production.
Excluding the operations of the company's equity investment in Saba, it
currently has production in the United States only. The cost of unevaluated
properties not being amortized, to the extent there is such a cost, is
assessed quarterly to determine whether the value has been impaired below the
capitalized cost. Any impairment assessed is added to the cost of proved
properties being amortized.  The costs associated with unevaluated properties
relate to projects which were undergoing exploration or development activities
or in which the company intends to commence such activities in the future. The
Company will begin to amortize these costs when proved reserves are
established or impairment is determined.

     At the end of each quarterly reporting period, the unamortized cost of
oil and gas properties, net of related deferred income taxes, is limited to
the sum of the estimated future net revenues from proved properties using
current prices, discounted at 10%, and the lower of cost or fair value of
unproved properties, adjusted for related income tax effects ("Ceiling
Limitation").

     The calculation of the ceiling limitation and provision for 
depreciation, depletion, and amortization is based on estimates of proved
reserves. There are numerous uncertainties inherent in estimating quantities
of proved reserves and in projecting the future rates of production, timing,
and plan of development.  The accuracy of any reserves estimate is a function
of the quality of available data and of engineering and geological
interpretation and judgment. Results of drilling, testing, and production
subsequent to the date of the estimate may justify revision of such estimate.
Accordingly, reserve estimates are often different from the quantities of oil
and gas that are ultimately recovered.

     During the fourth quarter of 1998, the Company recorded a $3,059,119
non-cash ceiling writedown of its oil and gas properties.

     Depreciation for  all  other  property  and equipment is provided over
estimated  useful lives using the  straight  line method of depreciation for
financial reporting purposes and the accelerated cost recovery system for
income tax purposes.  Renewals and betterments are capitalized when incurred. 
Costs of maintenance and repairs that do not improve or extend asset lives are
charged to expense.

     The  Company's investment in limestone reserves  will be amortized on a
unit-of-production basis as the reserves  are mined and  produced.  Since the
acquisition of the limestone  reserves in 1993, there has been no development
or production  of these  properties.  Management  has  determined  that there
is no impairment in value of the reserves at December 31, 1998.

     License  agreements  and  organization  expenses - The Company has
acquired certain  licenses for the use of  horizontal  drilling  technology 
developed by Amoco Corporation.  License agreements and organization  expenses
are amortized over a fifteen and five year life, respectively, using the
straight line method of amortization. Amortization charged to operations was
$16,593 and $16,510 in 1997 and 1998, respectively.

     Environmental expenditures  - If and when remediation of a property is
probable   and the related costs can be reasonably estimated, the
environmentally-related remediation costs will be expensed and recorded as
liabilities.  If  recoveries  of  environmental  costs  from third  parties 
are probable,  a receivable  will be recorded.  Management is not currently
aware of any required remediation.

     Revenue  recognition  - For  financial  reporting  purposes,  revenues
from drilling  operations are recognized in the accounting  period which 
corresponds with the  performance  of the service to the customer.  Revenue
from oil and gas production is recognized in the period in which the product
is sold. The related costs and expenses are recognized when incurred.

     Federal and State income taxes - The Company  follows  SFAS No. 109, 
"Accounting  for Income Taxes", which accounts for income taxes using the
liability method. Under SFAS No.  109,  deferred  tax  liabilities  and assets
are  determined  based on differences  between  the  financial  statement  and
tax  bases  of  assets  and liabilities  using  enacted  tax rates  expected
to be in effect for the year in which the  differences  are expected to
reverse.  The net change in deferred tax assets and liabilities is reflected
in the statement of operations.  The primary differences  between  financial 
reporting  and  tax  reporting  relate  to  the availability of net operating
loss carryforwards, and the use of accelerated  methods of  depreciation  for
income  tax  purposes. 

     Earnings per share - Basic (loss) per share has been computed using the
weighted average number of common shares outstanding during the respective
periods. In computing  average outstanding  shares during 1997,  the  Company 
has  converted  Horizontal  Ventures  shares outstanding  prior to the merger
to equivalent  Petro Union shares on a pro rata basis. Diluted earnings per
share is computed by considering the effect of outstanding options and
warrants.  However, diluted earnings per share is the same as basic earnings
per share in instances  where  a loss has  been incurred. Accordingly, diluted
earnings per share has not been presented.

     Accounting Pronouncement Issued, but Not Yet Adopted - The Company has
not yet adopted AICPA Statement of Position 98-5 "Reporting on the Costs of
Start-Up Activities."  Such pronouncement will require that the Company
expense the balance of its unamortized organization costs in the first quarter
of 1999.  At December 31, 1998, the balance of unamortized organization costs
is $16,542.

NOTE 3 - MERGER OF PETRO UNION, INC. AND HORIZONTAL VENTURES, INC.:

     On June 13, 1997,  Horizontal Ventures,  Inc. and Petro Union, Inc.
entered into an agreement under which all of the outstanding common and
preferred shares HVI would be  acquired  by Petro Union.  Petro Union was also
engaged in performing  contract drilling services using the licensed Amoco
technology. Petro Union was subject to supervision in the U.S. Bankruptcy
Court for the Southern District of Indiana under Chapter 11 of the U.S. 
Bankruptcy  Code,  and the agreement  with HVI was part of Petro Union's Plan
of Reorganization. On August 28, 1997, the Bankruptcy Court approved the Plan,
the principal points of which are as follows:

    *  The par value of Petro Union stock was converted from $.125 par value
       to no par value.

    *  All secured debt was paid according to the terms previously contracted
       for.

    *  Unsecured creditors in class C-1 received 20,000 shares of new Petro
       Union no par value stock in satisfaction of their claims, and unsecured
       creditors in class C-2 received 80,000 shares of new HVI no par
       value stock in satisfaction of their claims.

    *  The priority post-petition promissory note of Pembrooke Holdings
       Corporation (Pembrooke) in the amount of $150,000 was paid with
       $100,000 in cash and the issuance of 49,999 shares of new HVI
       no par value stock valued at $50,000.

    *  Existing shareholders of Petro Union received new HVI no par
       value stock in the ratio of 1 new share for each 220  shares of old
       stock.

    *  Randeep C. Grewal, CEO of HVI and Richard D. Wedel, President of Petro
       Union received 70,000 shares each of new Petro Union no par value stock
       valued at $20,000 each, or $40,000 in total.

    *  International  Publishing  Holding s.a. ("IPH"), a Luxembourg societe
       anonyme, loaned $200,000 to Petro Union secured by 50% interest in its
       nonproducing limestone reserves; the loan was then converted into
       40,000 shares of new HVI no par value stock.

    *  Petro Union  issued  590,000  shares of new HVI no par value stock for
       all the outstanding common and preferred  stock of HVI.

     After the Plan was consummated on September 9, 1997, HVI shareholders
owned approximately 63% of the new HVI no par value stock.

     Pro-forma summary statements of operations, combining Petro Union, Inc.,
and HVI, are as follows,  assuming the merger had occurred January 1, 1997:

<TABLE>
                         Year Ended December 31, 1997


                          Petro Union, Inc.  Petro Union, Inc.,
                         (January 1 through        d/b/a 
                         September 9, 1997)         HVI           Pro-Forma
<S>                       <C>                <C>               <C>
Revenues                    $    311,798       $    211,696      $    523,494
Cost of revenues                 237,801            247,979           485,780
                            _____________      _____________     _____________
Gross profit (loss)               73,997            (36,283)           37,714


General and administrative 
  expenses                       264,550            780,373         1,044,923
                            _____________      _____________     _____________


(Loss) from operations          (190,553)          (816,656)       (1,007,209)
Other income (expense)            (7,933)           (34,460)          (42,393)
                            _____________      _____________     _____________


(Loss) before tax               (198,486)          (851,116)       (1,049,602)
Provision for taxes                    -                  -                 -
                            _____________      _____________     _____________


Net  (loss)                 $   (198,486)      $   (851,116)     $ (1,049,602)
                            =============      =============     =============

</TABLE>

NOTE 4 - PURCHASE OF EQUITY INTEREST IN AND SUBSEQUENT MERGER WITH SABA
PETROLEUM COMPANY

During 1998, GREKA entered into the following transactions to purchase its
interests in Saba Petroleum Company (Saba).

<TABLE>

     Date     Consideration     Common Stock     Preferred Stock     Cost
<S>           <C>               <C>                 <C>         <C>
October                Cash           80,000                      $    70,130
October                Cash                                  690      750,000
November               Cash          333,333                        1,500,000
December       1.34 million 
                  shares of 
                      GREKA        2,976,765                       14,070,000
                                  __________         ___________  ____________
Total                              3,390,098                 690  $16,390,130
                                  ==========         ===========  ============

</TABLE>

In November, 1998, the Company paid $500,000 to the holder of Saba's Series A
Preferred Stock to extend the term of an option to purchase 6,910 shares of
Saba Series A Preferred Stock for an additional 30 days.  The cash payment is
reflected in the above table as part of the November purchases of shares. 
Such option expired unexercised.  Therefore, as of December 31, 1998,  GREKA
held 3,390,098 common shares (29.8% of total outstanding) and 690 shares of
convertible preferred stock of Saba.  As of December 31 1998,  GREKA  accounts
for its investment using the equity method.

GREKA 's  $16.4 million equity method investment has been allocated to the
fair value of each of Saba's assets and liabilities, as of December 31, 1998
in the following table.  The amounts presented represent 29.8% of the
estimated fair value of Saba's assets and liabilities (dollars in thousands).

<TABLE>
           <S>                                <C>
            Refinery                           $12,218.0
            Oil and Gas Properties              10,581.8
            Land                                 3,580.5
            Other Assets                         5,994.2
            Liabilities and minority interest  (13,675.2)
            Preferred stock                     (2,309.2)
                                               __________
            Total investment                   $16,390.1
                                               ==========
</TABLE>

The summarized audited financial information of Saba is shown below as of
December 31, 1998 and for the years ended December 31, 1998 and 1997:

<TABLE>
    <S>                                   <C>               <C>
     Balance Sheet Data                             1998            1997

     Oil and gas properties, net             $    32,904,810  $    54,844,840
     Other assets, net                            16,783,602       22,812,106
     Current liabilities                          40,003,281       39,075,063
     Other liabilities and 
     preferred stock                              13,176,220       28,984,304
                                             ________________ ________________
     Net assets                              $    (3,491,089) $     9,597,579
                                             ================ ================
     GREKA 's equity in net assets           $    (1,040,344) $           N/A
                                             ================ ================


     Earnings Data                                  1998            1997

     Revenues                                $    23,331,331  $    35,995,762
     Operating (loss) income                     (24,024,215)       6,744,071
     Net (loss) earnings                     $   (28,650,823) $     2,397,447
                                             ================ ================
     GREKA's equity in loss                  $      (586,020)             N/A
                                             ================ ================
</TABLE>

GREKA's equity in loss of Saba represents GREKA's share of Saba's losses since
the acquisition dates of Saba's shares during the fourth quarter of 1998.


In addition to the shares owned directly by GREKA, 568,000 Saba shares were
owned by IPH, an GREKA shareholder.  Such shares were subject to a call
agreement by GREKA at an exercise price equal to 120% of the cost of such
shares to IPH, payable in cash or common shares of GREKA. IPH had a part
agreement that became effective April 1, 1999 and was exercised on such date.
GREKA will issue 140,886 shares following the filing of a registration
statement. 

In December, 1998, GREKA's Board of Directors approved the acquisition of all
the remaining outstanding shares of Saba common stock through a proposed
merger with GREKA based on an exchange ratio of one share of GREKA common
stock for each six shares of Saba common stock.  In March 1999, the Company,
through a wholly owned subsidiary, merged with Saba in a transaction accounted
for as a purchase with a cost of approximately $9.0 million based upon the
issuance of 1,332,500 shares of GREKA stock.  The results of operations for
Saba will be included in the Company's consolidated results of operations as
of the acquisition date.

Saba's principal assets are an asphalt refinery, proved oil and gas reserves
of  17,603 MBOE, with a standardized measure value of $38.4 million (using
prices as of April 1, 1999) and various real estate holdings. 

The following are the unaudited pro forma revenue, net loss and loss per share
of the Company giving effect to the acquisition of Saba, as if such
acquisition had occurred at the beginning of 1998.  The unaudited pro forma
financial data do not purport to be indicative of the financial position or
results of operations that would actually have occurred if the acquisition had
occurred as presented or that may be obtained in the future.

<TABLE>
                                                     Year Ended 
                                                    December 31,
                                                        1998
      <S>                                         <C>
       Dollars in thousands, except share 
         amounts
       Revenue                                      $     23,477
       Net loss                                          (34,273)
       Loss per common share                               (8.08)

</TABLE>

NOTE 5 - NON PRODUCING LIMESTONE PROPERTY

The Company owns, through a wholly owned subsidiary, a limestone property,
including the land, timber and all the mineral rights associated with the
property.  International Publishing Holding s.a. (IPH), the Company's largest
shareholder, holds an option that expires on September 9, 2000 to acquire 90%
of such company for $3.5 million.

Subsequent to year-end, the Company entered into an agreement with IPH and
Pembrooke Holdings Corporation (Pembrooke).   Under the terms of such
agreement, Pembrooke has the following options to acquire 100% of the shares
of such subsidiary of GREKA :

  -  Pay $3.5 million by March 31, 1999 and four $200,000 annual installments
     beginning March 31, 2001

  -  Pay $3.85 million by May 30, 1999 and four $200,000 annual installments
     beginning March 31, 2001

  -  Issue a non-recourse note for $5.7 million due on or before November 1,
     1999, the terms of which would require Pembrooke to pay $3.85 million to 
     GREKA by May 31, 1999 or to pay GREKA $5.7 million on November 1, 1999.

In connection with the above, GREKA shall pay Pembrooke $50,000 and issue
shares of GREKA common stock having a value equal to $150,000 based upon the
average of the closing prices for the last 30 days prior to February 16, 1999
and GREKA will file a registration statement to register such shares by April
15, 1999 or, if the filing of such registration statement is not done by May
15, 1999, due to the negligence of GREKA, then GREKA will pay Pembrooke
$150,000. 

NOTE 6 - PROPERTY AND EQUIPMENT:

     A summary of the Company's property and equipment as of December 31,
1998 is as follows:

<TABLE>
        <S>                                 <C>
          Oil and gas properties:
            Leasehold Costs                    $     2,058,177
            Intangible development 
              costs                                    910,270
            Lease and well equipment                   289,717
            Storage facilities and 
              gathering systems                        187,652
                                               ________________
          Total                                      3,445,816
          Land and buildings                            85,814
          Drilling equipment                         1,242,189
          Transportation equipment                     163,632
          Office computer equipment                     69,840
                                               ________________
          Total cost                                 5,007,291
          Accumulated depletion and 
            depreciation                             4,081,340
                                               ________________
                                               $       925,951
                                               ================
</TABLE>

Depreciation, depletion and amortization (including an impairment charge of
$3,171,485) charged against income was $3,504,953 and $160,833 in 1998 and
1997, respectively.

Useful lives are as follows:

Buildings                                    20 to 40 years
Drilling equipment                            5 to 10 years
Transportation equipment                       5 to 6 years
Office and computer equipment                 3 to 10 years

NOTE 7 - COMMITMENTS AND CONTINGENCIES:

     The Company leases office space, automobiles, computers, and other
equipment under various operating leases.  The Company has options to renew
these leases. Aggregate commitments under these leases at December 31, 1998
were as follows:

<TABLE>
                          Year Ending December 31:     Amount
                                 <S>                 <C>
                                  1999                $   29,418
                                  2000                    20,570
                                  2001                    16,146
                                  2002                    16,146
                                  2003                    16,146

</TABLE>

     Rent expense included in the accompanying statements of operations was $
76,778 and $31,262 in 1998 and 1997, respectively. 

     In October 1994, the Company licensed certain directional drilling
technology from Amoco Corporation, a major oil corporation. The license
currently requires minimum annual payments of $15,000 per year or $1,639 per
well drilled under the license,  whichever is greater,  and the amounts are
adjusted  periodically for inflation.  The Company incurred license payments
approximating $15,000 and  $20,000 for the year ended December 31, 1998 and
1997, respectively.  Quarterly settlements are required under the license, and
Amoco has the right to terminate the license for non-payment.  If Amoco were
to terminate the Company's license, it could have an adverse affect on the
Company's operations.

NOTE 8 - FEDERAL AND STATE INCOME TAXES:

     Due to the losses incurred in 1998 and 1997, the Company has not recorded
any provision or benefit for Federal and State income taxes.

     The Company follows  SFAS No. 109, "Accounting for Income Taxes" in
accounting for deferred Federal income taxes.  The Company has  recorded 
deferred tax assets and  liabilities, using an expected tax rate of 35%, as
follows:

<TABLE>
                                                           December 31, 
                                                               1998
<S>                                                      <C>
Deferred tax asset (liability) attributable to:
  Net operating loss carryover                              14,996,540
  Accumulated depreciation                                     974,692 
                                                           ____________

Subtotal                                                    15,971,232
Less, Valuation allowance                                  (15,971,232)
                                                           ____________

Net deferred tax asset                                     $         -
                                                           ============
</TABLE>

As indicated above, a significant net operating loss carryover has been
incurred in prior years, primarily by Petro Union.  Management has not yet
determined the extent to which the net operating  loss will be limited under
Section 382 of the Internal Revenue Code,  if any, as a result of the merger
with HVI.  The net operating loss expires, if unused, as follows:

<TABLE>
                        Expires in          Amount
                          <S>           <C>
                           2007           $     214,000
                           2008               7,236,400
                           2009               4,551,900
                           2010                 510,700
                           2011              24,437,600
                           2012               1,103,400
                           2013               4,847,300
                                          _____________

                          Total           $  42,901,300
                                          =============
</TABLE>

NOTE 9 - NOTES PAYABLE:

Details of long term notes payable are as follows:

<TABLE>
         <S>                                               <C>
          Note payable to International Publishing 
            Holding, S.A. (IPH) dated November 2, 1998, 
            with interest at 6%                               $     1,500,000
          Note payable to IPH dated October 8, 1998, 
            without interest                                          500,000
          Other Notes                                                  65,972
                                                              ________________
          Total                                                     2,065,972
          Less, amount due within one year                         (2,013,338)
                                                              ________________
          Net long term portion                               $        52,634
                                                              ================
</TABLE>

Current maturities of long term notes are as follows:

<TABLE>
                          <S>          <C>
                           1999          2,013,338
                           2000             18,660
                           2001             13,719
                           2002             12,072
                           2003              8,183
                                       ____________
                          Total        $ 2,065,972
                                       ============
</TABLE>

The notes payable to IPH are due on May 31, 1999.

NOTE 10  - LITIGATION: 

At  December 31, 1998,  the Company had trade  accounts  receivable 
approximating $94,899  from  several  debtors,  some of whom have  refused to
pay.  Although no lawsuits  have been  filed to  collect  these  debts, 
management  is  currently continuing  to have  discussions  with the  debtors
in an effort to resolve  any disputes  and  collect  the  amounts  due.  In
one case,  the Company has a lien against  an oil and gas  property,  and in 
another  it has  received  a written promise to pay the amount  due. If 
continuing  efforts  are  unsuccessful,  the Company  intends to pursue its
claims through other legal actions,  and believes it will be  successful.  An
allowance for doubtful  accounts of $74,092 has been provided  for any 
uncollectible  amounts,  and  management  believes it will be adequate to
absorb any losses.

NOTE 11 - RELATED PARTY TRANSACTIONS:

The Company has an agreement with Grupo de Creacion,  Ltd. ("GDC"),  a
Gibraltar corporation and a shareholder of the Company, for financial
consulting services.  Under the agreement,  GDC assisted the Company in
arranging  three "Reg S" securities  offerings  during  1997,  resulting  in 
proceeds  of  approximately $5,800,000  for the sale of  Company  stock.  As 
compensation,  GDC  receives a negotiated  commission  of not less than 7% of
any  financing up to $10 million, and reduced percentages over that amount; in
addition, it receives an overriding royalty of 2% of all oil and gas 
production  received by the Company during the term of the  agreement.  The
agreement  expires  December 31, 2004. GDC was paid commissions  of 
approximately  $337,400 for completed financings in 1997,  and an overriding
royalty of approximately $500.

On September 9, 1997, the Company entered into an employment agreement with
Randeep S. Grewal for a five-year term. Mr. Grewal is the Chairman and Chief
Executive Officer and a director of the Company. His current salary is
$120,000 per year.  Compensation is reviewed annually.  Mr. Grewal
participates in the Company's benefit plans and is entitled to bonuses and
incentive compensation as determined by the Board of Directors of the Company. 
The agreement is terminable for Cause or by the death or disability of Mr.
Grewal.  Upon termination of the agreement by the Company for any reason other
than for Cause, death or disability, the Company is obligated to pay within 30
days after the date of termination (1) Mr. Grewal's Base Salary through the
date of the Severance Period, (2) Mr. Grewal's base salary for the balance of
the term of the agreement if the Date of Termination is within the first three
years of the Employment Agreement (Base Salary is the rate in effect at the
Date of Termination), (3) the Annual Bonus paid to Mr. Grewal for the last
full fiscal year during the Employment Period and (4) all amounts of deferred
compensation, if any.  The agreement allows Mr. Grewal to receive an
assignment of 2% overriding royalty of all oil and gas production received by
the Company.  Effective as of the Saba merger date of March 24, 1999, Mr.
Grewal's employment agreement has been amended. See Item 10 in Form 10-KSB.

On March 12,  1998,  an officer of the  Company  resigned  and  entered into
an agreement  providing for certain severance  benefits and mutual  covenants. 
The Company  agreed to pay the former  officer a severance  payment of
$50,000.

NOTE 12- STOCK OPTIONS AND WARRANTS:

On  September 9, 1997,  the  Company's  Chairman and CEO was granted  options
to purchase an  aggregate  of 150,000  shares of the  Company's no par value
common stock at an  option  price of $5 per  share,  exercisable  at the rate
of 30,000 shares per year, with the first such installment becoming
exercisable September 9, 1998,  and an  additional  30,000  shares  on  each 
succeeding  September 9 thereafter. A similar option was granted to the
Company's President, but the option lapsed upon his  resignation  in 1998. No 
compensation  expense was recorded in connection with the granting of these
options as the option price equaled the market price on the date of grant.

On October 14, 1998,  the Company's Chairman and CEO was granted options to
purchase an additional 150,000 shares of the Company's no par value common
stock at an option price of $8.25 per share (which equaled the market price on
this date).  In addition, other employees were granted options to purchase an
additional 100,000 shares of the Company's no par value common stock at an
option price of $8.25 per share.   

A summary of the outstanding options follows:

<TABLE>
                                        1998                  1997

                                           Weighted               Weighted 
                                           Average                Average 
                                           Exercise               Exercise 
                               Shares       Price      Shares       Price
<S>                       <C>           <C>        <C>          <C>    
Options outstanding, 
  January 1                 300,000      $  5.00           -     $          -
Options granted             250,000         8.25     300,000             5.00
Options terminated          150,000         5.00           -                -
                           ________      _______    ________     _____________
Options outstanding, 
  December 31               400,000         7.03     300,000             5.00
Exercisable at year end      30,000         5.00           -                -
Weighted average fair 
  value of options granted                  3.30                         7.88

</TABLE>

The Company also granted warrants to purchase common stock to the purchasers
of shares from one of the 1997 "Reg S" offerings.  A summary is  as follows:

                Number of
Date Granted     Shares       Option Price    Effective Date  Expiration Date

September 29,
    1997         127,750         $15.00         January 1,      December 31,
                                                   1998              1999

Such warrants expired unused on December 31, 1998.

As permitted under SFAS 123, the Company has elected to continue to account
for stock-based compensation under the provisions of APB Opinion No. 25.  Had
compensation cost been determined consistent with SFAS No. 123, the Company's
net income and earnings per share would have been reduced to the following pro
forma amounts:

<TABLE>
                                               December 31,   December 31,
                                                   1998           1997
  <S>                     <C>                 <C>            <C>
   Net loss:               As reported         $ (5,547,645)  $  (851,116)
                           Pro forma           $ (6,139,691)  $(1,245,162)


   Basic and diluted EPS   As reported         $      (3.42)  $     (1.44)
                           Pro forma           $      (3.78)  $     (2.11)

</TABLE>

The fair value of each option granted in 1998 and 1997 is estimated on the
date of grant using the Black-Scholes option pricing model with the following
assumptions: (a) risk free interest rates ranging from 5.2% to 6.4% (b)
expected volatility of 59.2% (c) average time to exercise of 7 years and (d)
expected dividend yield of zero.

NOTE 13 - SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

The following data is presented pursuant to FASB Statement No. 69 with respect
to oil and gas acquisition, exploration, development and producing activities,
which is based on estimates of year-end oil and gas reserve quantities and
forecasts of future development costs and production schedules.  These
estimates and forecasts are inherently imprecise and subject to substantial
revision as a result of changes in estimates of remaining volumes, prices,
costs and production rates.

Future cash inflows are estimated using year-end prices.  Oil and gas prices
at December 31, 1998 are not necessarily reflective of the prices the Company
expects to receive in the future.  

Production Revenues and Costs

<TABLE>
                                           For the year ended December 31,

                                            1998                     1997
<S>                                  <C>                       <C>
Revenue                                $    145,813             $    211,696
Production Costs                            121,016                  247,979
Depreciation, depletion, 
amortization                                333,468                   24,016
Writedown of oil and gas properties       3,171,485                        -
                                       _____________            ______________
Pretax (loss) from producing 
activities                             $ (3,480,156)            $    (60,299)


                                            1998                     1997

Capitalized costs at year end:
  Proved reserves                      $  3,445,816             $  1,963,337
  Unproved reserves                               -                  400,000
                                       _____________            ______________
                                          3,445,816                2,363,337

Less, Accumulated depreciation, 
  depletion and amortization             (3,242,711)                 (57,598)
                                       _____________            ______________

Net investment in oil and gas 
  properties                           $    203,105             $  2,305,739
                                       =============            ==============


                                            1998                     1997

Capitalized
  Costs Incurred:
  Acquisition of properties:
  Proved                               $          -             $  1,679,131
  Unproved                                        -                  400,000
  Exploration costs                               -                        -
  Development costs                       1,082,479                  284,206
                                       _____________            ______________
  Total Capitalized Cost, Incurred     $  1,082,479             $  2,363,337
                                       =============            ==============
</TABLE>

Discounted Future Net Cash Flows (unaudited)

The following information relating to discounted future net cash flows has
been prepared on the basis of the Company's estimated net proved oil and gas
reserves in accordance with FASB Statement No. 69. 

Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

<TABLE>
                                            1998                     1997
<S>                                   <C>                     <C>
Future cash flows                      $  1,725,500             $ 40,103,600

Future costs:
  Development                              (440,000)              (5,281,800)
  Production                               (793,700)             (23,805,600)
                                       _____________            ______________

Future net cash flows before income 
  taxes                                     491,800               11,016,200
Future income taxes                               -               (3,304,800)
                                       _____________            ______________

Future net cash flow after income 
  taxes                                     491,800                7,711,400
Discount at 10% per annum                  (231,100)              (3,101,100)
                                       _____________            ______________

Standardized measure of discounted 
  future net cash flows                $    260,700             $  4,610,300
                                       =============            ==============

Changes in Discounted Future Net Cash Flow, from Proved Reserve Quantities:

                                            1998                     1997

Balance, beginning of year
                                       $  4,610,300             $          -
  Sales and transfers of oil and gas 
    produced, net of production costs       (17,443)                 (13,578)
  Net changes in prices and production 
    costs                                (3,721,007)                       -
  Purchases of minerals in place                  -                4,623,878
  Sales of minerals in place                      -                        -
  Changes in estimated future 
    development costs                     4,841,800                        -
  Revisions of previous quantity 
    estimates                            (4,771,053)                       -
  Accretion of discounts                    861,000                        -
  Net change in income taxes              1,751,000                        -
  Change in production rates (timing) 
    and other                            (3,293,897)                       -
                                       _____________            ______________
Standardized measure of discounted 
  future net cash flows                $    260,700             $  4,610,300
                                       =============            ==============

</TABLE>

Reserve Information (Unaudited):

The following information with respect to the Company's 1998 and 1997 net
proved oil and gas reserves are estimates based on reports prepared by
Netherland, Sewell & Associates, Inc. pursuant to principles set forth by the
Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserve
Information promulgated by the Society of Petroleum Engineers.  Proved
developed reserves represent only those reserves expected to be recovered
through existing wells using equipment currently in place.  Proved undeveloped
reserves represent proved reserves expected to be recovered from new wells or
from existing well after material recompletion expenditures.  All of the
Company's reserves, excluding those of its equity method investment are
located in the United States.

<TABLE>
                                            1998                     1997
                                          Oil bbls                Oil bbls
  <S>                                  <C>                     <C>
   Proved developed and 
     undeveloped reserves
   Balance, beginning of year            2,553,007               1,826,385
   Production                              (12,935)                 (2,112)
   Discoveries, extensions, etc.


   Acquisition of reserves in 
     place                                                         728,734
   Revisions of estimates               (2,289,851)
                                       ____________            ____________
Balance, end of year                       250,221               2,553,007
                                       ============            ============

</TABLE>

Equity Share of Saba Oil and Gas Information:

As of December 31, 1998, the Company has a 30% equity interest in Saba
Petroleum Company (See Note 4).  Accordingly, the following information
represents the Company's equity share of Saba's oil and gas reserves and
standardized measure of discounted future net cash flows as of December 31,
1998.

                                        Gas          Oil
                                       MMcf         Mbbl

   Proved reserves                  6,853,334       4,144
                                   ___________   _________


                                        (Dollars in 
                                         Thousands)

      Future cash inflows               $     43,815

      Future costs

           Production                        (24,243)

           Development                         (7864)

      Future income tax expense                  (93)
                                        _____________

      Net future cash flows                   11,615
     
           Discount - 10%                     (4,724)

      Standardized measure of
      discounted future net cash flows      $  6,891
                                             ========
     

Acquisition of Saba in March 1999:

As discussed in Note 4, subsequent to year end, the Company completed its
acquisition of Saba.  The following information with respect to the Company's
estimated net proved oil and gas reserves are estimates based upon reports
prepared by independent petroleum engineers (Netherland, Sewell & Associates,
Inc.)  If this acquisition had been recorded in 1998, it would have increased
the Company's proved reserves as of December 31, 1998 as follows:

                                Acquired Properties      Company Pro Forma
                                  Gas          Oil       Gas          Oil
                                 MMcf         Mbbl      MMcf         Mbbl
   Proved Reserves         22,997,765       13,905   22,997,765     14,155
                          ===========    =========  ===========  =========

Discounted future cash flows at December 31, 1998 related to Saba and on a
Company pro forma basis as if the acquisition had occurred in 1998 are as
follows (in thousands):

<TABLE>
                                                             Company Pro 
                                                   Saba         Forma
  <S>                                        <C>            <C>
   Future cash inflows                        $   147,033    $   148,758
   Future costs
     Production                                   (81,354)       (81,754)
     Development                                  (26,389)       (27,183)
     Future income tax expense                       (312)          (312)
                                              ____________   ____________
     Future net cash flows                         38,978         39,509
     Discount - - 10% annually                    (15,853)       (16,084)
                                              ____________   ____________
   Standardized measure of discounted future 
     net cash flows                           $    23,125    $    23,425
                                              ============   ============

</TABLE>

                                 SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                 GREKA ENERGY CORPORATION


                                /s/ Randeep S. Grewal
Dated: April 15, 1999        By:_________________________________________
                                Randeep S. Grewal, Chairman of the Board
                                and Chief Executive Officer



     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

     Signature                Title                         Date


/S/ Randeep S. Grewal
___________________
Randeep S. Grewal        Chairman of the Board of         April 15, 1999
                         Directors and Chief
                         Executive Officer
                         (Principal Executive 
                         Officer, Financial Officer
                         and Accounting Officer)

/s/ Jan F. Holtrop
___________________
Dr. Jan F. Holtrop       Director                        April 15, 1999


/s/Dirk Van Keulen
___________________
Dirk Van Keulen          Director                        April 15, 1999


/s/ George C. Andrews
___________________
George C. Andrews        Director                        April 15, 1999

/s/ Dai Vaughan
___________________     
Dai Vaughan              Director                        April 15, 1999