FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   (Mark One)

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

                For the quarterly period ended September 30, 1999

                                       OR

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

            For the transition period from ____________ to ____________

                         Commission file number 0-20760

                            GREKA Energy Corporation
           ------------------------------------------------------
           (Exact name of registrant as specified in its charter)

           Colorado                                             84-1091986
---------------------------------                          -------------------
  (State or other jurisdiction                             (I.R.S. Employer
of incorporation of organization)                          Identification No.)

                630 Fifth Avenue, Suite 1501, New York, NY 10111
                ------------------------------------------------
                     (Address of principal executive office)

                                 (212) 218-4680
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not applicable
                   ------------------------------------------
                     (Former name, former address and former
                   fiscal year, if changed since last report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  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. X Yes   No
                                         ---   ---
               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                 PROCEEDINGS DURING THE PRECEDING FIVE YEARS

     Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  X Yes   No
                      ---   ---
<PAGE>

                  APPLICABLE ONLY TO CORPORATE ISSUERS

     Indicate the number of shares  outstanding of each of the issuer's  classes
of common stock, as of the latest practicable date:

As of November 15, 1999,  GREKA Energy had 4,311,603  shares of Common Stock, no
par value per share, outstanding.


                               TABLE OF CONTENTS
                                                                            Page

PART I - FINANCIAL INFORMATION ............................................  3

Item 1.  Financial Statements .............................................  3

   Condensed Consolidated Balance Sheets as of September 30, 1999
     (Unaudited) and December 31, 1998 ....................................  3
   Condensed Consolidated Statements of Operations for the Nine and
      Three Month Periods Ended September 30, 1999 and 1998 (Unaudited)..... 5
   Condensed Consolidated Statements of Cash Flows for the Nine
      Month Periods Ended September 30, 1999 and 1998 (Unaudited) .........  6
   Notes to Condensed Consolidated Financial Statements (Unaudited) .......  7

Item 2.  Management's Discussion and Analysis of Financial
   Condition and Results of Operations ....................................  20
Item 3.  Quantitative and Qualitative Disclosures About Market Risk........  30

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.................................................  31

Item 2.  Changes in Securities and Use of Proceeds.........................  32

Item 3.  Defaults Upon Senior Securities...................................  32

Item 4.  Submission of Matters to a Vote of Security Holders...............  32

Item 5.  Other Information.................................................  32

Item 6.  Exhibits and Reports on Form 8-K..................................  33

SIGNATURE..................................................................  34









                                       2
<PAGE>




                         PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

                    GREKA ENERGY CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


                                     ASSETS


                                                  September 30,
                                                      1999          December 31,
                                                   (Unaudited)         1998
                                                  ------------     -------------
Current Assets
     Cash and cash equivalents ...............    $    485,015     $    250,212
     Accounts receivable, net of
      allowance for doubtful accounts
      of $161,500(1999)and $74,000 (1998) ....       6,027,306           20,807
     Inventories .............................       7,337,608               --
     Other current assets ....................       1,988,837          150,788
                                                  ------------     -------------
            Total Current Assets .............      15,838,766          421,807
                                                  ------------     -------------
Property and Equipment
     Investment in limestone property,
      at cost ................................       3,699,304        3,500,000
     Oil and gas properties (full
      cost method) ...........................      24,796,168        3,445,816
     Land, plant and equipment ...............      42,857,993        1,561,475
                                                  ------------     -------------
                                                    71,353,465        8,507,291
     Less accumulated depletion,
      depreciation and impairment ............      (6,340,722)      (4,081,340)
                                                  ------------     -------------

            Total Property and Equipment .....      65,012,743        4,425,951
                                                  ------------     -------------
Other Assets
     Investment in Saba Petroleum Company ....            --         15,804,110
     Other ...................................       1,998,532          154,937
                                                  ------------     -------------

            Total Other Assets ...............       1,998,532       15,959,047
                                                  ------------     -------------
                                                  $ 82,850,041     $ 20,806,805
                                                  ============     =============

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

                                       3
<PAGE>


                   GREKA ENERGY CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS


                    LIABILITIES AND STOCKHOLDERS' EQUITY


                                                  September 30,
                                                      1999          December 31,
                                                   (Unaudited)         1998
                                                   ------------    -------------
Current Liabilities

     Accounts payable and accrued
      liabilities ..............................   $ 11,062,902    $    236,323
     Income taxes payable ......................        400,804            --
     Current portion of long-term debt .........     23,749,621       2,013,338
                                                   ------------    -------------
            Total Current Liabilities ..........     35,213,327       2,249,661
                                                   ------------    -------------
Long-term Debt, net of current portion .........      8,286,236          52,634

Other Liabilities ..............................        740,642              --

Preferred Stock of Subsidiary ..................      7,411,756              --
                                                   ------------    -------------

                                                     16,438,684          52,634
                                                   ------------    -------------

Commitments and contingencies

Stockholders' Equity
     Common Stock, no par value, authorized
     50,000,000 shares; issued and
     outstanding 4,311,603 (1999) and
     2,910,988 (1998) shares ...................     36,833,623      25,735,019
     Accumulated comprehensive income ..........         63,982            --
     Accumulated deficit .......................     (5,699,525)     (7,230,509)
                                                   ------------    -------------
     Total Stockholders' Equity ................     31,198,080      18,504,510
                                                   ------------    -------------

                                                   $ 82,850,041    $ 20,806,805
                                                   ============    =============

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


                                       4
<PAGE>


<TABLE>
<CAPTION>

                    GREKA ENERGY CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                      Nine Months                     Three Months
                                                 Ended September 30,              Ended September 30,
                                                 1999            1998             1999            1998
                                              ------------    ------------    ------------    ------------
Revenues
<S>                                           <C>             <C>             <C>             <C>
Oil and gas sales .........................   $  7,572,548    $    129,852    $  2,877,134    $      9,704
Refinery product sales and other...........     11,109,927          72,011       6,756,778          22,408
                                              ------------    ------------    ------------    ------------
         Total Revenues ...................     18,682,475         201,863       9,633,912          32,112
                                              ------------    ------------    ------------    ------------
Expenses
Production costs ..........................      3,672,740         119,334       1,089,991          29,942
Refinery product cost
of sales ..................................      6,611,000            --         4,545,349            --
General & administrative ..................      2,347,971       1,044,753         760,968         278,108
Depletion, depreciation
& amortization ............................      2,830,334         226,225       1,111,148         116,859
                                              ------------    ------------    ------------    ------------
Total Expenses ............................     15,462,045       1,390,312       7,507,456         424,909
                                              ------------    ------------    ------------    ------------
Operating income (loss) ...................      3,220,430      (1,188,449)      2,126,456        (392,797)
Other Income (Expenses)
Equity in pre-acquisition
loss of Saba ..............................       (553,483)           --              --              --
Other, net ................................        650,516            --           (28,749)           --
Interest expense ..........................     (1,334,996)           --          (688,675)           --
                                              ------------    ------------    ------------    ------------
Other Income (Expense), Net ...............     (1,237,963)           --          (717,424)           --
                                              ------------    ------------    ------------    ------------
Income (loss)
before income taxes .......................      1,982,467      (1,188,449)      1,409,032        (392,797)

Provision for Colombia
taxes .....................................        472,100            --              --              --
Minority interest in (Loss) of
Consolidated Subsidiary ...................        (20,617)           --              --              --
                                              ------------    ------------    ------------    ------------
Net Income (Loss) .........................      1,530,984      (1,188,449)      1,409,032
Other Comprehensive Income -
         net of tax Foreign currency
         translation adjustments ..........         63,982            --              --              --
                                              ------------    ------------    ------------    ------------
Comprehensive Income (Loss) ...............   $  1,594,966    $ (1,188,449)   $  1,409,032    $   (392,797)
                                              ============    ============    ============    ============
NeT Earnings (Loss) per common share
Basic .....................................   $       0.36    $      (0.76)   $       0.33    $      (0.25)
NeT Earnings (Loss) per common share
Fully Diluted .............................   $       0.35    $      (0.76)   $       0.32    $      (0.25)


Weighted Average Common Shares Outstanding,
Basic and Diluted .........................      4,255,737       1,570,981       4,290,079       1,570,981
</TABLE>

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

                                       5
<PAGE>
<TABLE>
<CAPTION>

                    GREKA ENERGY CORPORATION AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998

                                                           1999            1998
                                                       ------------    ------------
 Cash Flows from Operating Activities
<S>                                                    <C>             <C>
         Net income (loss) .........................   $  1,530,984    $ (1,188,450)
         Adjustments to reconcile net income (loss)
           to net cash used in operating activities:
         Depletion, depreciation and
         amortization ...............................     2,830,334         226,225
      Equity in pre-acquisition loss of Saba .......        553,483              --
      Minority interest in (loss) of
        consolidated subsidiary ....................        (20,617)             --
      Compensation expense attributable to the
           issuance of Common Stock ................        150,000              --
         Changes in:
         Accounts receivable .......................     (4,358,512)          7,952
         Inventories ...............................     (2,132,891)             --
      Other assets .................................        197,693          (3,272)
      Accounts payable and accrued
        liabilities ................................       (643,627)     (1,015,639)
                                                       ------------    ------------
Net Cash Used In Operating
        Activities .................................       (940,913)     (1,973,184)
                                                       ------------    ------------
Cash Flows from Investing Activities
     Acquisition of inventory ......................     (1,000,000)             --
     Expenditures for property and equipment .......     (1,090,763)     (1,180,560)
     Proceeds from Sale of property.................        915,000              --
     Expenditures for acquisition of Saba,
      net of cash acquired .........................        234,850              --
                                                       ------------    ------------
Net Cash Used In
       Investing Activities ........................       (940,913)     (1,180,560)
                                                       ------------    ------------
Cash Flows from Financing Activities
     Increase in deferred financing costs ..........       (330,348)             --
     Proceeds from notes payable and
      long-term debt:
      BNY Financial Corporation ....................     10,526,450              --
      15% Debenture ................................      1,000,000              --
     Principal payments on notes payable and
      long-term debt:
      Bank One, Texas ..............................     (6,000,000)             --
      BNY Financial Corporation ....................     (2,021,838)             --
         Other .....................................       (105,395)        (24,802)
         Net proceeds from issuance of Common
         Stock .....................................             --          84,446
                                                       ------------    ------------
Net Cash Provided By Financing
      Activities ...................................      3,068,869          59,644
                                                       ------------    ------------
Net Increase (Decrease) in Cash and
         Cash Equivalents ..........................        234,803      (3,094,100)
Cash and Cash Equivalents at Beginning
         of Period .................................        250,212       3,932,647
                                                       ------------    ------------
Cash and Cash Equivalents at End
 of Period .........................................   $    485,015    $  1,838,547
                                                       ============    ============
</TABLE>

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


                                       6

<PAGE>

                    GREKA ENERGY CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
         POLICIES
General

The accompanying unaudited condensed consolidated financial statements have been
prepared on a basis  consistent  with the  accounting  principles  and  policies
reflected in the financial  statements for the year ended December 31, 1998, and
should be read in conjunction  with the  consolidated  financial  statements and
notes thereto  included in the Company's 1998 Form 10-KSB/A2.  In the opinion of
management,   the  accompanying   unaudited  condensed   consolidated  financial
statements contain all adjustments (which, except as otherwise disclosed herein,
consist of normal  recurring  accruals  only)  necessary  to present  fairly the
Company's  consolidated  financial  position as of  September  30,  1999,and the
consolidated  results of  operations  for the nine and three month periods ended
September 30, 1999 and 1998, and the consolidated  cash flows for the nine month
periods ended September 30, 1999 and 1998.

Acquisition of Saba Petroleum Company

On October 8, 1998, the Company disclosed that it had acquired over five percent
of the outstanding  common stock of Saba Petroleum  Company  ("Saba"),  with the
intent to gain control of Saba.

In December,  1998, the Boards of Directors of both companies  approved  Greka's
proposal to acquire Saba. Under the acquisition  agreement,  Saba's stockholders
would  receive one share of the  Company's  Common  Stock for each six shares of
Saba's common stock outstanding.

In addition to the shares  owned  directly by the  Company,  568,200 Saba shares
were owned by International  Publishing Holding ("IPH"), a Company  shareholder.
Such shares were subject to a call agreement by the Company at an exercise price
equal to 120% of the  cost of such  shares  to IPH,  payable  in cash or  common
shares of the Company.  IPH had a put agreement that became  effective  April 1,
1999, and was exercised on such date. The Company has authorized the issuance of
140,886 shares to IPH in exchange for the shares of Saba owned directly by IPH.

During 1998,  Greka acquired for cash and Greka Common Stock  approximately  3.4
million common and 690 preferred shares of Saba at a total cost of approximately
$16.4  million.  The  acquisitions  resulted in Greka  owning 29.9% of the total
outstanding  common shares of Saba.  This investment was accounted for under the
equity method  through March 24, 1999.  Effective  March 24, 1999,  the Company,
through a wholly-owned subsidiary,  acquired Saba in a transaction accounted for
as a purchase with an additional cost of approximately  $10.5 million based upon
the issuance of 1,290,000 shares of GREKA Common Stock ($10.3 million) and other
expenditures ($0.2 million).  The results of operations for Saba are included in
the Company's  consolidated  results of operations as of the  acquisition  date.
During 1998 and through March 24, 1999, the Company recorded  cumulative  equity
losses from Saba of approximately $1.1 million.

                                       7
<PAGE>



NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
         POLICIES (Continued)

Saba's  principal  assets at March 24, 1999,  consisted of an asphalt  refinery,
proved oil and gas reserves of 20,990 MBOE with  estimated  future net revenues,
discounted at 10% of $34.3 million (using prices as of April 1, 1999),  unproven
oil and gas properties and various real estate holdings in California.

The Company's net acquisition cost of $25.8 million was allocated using the fair
value of each of Saba's assets and liabilities at the date of acquisition.


                                           Acquisition
                                              cost

              Refinery                      $25,400
              Oil and Gas Properties         28,628
              Land                           16,600
              Other Assets                    8,460
              Liabilities and minority
               interest                     (46,145)
              Preferred Stock                (7,188)
                                            -------
              Total                         $25,755
                                            =======

The  Company  revised the  allocation  of the Saba  acquisition  cost during the
second and third quarter of 1999 based on new information and analyses performed
during the quarter.  With additional  information which may arise in the future,
the Company may further revise the allocation during the remainder of 1999.

Management's Plans

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,  the Company incurred 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 had also not made payments on two loans
from one of its primary  stockholders,  but had received  extensions  in the due
dates  for  repayments  to  May  31,  1999.  In  addition,  the  Company  made a
substantial investment in, and subsequently acquired, Saba in March 1999. At the
time of the acquisition,  Saba was not in compliance with certain  requirements,
restrictions and other covenants in its 9% 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  Preferred  Stock (with a stated value of $7.2
million).  As a  consequence,  it could not borrow under its revolving bank loan
agreement. Saba also received a notice of default from


                                       8
<PAGE>

NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
         POLICIES (Continued)

the Colombian tax authorities for the payment of income taxes for 1997 and 1998.
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  was  classified  as  currently  payable  by the  Company  and  Saba,
respectively,  and as a  result,  the  Company  and  Saba  had  working  capital
deficiencies of approximately $1.8 million and $35.4 million,  respectively,  at
December 31, 1998.

The  independent  public  accountants  for the Company and Saba issued  modified
reports at December  31,  1998,  with  respect to the ability of the Company and
Saba to each  continue as a going  concern.  The  Company's  independent  public
accountants,  after  consideration  of  the  refinancing  transactions  and  the
improvements  in the operations and financial  position as a whole, on September
16, 1999,  deleted the fourth  paragraph of the previously  issued report in its
entirety.  The deleted paragraph  expressed the independent public  accountants'
substantial  doubt as to the  ability  of the  Company  to  continue  as a going
concern.

The entire working capital deficit of Saba that existed on the effective date of
the acquisition,  March 24, 1999, was inherited by the Company.  The Company has
entered into, and concluded, material transactions that conform to the Company's
strategy to capitalize on its asset base, including the following events:

o        At May 1, 1999,  the  Company  assumed  full  operation  of its asphalt
         refinery in  California  which is expected  to  significantly  increase
         operating cash flows,
o        The Company secured  financing with BNY Financial  Corporation, ("BNY")
         of up  to $11.0 million  in May 1999 and  which was  increased to up to
         $12.0  million in September 1999,
o        The  payment of  $6.0 million to Bank One, Texas ("Bank One") to reduce
         existing debt owed by Saba,
o        The  Company   negotiated   terms  and  conditions   with  a  financial
         institution for funds up to $35.0 million, providing for refinancing to
         reduce  the  current   liabilities   with  respect  to  the   Company's
         indebtedness  to Bank One, IPH and BNY,
o        The Company  entered  into a  term  sheet providing for  restructure of
         Saba's  Preferred Stock (See Note 5 - Preferred Stock of Subsidiary),
o        The Company  entered into a term sheet  providing  for  restructure  of
         Saba's 9% senior  subordinated  debentures  (See Note 4 - Notes Payable
         and Long- Term Debt),
o        The  Company  closed the  sale  of  non-core  assets  of  the  Company,
         including  its oil  and  gas  asset   in Colombia,  and
o        Acquired  the  minority  interests in its Canadian subsidiary (See Note
         2 - Sale and Acquisition of Assets).

In view of the significant changes which result from the events described above,
management believes that the results of operations and cash flows of the Company
reported  herein are indicative of the expected  future results of operations of
the Company. Comparisons of the Company's results of operations for the nine and
three month  periods ended  September 30, 1999 and 1998,  and cash flows for the
nine month  periods  ended  September  30, 1999 and 1998,  reflect the Company's
financial  and  operational  strength.  Such  strength  is  attributable  to the
Company's  successful  implementation of its business plan based upon consistent
cash flow that is hedged from oil price activity.  Results of operations for the
nine month period ended  September  30, 1999,  and more  particularly  the three
month period ended September 30, 1999, are more  representative of the Company's
long-term potential.  Upon closing the refinancing transactions described above,
it is expected that there will be a material,  favorable change to the Company's
Balance  Sheet as a result of  reclassifying  current  liabilities  to long-term
liabilities.  (See Management's  Discussion and Analysis of Financial  Condition
and Results of Operations and Liquidity and Capital Resources.)


                                       9
<PAGE>


NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
         POLICIES (Continued)

Inventories

Inventories  are  stated at the lower of cost  (first-in,  first-out  method) or
market, and consist of the following at September 30, 1999:

                           Crude Oil                 $1,403,648
                           Asphalt and
                             related by-products      4,971,023
                           Oilfield materials
                             and supplies               962,937
                                                     ----------
                                                     $7,337,608
                                                     ==========

Oil and Gas Property

The  Company  periodically  reviews  the  carrying  value  of its  oil  and  gas
properties  in  accordance  with   requirements  of  the  full  cost  method  of
accounting.  Under these rules,  capitalized costs of oil and gas properties may
not exceed the  present  value of  estimated  future net  revenues  from  proved
reserves,  discounted  at 10%,  plus the lower of cost or fair  market  value of
unproved  properties  ("ceiling").  Application  of this ceiling test  generally
requires  pricing  future  revenue at the prices in effect as of the end of each
reporting period and requires a writedown for accounting purposes if the ceiling
is exceeded.

New Accounting Pronouncements

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative  Instruments and Hedging  Activities." This statement
broadens the definition of a derivative  instrument and  establishes  accounting
and reporting standards  requiring that every derivative  instrument be recorded
in the balance sheet as either an asset or liability measured at its fair market
value.  Derivatives that are not hedges must be adjusted to fair value currently
in earnings.  If a derivative is a hedge,  depending on the nature of the hedge,
special  accounting  allows changes in fair value of the derivative to be either
offset  against the change in fair value of the hedged asset or liability in the
income  statement or to be  recognized as  comprehensive  income (a component of
stockholders'  equity)  until the hedged item is  recognized  in  earnings.  The
Company  must  formally  document,  designate  and assess the  effectiveness  of
transactions  that  receive  hedge  accounting.  The  ineffective  portion  of a
derivative's change in fair value will be immediately recognized in earnings.

The  Company  adopted  SFAS 133 in fiscal  year 1999,  but since it does not use
derivatives currently, there was no impact resulting from such adoption.

                                       10
<PAGE>


NOTE 2 - SALE AND ACQUISITION OF ASSETS

In April 1999,  the Company and IPH closed an agreement  with  Pembrooke  Calox,
Inc.  ("Pembrooke")  for the sale of the  Company's  and  IPH's  interests  in a
355-acre  limestone  property  located in Indiana in exchange for a non-recourse
promissory note, secured by the limestone property.  The buyer had the option to
pay either $3.85  million by July 31, 1999  followed by four annual  payments of
$200,000 each  beginning in 2001, or $5.7 million by November 1, 1999. The buyer
had not paid any funds to the Company or IPH on or before July 31, 1999. As part
of this transaction, the Company paid Pembrooke $50,000 and issued 16,736 shares
of Common  Stock  following  the filing of a  registration  statement on May 17,
1999.The Company has not recorded the sales  transaction due to the terms of the
sale and pending  realization  of the note  receivable  due on November 1, 1999.
(See Note 8 - Subsequent Events)

In July 1999, at a cost of $335,554 the Company  acquired the  remaining  common
stock  of  Beaver  Lake  Resources  Corporation  ("BLRC")  that it did not  hold
effective  July 31, 1999  whereby the  Company  issued a total of  approximately
70,000  shares  resulting  in each  BLRC  shareholder  receiving  1 share of the
Company's common stock in exchange for 74.4 shares of BLRC's common stock.  BLRC
is now a wholly-owned subsidiary of the Company.

BLRC sold certain  Canadian oil and gas interests in July and August 1999 for an
aggregate contract price of $915,000.

NOTE 3 - STATEMENT OF CASH FLOWS

Following is certain supplemental  information regarding cash flows for the nine
month periods ended September 30, 1999 and 1998:

                                            1999               1998
          Interest paid                   $1,330,957          $    -
          Income taxes paid               $   43,296          $    -



NOTE 3 - STATEMENT OF CASH FLOWS (continued)

Non-cash investing and financing transactions are as follows:

The dividend  obligation on Saba's  Preferred  Stock for the three months ending
September 30, 1999,  that was due and payable on September 30, 1999, of $107,400
was accrued by increasing that issue's reported carrying amount.


                                       11

<PAGE>

A promissory note ($345,290),  bearing  interest at the rate of 13.5%,  that was
due to the  seller of an oil and gas  property,  which was  acquired  by Saba in
December 1997, was cancelled by the seller as part of a settlement.  The settled
amount is part of the accounts payable at September 30, 1999.

NOTE 4 - NOTES PAYABLE AND LONG-TERM DEBT

Notes payable and long-term debt consist of the following at September 30, 1999:

     Saba 9% senior subordinated Debentures
      due 2005 (a)                          $ 3,412,918
     Loan  agreement-Bank  One (b)           14,101,769
     Demand loan agreement with a bank (c)    1,250,000
     Capital lease  obligations (d)             461,431
     Term loan with a bank (e)                  353,860
     Notes payable (f)                        2,000,000
     15% convertible senior subordinated
      Debenture due 2001 (g)                  1,000,000
     Loan agreement-BNY Financial
      Corporation (h)                         9,404,000
     Other                                       51,879
                                            -----------
                                             32,035,857
     Less current portion                    23,749,621
                                            -----------
                                            $ 8,286,236
                                            ===========

As discussed in Note 1, the Company  completed the  acquisition of Saba on March
24, 1999.  The following  notes discuss the debt  obligations  outstanding as of
September 30, 1999. With respect to certain of these instruments, the Company is
in the process of renegotiating the terms and conditions of the obligations.



NOTE 4 - NOTES PAYABLE AND LONG-TERM DEBT (continued)

(a) In December 1995,  and February 1996,  Saba issued a total of $12.65 million
of 9% convertible senior subordinated debentures ("Debentures") due December 15,
2005. The Debentures were  convertible  into common stock of Saba, at the option
of the holders of the Debentures,  at any time prior to maturity at a conversion
price of $4.38 per share, subject to adjustment in certain events.

Debentures in the amount of $9,075,000  were converted into 2,074,213  shares of
Saba's common stock prior to the  acquisition of Saba by the Company on March24,
1999.

In July and August 1999,  the Company  entered into a term sheet with a majority
of the holders of the outstanding  Saba debentures to exchange the debentures of
Saba for new debentures of the Company with interest at the rate of 9%, maturing
on  December  31,  2005 with a right of the Company to redeem at any time for an
amount  equal to 102% of the  principal  amount  plus  any  accrued  but  unpaid
interest, subject to the right of holders to first convert. The conversion price
offered by the Company is 95% of the average  closing bid price of the Company's


                                       12


<PAGE>

common stock for the 30 consecutive  trading days of the Company's  common stock
ending  one day  prior to the date  notice  of  conversion  is  received  by the
Company,  but in no event less than $8.50 nor greater than $12.50 per share. The
terms further offer that, commencing April 1, 2000, each holder of the Company's
debentures  shall have the right upon  written  notice to the Company to require
that it redeem its  debentures at an amount equal to the  principal  amount plus
any accrued but unpaid  interest.  The Saba  debentures  were  delisted from the
American Stock Exchange in August 1999.

Saba is not in  compliance  with  certain of the  Debentures'  restrictions  and
covenants,  and  accordingly,  such debt is classified  as currently  payable at
September 30, 1999.

(b) Amounts  outstanding  under the loan agreement with Bank One aggregate $14.1
million at September 30, 1999. A portion of the  indebtedness was advanced under
a reducing,  revolving  borrowing  base loan.  The  balance of the  indebtedness
consists  of term loans that  matured  on July 31,  1998,  and were not paid nor
extended.

In February 1999, Bank One notified Saba that as a result of continuing defaults
under Saba's  principal  credit  facilities  with Bank One the entire  amount of
$20.1 million then outstanding under the facilities was accelerated and declared
immediately  due and payable.  In May 1999,  the Company  borrowed  $6.0 million
under the terms of a new credit  facility with BNY  and applied such proceeds to
the Bank One indebtedness, reducing the outstanding balance to $14.1 million.

In July  1999,  the  Company,  Saba and Bank One  entered  into an  Amended  and
Restated  Forbearance  Agreement,  under  which  Bank One  agreed  that it would
forbear  from  exercising  its  remedies  under the  credit  facilities  through
September  15,  1999,  provided  that  Saba  maintain  compliance  with  certain
conditions  regarding  Events of Default,  making timely  interest  payments and
securing  alternative  financing to retire the Bank One  indebtedness.  Saba has
maintained compliance and Bank One has continued to forbear.


NOTE 4 - NOTES PAYABLE AND LONG-TERM DEBT(continued)

(c) The Company's Canadian  subsidiary has a demand revolving reducing loan with
a borrowing  base of $1.2 million.  Interest is payable at a variable rate equal
to the Canadian  prime rate plus 0.75% per annum (7.0% at September  30,  1999).
The loan is collateralized by the subsidiary's oil and gas producing  properties
and a first and fixed floating charge  debenture in the principal amount of $3.6
million over all assets of the  subsidiary.  The  borrowing  base reduces at the


                                       13


<PAGE>

rate of $34,175 per month.  In accordance  with the terms of the loan agreement,
$410,100 of the total loan  balance of $1.2 million is  classified  as currently
payable at September 30, 1999.  Although the bank can demand  payment in full of
the loan at any time, it has provided a written  commitment  not to do so except
in the event of default. Management believes that there has not been an event of
default under this agreement.

(d) A subsidiary of the Company leases certain  equipment under  agreements that
are classified as capital leases.  Lease payments vary from three to five years.
The  effective  interest  rate on the  total  amount  of  capitalized  leases at
September 30, 1999, was 8.21%.

 (e) The term loan with a bank ($353,860) is due to the seller of a fee interest
in property in which the Company owns mineral interests. The note bears interest
at the prime  rate plus 1% (9.25% at  September  30,  1999),  is  scheduled  for
repayment in monthly  installments  to a maturity date of February  2001, and is
collateralized by the fee interest acquired by the Company.

(f) In October  1998 and  November  1998,  the  Company  borrowed  $500,000  and
$1,500,000,  respectively,  from  IPH.  The  initial  borrowing  does  not  bear
interest;   the  second  note  bears   interest  at  the  rate  of  6%,  and  is
collateralized  by all of the issued and outstanding  shares of capital stock of
Greka SMV Inc., a wholly owned subsidiary of the Company. Both loans had been
amended and matured for payment on September  30, 1999.  The Company  intends to
pay off this obligation upon closing of a financing  transaction  secured by the
Company's interest in certain oil and gas assets and real estate.


(g) In February,  1999, the Company issued $1,000,000 of 15% convertible  senior
subordinated  debentures due February 1, 2001. The debentures are secured by the
Company's limestone deposits to the extent of the outstanding debenture balance.
The debentures are convertible  into Common Stock of the Company,  at the option
of the holders of the  debentures,  at any time from August 1, 1999,  to January
31,  2000,  at a  conversion  price of $15.00  per  share,  and at any time from
February 1, 2000,  until  January 31,  2001,  at a  conversion  price of $20.00.
Interest  will accrue on the  debentures to the maturity  date.  The Company may
call the entire amount outstanding, or a portion thereof, at any time during the
term of the  debenture  by paying the  principal  amount  owing plus any accrued
interest.  The principal use of proceeds from the sale of the  debentures was to
provide working capital.


                                       14
<PAGE>


NOTE 4 - NOTES PAYABLE AND LONG-TERM DEBT(continued)

(h) In May  1999,  the  Company  entered  into a loan  agreement  with BNY  that
provides for financing of up to $11.0 million,  consisting of a term note in the
amount of $6.0  million  and a revolving  credit  facility in the face amount of
$5.0 million.  The term loan was fully advanced at closing and the proceeds were
used to reduce indebtedness with Bank One. Advances under the revolving loan are
based upon eligible  accounts  receivable and inventory of the Company's asphalt
refinery operation.  Amounts outstanding under the credit facility bear interest
at  the  rate  of  prime  plus  1%  (9.25%  at  September   30,  1999)  and  are
collateralized by real estate interests located in Santa Maria, California,  all
assets owned by Santa Maria Refining Company,  and the common stock certificates
of Santa Maria Refining Company and Saba Realty, Inc., wholly-owned subsidiaries
of the  Company.  Amortization  of the term  loan  began  in  August  1999,  and
accordingly,  $3.6  million of the term loan amount is  classified  as currently
payable at September 30, 1999.


NOTE 5 -  PREFERRED STOCK OF SUBSIDIARY

In December 1997,  Saba sold 10,000 shares of Series A 6% Convertible  Preferred
Stock for $10.0 million to RGC International  Investor LDC. ("RGC").  Since that
date,  a portion of the issued  shares had either been  redeemed  or  converted,
including 150 shares of Preferred  Stock  converted  into 305,868 shares of Saba
common stock in January 1999,  such that at September 30, 1999,  there  remained
7,160 shares of preferred stock outstanding.  On March 15, 1999, the Company and
RGC entered into a term sheet that provided for the  conversion of the preferred
stock to a subordinated convertible note obligation of the Company.

NOTE 6 - BUSINESS SEGMENTS

Effective  January 1, 1998, the Company  adopted the provisions of SFAS No. 131,
"Disclosures  about  Segments of an  Enterprise  and Related  Information."  The
Company  considers  that  its  operations  are  principally  in  three  industry
segments:   Central  Coast  of  California   production  and  asphalt   refining
("Integrated  Operations"),  exploration  and  production ("E & P") Americas and
exploration and production ("E & P") international.

Earnings of industry  segments exclude interest expense on corporate  borrowings
and unallocated corporate expenses.

Foreign  income and other taxes and certain  state taxes are included in segment
earnings on the basis of operating results.

Identifiable  assets are those assets used in the  operations  of the  segments.
Corporate  assets consist of cash,  short-term  investments,  certain  corporate
receivables, and other assets.


                                       15
<PAGE>


NOTE 6 - BUSINESS SEGMENTS (continued)

Summaries of the  Company's  operations by segments for the nine and three month
periods  ended  September  30,  1999  and  1998,  are  as  follows  (dollars  in
thousands):

Three months ended       Integrated    E & P     E & P       Corporate
September 30, 1999:      Operations  Americas international  and other   Total
                         --------    --------    --------    --------    -------
Total revenues ......... $  8,734   $    899    $     --    $     --     $ 9,633
Production costs .......    4,974        661          --          --       5,635
Other expenses .........      279        177          81         224         761
Depreciation,
 depletion and
 amortization ..........    1,014         29          --          68       1,111
                         --------   --------    --------    --------    --------
Results of operations
 from segment
 activities ............    2,467         32         (81)       (292)      2,126

Interest expense, income
taxes and other (income)      308         41        (265)        182         266
                         --------   --------    --------    --------    --------
Net Income (Loss) ...... $  2,159   $      9   $     184   $    (474)   $  1,860
                         ========   ========    ========    ========    ========
Identifiable assets at
September 30, 1999...... $ 39,833   $ 31,864    $  4,474    $  6,486    $ 82,657
                         ========   ========    ========    ========    ========


Three months ended        Integrated    E & P     E & P       Corporate
September 30, 1998:       Operations  Americas international  and other   Total
                           --------   --------    --------    --------    ------
Total revenues .........               $  10                             $  10
Production costs .......                  30                                30
Other operating expenses               $ 395                               395
Depreciation, depletion
 and amortization ......                   0                                --
Results of operations                 --------                          --------
 from segment activities                (415)                             (415)
Interest expense and
other (income) (net) ...                 (22)                              (22)
                                      --------                          --------
Net loss ...............               $(393)                           $ (393)





                                       16
<PAGE>








NOTE 6 - BUSINESS SEGMENTS (continued)

Nine months ended        Integrated    E & P     E & P       Corporate
September 30, 1999:      Operations  Americas international  and other   Total
--------------------      -------   -------    -------      ---------  -------
Total revenues .........   $14,204   $ 2,463    $ 2,015      $      --  $18,682
Production costs .......     7,761     1,412      1,111             --   10,284
Other expenses .........       460       600        208          1,080    2,348
Depreciation,
 depletion and
 amortization ..........     1,935       471        299            125    2,830
                           -------   -------    -------      ---------  -------
Results of operations
 from segment
 activities ............     4,048       (20)       397         (1,205)   3,220

Interest expense, income tax
and other (income) .....    380          103  (341)       1,096          1,238
                           -------   -------    -------      ---------  -------
Net Income
(Loss) .................   $ 3,668   $ (123)    $   738      $ (2,301)  $ 1,982
                           =======   =======    =======      =========  =======

Nine months ended        Integrated    E & P     E & P       Corporate
September 30, 1998:      Operations  Americas international  and other   Total
                            -------   -------    -------      ---------  -----

Total revenues ...........           $   130                               130
Production costs .........               119                               119
Other operating expenses .             1,271                             1,271
Depreciation, depletion
 and amortization ........              --
--
                                     -------                            -------
Results of operations
 from segment activities              (1,260)                           (1,260)

Interest expense and
other (income) (net) .....               (72)                              (72)
                                     -------                           --------
Net(loss) ................           $(1,188)                          $(1,188)
                                     =======                           ========

Total assets at September  30, 1999,  increased by $61.8 million from the amount
reported at December 31, 1998, due principally to the acquisition of Saba by the
Company on March 24, 1999.

Revenues and expenses reflect Saba's operations on a consolidated basis from the
effective date of the acquisition, March 24, 1999.

In  view  of the  significant  changes  to  the  Company  during  1998  and  the
acquisition of Saba completed in March 1999, and the changes  resulting from the
sale  of  certain  assets,   the  change  in  refinery   operations,   and  debt
restructuring,  management believes that the results of operations for the three
months  ended  September  30,  1999,  of the  Company  reported  herein are more
indicative of the expected future results of operations of the Company.

                                       17

<PAGE>

NOTE 7 - CONTINGENCIES

In 1993, Saba acquired a producing  mineral  interest in California from a major
oil company. At the time of acquisition,  Saba's  investigation  revealed that a
discharge of diluent, a light, oil-based fluid which is often mixed with heavier
grades of crude had occurred on the acquired  property.  The purchase  agreement
required  the seller to  remediate  the area of the  diluent  spill.  After Saba
assumed  operation  of the  property,  it  became  aware of  additional  diluent
contamination  and  believes the major oil company is  responsible  to remediate
these  areas  as  well.  Saba has  notified  the  seller  of its  obligation  to
remediate.  Notwithstanding  the Company's  compliance  in  proceeding  with any
required  remediation on seller's account,  the Company is committed to hold the
seller accountable for the required remediation.  Since the investigation is not
complete, an accurate estimate of cost cannot be made.

In 1995, Saba agreed to acquire an oil and gas interest in California on which a
number of out of  production  oil  wells had been  drilled  by the  seller.  The
acquisition  agreement  required that Saba assume the  obligation to abandon any
wells that Saba did not return to production,  irrespective  of whether  certain
consents  of third  parties  necessary  to  transfer  the  property to Saba were
obtained.  Management believes Saba has no obligation to remediate this property
because it believes the seller did not give Saba any consideration to enter into
the contract for the  property.  Notwithstanding  the  Company's  compliance  in
proceeding with any required  remediation on seller's  account,  is committed to
hold the seller accountable for the required obligations of the property.  Since
the investigation is not complete, an accurate estimate of cost cannot be made.

The Company  owns an asphalt  refinery in Santa  Maria,  California,  with which
significant environmental remediation obligations are associated.  The party who
sold the asphalt  refinery to Saba performs all  environmental  obligations that
arose  during and as a result of its  operations  of the  refinery  prior to the
acquisition  by Saba. A  determination  as to the extent of such  remediation is
ongoing.

The Company,  as is customary in the  industry,  is required to plug and abandon
wells and remediate facility sites on its properties after production operations
are completed.  The cost of such  operation will be significant  and will occur,
from time to time, as properties are abandoned.

There  can  be no  assurance  that  material  costs  for  remediation  or  other
environmental  compliance will not be incurred in the future.  The occurrence of
such environmental  compliance costs could be materially adverse to the Company.
No  assurance  can be given that the costs of  closure  of any of the  Company's
other oil and gas  properties  would not have a material  adverse  effect on the
Company.

                                       18
<PAGE>


NOTE 8 - SUBSEQUENT EVENTS

On October 27, 1999, Pembrooke obtained a temporary  restraining order enjoining
the Company and IPH from  declaring  Pembrooke  in default of its payment on the
$5.7  million  non-recourse  note that was due and  payable on  November 1, 1999
secured by, and in  connection  with the sale to Pembrooke of the  Company's and
IPH's interests in, a 355-acre limestone property located in Indiana.  The court
ordered a referee to  adjudicate a  particular  factual  issue before  ruling on
Pembrooke's motion for a preliminary injunction.

In November  1999, the Board of Directors of GREKA Energy  unanimously  approved
the  Company's  adoption of a  shareholder  rights plan in order to preserve the
long-term  value of the  Company  for  Greka  Energy's  shareholders.  Under the
shareholder  rights plan,  one right will be  distributed  for each  outstanding
share of GREKA Energy  common  stock.  Each right will entitle the holder to buy
one share of GREKA Energy common stock for an initial  exercise  price of $60.00
per share.  The rights will  initially  trade with common shares and will not be
exercisable  unless certain takeover events occur.  The plan generally  provides
that if a  person  or  group  acquires  or  announces  a  tender  offer  for the
acquisition of 33% or more of GREKA Energy common stock without  approval of the
Board of Directors,  the rights will become  exercisable  and the holders of the
rights,  other than the acquiring person or group,  will be entitled to purchase
shares of GREKA Energy common stock (or under certain circumstances stock of the
acquiring  entity)  for 50% of its  current  market  price.  The  rights  may be
redeemed by GREKA Energy for a redemption price of $.01 per right.

Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Overview

     GREKA  Energy is an  independent  integrated  energy  company  committed to
create shareholder value by capitalizing on consistent cash flow hedged from oil
price fluctuations  within integrated  operations,  exploiting E&P opportunities
and  penetrating  new niche markets  utilizing  proprietary  technology  with an
emphasis on low cost short radius horizontal  drilling technology patented by BP
Amoco and licensed to GREKA  Energy.  GREKA  Energy has oil and gas  production,
exploration and  development  activities in North America and the Far East, with
primary areas of activity in Alberta, California,  Louisiana, Texas, New Mexico,
Indonesia  and China.  In  addition,  GREKA  Energy owns and operates an asphalt
refinery in California.

         GREKA Energy has a three-prong  strategy that  capitalizes on its asset
base to enhance shareholder value as follows:

         Integrated Hedged Operations

Hedged  operations of GREKA Energy focus on the  integration  of its Santa Maria
(California)  assets,  including an asphalt  refinery and interests in heavy oil


                                       19


<PAGE>

fields.  To date,  GREKA  Energy  has only been  able to  supply to the  asphalt
refinery  20-35%  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  integration  of the
refinery (100% owned) with the interests in the heavy oil producing fields (100%
working interest) provides a stable hedge to GREKA Energy on each equity barrel.
GREKA Energy's strategy in these integrated assets is two-fold:

     1.  GREKA  Energy  intends to proceed  with  acquisitions  that enhance the
         long-term feedstock supply to the refinery.

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

The two actions are targeted to increase  throughput  into the refinery from the
average  rate for the three  months ended  September  30, 1999 of  approximately
3,100  barrels  per  day to  10,000  barrels  per  day by  yearend  2001.  It is
anticipated that the profitability from these integrated  operations will not be
affected  by volatile  oil prices  relative  to the equity  barrels.  It is also
anticipated  that,  by using  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.

         Exploitation & Production

The Company is currently  focusing on return to production ("RTP") work that had
been ignored by Saba for over eighteen  months.  Such RTP is expected to enhance
the current production levels and capitalize on current oil prices. GREKA Energy
plans to  capitalize  on its existing  portfolio  of domestic and  international
exploration  projects that are synergistic  with GREKA Energy's Amoco Horizontal
Drilling  Technology.  The Company plans to  specifically  focus on its existing
concessions  in locations  such as China where the Company  believes  there is a
significant demand for energy.

         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.


                                       20

<PAGE>

Recent History

     During  the  first  part  of  1998,  management  of  GREKA  Energy  focused
substantially  all of its efforts on corporate  restructuring,  recapitalization
and acquisition efforts and an investment in a horizontal drilling pilot program
in the Cat Canyon  field in  California  that all were part of its  strategy  to
capitalize on its experience with  horizontal  drilling  technology.  During the
latter  part of 1998 and early 1999,  management  was  primarily  focused on the
acquisition of Saba,  which had  substantial  reserves suited to exploitation by
GREKA Energy's horizontal drilling  technology,  and considerable  expenses were
incurred in connection with the Saba  transactions in the first quarter of 1999.
Due to the  significance  to GREKA  Energy  of the Saba  acquisition,  which was
completed  effective March 24, 1999, GREKA Energy's management and staff devoted
a  substantial  amount of time and effort to the  acquisition.  Greka Energy has
already  executed,  and  continues  to  execute,  a rework  program to return to
production existing wells on all properties that had wells shut-in over eighteen
months.  Subsequent  to the  reworks,  Greka  Energy  intends  during the fourth
quarter  of  1999  to  implement  its  horizontal  drilling  program  using  its
proprietary technology on the Santa Maria Valley area assets.

Acquisition of Saba

     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 effective March 24, 1999:

      On  October 6, 1998,  GREKA  Energy  entered  into an  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 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. ("IPH"), a shareholder
of GREKA Energy. GREKA Energy executed a promissory note to repay the $500,000
to IPH without  interest,  which note matured  September  30, 1999.  The Company
intends  to pay off this  obligation  upon  closing of a  financing  transaction
secured by the Company's interest in certain oil and gas assets and real estate.

     Under this  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
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. GREKA Energy paid $500,000 to
RGC on November 6, 1998 to extend the term of the exclusive  right,  but did not
exercise the right.

     On October 8, 1998 GREKA Energy and Saba  entered  into an agreement  under
which on  November 6, 1998 Saba issued to GREKA  Energy  333,333  shares of Saba
common stock in exchange for cash of $1,000,000.

     The  November  6,  1998  payments  to RGC and Saba 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,  bearing 6% interest, which note matured September 30,
1999.  The  promissory  note is secured by GREKA  Energy's  pledge of all of the
issued and  outstanding  shares of capital  stock of Greka SMV,  Inc.,  a wholly
owned subsidiary of GREKA Energy.


                                       21

<PAGE>

     IPH in  conjunction  with  GREKA  Energy  made  open  market  purchases  of
approximately  5% of the issued and  outstanding  shares of Saba  common  stock.
Under an option  agreement  between  GREKA Energy and IPH,  GREKA Energy had the
right to purchase the approximate  568,200 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. IPH had a put agreement that became effective April 1, 1999
and was exercised on such date.  The Company will issue 140,886 shares to IPH in
exchange  for  the  shares  of  Saba  owned  directly  by  IPH,   following  the
effectiveness  of a registration  statement.  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 December 18, 1998 GREKA Energy  entered into an agreement to acquire the
2,971,766  shares of Saba common stock held by Saba  Acquisub,  Inc. in exchange
for the  issuance by GREKA Energy of  1,340,000  shares of GREKA  Energy  common
stock to Capco Resources Ltd., the shareholder of Saba Acquisub. Even though the
Company, in accordance with the terms of the agreement and in good faith, issued
the  1,340,000  shares of GREKA Energy  common  stock,  the Company had actually
received from Capco  Resources Ltd. only  2,006,566  shares of Saba common stock
held by Saba Acquisub, Inc. in return.

     Also  on  December  18,  1998,  GREKA  Energy  and  Saba  entered  into  an
acquisition  agreement  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.  The acquisition  was completed  effective March 24, 1999 and
GREKA Energy issued approximately  1,290,000 shares of its common stock and Saba
became a wholly owned subsidiary of GREKA Energy.

Sale of Non-Core Assets; Limestone Property

     In April  1999,  the  Company and IPH closed an  agreement  with  Pembrooke
Calox,  Inc.  for the sale of the  Company's  and IPH's  interests in a 355-acre
limestone property located in Indiana in exchange for a non-recourse  promissory
note, secured by the limestone property.  The buyer had the option to pay either
$3.85 million by July 31, 1999 followed by four annual payments of $200,000 each
beginning in 2001,  or $5.7 million by November 1, 1999.  The buyer had not paid
any funds to the  Company  or IPH on or before  July 31,  1999.  As part of this
transaction,  the Company paid  Pembrooke  $50,000 and issued  16,736  shares of
Common Stock  following the filing of a registration  statement on May 17, 1999.
(See Part II, Item 1 - Legal Proceedings)

                                       22


<PAGE>

Beaver Lake Resources Corporation

In July 1999,  the Company  acquired the  remaining  common stock of Beaver Lake
Resources  Corporation  ("BLRC")  that it did not hold  effective  July 31, 1999
whereby the Company issued a total of  approximately  70,000 shares resulting in
each  BLRC  shareholder  receiving  1 share  of the  Company's  common  stock in
exchange  for 74.4 shares of BLRC's  common  stock.  BLRC is now a  wholly-owned
subsidiary of the Company.

International Properties

     In August 1999, GREKA Energy's wholly-owned subsidiary and the China United
Coalbed Methane  Corporation Ltd. ("CUCBM") signed a production sharing contract
to jointly exploit  coalbed  methane (CBM) resources in Fengcheng,  East China's
Jiangxi  Province.  The contract  block, in which GREKA Energy has a 49% working
interest,   covers  a  total  area  of  380,534  acres  in  Fengcheng  which  is
approximately 30 miles from the capital of Nanchang. Early studies indicate that
the  block  has more  than  1.2 TCF of CBM  recoverable  reserves  at a depth of
500-2000 feet. The field has been proven  productive  following 266 core samples
taken.  Of the two  wells  drilled  in the  block,  both are  completed  and are
successfully  producing CBM. The 30-year contract provides that the Company,  as
operator, will drill at least 10 CBM wells over a three year term.

Cautionary Information About Forward-Looking Statements

     This  report  contains  forward-looking  statements  within the  meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934 that include, among others, statements concerning:

        *  the benefits expected to result from GREKA Energy's
           acquisition of Saba 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,
        *  the  state  of  GREKA  Energy's  Year  2000  readiness,   *  business
        strategies, and * expansion and growth of business operations.


                                       23

<PAGE>

     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 below.


Cautionary Information About Forward-Looking Statements (continued)

     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,
     *  the failure of GREKA Energy's technology systems or the technology
        systems of third parties with whom GREKA Energy has material
        relationships to be Year 2000 compliant, and
     *  adverse changes in the regulatory environment affecting GREKA Energy.

The  cautionary  statements  contained  or referred to in this report  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.

Long-Term Potential

Management  believes  that the  results  of  operations  and cash flows of GREKA
Energy  reported  herein  are  indicative  of the  expected  future  results  of
operations  and cash flows of GREKA Energy,  most  particularly,  the results of
operations  achieved during the three month period ended September 30, 1999. The
results of the Company as reported  herein,  and which are  demonstrative of the
successful  implementation  of  management's  business  plan,  are  beginning to
reflect the long-term  potential of the Company.  The Company's EBITDA is 33% of
its revenue for the three months ended  September  30, 1999,  and it is expected
that as the  Company  increases  its  revenues,  its cash  flows  will  increase
substantially.


                                       24

<PAGE>

Results of Operations

Comparison of Three Month Periods Ended September 30, 1999 and 1998

     Revenues increased from $32,112 for the third quarter of 1998 to $9,633,912
for the third quarter of 1999.  This increase was primarily  attributable to the
acquisition of Saba,  followed by the  cancellation of the processing  agreement
with Crown Asphalt Distribution on April 30, 1999 and the subsequent recognition
of refinery revenues by the Company.


     Production  costs  increased  from $29,942 for the third quarter of 1998 to
$4,435,414  for  the  third  quarter  of  1999.   This  increase  was  primarily
attributable  to the  cancellation  of the  Crown  marketing  agreement  and the
related  recognition  of refinery  expenses  by the Company and lease  operating
expenses on properties included in the Saba acquisition.

Results of Operations (continued)

     General and  administrative  expenses increased from $394,967 for the third
quarter of 1998 to $760,968  for the third  quarter of 1999.  The  increase  was
primarily attributable to expenses related to the acquisition of Saba.

     Depletion,  depreciation and amortization increased from $-0- for the third
quarter of 1998 to $1,111,148  for the third  quarter of 1999.  The increase was
primarily attributable to the acquisition of Saba.

     Interest  expense of $688,678 was attributable to borrowings by the Company
from IPH and GMAC, the issuance of 15% debentures and assumption of debt related
to the acquisition of Saba.

Comparison of Nine Month Periods Ended September 30, 1999 and 1998

     Revenues  increased  from  $201,863  in the  first  nine  months of 1998 to
$18,682,475  in the first  nine  months of 1999.  The  substantial  increase  in
revenue  is due  to  acquisition  of  Saba  and  cancellation  of the  marketing
agreement  with Crown  Asphalt  Distribution  and the related  assumption of all
marketing and sales operations of the refinery.

     Production  costs  increased from $119,334 in the first nine months of 1998
to $3,672,740 in the first nine months of 1999. This increase is consistent with
the increase in revenues  related to the cancellation of the Crown agreement and
lease operating expenses on properties included in the Saba acquisition.

     General and administrative  expenses increased from $1,044,753 in the first
nine  months  of 1998 to  $2,347,971  in the nine  months of 1999.  General  and
administrative expenses have increased due to the acquisition of Saba.

     Depreciation,  depletion and  amortization  increased  from $226,225 in the
first nine months of 1998 to  $2,830,334  in the first nine months of 1999.  The
increase was attributable to the acquisition of Saba.

     Interest  expense of  $1,334,996  was  attributable  to  borrowings  by the
Company  from IPH and BNY, the issuance of 15% debentures and assumption of debt
included in the acquisition of Saba.

                                       25

<PAGE>

Liquidity and Capital Resources

     Working  capital  increased  $18,494,930  from a deficit of  $37,976,891 at
March 31,  1999 to a deficit of  $19,481,961  at  September  30,  1999.  Working
capital  deficit at September 30, 1999 of  $19,481,961  increased from a working
capital  deficit of $1,827,854 at December 31, 1998.  Current  assets  increased
$15,416,859  from $421,807 at December 31, 1998 to  $15,838,766 at September 30,
1999 which  includes an increase of $234,803 in Cash and cash  equivalents  from
$250,212 at December 31, 1998 to $485,015 at September  30, 1999.  Approximately
$7.7  million of refinery  raw  material  and  finished  product  inventory  and
refinery   accounts   receivable  result  from  refinery   operations.   Current
liabilities  increased  from  $2,249,661 at December 31, 1998 to  $35,320,727 at
September 30, 1999, an increase of $33,071,166.  Accounts payable increased. The
current portion of long term debt increased  $22,081,573  during the period. The
foregoing  changes  are a result of the  acquisition  of Saba and the  Company's
assumption of the marketing and sales operations of its Santa Maria refinery.

         Cash Flows

     The  Company's  net cash used in  operating  activities  increased  from an
outflow of $1,447,475  for the nine month period ended  September 30, 1998 to an
outflow of $1,893,153  for the nine month period ended  September  30,1999.  Net
income for the period,  adjusted for non-cash  charges,  provided  $5,044,184 of
cash inflow.  Changes in other assets and liabilities  were responsible for cash
outflows of $6,937,337.

     The Company's net cash flows from investing activities decreased from a net
outflow of $1,180,560  from the nine month period ended  September 30, 1998 to a
net outflow of  $1,239,553  for the nine month period ended  September 30, 1999.
This change was primarily  attributable to a $1 million  investment in inventory
for the asphalt refinery.

     The Company's net cash provided by financing  activities  increased from an
inflow of $59,644  for the nine month  period  ended  September  30,  1998 to an
inflow of  $3,068,869  in the nine months ended  September  30,  1999.  Cash was
provided  during the nine months ended  September  30, 1999 from proceeds of the
Company's  financing facility with BNY in the amount of $10,526,450 and proceeds
from the  Company's  15%  Debenture  in the amount of $1 million.  Cash was used
during the nine month period ended  September 30, 1999 to reduce its  obligation
to Bank One by $6  million  and make  payments  on its BNY note  payable  in the
amount of $2,021,838.

         Liquidity

     Under the direction of GREKA Energy's management and in accordance with its
business  strategy,  GREKA Energy has improved its liquidity and expects to have
low capital requirements.  Specifically,  GREKA Energy expects to have an annual
capex of $5 million  funded by its cash flow.  The Company is current on all its
interest  payments,  and has  sufficient  cash flow for all of its operating and
foreseen  capital  requirements.  Further,  GREKA Energy  intends to achieve the
following:

     *    Reduce  current  liabilitie   from  $23,749,621  to  $11,749,621 as of
          September  30, 1999 by obtaining up to $35.0 million of financing, the
          proceeds of which, upon conclusion, will be used to reduce the current
          liabilities  with  respect to the Company's indebtedness  to Bank One,
          IPH and BNY.


                                       26

<PAGE>

     *    Utilize  the  in-house   proprietary  and  cost  effective  horizontal
          drilling  technology  to enhance  production in the Santa Maria Valley
          area.

     *    Continue  integration of GREKA  Energy-operated oil and gas properties
          and the wholly-owned  and operated asphalt refinery that  collectively
          provide for low cost operating expenses and high cash flow.

GREKA Energy's  management also believes that the disposition of non-core assets
and acquisition of the minority  interest of BLRC brings  opportunities for cost
savings, and other synergies,  resulting in improved cash flow potential for the
long-term  growth of GREKA  Energy  and of  shareholder  value.  Further,  these
dispositions give 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.

         Capital Expenditures

      The Company's growth is focused on acquisitions  that are synergistic with
its  technology.  It  is  intended  that  such  acquisitions  will  be  achieved
concurrent with the closing of adequate financing.  Operationally on the current
asset base, the Company  expects to fund its annual capex of $5.0 million by its
cash flow.

Debt Financing and Restructuring

     Outstanding debt and the Company's plans for payment or restructuring:

     *    The Company entered into a term sheet with a financial  institution to
          lend  the  Company  up to  $35.0  million,  secured  by the  Company's
          interest in certain oil and gas properties and certain California real
          estate. Upon conclusion, the proceeds from this financing will be used
          to reduce  the  current  liabilities  with  respect  to the  Company's
          indebtedness to Bank One, IPH, and BNY.

     *    The Company  entered  into a term sheet with a majority of the holders
          of Saba's 9% senior subordinated debentures ($3.6 million) to exchange
          the debentures of Saba for new debentures of the Company.

     *    The  Company  entered  into a term  sheet in March  1999 with the Saba
          Preferred  Stockholder  holding Saba's  Preferred Stock (with a stated
          value of $7.3  million)  that  provided for the  conversion  of Saba's
          Preferred Stock to a subordinated  convertible  note obligation of the
          Company.

                                       27

<PAGE>

     In September 1999, the revolving credit facility that provides  advances to
GREKA Energy's  subsidiaries  by BNY  for working  capital of up to $5.0 million
against  eligible  receivables and inventory of the Santa Maria asphalt refinery
was increased to $6.0 million,  raising the total  available  funds  acquired in
April 1999 under the  revolving  credit  facility and the reducing  term loan of
$6.0 million from $11.0 million to $12.0 million.

Debt Financing and Restructuring (continued)

     In July 1999,  the  Company,  Saba and Bank One entered into an amended and
restated  forbearance  agreement under which Bank One has agreed to forbear from
exercising  its  remedies  to  collect  the  indebtedness  owed by Saba  through
September 15, 1999 on the condition  that the Company shall have entered into on
or before July 15, 1999 a term sheet with a reputable  financial  institution or
other lender acceptable to Bank One pursuant to which such lender has stated its
willingness to fund a loan to Saba on or before  September 15, 1999, all or part
of the  proceeds  of  which  would  be used to pay off in full  the  outstanding
principal  balance and accrued,  unpaid  interest owed by Saba to Bank One. Saba
has maintained compliance and Bank One has continued to forbear.

     In July 1999, the Company  entered into a term sheet with a majority of the
holders of the  outstanding  Saba  debentures to exchange the debentures of Saba
for new  debentures of the Company with interest at the rate of 9%,  maturing on
December  31,  2005  with a right of the  Company  to  redeem at any time for an
amount  equal to 102% of the  principal  amount  plus  any  accrued  but  unpaid
interest, subject to the right of holders to first convert. The conversion price
offered by the Company is 95% of the average  closing bid price of the Company's
common stock for the 30 consecutive  trading days of the Company's  common stock
ending  one day  prior to the date  notice  of  conversion  is  received  by the
Company,  but in no event less than $8.50 nor greater than $12.50 per share. The
terms further offer that, commencing April 1, 2000, each holder of the Company's
debentures  shall have the right upon  written  notice to the Company to require
that it redeem its  debentures at an amount equal to the  principal  amount plus
any accrued but unpaid  interest.  The Saba  debentures  were  delisted from the
American Stock Exchange in August 1999.

     In August  1999,  the  Company  entered  into a term sheet with a financial
institution  to lend the Company up to $35.0  million,  secured by the Company's
interest in certain oil and gas properties and certain California real estate.

                                       28

<PAGE>

Year 2000 Readiness Disclosure

     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 systems and  non-information  technology
systems using embedded  technology may be affected by the Year 2000.  Management
currently  believes that since GREKA Energy's  drilling  equipment does not make
use of embedded computer chips and its other operating  equipment is not heavily
automated with technology systems, the costs of becoming ready for the Year 2000
will not have a material adverse effect on GREKA Energy's  financial  condition,
results of operations or cash flows.

     GREKA Energy currently  believes that its existing  technology  systems and
software  will not need to be  upgraded  to become  Year 2000  compliant.  GREKA
Energy's  third-party  accounting  software  vendor  has  modified  the  current
operating  system  utilized by GREKA Energy and provided the modified  system to
GREKA Energy in the first  quarter of 1999.  The cost of this  modification  was
included  in the  vendor's  system  support  contract  and did not  result  in a
significant additional expense for GREKA Energy.

    GREKA Energy is in the process of verifying  whether vendors,  suppliers and
significant  customers  with which GREKA Energy has material  relationships  are
Year 2000 compliant. GREKA Energy believes that some of these third parties will
not be  materially  affected  by the Year 2000 since  those  third  parties  are
relatively  small entities  which do not rely heavily on technology  systems for
their  operations.  GREKA Energy does not know  whether the other third  parties
will be Year 2000 complaint.  Under a worst-case  scenario,  if GREKA Energy and
such third parties are not Year 2000 compliant on a timely basis, there could be
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's  current Year
2000  contingency  plan is  essentially  to have all necessary  tasks  performed
manually in the event of material  Year 2000  problems  affecting  GREKA Energy.
Management of GREKA Energy believes that GREKA Energy has adequate  personnel to
perform  those  functions  manually  until any Year 2000  problems are resolved.
Inflation


                                       29

<PAGE>

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

     As discussed in the  explanatory  note  preceding the table of contents for
this report, GREKA Energy filed its SEC reports for periods through December 31,
1998 under SEC  Regulation  S-B.  Regulation S-B does not contain the disclosure
requirements  under this item. In addition,  the information  under this item is
not required for interim period reports until after the first fiscal year end in
which  this  item is  applicable.  Therefore,  GREKA  Energy  expects  to  begin
presenting  the  information  required by this item in its Annual Report on Form
10-K for the fiscal year ending December 31, 1999.

                                       30
<PAGE>



                    PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

     The  following  material  developments  occurred  during the quarter  ended
September 30, 1999 with respect to the legal  proceedings  reported in the GREKA
Energy  Annual  Report on Form  10-KSB/A for the fiscal year ended  December 31,
1998:

     As reported in the GREKA  Energy 1998 Annual  Report on Form  10-KSB/A,  on
December 11, 1998, a  wholly-owned  subsidiary of GREKA Energy,  Sabacol,  Inc.,
filed a voluntary petition under Chapter 11 of the U.S.  Bankruptcy Code in U.S.
Bankruptcy   Court  for  the  Central   District  of  California  (BK  Case  No.
ND98-15858-RR).  On April 26,  1999,  following  the  Company's  motion,  it was
announced that Sabacol had successfully obtained the Bankruptcy Court's approval
of the sale of substantially all its assets and the authorized  dismissal of its
bankruptcy  case, upon  consummation of the sale.  Following  Sabacol's  request
filed in July 1999 with the bankruptcy court, an order dismissing the bankruptcy
case was entered on August 4, 1999.

     In July 1999 in  Gitte-Ten,  Inc. v. Saba  Petroleum  Company  (Case No. CV
980202 Superior and Municipal  Courts of the State of California,  County of San
Luis  Obispo,  March  1998),  the matter was  settled  in  September  1999 which
included a dismissal with prejudice as to the action.

     Capco  Resources,  Ltd. v. GREKA Energy  Corporation  and Randeep S. Grewal
(Case No. 99-8521-R,  U.S. District Court,  Central District of California).  In
August 1999, Capco Resources,  Ltd.  ("Capco") filed an action against GREKA and
Randeep S. Grewal,  the President of GREKA,  alleging that GREKA  breached,  and
GREKA  and Mr.  Grewal  made  misrepresentations  in  connection  with,  a Stock
Exchange Agreement entered into between Greka, Capco and Capco's affiliates (the
"Exchange"). Capco claims that it is entitled to $12.25 million in damages, plus
interest  and  costs,  and  requests  that  the  court  require  GREKA to file a
registration  statement for the resale of 1 million shares of GREKA common stock
that Capco  received  pursuant to the  Exchange.  Shortly after filing this suit
Capco  threatened to exert control over and sell the GREKA shares in a brokerage
account  that was to have  been  transferred  to GREKA as part of the  Exchange.
GREKA filed the case of GREKA vs.  Capco and Service  Asset  Management  Company
d/b/a Penson Financial  Services,  Inc. d/b/a Global Hanna Trading in the Denver
Colorado  District Court and obtained a temporary  restraining order temporarily
restraining  this  conduct  by  Capco  (Case  No.  99-CV-6006).   Prior  to  the
preliminary  injunction  hearing  Capco  removed  the case to the  U.S.  Federal
District Court in Denver,  Colorado (Civil Action No.  99-K-1814).  On September
17,  1999 GREKA  received a new  temporary  restraining  order from the  federal
district  court.  This order  remains in effect  until a motion for  preliminary
injunction is heard following the  consolidation of Capco's federal action filed
in  California  with Greka's  federal  action sited in Colorado as a result of a
transfer  from  California  to Colorado of Capco's  federal  action  having been
ordered on October  18,  1999 by the  California  federal  district  court after
granting  GREKA's motion.  While GREKA and Mr. Grewal plan to vigorously  defend
all claims  asserted by Capco and to  aggressively  pursue all counter and third
party claims, the litigation is in its preliminary, pre-discovery stages.


                                       31

<PAGE>

     Pembrooke  Calox,  Inc.  v. GREKA  Energy  Corporation,  et al.  (Index No.
604905/99,  Supreme Court of the State of New York). In October 1999,  Pembrooke
Calox, Inc. ("Pembrooke") obtained a temporary restraining order enjoining GREKA
from declaring Pembrooke in default of payment under a $5.7 million non-recourse
note due  November  1, 1999  which was  executed  in  exchange  for  Pembrooke's
acquisition  of GREKA's  interest  in a  limestone  reserve  located in Indiana.
Pembrooke's underlying action alleges, amongst other things, that GREKA withheld
information  in  violation of a  settlement  agreement  entered into between the
parties.  The court ordered a referee to  adjudicate a particular  factual issue
before  ruling on  Pembrooke's  motion  for a  preliminary  injunction.  Without
setting forth any basis for the alleged  damages,  Pembrooke  requests relief in
the amount of $501.5 million which is unsupportable  and frivolous.  While GREKA
plans to vigorously defend all claims asserted by Pembrooke and seek appropriate
sanctions, the litigation is in its preliminary, pre-discovery stages.

     From time to time,  GREKA  Energy and its  subsidiaries  are named in legal
proceedings  arising  in the  normal  course  of  business.  In the  opinion  of
management,  such legal  proceedings are not expected to have a material adverse
effect on GREKA  Energy's  financial  condition,  results of  operations or cash
flows.

Item 2.  Changes in Securities and Use of Proceeds.

     During the three months ended September 30, 1999, the Company issued 69,898
shares  of its  Common  Stock  to the  minority  interest  holders  of  BLRC  in
connection with the Company's acquisition of the minority interests in BLRC (see
Overview-Beaver Lake Resources Corporation).

Item 3.  Defaults Upon Senior Securities.

     The information  required by this Item is incorporated  herein by reference
to the  discussion  in Part I Item 2 of this  report  under  the  caption  "Debt
Financing and Restructuring."

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

         None.

Item 5.  Other Information.

     In  November  1999,  the Board of  Directors  of GREKA  Energy  unanimously
approved  the  Company's  adoption  of a  shareholder  rights  plan in  order to
preserve the  long-term  value of the Company for Greka  Energy's  shareholders.
Under the  shareholder  rights  plan,  one right  will be  distributed  for each
outstanding  share of GREKA  Energy  common  stock.  Each right will entitle the
holder to buy one share of GREKA  Energy  common  stock for an initial  exercise
price of $60.00 per share.  The rights will  initially  trade with common shares
and will not be  exercisable  unless  certain  takeover  events occur.  The plan
generally  provides  that if a person or group  acquires  or  announces a tender
offer for the  acquisition  of 33% or more of GREKA Energy  common stock without
approval of the Board of Directors,  the rights will become  exercisable and the
holders  of the  rights,  other  than the  acquiring  person or  group,  will be
entitled to  purchase  shares of GREKA  Energy  common  stock (or under  certain
circumstances  stock of the  acquiring  entity)  for 50% of its  current  market
price. The rights may be redeemed by GREKA Energy for a redemption price of $.01
per right.

                                       32
<PAGE>


Item 6.  Exhibits and Reports on Form 8-K.

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

     Exhibit No.    Description

         3.1        Amendment to Article II of the Bylaws of Greka Energy*

        10.1        Arrangement Agreement dated June 16, 1999 among GREKA Energy
                    Corporation and Beaver Lake Resources  Corporation (filed as
                    Exhibit 10.1 to the GREKA Energy Report on Form 10-Q for the
                    quarter   ended  June  30,  1999  SEC  file   #0-207670  and
                    incorporated by reference herein)

        10.2        Amended and Restated  Executive  Employment  Agreement dated
                    November 3, 1999 among Randeep S. Grewal and Greka Energy*

        10.3        Amendment  dated  September  24, 1999  to  Loan and Security
                    Agreement  dated   April  30,  1999  among   BNY   Financial
                    Corporation,  Greka Integrated, Inc., Saba Realty, Inc.  and
                    Santa Maria Refining Company *

        10.4        Rights Agreement dated November 3, 1999*

        11.1        Computation of Earnings per Common Share*

        27.1        Financial Data Schedule*

* Filed herewith

     (b) During the quarter for which this report is filed,  GREKA  Energy filed
the following Reports on Form 8-K:

Current Report on Form 8-K dated July 14, 1999 which reported  events under Item
2, Acquisition or Disposition of Assets.

Current  Report on Form 8-K/A dated  September  13, 1999 which  reported  events
under  Item 2,  Acquisition  or  Disposition  of Assets,  and Item 7,  Financial
Statements and Exhibits.

                                       33
<PAGE>



                                    SIGNATURE

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                              GREKA ENERGY CORPORATION


Date November 15, 1999         By:/s/ Randeep S. Grewal
                               -------------------------------
                               Randeep S. Grewal, Chairman and
                               Chief Executive Officer













                                       34