Greka Energy Corporation has successfully closed as scheduled the sale of its interests in the Potash Field. The buyer, Sundown Energy, Inc., paid a contract price of $20 million cash for these producing assets in Louisiana.
The sale proceeds were used to substantially pay down the Company's debt. Bank of Texas, N.A. was paid $12.5 million and related trade payables were paid $7 million, approximately.
The sale, effective May 1, 2002, transferred the Company's operatorship and ownership of a 100% working interest and a net revenue interest of 78-83% in approximately 3,000 acres in the Potash Field, which Exxon discovered in the 1930's. The Potash Field is a salt dome in South Louisiana on the Mississippi River that is south of New Orleans.
The Company had acquired the Potash Field in the 1999 Saba acquisition. At that time, the field was shut-in and clouded with title defects including several related lawsuits. During the Company's three years of owning and operating the field, the Company successfully implemented its planned strategy to convert the Potash Field from a liability to an asset. This included eliminating the title defects and related litigation through settlements with the mineral owners and related creditors, executing several workovers that confirmed the reservoir productivity, and successfully drilling the HD No. 1 well to a total depth of over 10,000' that proved the Company's geophysical interpretation and field potential.