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Investor Relations

Greka Drilling announces interim results - Revenues More than Double

Greka Drilling announces interim results - Revenues More than Double

07 September 2011

Greka Drilling Limited (AIM: GDL), the largest independent and specialised unconventional gas driller in China is pleased to announce its results for the half year ended 30 June 2011.

CORPORATE HIGHLIGHTS

  • Successful 100% demerger from Green Dragon Gas
  • Admitted to the London Stock Exchange AIM market on 8 March 2011
  • 25 new drilling rigs ordered with an option for an additional 12

OPERATIONAL HIGHLIGHT

  • Utilization rate increased to 86%
  • 26,435 meters drilled
  • Average revenue per rig: US$1.47m
  • Average days to drill a vertical well: 26 rig running days
  • Average days to drill a horizontal well: 37 rig running days
  • Average depth per vertical well: 830 meters
  • Average meterage per horizontal well: 2,861 meters

FINANCIAL HIGHLIGHTS

  • Revenue US$17.1m, a 121% increase over same period last year
  • Net profit US$0.9m, compared with US$1.0m loss in same period last year
  • EPS US$0.002, compared with loss per share of US$0.003 in same period last year
  • Cash on hand of US$38.5m
  • Unused US$12.5m revolving working capital facility

OUTLOOK

  • 25 ordered rigs: 1st rig to arrive on site on schedule in September with balance of 24 for delivery at rate of 4 rigs per month on site, beginning November 2011. Committed rig fleet to be 32 with an additional 125 on option
  • Drilling meterage expected to accelerate substantially in second half and beyond with the arrival of the new rig fleet
  • Rig crew numbers to be reduced as new rigs are more automated
  • Skilled personnel to increase rapidly by year end
  • Continued evaluation of third party drilling contracts
  • Evaluating acquisitions to expand beyond China

Randeep Grewal, Chairman and Chief Executive of Greka Drilling, commented:

"China's undisputed vast resource of unconventional gas is the prize, the attainment of which has been thwarted by the lack of specific technology and aptitude to commercially extract this resource. In effect there are today and have been others previously, many 'gold diggers without the right shovels'. Converting the resource into reserves and hence revenue involved the development of the required technology to drill in the very complex, under-saturated, brittle, and heavily faulted coal beds with the world's highest gas content.

It took materially longer than we initially anticipated to unlock the unconventional gas resource potential, but unlock it we did and now our committed fleet expansion from 7 to 32 rigs makes us the largest dedicated unconventional gas driller within China and we have an ambition to be the same across Asia through continued expansion in the future."

For further information on Greka Drilling (including pictures of the Company's first new rig), please refer to the Company's website at www.grekadrilling.com or contact:

Stephen Hill, VP Corporate Communications
Greka Drilling

+852 3710 0108

Dr Azhic Basirov / David Jones
Nomad 
Smith & Williamson

+44 20 7131 4000

Tim Redfern / Anu Tayal / Jamie Richards
Broker 
Evolution Securities

+44 20 7071 4312

Paul Connolly / John Dwyer / Steve Baldwin
Broker 
Macquarie Capital (Europe)

+44 20 3037 2000

James Henderson / Nick Lambert / Rollo Crichton-Stuart
Investor relations 
Pelham Bell Pottinger

+44 20 7861 3232