LONDON (Alliance News) - Greka Drilling Ltd Monday said it swung to a pretax loss in 2014 after it was hit by less activity in the drilling sector, caused by the fall in oil prices, but said activity picked up in the fourth quarter into a "robust 2015".
The independent and specialized unconventional gas drilling company focused primarily on China swung to a USD5.3 million pretax loss for the year ended December 31, from a USD308,000 profit in 2013, after revenue fell and costs increased.
Revenue for the year fell to USD24.4 million from USD30.5 million as finance income dropped to USD390,000 compared to USD3.0 million in 2013 whilst finance costs rose to USD2.9 million from USD1.6 million. Administrative expenditure also saw a small increase in 2014.
"2014 was a difficult financial year as we waited for our clients to start their drilling campaigns. During the year management focused its attention on personnel and operational optimization which was well reflected in improved drilling accuracy and efficiency. In addition, we successfully started the operations in India which adds an important geography to our footprint," said Chairman and Chief Executive Randeep Grewal.
Revenue declined in 2014 as the company faced delays and uncertainty in the oil and gas sector due to the fall in oil prices since the middle of 2014, but Greka said drilling picked up in the fourth quarter from its new contract with Essar.
"While we were prepared for a robust drilling campaign, our contracted clients were, for reasons outside of Greka Drilling's control, not in a position to mobilize the drilling campaigns. The company had little alternative but to wait," said Grewal.
"Following two consecutive years of weakness, we are looking forward to a robust 2015. I am pleased to report that the year has started with increased activity levels and firm drilling mobilized orders that we expect to significantly increase activity levels over 2014," added Grewal. "Greka Drilling has the capability to deliver the contracted 130 well drilling programmes for our clients within 2015, however this will be dependent upon our clients' requirements."
Greka shares were down 1.0% to 9.90 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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