LONDON (Alliance News) - Greka Drilling Ltd Friday said it drilled more wells in the first half of 2015 from a year earlier but warned revenue in the current year will be impacted by its main client in India deciding to suspend its drilling campaign.
The China-focused unconventional drilling company said it drilled 28 wells in the first half of 2015, up from 19 wells a year earlier. Of those 28 wells, 19 of them were drilled in China and the other nine wells were drilled in India. Of the wells drilled in China, all but one was for its long-term partner Green Dragon Gas Ltd.
Of the 19 wells drilled in China, 17 of them were vertical wells which took an average time of 11.2 days to drill compared to only 9.3 days a year earlier whilst the two latral wells took an average of 11.8 days compared to 11.5 days.
It drilled a total of 26,367 metres which was up 25% from 21,259 metres a year earlier. Of the total metres drilled, 16,447 metres were in China and the other 9,920 metres was in India.
"As witnessed globally, the exploration and production sector has seen a material reduction in drilling campaigns and all service sector companies have felt the impact of such reductions. Notwithstanding the macro industry trend, the mobilised drilling campaigns of our key client, Green Dragon Gas, provide us confidence in a robust 2015 which we continue to expect to be an improvement over 2014," said Chairman and Chief Executive Randeep Grewal.
However, its main client in India, Essar, has suspended its drilling campaign and only intends to drill one further well to test Greka's technology against its coal-bed-methane reservoirs.
"Whilst Essar's current suspension of its drilling campaign will reduce the initially forecasted revenue in the current year from India by the value of the remaining contract value, we remain confident about the company's longer term prospects in India," said Grewal.
Grewal is also the chairman of fellow-listed Greka Engineering and Technology Ltd, which also released an operatiional update Friday. Greka Drilling and Greka Engineering demerged in 2011, with both companies continuing to work in China with Green Dragon Gas PLC which released an update Thursday.
Greka Drilling shares were up 11.4% to 6.72 pence per share on Friday morning whilst Greka Engineering shares were up 4.4% to 0.600 pence.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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