18 Jan 2017 12:01
18 January 2017
OPERATIONS UPDATE
Greka Drilling Limited (AIM: GDL), the largest independent and specialised unconventional oil and gas driller in Asia, is pleased to provide an operations update to 31 December 2016.
Operational Highlights
l 33 wells were drilled in 2016 (2015: 62 wells), of which:
² 85% third party and in India
² 5 wells drilled in China (2015: 53 wells)
² 28 wells drilled in India (2015: 9 wells)
² 5 wells drilled for Green Dragon Gas Ltd. ("Green Dragon Gas") (2015: 51 wells)
² 28 wells drilled for Essar Oil Limited ("Essar") (2015: 11 wells for other clients: Essar - 9 wells; PetroChina - 2 wells).
l A total of 39,553 metres were drilled in 2016 (2015: 76,690 metres):
² 6,072 metres were drilled in China
² 33,481 metres were drilled in India
² 13.2% of the metres involved the use of in house measurement-while-drilling ("MWD") directional tools (i.e. were lateral or directional wells).
l The average drilling time for LiFaBriC lateral wells in China from spud to completion was 27.5 days in 2016 compared with 32.3 days in 2015.
l The average drilling time for Directional wells in India from spud to completion was 12.9 days in 2016 compared with 16.1 days in 2015.
l Greka Drilling continues to emphasize training, with 4,584 man-hours of training conducted in 2016 for staff in India and China.
l Strong HSE focus. No Lost Time Injuries occurred in 2016.
2017 OUTLOOK
For India:
l Continue work load and contract with Essar
l Attain contract from state controlled entities - ONGC and Coal India
l Acquire new contracts with other oil and gas operators in central India
For China:
l Expand capability into the workover market
l Expand capability into the Geothermal market
l Secure workload from key client CNPC, PetroChina and Green Dragon Gas.
Randeep S. Grewal, Chairman and Chief Executive of Greka Drilling, commented:
"As predicted, 2016 was a challenging year while the oil and gas operators realigned their portfolios to the new commodity price environment. During this period we continued to take steps to reduce costs, improve our drilling efficiency and diversify our services and customer base.
In India, we won a new contract from Essar Oil to provide drilling for vertical and directional wells on a day-rate basis. Greka Drilling completed 28 directional wells with 33,481 metres under this contract in 2016, and continues to drill to meet Essar's drilling requirements under the current contract until mid-February 2017. In addition to Essar, GDL is also in advanced talks with other oil and gas operators to mobilise other rigs in the central part of India during 2017.
In China, we completed our limited contract for key client Green Dragon Gas by year end and expect to attain new contracts from this client in 2017. In November 2016, we won a new contract from PetroChina to provide drilling for up to five horizontal wells. The rig has been mobilised for two wells and is rigged up on site with the spudding of the first well expected following Chinese New Year, in mid-February.
We are in the process of expanding our capability and diversifying our operations into the geothermal and work-over market in 2017. Our equipment provides us an ideal foundation to expand our capacity into these stable markets regardless of commodity prices. We expect these two markets will provide the business stability while be complementary to our niche in the CBM sector within China and India.
We remain confident about the market and the Company's longer term prospects, both in China, India and in other markets."
For further information on Greka Drilling, please refer to the Company's website at www.grekadrilling.com or contact:
Sarah Lowther
Media Relations +44 (0)20 7016 9829
Greka Drilling
Dr Azhic Basirov / David Jones / Ben Jeynes
Nominated Adviser and Broker +44 (0)20 7131 4000
Smith & Williamson