Greka Drilling Limited Greka Drilling signs drilling contract with CNPC

TIDMGDL

Greka Drilling Limited

28 December 2012

Greka Drilling Limited

("Greka Drilling" or "the Company")

Greka Drilling signs drilling contract with CNPC

Greka Drilling Limited (AIM: GDL), the largest independent and specialized unconventional oil & gas driller in China, is pleased to announce that it has signed a contract with China National Petroleum Corporation ("CNPC")'s Huabei Oilfield Company ("the Contract"), for Greka's proven LiFaBriC drilling services. This initial contract is expected to be completed early in Q1 2013. CNPC is China's largest state owned energy enterprise and a controlling shareholder of PetroChina, amongst others.

CNPC had previously focused their CBM drilling program using a combination of vertical fracked wells and multi-lateral horizontal wells provided by other service companies. Such traditional completions have failed to meet CNPC's production expectations.

The initial contract involves drilling a LiFaBriC well. The previously announced Petro-king Sinopec contract will utilize 5 rigs, whilst this additional CNPC contract will utilize 2 rigs in the first instance. The wellwill be drilled in CNPC's Zhengzhuang Block in the Qinshui Basin. The Contract will be serviced from the Company's existing facilities in Shizhuang, Shanxi, also located in the Qinshui Basin.

CNPC has announced plans to drill a total of 1,500 - 2,000 wells in 2013, across its acreage; this represents a considerable increase compared with 2012. If this initial trial is deemed successful, it is expected that CNPC would formally decide that the completion methodology in the Qinshui Basin will be LiFaBriC, Greka's proprietary completion methodology.

Randeep Grewal, Chairman and CEO of Greka Drilling commented:

"The significance of securing a contract directly with CNPC is a defining moment in time for the Company. We have set new milestones in the drilling services sector in China, both technical and operational. The years of research and development are starting to become understood and appreciated within China by those that matter. China's aggressive targets for unconventional gas production in the 12(th) 5-year plan can be only be met if the focus by producers is on actual gas production and not simply by drilling wells that are unproductive as has historically been the case. Unfortunately, CBM producers in China have had to depend on the incumbent service sector capabilities to overcome a geologically challenged resource. The traditional service sector has failed to deliver. This is where Greka Drilling stands out. The five years of a track record, drilling successful LiFaBriC wells with proven, actual and sustainable gas production places our capabilities in a class of its own.

We consider this initial contract to be a positive move in securing future contracts with CNPC. Greka rigs are contracted to be drilling on CNPC, Sinopec and Green Dragon Gas properties during 2013, a goal we accomplished on time and as planned in this year.

We are well on the way to becoming a significant service provider within the gas sector in China."

For further information on Greka Drilling, please refer to the website at www.grekadrilling.com or contact:

 
 Stephen Hill, VP Corporate Communications 
  Greka Drilling                              +852 3710 0108 
 Dr Azhic Basirov / David Jones 
  Nomad & Broker 
  Smith & Williamson                          +44 20 7131 4000 
 Jeffrey Auld / Steve Baldwin 
  Broker 
  Macquarie Capital (Europe)                  +44 20 3037 2000 
 James Henderson / Rollo Crichton-Stuart 
  Investor relations 
  Pelham Bell Pottinger                       +44 20 7861 3232

This information is provided by RNS

The company news service from the London Stock Exchange

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