Greka Drilling Limited Operations Update (7090J)

TIDMGDL

RNS Number : 7090J

Greka Drilling Limited

19 July 2013

Greka Drilling Limited

("Greka Drilling" or the "Company")

Operations Update: Customer Base Expanded

Greka Drilling Limited (AIM: GDL), the largest independent and specialized unconventional oil & gas driller in Asia, is pleased to provide an operations update to 30 June 2013.

OPERATIONAL HIGHLIGHTS

-- Five counterparties: Green Dragon Gas, CNPC Huabei Anze, CNPC Huabei Jincheng , Sinopec CBM (BOFA) and Sinopec Unconventional Oil (Petroking)

   --      26 wells drilled in first half 2013

-- 36,347 metres drilled, compared to 57,997 metres drilled in the same period 2012; the experience gained in the area allowed the Company to drill LiFaBriC wells with fewer branches

   --      Vertical wells averaging 25 drilling days versus 37 days in the same period in 2012 
   --      Horizontal wells averaging 87 drilling days (radius bend and lateral section) 
   --      Directional wells averaging 20 days; deepest well 1,076m Measured Depth ("MD")

-- Exploration drilling (LiFaBriC) wells at 61 days improving on previous Company guidance of 90 days. This references the Exploration drilling for Green Dragon Gas

   --      Longest and deepest LiFaBriC well drilled: 1,917m MD and 1,040m True Vertical Depth 
   --      9,286 man-hours of employee training

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

"The first half of 2013 has been particularly slow with most of our teams focused on training and rig maintenance rather than drilling. Whilst the first half of the year has historically included a very slow first quarter with Green Dragon Gas, the Company has successfully secured third party contracts to compensate for this seasonality. The Company had readied rigs for mobilization for third parties but was delayed by the lack of site availability from the new clients thus deferring the drilling contracts. Additionally, the new clients are monitoring the production performance from pilot wells drilled by the Company before initiating their drilling programs under their contractual commitments. Our client, Green Dragon Gas, reduced its drilling activity while focusing on resolving its title issues and thus released a number of rigs, which we expect to be redeployed in the latter part of the year following the recent resolution of this issue.

Although this was a slow first half, we now have a significant contractual backlog with five clients and our dependence on a single client has significantly reduced.

The Company's clean environmental footprint, proprietary LiFaBriC design and rig efficiency are ideally suited to be focused on many more clients considering the recent palpable shift in thinking towards completion methods in China. We are confident that the Company is poised to take advantage of the concerns surrounding pollution through fracking, and importantly, the need to significantly improve well life and the associated returns. As with all new technologies, adoption does take time. That said the number of wells that are required to be drilled just within the Company's existing customer base would keep Greka Drilling busy for at least the next two years with our existing fleet, assuming the clients were able to secure all of those well sites for us within that period.

We are excited about our expansion plans into India and continue to pursue this opportunity."

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 
  Smith & Williamson                          +44 20 7131 4000 
 Steve Baldwin / Nicholas Harland 
  Broker 
  Macquarie Capital (Europe)                  +44 20 3037 2000 
 Tan Jeh Wuan 
  Financial Adviser 
  DBS Bank - Singapore                        +65 6878 5353 
 James Henderson / Nick Lambert / 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

END

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