TIDMGDL
RNS Number : 8466V
Greka Drilling Limited
21 April 2016
21 April 2016
Greka Drilling Limited
("Greka Drilling" or the "Company")
Annual results for the year ended December 2015
Greka Drilling Limited (AIM: GDL), the largest independent and
specialised unconventional oil & gas driller in Asia, is
pleased to announce annual results for the year ended 31 December
2015.
HIGHLIGHTS
OPERATIONAL HIGHLIGHTS:
-- There were 3 principal contracted counterparties: Green
Dragon Gas Ltd and PetroChina Huabei in China, and Essar Oil
Limited in India.
-- 62 wells drilled in 2015, a 38% increase over the 45 wells drilled in 2014.
-- A total of 76,690 metres drilled in 2015, a 31% increase over 2014 (58,520 metres).
FINANCIAL HIGHLIGHTS:
-- Annual revenues in 2015 increased to US$29.9m (2014: US$24.4m).
-- Loss before tax widened to US$7.5m (2014: loss of US$5.3m)
principally due to foreign exchange loss due to US$ appreciation
against RMB. Foreign exchange losses in 2015 were US$3.6m (2014:
US$0.8m).
-- Earnings before Interest, Tax, Depreciation and Amortisation
("EBITDA") in 2015 was US$2.4m (2014: US$1.9m).
-- Gross margin of 20%, compared with 26% in the same period last year.
-- Year-end cash and bank deposits of US$2.4m including restricted cash (2014: US$8.0m).
-- Following the period end, a US$5 million debt facility was secured on 31 March 2016.
DRILLING HIGHLIGHTS:
-- Drilling efficiency improved significantly: in December 2015
we drilled 2,277 metres per rig per month in China, compared with
1,890 metres per rig per month in December 2014.
-- The average drilling time for LiFaBriC lateral wells from
spud to completion was 32.3 days in 2015 compared with 37.0 days in
2014.
-- The longest LiFaBriC section in 2015, surface to
intersection, was 1,760m measured depth ("MD") (compared to 1,600m
in 2014).
-- The longest horizontal well in 2015, surface to target, was
1,928 metres MD for a third party client in China.
-- We completed LiFaBriC wells intersecting into directional
wells in China at a measured depth of 1,500 metres, which is
technically more demanding than intersecting a vertical well.
-- We successfully drilled an experimental LiFaBriC well into
coal seam 15 in Qinshui Basin, thereby opening up a new resource
access for our client Green Dragon Gas.
-- The deepest directional well we drilled in 2015 had a 1,311
metres true vertical depth ("TVD") and a 1,429 metres MD.
-- Strong HSE focus, no Lost Time Injuries occurred in 2015.
Randeep S. Grewal, Chairman & CEO of Greka Drilling,
commented:
"In 2015 we accomplished a 23% increase in revenues despite the
challenging environment faced by the global drilling industry due
to the rapid collapse in the commodity prices. However our earnings
were adversely impacted by foreign exchange losses and by our
ongoing investment in India, where we have the only fleet of modern
CBM-tailored rigs and we are at the forefront of developments in
the CBM industry. We are delighted that Essar Oil Limited recently
remobilised two of our rigs in India for drilling in the Raniganj
block, which vindicates our commitment to the India market.
In response to limited drilling opportunities in the first half
of 2016, we have been taking steps to reduce the fixed cost
elements of our business and we are delighted to have procured a
US$5 million working capital facility, as announced on 31 March
2016. We are encouraged by the increasing attention in the CBM
markets on the benefits of lateral wells, where Greka Drilling is a
pioneer with our LiFaBriC technology, and for which we anticipate
significant business when the drilling market recovers."
For further information on Greka Drilling, please refer to the
Company's website at www.grekadrilling.com or contact:
James Henderson / Rollo Crichton-Stuart
Investor Relations
Bell Pottinger +44 (0)20 3772 2500
Dr Azhic Basirov / David Jones / Ben
Jeynes
Nominated Adviser and Broker
Smith & Williamson +44 (0)20 7131 4000
CHAIRMAN'S STATEMENT
The past year has seen one of the most drastic downturns in
living memory for the global oil and gas industry. Notwithstanding
these market conditions, Greka Drilling was able to increase the
number of wells drilled by 38% in 2015 because of our captive core
clients and focus on China and India. The uncertainty over pricing
and returns has delayed investment decisions by operators across
the industry and surplus rig capacity has built up in most
markets.
In China the business had a delayed start to the 30 well
LiFaBriC contract with Green Dragon Gas Ltd ("Green Dragon Gas")
and it is anticipated that the remaining 16 wells under this
contract will be drilled in the second half of 2016. Beyond this
particular contract, we have worked closely with Green Dragon Gas
to assess historic well performance and have identified a number of
re-drill opportunities in areas where heavy faulting may have
constrained production rates. Chinese coals are typically faulted
and brittle such that well bores can soon become plugged with
particles, thus reducing flowrates: our knowledge of the local
faulting structure enables us to re-enter the well efficiently and
quickly, with the low in-seam drilling time reducing the risk of
such plugging. These re-drill wells should enable Green Dragon Gas
to augment production rates from these wells with a lower drilling
time.
Our experience continues to validate the advantages of the
LiFaBriC completion methodology. The first LiFaBriC well drilled,
GSS-008 in Qinshui Basin, recently completed 8 straight years of
continuous and sustained gas production. To date the well has
produced a cumulative 1.28 bcf, it continues to produce 618 mcf/d
(17,400 m(3)/d) and has yet to show any decline in production,
whereas all non-LiFaBriC lateral well designs in China have shown
declining flowrates within the first three years of production. The
Company is immensely proud of this achievement and highlights the
benefits of our methodology.
We continue to seek third party drilling opportunities,
particularly for PetroChina Huabei, a leading state-owned developer
of coal bed methane in China and for whom we can use our
directional expertise and specialist rigs to drill lateral wells.
Since the oil price collapse we have seen significant over-capacity
develop in the drilling markets in China, with an associated drop
in standards from drilling companies as they seek to compete on
price for vertical and directional drilling. We will not reduce our
standards of safety and environmental protection or drill
loss-making wells, and instead we are reducing our overhead costs
and parking rigs where necessary. The Government of China remains
supportive of the coal bed methane industry and we see an
increasing focus on drilling lateral wells and as such, we continue
to be positive about the medium and long term prospects in
China.
In India we drilled an additional 9 vertical and directional
wells last year in the Raniganj East Block, West Bengal for Essar
Oil Limited. Coal bed methane from this block is the primary
feedstock for a newly constructed urea plant, which will require a
steady gas supply for many years to come. Essar Oil Limited has
re-contracted Greka Drilling to provide drilling services in
Raniganj and we are pleased to have been able to announce on 20
April 2016 that a mobilisation order for two of our GD75 rigs to be
engaged has now been received.
India has significant resources of shallow onshore gas,
particularly coal bed methane, and there is a clear desire from the
Government to develop this clean energy source. The development of
this energy source has to date been delayed by a pricing policy
that has kept wellhead gas prices below the import parity price,
such that major resource holders have been reluctant to invest.
However, this is now changing with the Government recently
introducing new pricing policies to encourage both onshore and
offshore gas developments, and state-owned coal bed methane
resource holders have announced major investment plans. Greka
Drilling has the best quality and safest coal bed methane rigs in
India and we expect our rigs to be more fully utilised in the
second half of 2016.
While Greka Drilling was able to drill 31% more metres in 2015
than in 2014 this was still below our planned metrage based on the
contracts with Essar Oil Limited and Green Dragon Gas, due to
adjustments in our clients' development schedules. The Company's
losses widened in 2015 reflecting the appreciation of the US dollar
against the RMB over the year in respect of payables. Our Earnings
Before Interest, Tax, Depreciation and Amortisation ("EBITDA")
remained positive in 2015 as in all previous years.
In March 2016 we secured a US$5 million loan financing for
working capital purposes. This loan will provide flexibility and
support for the balance sheet in the current market downturn. As
new investment re-emerges in the gas industry we will seek out
drilling opportunities in new markets such as Australia and Europe;
but our current focus, at least for the first half of 2016, is to
reduce expenditures and prepare for the eventual upturn in our
markets. Our current operational focus on China and India, with
more flexibility in operating costs and localised pricing, coupled
with the new loan facility, leaves us better positioned than most
of our global peers and provides the best opportunities for
shareholder value.
Randeep S. Grewal
Chairman and Chief Executive Officer
21 April, 2016
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Consolidated Statement of Comprehensive Income
Year Ended Year Ended
31 December 31 December
2015 2014
Note US$'000 US$'000
------------------------------------------- -------- ------------- -------------
Revenue 3 29,916 24,421
Cost of sales (23,951) (18,149)
------------------------------------------- -------- ------------- -------------
Gross profit 5,965 6,272
Administrative expenses (9,256) (9,082)
------------------------------------------- -------- ------------- -------------
Loss from operations 4 (3,291) (2,810)
Finance income 5 3 390
Finance costs 6 (4,241) (2,878)
------------------------------------------- -------- ------------- -------------
Loss before income tax (7,529) (5,298)
Income tax credit/(charge) 9 228 (452)
------------------------------------------- -------- ------------- -------------
Loss for the year (7,301) (5,750)
Other comprehensive expense, net of
tax:
Exchange differences on translation
of foreign operations (88) 316
------------------------------------------- -------- ------------- -------------
Total comprehensive income for the
year (7,389) (5,434)
------------------------------------------- -------- ------------- -------------
(Loss)/Profit for the period attributable
to:
- Owners of the company (7,246) (5,757)
- Non-controlling interests (55) 7
------------------------------------------- -------- ------------- -------------
(7,301) (5,750)
------------------------------------------- -------- ------------- -------------
Total comprehensive (expense)/ income
attributable to:
- Owners of the company (7,476) (5,514)
- Non-controlling interests 87 80
------------------------------------------- -------- ------------- -------------
(7,389) (5,434)
------------------------------------------- -------- ------------- -------------
Earnings per share
- Basic and diluted (in US dollar) 8 (0.0184) (0.0144)
============= =============
Consolidated Statement of Financial Position
As at 31 As at 31 December
December 2014
2015
Note US$'000 US$'000
----------------------------------- ----- ---------- ------------------
Assets
Non-current assets
Property, plant and equipment 84,962 92,963
Intangible assets 388 492
----------------------------------- ----- ---------- ------------------
85,350 93,455
----------------------------------- ----- ---------- ------------------
Current assets
Inventories 7,138 6,740
Trade and other receivables 10 3,363 7,306
Cash and bank balances (including
restricted cash) 11 2,421 8,017
----------------------------------- ----- ---------- ------------------
12,922 22,063
----------------------------------- ----- ---------- ------------------
Total assets 98,272 115,518
----------------------------------- ----- ---------- ------------------
Liabilities
Current liabilities
Trade and other payables 12 25,165 29,344
Loans and borrowings 13 5,852 11,930
Provisions 14 585 -
----------------------------------- ----- ---------- ------------------
31,602 41,274
----------------------------------- ----- ---------- ------------------
Non-current liabilities
Deferred tax liabilities 1,184 1,369
----------------------------------- ----- ---------- ------------------
1,184 1,369
----------------------------------- ----- ---------- ------------------
Total Liabilities 32,786 42,643
----------------------------------- ----- ---------- ------------------
Net assets 65,486 72,875
----------------------------------- ----- ---------- ------------------
Capital and reserves
Share capital 4 4
Share premium account 77,186 77,186
Invested capital (1,533) (1,533)
Reserve fund 917 917
Foreign exchange reserve 855 1,086
Retained (deficit)/earnings (11,654) (4,409)
----------------------------------- ----- ---------- ------------------
Total equity attributable to
owners of the Company 65,775 73,251
Non-controlling interests (289) (376)
----------------------------------- ----- ---------- ------------------
Total equity 65,486 72,875
----------------------------------- ----- ---------- ------------------
Consolidated Statement of Changes in Equity
Equity
attributable
Foreign Retained to owners
Share Share Invested Reserve exchange (deficit)/ of the Non-controlling
capital premium capital fund reserve earnings Company interests Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
At 1 January 2014 4 77,186 (1,533) 917 843 1,348 78,765 (456) 78,309
Profit for the
year - - - - - (5,756) (5,756) 80 (5,676)
Other
comprehensive
expense
- Exchange
difference on
translation of
foreign
operations - - - - 242 - 242 242
--------- -------- --------- -------- --------- ----------- ------------- ---------------- --------
Total
comprehensive
(expense)/income
for the year - - - - 242 (5,756) (5,514) 80 (5,434)
At 31 December
2014 4 77,186 (1,533) 917 1,085 (4,408) 73,251 (376) 72,875
Loss for the year (7,246) (7,246) (55) (7,301)
Other
comprehensive
income:
- Exchange
difference on
translation of
foreign
operations - - - - (230) - (230) 142 (88)
Total
comprehensive
(expense)/income
for the year - - - - (230) (7,246) (7,476) 87 (7,389)
At 31 December
2015 4 77,186 (1,533) 917 855 (11,654) 65,775 (289) 65,486
========= ======== ========= ======== ========= =========== ============= ================ ========
The following describes the nature and purpose of each reserve
within owners' equity.
Share capital: Amount subscribed for share capital at nominal
value.
Share premium: Amount subscribed for share capital in excess of
nominal value.
Invested capital: Amount represents the difference between the
nominal value of the Company's share of the paid-up capital of the
subsidiaries acquired and the Company's cost of acquisition of the
subsidiaries under common control.
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Reserve fund: The rules and regulations of the People's Republic
of China require that one tenth of profits as determined in
accordance with China Accounting Standards for Business Enterprises
in each period be reserved for making good previous years' losses,
expanding business, or for bonus issues, provided that the balance
after such issue is not less than 25% of the registered capital.
The amount is non-distributable.
Foreign exchange reserve: Foreign exchange differences arising
on translating the financial statements of foreign operations into
the reporting currency.
Retained (deficit)/earnings: Cumulative net gains and losses
recognised in profit or loss.
Consolidated Statement of Cash Flows
Year ended Year ended
31 December 31 December
2015 2014
Note US$'000 US$'000
----------------------------------------- ------ ------------- -------------
Operating activities
Loss before income tax (7,529) (5,298)
Adjustments for:
Depreciation 5,647 4,453
Amortisation of other intangible
assets 5 80
Loss on disposal of property, plant
and equipment 356 50
Finance (loss)/gains 3,629 776
Finance income (3) (390)
Finance costs 612 2,102
------------------------------------------------- ------------- -------------
Operating cash flows before changes
in working capital 2,787 1,773
(Increase)/decrease in inventories (777) 1,030
Decrease in trade and other receivables 2,292 2,208
(Increase)/decrease in trade and
other payables (2,713) 3,880
------------------------------------------------- ------------- -------------
Cash generated from operations 1,589 8,891
Income tax payment (225) (2)
------------------------------------------------- ------------- -------------
Net cash from operating activities 1,364 8,889
------------------------------------------------- ------------- -------------
Investing activities
Payments for purchase of property,
plant and equipment (359) (1,247)
Payments for intangible assets - (9)
Movement in restricted cash 3,849 6,523
Interest received - 390
------------------------------------------------- ------------- -------------
Net cash generated from investing
activities 3,490 5,657
------------------------------------------------- ------------- -------------
Financing activities
Proceeds of short term loan 5,852 21,639
Repayment of short term loan (11,242) (35,819)
Finance costs paid (565) (2,356)
------------------------------------------------- ------------- -------------
Net cash used in financing activities (5,955) (16,536)
------------------------------------------------- ------------- -------------
Net (decrease)/increase in cash
and cash equivalents (1,101) (1,990)
Cash and cash equivalents at beginning
of the year 1,737 3,994
------------------------------------------------- ------------- -------------
636 2,004
Effect of foreign exchange rate
changes (283) (267)
------------------------------------------------- ------------- -------------
Cash and cash equivalents at end
of year 353 1,737
================================================= ============= =============
Notes Forming Part of the Financial Statements
1 GENERAL
Greka Drilling Limited (the "Company") was incorporated in the
Cayman Islands on 1 February 2011 under the Companies Law (2010
Revision) of the Cayman Islands. The registered office and
principal place of business of the Company are located at PO Box
472, Harbour Place 2nd Floor, 103 South Church Street, George Town,
Grand Cayman KY1-1106, Cayman Islands and 29th Floor, Landmark
Plaza, No. 1 Business Outer Ring Road, Central Business District,
Henan Province, Zhengzhou 450000, PRC respectively.
The Company was established as an investment holding company for
a group of companies whose principal activities consist of the
provision of coal bed methane drilling services in China and India.
The Company and its subsidiaries are hereinafter collectively
referred to as the "Group".
The financial statements are presented in United States dollars
which is same as the functional currency of the Company. The
functional currencies of the subsidiaries are Renminbi (RMB) for
China and Rupee for India.
2 PRINCIPAL ACCOUNTING POLICIES
The financial statements have been prepared in accordance with
IFRS as adopted by the European Union, that are effective for
accounting periods beginning on or after 1 January 2014. The
principal accounting policies adopted in the preparation of the
consolidated financial statements are set out in the Group's full
annual report and accounts for the year ended 31 December 2015.
3 REVENUE AND SEGMENT INFORMATION
The Group determines its operating segment based on the reports
reviewed by the chief operating decision-makers ("CODMs") that are
used to make strategic decisions.
The Group reports its operations as two reportable segments: the
provision of contract drilling services in the PRC and India. The
division of contract drilling operations into two reportable
segments is attributable to how the CODMs manage the business.
The accounting policies of the reportable segments are the same
as those described in the summary of principal accounting policies.
We evaluate the performance of our operating segments based on
revenues from external customers and segmental profits.
Drilling services revenue and management services revenue
represent the net invoiced value of contracted drilling services
and management services provided to two major customers, one in the
PRC (who is a related party) and the other in India, from which the
entire Indian segment revenue of $4,230,000 is generated. The rest
of the revenue in PRC is derived from other customers from each of
whom less than 10% of total revenue is derived in 2015 and
2014.
For the Year Ended 31 December 2015
PRC India Intercompany Consolidated
--------------------- --------- -------- ------------- -------------
US$'000 US$'000 US$'000 US$'000
Revenue 25,911 4,230 (225) 29,916
Cost of sales (17,385) (6,791) 225 (23,951)
Gross profit/(loss) 8,526 (2,561) - 5,965
For the Year Ended 31 December 2014
PRC India Intercompany Consolidated
--------------------- ----------------- ---------------- ---------------- ---------------
US$'000 US$'000 US$'000 US$'000
Revenue 20,975 3,678 (232) 24,421
Cost of sales (13,109) (5,272) 232 (18,149)
Gross profit/(loss) 7,866 (1,594) - 6,272
As at 31 December 2015
PRC India Intercompany Consolidated
--------------------- ------------ ------- ------------- -------------
Segment assets 94,180 19,504 (15,412) 98,272
Segment liabilities 11,492 3,973 17,321 32,786
PPE 68,830 16,132 - 84,962
As at 31 December 2014
PRC India Intercompany Consolidated
--------------------- ------- ------------------- ------------- --------------
Segment assets 88,749 21,535 5,234 115,518
Segment liabilities 20,796 2,650 19,197 42,643
PPE 76,807 16,156 92,963
4 LOSS FROM OPERATIONS
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Loss from operations is stated after charging:
2015 2014
US$'000 US$'000
Auditors' remuneration:
Fees payable to the Company's auditors
for the audit of
the annual financial statements
Fees payable to the Company's auditors 127 127
for the review of
the interim results 15 16
Cost of inventories recognised as expense 8,163 6,065
Staff costs (note 7) 9,622 8,088
Depreciation of property, plant and equipment 5,647 4,453
Operating lease expense (property) 627 576
Amortisation of intangible assets 75 80
Loss on disposal of property, plant and
equipment 356 50
5 FINANCE INCOME
2015 2014
US$'000 US$'000
Bank interest 3 390
-------- --------
3 390
======== ========
6 FINANCE COSTS
2015 2014
US$'000 US$'000
Foreign exchange losses (3,629) (776)
Interest expense on short term loans (612) (2,102)
(4,241) (2,878)
======== ========
7 STAFF COSTS
2015 2014
US$'000 US$'000
Staff costs (including directors' remuneration)
comprise:
Wages and salaries 7,877 6,120
Employer's national social security contributions 1,564 1,652
Other benefits 181 316
-------- --------
9,622 8,088
======== ========
8 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share
attributable to the owners of the Company is based on the following
data:
2015 2014
US$'000 US$'000
Loss for the year (7,301) (5,757)
Number of shares 398,245,758 398,245,758
Weighted average number of ordinary shares
for the purposes of basic earnings per
share (thousands) 398,246 398,246
Weighted average number of ordinary shares
for the purposes of diluted earnings
per share (thousands) 398,246 398,246
============== ==============
Basic loss per share (US$) (0.0184) (0.0144)
============== ==============
Diluted loss per share (US$) (0.0184) (0.0144)
============== ==============
There were no potentially dilutive instruments issued in 2015
and 2014. Potentially dilutive instruments (warrants) have been
issued post year end, however this has no impact on the diluted EPS
given the Group has made a loss for the year.
9 TAXATION
2015 2014
US$'000 US$'000
Current tax charge/(credit) - (181)
Deferred tax charge 228 (271)
Tax charge recognised in the income statement 228 (452)
======== ========
The reasons for the difference between the actual tax charge for
the years and the standard rate of corporation tax in the PRC
applied to the (loss)/profit for the year are as follows:
2015 2014
US$'000 US$'000
(Loss)/profit before income tax (7,529) (5,298)
======== ========
Expected tax charge based on the standard
rate of corporation tax in the PRC of
25% (2013: 25%) (1,882) (1,325)
Effect of:
Income tax in overseas jurisdictions 1,707 1,148
Tax losses and other temporary differences
not recognised 403 (275)
Under provision of prior year
-------- --------
Income tax charge 228 (452)
======== ========
Taxation for the Group's operations in the PRC is provided at
the applicable current tax rate of 25% on the estimated assessable
profits for the year. Taxation for operations in India is taxed at
4.326% of gross revenue.
10 TRADE AND OTHER RECEIVABLES
2015 2014
US$'000 US$'000
Trade receivables 1,190 3,055
Prepayments 1,103 3,580
Other receivables 1,070 671
Amounts due from related parties - -
-------- --------
3,363 7,306
======== ========
The fair values of trade and other receivables approximate their
respective carrying amounts at the end of each reporting period due
to their short maturities. There is no allowance for impairment of
receivables.
The ageing analysis of trade receivables prepared based on
allowed credit terms that are past due but not impaired as of the
end of the reporting period is set out below. The debtors are not
considered to be impaired given post year end receipts.
2015 2014
US$'000 US$'000
Less than 60 days past due 1,190 3,055
======== ========
11. CASH AND BANK BALANCES
2015 2014
US$'000 US$'000
Cash and cash equivalents 353 1,737
Restricted bank balance* 2,068 6,280
-------- --------
2,421 8,017
======== ========
* The restricted bank balance represents deposits placed in
financial institutions to secure bills payable of an equivalent
amount related to trade payables of US$ 2.4m.
12 TRADE AND OTHER PAYABLES
2015 2014
US$'000 US$'000
Trade payables 12,939 17,179
Other current liabilities 2,426 2,430
Amounts due to related parties 9,800 9,735
-------- --------
25,165 29,344
======== ========
Trade and other payables are expected to be settled within one
year. The fair values approximate their respective carrying amounts
at the end of each reporting period due to their short
maturities.
13 LOANS AND BORROWINGS
2015 2014
US$'000 US$'000
Bank loans 5,852 11,930
======== ========
The banks loans are all secured. The detailed information
regarding loan maturity dates and interest rates are below:
Bank name Balance as at Dec Expiry Balance as at Dec Expiry
31,2015 Date 31,2014 Date
-------------- ----------------------- ------------ ----------------------- ------------
Interest USD Interest USD
rate rate
-------------- --------- ------------ ------------ --------- ------------ ------------
CITIC Bank 7.000% 2,771,960 29-Apr-2016 7.200% 2,941,657 12-Mar-2015
-------------- --------- ------------ ------------ --------- ------------ ------------
SPD Bank 7.280% 3,079,956 8-Jan-2016 6.000% 3,268,508 8-Jan-2015
-------------- --------- ------------ ------------ --------- ------------ ------------
Ping An Bank N/A N/A N/A 7.500% 5,719,889 13-Jan-2015
-------------- --------- ------------ ------------ --------- ------------ ------------
Total 5,851,916 11,930,054
-------------- --------- ------------ ------------ --------- ------------ ------------
Loans due to SPD Bank, CITIC Bank and Ping An Bank have been
repaid post year end.
14 PROVISIONS
2015 2014
US$'000 US$'000
Provisions 585 -
======== ========
The provision in the year relates to a lawsuit initiated against
the Group by a contractor in China. Whilst the Group is appealing
the lawsuit decision and continues to negotiate with the
contractor, a provision has been prudently recognised for the full
amount.
15 SUBSEQUENT EVENTS
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On 31 March 2016, Greka Drilling Limited (the "Company") secured
US$5 million in loan financing from Guaranty Finance Investors LLC
("GFI"), the proceeds of which it expects to use for working
capital purposes. The loan, on which interest is payable at the
rate of 7% per annum, is repayable on 31 March 2019 and is
unsecured (although first priority would be granted to the GFI loan
if the Company created any security over its drilling rigs in
relation to other indebtedness).
As part of the financing, the Company has issued GFI with
warrants to subscribe for 35,000,000 new ordinary shares in the
Company at an exercise price of 5p per share, representing a
premium of 43% to the Company's closing share price on 29 March
2016. The warrants are exercisable at any time between 1 April 2017
and 31 March 2019. At any time after 31 March 2017 the Company may
elect to prepay the loan, provided that the amount repaid
(including interest paid previously) would provide GFI with a total
annual return of 25%; such prepayment would be deemed to have
redeemed the warrants in lieu of issuing new shares.
16 PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information for the years ended 31 December 2015
and 31 December 2014 set out in this Announcement does not
constitute the Group's statutory financial information but is
extracted from the Company's audited financial statements for those
years. The auditors have reported on the full financial information
for both periods and their reports were unqualified and did not
include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports.
17 ANNUAL REPORT
The Company's Annual Report and copies of this announcement will
be available on the Company's website at www.grekadrilling.com and
from the office of the Company's Nominated Adviser, Smith &
Williamson Corporate Finance Limited at 25 Moorgate, London EC2R
6AY, United Kingdom.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR URVNRNOASUAR
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Greka Drilling (LSE:GDL)
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Greka Drilling (LSE:GDL)
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