TIDMGDL
RNS Number : 6245D
Greka Drilling Limited
28 April 2017
28 April 2017
Greka Drilling Limited
("Greka Drilling" or the "Company")
Annual results for the year ended 31 December 2016
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
2016.
HIGHLIGHTS
OVERVIEW:
-- There were three principal contracted counterparties: Green
Dragon Gas Ltd and PetroChina Huabei in China, and Essar Oil
Limited in India
-- 33 wells drilled in 2016, of which 5 wells were drilled in China and 28 wells in India
-- A total of 39,553 metres were drilled in 2016 (2015: 76,690 metres)
FINANCIAL:
-- Annual revenue of US$7.2m (2015: US$29.9m)
-- Loss before tax widened to US$9.6m (2015: loss US$7.5m) due to lack of workload
-- Year-end cash and bank deposits of US$2.1m (2015: US$2.4m)
OPERATIONAL:
-- 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
-- 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
-- Greka Drilling has developed LiFaBriC completion with a 3 1/2
" steel liner, for Green Dragon Gas's LiFaBriC Optimization
program
Randeep S. Grewal, Chairman & CEO of Greka Drilling,
commented:
"As anticipated a very challenging 2016, where our levels of
activity experienced a significant decline compared with previous
years due to the continued problems of the oil & gas service
industry. The resulting decline in revenue was mitigated by our
aggressive cost reduction program. Survival of the fittest
certainly applied within the industry.
Despite limited drilling opportunities during 2016 in both China
and India, the Group was selected by leading CBM development
operators in both countries. In China, PetroChina and Green Dragon
Gas contracted our China team for horizontal and directional wells
while in India, Essar re-contracted our India team for its vertical
drilling campaign on a day-rate basis.
The winning of these contracts in both China and India in the
face of aggressive competition underscores Greka Drilling's
technical superiority and the recognition of the Company's
excellence and experience in unconventional gas development. Having
endured the toughest times the industry has experienced, we are
excited about our prospects in 2017 and beyond. Greka Drilling
continues to win contracts in both China and India from operators
that are attempting to monetize the very favorable CBM specific
policies implemented by both governments. In both cases, the
governments are focused on domestic clean energy and CBM resources
are ideally suited for such a solution."
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
Greka Drilling 9829
Dr Azhic Basirov / David Jones
/ Ben Jeynes
Nominated Adviser and Broker +44 (0)20 7131
Smith & Williamson 4000
CHAIRMAN'S STATEMENT
The past year was the most challenging year since the inception
of the Company in 2007. In China our main client Green Dragon Gas
reduced its work load significantly due to pending partner issues
which were being resolved. Notwithstanding this shortcoming, Greka
Drilling China won the bidding for a contract from PetroChina
Huabei, while Greka Drilling India won a day rate contract with
Essar, a first for the Company.
The industry downturn created fierce competition between the
service companies, and tender wins in both China and India from
state-owned industry giants PetroChina and ONGC alongside
corporates Green Dragon and Essar, confirm Greka Drilling's
leadership within the CBM sector. The contracts are affirmations of
Greka Drilling's advanced rig technology and experienced crews. The
Company launched a strategy in 2013 to diversify its geographic
footprint as well as its client base. This strategy progressed well
during 2016 as demonstrated by the meterage drilled in India for a
third party client Essar. The diversification strategy demonstrated
its merits and will continue to be followed.
During 2016, we made a concerted effort to reduce ongoing fixed
costs. A restructuring exercise has led to a materially enhanced
cost structure with principally variable costs. We were able to
reduce our fixed cost and optimize our staff to keep only the
highest skilled manpower through the Company. Similarly, our
G&A had significant reduction compared with 2015, following the
same concept. Notwithstanding the tough conditions and headcount
reductions, our drilling performance, speed and quality were all
enhanced with the survival. These organic enhancements have made
Greka Drilling far more efficient which will improve the
profitability of the recurring contract wins in both China and
India.
In March and September 2016, we secured US$5million and
US$3million loan financing for working capital purposes. These two
timely loans provided flexibility and support during a difficult
period.
The Chinese Government has had a long-standing policy to provide
incentives for the development, under market principles, of the
complex but abundant gas trapped within its coal seams. This policy
has now been adopted in India where for the first time a natural
resource - CBM - has been declared to be subject to market
conditions rather than regulated by the government. This has
prompted many domestic gas developers to focus on the CBM assets.
This development is welcomed by us and has resulted in our Indian
business development team being very busy with RFQ's. Greka
Drilling intends to take full advantage of this macro trend during
2017.
In conclusion, we are happy to see 2016 close and excited about
our prospects for 2017 and beyond. In 2017 to date, we have won a
bidding competition for a drilling campaign with ONGC and are
drilling for PetroChina under a contract awarded in late 2016 while
in discussions with both Green Dragon and Essar for implementing
their respective drilling campaigns. The number of active drilling
campaigns and tender awards in both China and India demonstrate
abundant opportunity for Greka Drilling.
Finally, I want to thank the hard-working personnel within the
group who have sustained their commitment through a very difficult
year and are now focused on the successes that lie ahead.
Randeep S. Grewal
Chairman
28 April 2017
Consolidated Statement of Comprehensive Income
Year Ended Year Ended
31 December 31 December
2016 2015
Note US$'000 US$'000
------------------------------------- ------ ------------- -------------
Revenue 3 7,154 29,916
Cost of sales (8,168) (23,951)
------------------------------------- ------ ------------- -------------
Gross profit (1,014) 5,965
Administrative expenses (6,167) (9,256)
------------------------------------- ------ ------------- -------------
Loss from operations 4 (7,181) (3,291)
Finance income 5 73 3
Finance costs 6 (2,451) (4,241)
------------------------------------- ------ ------------- -------------
Loss before income tax (9,559) (7,529)
Income tax credit 9 1,815 228
------------------------------------- ------ ------------- -------------
Loss for the year (7,744) (7,301)
Other comprehensive expense,
net of tax:
Exchange differences on translation
of foreign operations* (2,402) (88)
------------------------------------- ------ ------------- -------------
Total comprehensive income
for the year (10,146) (7,389)
------------------------------------- ------ ------------- -------------
(Loss)/Profit for the period
attributable to:
- Owners of the company (7,838) (7,246)
- Non-controlling interests 94 55
------------------------------------- ------ ------------- -------------
(7,744) (7,301)
------------------------------------- ------ ------------- -------------
Total comprehensive (expense)/
income attributable to:
- Owners of the company (10,212) (7,476)
- Non-controlling interests 66 87
------------------------------------- ------ ------------- -------------
(10,146) (7,389)
------------------------------------- ------ ------------- -------------
Earnings per share
- Basic and diluted (in
US$) 8 (0.0194) (0.0184)
------------------------------------- ------ ------------- -------------
* Items that may be reclassified to profit or loss
Consolidated Statement of Financial Position
As at 31 As at 31 December
December
2016 2015
Note US$'000 US$'000
----------------------------- ----- ----------- --------------------
Assets
Non-current assets
Property, plant and
equipment 79,601 84,962
Intangible assets 292 388
Deferred tax assets 377 -
----------------------------- ----- ----------- --------------------
80,270 85,350
----------------------------- ----- ----------- --------------------
Current assets
Inventories 5,981 7,138
Trade and other receivables 10 3,759 3,363
Cash and bank balances
(including restricted
cash) 11 2,135 2,421
----------------------------- ----- ----------- --------------------
11,875 12,922
----------------------------- ----- ----------- --------------------
Total assets 92,145 98,272
----------------------------- ----- ----------- --------------------
Liabilities
Current liabilities
Trade and other payables 12 25,045 25,165
Loans and borrowings 13 3,604 5,852
Provisions - 585
----------------------------- ----- ----------- --------------------
28,649 31,602
----------------------------- ----- ----------- --------------------
Non-current liabilities
Loans and borrowings 13 7,298 -
Deferred tax liabilities - 1,184
Derivative financial
liability 14 858 -
----------------------------- ----- ----------- --------------------
8,156 1,184
----------------------------- ----- ----------- --------------------
Total Liabilities 36,805 32,786
----------------------------- ----- ----------- --------------------
Net assets 55,340 65,486
----------------------------- ----- ----------- --------------------
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 (1,519) 855
Retained (deficit) (19,492) (11,654)
----------------------------- ----- ----------- --------------------
Total equity attributable
to owners of the Company 55,563 65,775
Non-controlling interests (223) (289)
----------------------------- ----- ----------- --------------------
Total equity 55,340 65,486
----------------------------- ----- ----------- --------------------
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 2015 4 77,186 (1,533) 917 1,085 (4,408) 73,251 (376) 72,875
Profit for the
year (7,246) (7,246) (55) (7,301)
Other
comprehensive
expense
- 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
Loss for the year (7,838) (7,838) 94 (7,744)
Other
comprehensive
income:
- Exchange
difference
on translation
of foreign
operations - - - - (2,374) - (2,374) (28) (2,402)
Total
comprehensive
(expense)/income
for the year - - - - (2,374) (7,838) (10,212) 66 (10,146)
At 31 December
2016 4 77,186 (1,533) 917 (1,519) (19,492) 55,563 (223) 55,340
--------- -------- --------- -------- --------- ----------- ------------- ---------------- ---------
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.
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
2016 2015
Note US$'000 US$'000
------------------------------------ ------ ------------- -------------
Operating activities
Loss before income tax (9,559) (7,529)
Adjustments for:
Depreciation 2,445 5,647
Amortisation of other intangible
assets 71 75
Loss on disposal of property,
plant and equipment 152 356
Finance (loss)/gains 1,482 3,629
Finance income (73) (3)
Finance costs 969 612
-------------------------------------------- ------------- -------------
Operating cash flows before
changes in working capital (4,513) 2,787
Decrease/(increase) in inventories 1,157 (777)
Decrease in trade and other
receivables 396 2,292
Decrease in trade and other
payables (1,014) (2,713)
-------------------------------------------- ------------- -------------
Cash generated from operations (3,974) 1,589
Income tax payment (216) (225)
-------------------------------------------- ------------- -------------
Net cash from operating
activities (4,190) 1,364
-------------------------------------------- ------------- -------------
Investing activities
Payments for purchase of
property, plant and equipment (318) (359)
Payments for intangible - -
assets
Movement in restricted cash 2,068 3,849
Interest received 59 -
------------------------------------ ------ ------------- -------------
Net cash generated from
investing activities 1,809 3,490
-------------------------------------------- ------------- -------------
Financing activities
Proceeds from promissory 8,000 -
notes
Proceeds of short term loan 3,604 5,852
Repayment of short term
loan (5,852) (11,242)
Finance costs paid (738) (565)
-------------------------------------------- ------------- -------------
Net cash used in financing
activities 5,014 (5,955)
-------------------------------------------- ------------- -------------
Net (decrease)/increase
in cash and cash equivalents 2,633 (1,101)
Cash and cash equivalents
at beginning of the year 353 1,737
-------------------------------------------- ------------- -------------
2,986 636
Effect of foreign exchange
rate changes (851) (283)
-------------------------------------------- ------------- -------------
Cash and cash equivalents
at end of year 2,135 353
-------------------------------------------- ------------- -------------
Notes
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 BASIS OF PREPARATION
The financial information contained in this announcement does
not constitute the Company's statutory accounts for 2015 or 2016.
Statutory accounts for the year ended 31 December 2015 and for the
year ended 31 December 2016 have been reported on by the
independent Auditors. The Auditors' Reports for both years were
unqualified and did not include references to any matters by way of
emphasis.
The financial information contained in this announcement has
been prepared in accordance with IFRS as adopted by the European
Union. The principal accounting policies adopted in the preparation
of the financial information contained in this announcement are set
out in the Group's full annual report and accounts for the year
ended 31 December 2016.
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.
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. 100% of
revenue in India was derived from one single customer.
For the Year Ended 31 December 2016
PRC India Intercompany Consolidated
US$'000 US$'000 US$'000 US$'000
--------------------- -------------- -------------- -------------- --------------
Revenue 3,433 3,913 (192) 7,154
Cost of
sales (5,504) (2,856) 192 (8,168)
Gross (loss)/profit (2,071) 1,057 - (1,014)
Depreciation 2,194 251 - 2,445
Amortisation 71 - - 71
For the Year Ended 31 December 2015
PRC India Intercompany Consolidated
US$'000 US$'000 US$'000 US$'000
--------------------- --------- -------- ------------- -------------
Revenue 25,911 4,230 (225) 29,916
Cost of
sales (17,385) (6,791) 225 (23,951)
Gross profit/(loss) 8,526 (2,561) - 5,965
Depreciation 5,484 163 - 5,647
Amortisation 75 - - 75
As at 31 December 2016
PRC India Intercompany Consolidated
US$'000 US$'000 US$'000 US$'000
--------------- -------- --------- ------------- -------------
Segment
assets 86,613 19,699 (14,167) 92,145
Segment
liabilities 9,517 4,096 23,192 36,805
PPE 62,929 16,672 _ 79,601
PPE additions 44 274 - 318
As at 31 December 2015
PRC India Intercompany Consolidated
--------------- ------- ------- ------------- -------------
Segment
assets 94,180 19,504 (15,412) 98,272
Segment
liabilities 11,492 3,973 17,321 32,786
PPE 68,830 16,132 _ 84,962
PPE additions 802 - - 802
4 LOSS FROM OPERATIONS
Loss from operations is stated after charging:
2016 2015
US$'000 US$'000
Auditors' remuneration:
Fees payable to the Company's
auditors for the audit of
the annual financial statements
Fees payable to the Company's 127 127
auditors for the review of
the interim results 15 15
Cost of inventories recognised
as expense 1,231 8,163
Staff costs (note 7) 5,294 9,622
Depreciation of property, plant
and equipment 2,445 5,647
Operating lease expense (property) 900 627
Amortisation of intangible assets 71 75
Loss on disposal of property,
plant and equipment 152 356
5 FINANCE INCOME
2016 2015
US$'000 US$'000
Bank interest 59 3
Decrease in fair value of warrants 14 -
(note 14)
-------- --------
73 3
-------- --------
6 FINANCE COSTS
2016 2015
US$'000 US$'000
Foreign exchange losses (1,482) (3,629)
Interest expense on loans (969) (612)
(2,451) (4,241)
-------- --------
7 STAFF COSTS
2016 2015
US$'000 US$'000
Staff costs (including directors'
remuneration comprise:
Wages and salaries 4,088 7,877
Employer's national social
security contributions 1,102 1,564
Other benefits 104 181
-------- --------
5,294 9,622
-------- --------
8 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share
attributable to the owners of the Company is based on the following
data:
2016 2015
US$'000 US$'000
Loss for the year (7,744) (7,301)
Number of shares 398,245,758 398,245,758
Weighted average number of ordinary
shares for the purposes of basic
earnings per share (thousands) 398,246 398,246
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share (thousands) 398,246 398,246
-------------- --------------
Basic and diluted loss per share
(US$) (0.0194) (0.0184)
-------------- --------------
There were 56,000,000 warrants outstanding at the end of the
year that could potentially dilute basic earnings per share in the
future. As the Group is in a loss making position, the potential
ordinary shares are anti-dilutive and therefore a diluted loss per
share has not been calculated.
9 TAXATION
2016 2015
US$'000 US$'000
Current tax charge (162) -
Deferred tax credit 1,977 228
Tax credit recognised in the
income statement 1,815 228
-------- --------
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 for the year are as follows:
2016 2015
US$'000 US$'000
Loss before income tax (9,559) (7,529)
-------- --------
Expected tax charge based on
the standard rate of corporation
tax in the PRC of 25% (2015:
25%) (2,390) (1,882)
Effect of:
Income tax in overseas jurisdictions 649 1,707
Tax losses and other temporary
differences not recognised - 403
Income tax credit (1,815) 228
-------- --------
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
2016 2015
US$'000 US$'000
Trade receivables 1,415 1,190
Prepayments 902 1,103
Other receivables 1,442 1,070
-------- --------
3,759 3,363
-------- --------
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.
2016 2015
US$'000 US$'000
Less than 60 days past due 1,415 1,190
-------- --------
11. CASH AND BANK BALANCES
2016 2015
US$'000 US$'000
Cash and cash equivalents 2,135 353
Restricted bank balance* - 2,068
-------- --------
2,135 2,421
-------- --------
* The restricted bank balance in 2015 represented deposits
placed in financial institutions to secure bills payable of an
equivalent amount related to trade payables.
12. TRADE AND OTHER PAYABLES
2016 2015
US$'000 US$'000
Trade payables 8,557 12,939
Other current liabilities 3,561 2,426
Amounts due to related parties 12,927 9,800
-------- --------
25,045 25,165
-------- --------
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
2016 2015
US$'000 US$'000
Current liabilities
Bank loans (1) 3,604 5,852
Non-current liabilities
Promissory notes (2) 7,298 -
Total loans and borrowings 10,902 5,852
-------- --------
(1) Bank loans
The banks loans are all secured. The detailed information
regarding loan maturity dates and interest rates are below:
Bank name Balance as at Expiry Balance as Expiry
31 December Date at 31 December Date
2016 2015
----------- --------------------- ------------ --------------------- ------------
Interest US$ Interest US$
rate rate
----------- --------- ---------- ------------ --------- ---------- ------------
CITIC
Bank 6.600% 1,729,854 11-May-2017 7.000% 2,771,960 29-Apr-2016
----------- --------- ---------- ------------ --------- ---------- ------------
SPD Bank 6.960% 1,874,009 17-Jan-2017 7.280% 3,079,956 8-Jan-2016
----------- --------- ---------- ------------ --------- ---------- ------------
Total 3,603,863 5,851,916
----------- --------- ---------- ------------ --------- ---------- ------------
The loan due to SPD Bank has been renewed post year end.
(2) Promissory notes
During the year, Greka Drilling Limited secured US$5 million and
US$3 million in loan financing from Guaranty Finance Investors LLC
("GFI"). The promissory notes are repayable on 30 March 2019 and 30
September 2019 respectively. The notes bear an interest of 7% per
annum and are unsecured as detailed in note 14.
On initial recognition, financing costs of US$872,000 were
deducted from the promissory notes balance.
14. DERIVATIVE FINANCIAL LIABILITY
2016 2015
US$'000 US$'000
Derivative financial liability 858 -
During the year ended 31 December 2016, 35,000,000 and
21,000,000 warrants, at a subscription price of 5 pence per share,
were granted to Guaranty Finance Investors LLC as part of the
financing agreements entered into in March 2016 and September 2016
respectively. The warrants have an exercise period of 2 years from
1 April 2017 to 31 March 2019 and 30 September 2017 to 30 September
2019 respectively.
The fair values on the grant date and reporting date were
determined using the Black Scholes Model. The fair value was based
on the following assumptions:
Share price 0.035
------------- ------
Expected
volatility 83%
------------- ------
Option life 2
------------- ------
Expected
dividends 0
------------- ------
Risk free
rate 0.18%
------------- ------
The fair value of the 35,000,000 and 21,000,000 warrants on the
grant date was US$605,000 and US$267,000 respectively. On initial
recognition the warrants' cost was deducted from the promissory
notes balance as it represents the cost of obtaining the financing.
Subsequent changes in the fair value of the warrants are recognised
through profit or loss. The warrants were valued at US$858,000 at
year end with the change of fair value of US$14,000 recognised
through profit or loss (note 5).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBURRBNASUUR
(END) Dow Jones Newswires
April 28, 2017 02:01 ET (06:01 GMT)
Greka Drilling (LSE:GDL)
過去 株価チャート
から 6 2024 まで 7 2024
Greka Drilling (LSE:GDL)
過去 株価チャート
から 7 2023 まで 7 2024