21st Sep 2015 08:05
LONDON (Alliance News) - Greka Drilling Ltd on Monday reported a wider pretax loss in the first half of 2015, but said it is defying the downturn in the oil and gas markets after it drilled more wells in the period using its unique technology.
The specialised unconventional gas driller in Asia reported a USD4.9 million pretax loss in the first six months of 2015, slightly wider than the USD4.3 million loss despite revenue rising to USD11.9 million from USD8.9 million.
The loss widened after the company's margin was squeezed, producing a USD536,000 gross loss in the half compared to a USD2.4 million gross profit a year earlier after its cost of sales doubled to USD12.4 million from USD6.5 million.
The company's administrative costs dropped to USD3.9 million from USD4.6 million and its finance costs dropped considerably to USD480,000 from USD2.5 million.
Greka Drilling pioneers its LiFaBriC technology, an adaptation of the horizontal drilling methods traditionally used for drilling in coal seam reservoirs. Its biggest customer is fellow AIM-listed Green Dragon Gas PLC which is using the technology to complete a 30 well LiFaBriC programme over its Chinese acreage.
In the first half, Greka drilled 28 wells compared to 19 wells in the same period a year ago. Of those wells drilled, 19 were drilled in China for Green Dragon and the remaining 9 wells were drilled in India for Essar Oil Ltd.
"This increase is in distinct contrast to the contraction that has been seen for almost every other drilling company in the oil and gas industry. It reflects the number of opportunities that lie within the unconventional gas sector in Asia and the ability of Greka Drilling to capitalise on them," said Randeep Grewal, chairman and chief executive of Greka.
"While there were delays in mobilisation for our key clients in the first few months of 2015, the Green Dragon Gas 30-well LiFaBriC contract is now in full swing, and we continue to expect this drilling campaign to be completed by year-end. As a result we still anticipate that the full year results for 2015 will be an improvement on those for 2014," he added
The company said it drilled its fastest ever vertical well in the period, which was drilled to a total depth of 652 metres in just under 10 days. It also drilled its fastest ever directional well, which was drilled to a total depth of 848 metres in just under 7 days.
At the end of June, the company reported a cash balance of USD6.0 million and it had USD6.2 million of bank loans, which is substantially down from the USD11.9 million in loans owed at the end of December.
"We remain bullish about the opportunities for Greka Drilling as the leading independent driller for unconventional gas in Asia," said Grewal.
Greka Drilling shares were down 2.1% to 5.58 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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