24th Sep 2014 07:40
LONDON (Alliance News) - Greka Drilling Ltd saw its shares slide early Wednesday after it reported a wider pretax loss for the first half of the year as it drilled seven fewer wells than it had in the first half of 2013.
However, Chairman and Chief Executive Randeep Grewal remained positive, saying the gas well drilling company in China had started work on its two main contracts, has a "healthy" backlog of work, and has increased the number of its customers.
Its pretax loss in the six months to June 30 was USD4.3 million, compared with the USD2.8 million loss it reported a year earlier, as revenue slid to USD8.9 million, from USD14.4 million, and its finance costs rose steeply.
It drilled 19 wells in the first half of the year, compared with 26 in the first half of 2013. The wells were also smaller on average: it drilled 21,159 metres, down 42% from 36,347 metres a year earlier.
"Whilst mobilization orders have been slower than anticipated, the company is pleased that we have seen forward momentum on two of our main contracts," Grewal said. "Greka Drilling maintains a healthy backlog of business on both contracts that have been recently mobilized and those that still remain to be given mobilsation orders. We are also pleased to have increased our counter parties year on year and continue to remain in dialogue with numerous potential business opportunities."
Its counter parties or customers now comprise Green Dragon Gas, CNPC Huabei, CNPC Jincheng, Sinopec, Essar Oil and Guangdong Bureau of Coal Geology.
Finance costs rose to USD2.5 million in the first half, from USD709,000 a year earlier, as interest on short term loans rose and it booked a USD1.1 million foreign exchange loss.
Grewal said the company has started work on its USD65 million contract with Essar Oil in India, with the first two rigs ready to start the first wells shortly. It has also completed the first two LiFaBriC wells in its contract with Green Dragon Gas and said it was recently mobilised to finish the rest of the 10 well programme.
"We would expect a busier second half of the year, considering the currently mobilized rigs to Green Dragon and Essar. In addition to these significant clients, we also expect to be mobilized on the CNPC backlog during the second half of 2014 following their well site construction," the company said.
Still, Greka Drilling shares were down 13.3% at 8.78 pence early Wednesday, the worst-performing stock on the AIM All-Share index.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Greka Drilling