Final Results

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 3½" 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:

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

* Items that may be reclassified to profit or loss

 Consolidated Statement of Financial Position

 Consolidated Statement of Changes in Equity

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

Notes

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.

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.

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

For the Year Ended 31 December 2015

As at 31 December 2016

As at 31 December 2015

Loss from operations is stated after charging:

The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

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.

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:

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.

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.

* The restricted bank balance in 2015 represented deposits placed in financial institutions to secure bills payable of an equivalent amount related to trade payables.

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.

(1) Bank loans

The banks loans are all secured. The detailed information regarding loan maturity dates and interest rates are below:

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.

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:

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).