Final Results

12 March 2013

Greka Drilling Limited

("Greka Drilling" or the "Company")

Annual results for the year ended December 2012

Revenue increases 39%, meters drilled by 67%

Greka Drilling Limited (AIM: GDL), the largest independent and specialized unconventional oil & gas driller in China, is pleased to announce annual results for the year ended 31 December 2012.

FINANCIAL HIGHLIGHTS

·; Revenue of US$60.9m, a 39% increase over same period last year of US$43.8m.

·; Total assets increased by US$25.7m to US$114.1m an increase of 29% year on year.

·; EPS US$0.005, compared with US$0.007 in same period last year.

·; Cash and bank deposits of US$3.1m.

·; Paid off US$12.5m working capital facility in full from affiliate Green Dragon Gas Limited, further demonstrating the Company's increasing operational independence.

·; Increased China based working capital facility to US$12.0m by year end.

CORPORATE HIGHLIGHTS

·; Headcount grew to 665 with a total of 106,581 hours of training and the ability to operate crews 24/7, 365 days of the year. Fleet increased from 16 rigs to 32 rigs over the period, an increase of 100% year-on-year; average number of rigs in 2012 was 28 versus 14 in 2011.

·; 79 directional drillers compared with 51 a year earlier, one of the largest team of directional drillers in China.

OPERATIONAL HIGHLIGHTS

·; 3 contracted counterparties: Green Dragon Gas, CNPC Huabei and Petroking.

·; 90 wells drilled in 2012 compared with 50 wells drilled in 2011, an increase of 80% year-on-year.

·; 147,126 meters drilled, compared to 88,224 meters drilled in 2011, a 67% increase

·; Vertical wells averaging 37 drilling days.

·; Horizontal wells averaging 51 drilling days.

·; Exploration drilling (LiFaBriC) wells at 88 days improving on previous company guidance of 90 days.

Randeep Grewal, Chairman and Chief Executive of Greka Drilling, commented:

"I am delighted to report that we have continued to grow the business on time and within plan. For the full year we have increased revenues, evaluated many unconventional basins in China, India and South East Asia. These third party evaluations conducted by our in house geology and engineering personnel give us a very high degree of confidence that the LiFaBriC drilling methodology has a significant and wider footprint in Asia as whole, in addition to multiple opportunities within China itself. We are the one stop shop of choice for unconventional drilling completions in Asia."

For further information on Greka Drilling, please refer to the website at www.grekadrilling.com or contact:

CHAIRMAN'S STATEMENT

Today is the second anniversary of the Company becoming an independent operating entity and the merits of the successful demerger are further demonstrated by our performance this year.

I am pleased to report that 2012 saw us continue to profitably expand as predicted. This expansion was demonstrated throughout the Company, from rigs accepted to revenues and by year end, customers.

Operationally we drilled more meters and more wells - with the wells drilled being deeper and longer than ever before. We successfully drilled 90 wells with a total of 147,126 meters drilled which represented an increase of 80% and 67% over the previous year, respectively. Drilling efficiencies were improved with the fastest vertical and LiFaBriC well completions achieving 42% and 14% improvements over last year, respectively.

Total headcount grew to 665 from 520 a year earlier, in support of the rig fleet increase to 32. The average number of operating rigs was 28 in 2012, compared to 14 in 2011. Directional drillers were added to the team increasing the headcount to 79 from 51 in the previous year. The directional drilling headcount now exceeds any other independent drilling company operating in China. Precision of the directional drilling was further enhanced with improvements in the Rotating Magnet Ranging Systems, allowing for easier intersection during LiFaBric completions.

In addition to the operational expansion, our financial performance was enhanced with local banks increasing their working capital facilities to support our growth. As a result, the Company successfully paid off all its affiliate working capital facility and concluded the year without any affiliate debt. Notwithstanding the increase in the depreciation charge resulting from the material increase in rigs, our profitable yearend results are supported by a strengthened balance sheet which resulted in total assets growing to US$114 million from US$88 million in the previous year.

Third party contracts executed to drill for both of the largest operators within China, CNPC and Sinopec, further validating the competency embedded within the Company. Importantly, these contracts include drilling LiFaBric wells, the Company's proprietary methodology, as well as traditional vertical and directional wells. The contracts are for Coal Bed Methane ("CBM") as well as Shale reservoirs. In totality, these contracts validate the Company's capability that extends to all facets of the industry's drilling demands. We see a very large market that continues to grow exponentially throughout Asia.

In accordance with the Company's business plan, we expect to establish the corporate headquarters in Singapore, a geographically central location to facilitate the expansion beyond China. We are concluding our discussions with several clients and expect to announce our expansion into India as the first step out from China within the widened Asian expansion plans. We also look forward to updating shareholders on the recently announced Chinese third party contracts. The Company's proprietary LiFaBriC methodology is well suited to various CBM basins within India and could significantly enhance several of the CBM developers' potential in the near term. We look forward to concluding an agreement with select clients.

While 2012 was a busy year absorbing the growth and expanding the client base in China, we expect 2013 will see continued profitable growth within China further complemented by an expansion into India.

Randeep S. Grewal

Chairman & CEO

Consolidated Statement of Comprehensive Income

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 issue, 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 (deficits)/earnings:  Cumulative net gains and losses recognized in profit or loss.

Consolidated Statement of Cash Flows

Abridged notes to the financial information for the year ended 31 December 2012

1 GENERAL

Greka Drilling Limited (the "Company" or the "Group") was incorporated in the Cayman Islands. The financial statements have been prepared in accordance with IFRSs as adopted by the European Union, that are effective for accounting periods beginning on or after 1 January 2012. The principal accounting policies adopted in the preparation of the financial statements are disclosed in the Group's full annual report and accounts for the year ended 31 December 2012.

2 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 a single reportable segment: the provision of contract drilling services in the People's Republic of China (the "PRC"). The consolidation of our contract drilling operations into one reportable segment is attributable to how the CODMs manage the business.

We evaluate the performance of our operating segment based on revenues from external customers and segment profit.

Drilling services revenue and management services revenue represent the net invoiced value of contract drilling services and management services provided to customers in the PRC, of which 95% is derived from one customer. The amounts of each significant category of revenue recognised during the year are as follows:

All the non-current assets of the Group are located in the PRC.

3 PROFIT FROM OPERATIONS

Profit from operations is stated after charging/(crediting):

*This mainly represents a reward received from the Henan Government by a subsidiary. The amount was a one-off receipt and recognized fully to profit and loss since the attaching conditions have been fulfilled.

4 FINANCE INCOME

5 FINANCE COSTS

6 STAFF COSTS

7 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:

There were no potentially dilutive instruments issued in 2012 and 2011.

8 TAXATION

The reasons for the difference between the actual tax charge and the standard rate of corporation tax applied to the Group's operations for the year are as follows:

The Company is not subject to income tax in the Cayman Islands. 

9 LOANS AND BORROWINGS

Bank borrowings of RMB75,000,000 (2011: RMB12,500,000) have a one year term, with interest rates ranging from 6.90% p.a. and 7.544% p.a. (2011: 7.544% p.a.). This amount is secured by the Group's properties situated in Zhengzhou of the PRC.

10 WORKING CAPITAL FACILITIES

On 27 January 2012, the Company drew down the US$12,500,000 working facility loan in full from Greka China Limited, a related company in Green Dragon Gas Group under the agreement signed on 11 February 2011. The facility had a two-year repayment period and 8% annual interest rate. The facility was fully repaid at the year end.

11 PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information for the years ended 31 December 2012 and 31 December 2011 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.

12 ANNUAL REPORT

The Company's Annual Report and copies of this announcement will be available in due course 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.