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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Greka (DI) | LSE:GDL | London | Ordinary Share | KYG411101002 | ORD USD0.00001 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.30 | 1.10 | 1.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
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$3million loan financing for working capital purposes. These two timely loans provided flexibility and support during a difficult period.
The Chinese Government has had a long-standing policy to provide incentives for the development, under market principles, of the complex but abundant gas trapped within its coal seams. This policy has now been adopted in India where for the first time a natural resource - CBM - has been declared to be subject to market conditions rather than regulated by the government. This has prompted many domestic gas developers to focus on the CBM assets. This development is welcomed by us and has resulted in our Indian business development team being very busy with RFQ's. Greka Drilling intends to take full advantage of this macro trend during 2017.
In conclusion, we are happy to see 2016 close and excited about our prospects for 2017 and beyond. In 2017 to date, we have won a bidding competition for a drilling campaign with ONGC and are drilling for PetroChina under a contract awarded in late 2016 while in discussions with both Green Dragon and Essar for implementing their respective drilling campaigns. The number of active drilling campaigns and tender awards in both China and India demonstrate abundant opportunity for Greka Drilling.
Finally, I want to thank the hard-working personnel within the group who have sustained their commitment through a very difficult year and are now focused on the successes that lie ahead.
Randeep S. Grewal
Chairman
28 April 2017
Consolidated Statement of Comprehensive Income
Hot Features
Premium
Year Ended Year Ended
31 December 31 December
2016 2015
Note US$'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)
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