Greka Drilling Limited provides 2012 operational review

Wednesday, January 30, 2013
  • Signed contract with China National Petroleum Corporation's Huabei Oilfield Company, for the Company's proven LiFaBriC drilling services - as announced on 28 December 2012.
  • A total of 25 successful intersections completed with the Company's own Rotating Magnet Ranging Systems ("RMRS").
  • 90 wells drilled in 2012 compared with 50 wells drilled in 2011, an increase of 80% year-on-year.
  • The maximum meters drilled in a LiFaBriC well was 5,454m in 2012 (5,297m in 2011).

2012 OPERATIONAL HIGHLIGHTS

  • As announced on 11 December 2012, Greka Drilling signed a contract with Petro-king Oilfield Technology Ltd. - to drill 100 wells for Sinopec which will commence immediately following the Chinese New Year in the first quarter of 2013.
  • Signed contract with China National Petroleum Corporation's Huabei Oilfield Company, for the Company's proven LiFaBriC drilling services - as announced on 28 December 2012.
  • A total of 25 successful intersections completed with the Company's own Rotating Magnet Ranging Systems ("RMRS").
  • 90 wells drilled in 2012 compared with 50 wells drilled in 2011, an increase of 80% year-on-year.
  • Use of air hammer and DHM compound drilling to shorten the time from spud to well completion has been successful with reduced time to completion proving the efficiencies of Greka's drilling methodology. Accomplishments for the Company's client, Green Dragon Gas Limited (AIM:GDG), during 2012 included:

    • Fastest vertical well for 2012, was drilled by rig GD75-21 to a total vertical depth ("TVD") of 785m and was completed, from spud to completion, in 11 days (an average of 71m per day) versus 15 days in 2011 to drill well GSS-136, to a TVD of 753m (an average of 50m per day), an improvement in drilling efficiency of approximately 42%.
    • Fastest horizontal well for 2012, was drilled by GD75-20 to a measured depth ("MD") of 2,653m and was completed from spud to completion in a total of 32 days (an average of 83m per day) versus 30 days in 2011 to drill well GSS-5575-08L to a MD of 2,185m (average 73m per day), an improvement in drilling efficiency of 14% year-on-year.
    • A total of 147,126m were drilled in 2012 compared with 88,224m drilled during 2011, an increase of 67% year-on-year.

  • The maximum meters drilled in a LiFaBriC well was 5,454m in 2012 (5,297m in 2011).
  • The longest MD of a single LiFaBriC section, surface to intersect, was 1,809m during 2012 (1,668m in 2011), an 8% increase.
  • The longest TVD of a single vertical well was 1,414m in 2012 (1,233m in 2011).
  • Despite the addition of 25 newly acquired GD75 rigs in H1 2012, there was no reduction in overall drilling efficiency of the Company's rig fleet. In fact, the Company experienced an 8% improvement in meters drilled per rig during 2012 (6,703m per rig) over 2011 (6,206m drilled per rig); however a lower utilization rate of 44% in 2012 compares to 53% in 2011. This reduction represents the impact of introducing new rigs and related crews.
  • Completely replaced third party Directional Drilling contractors with Greka's own crews in H2 2012, allowing the Company to standardize its drilling practices. This change will also facilitate the ease with which knowledge can be shared within the Company and will allow Greka Drilling to continue to seek improvements in operational efficiency.
  • Rig manufacturer Drillmec set up a warehouse in Greka Drilling facility in GSS block, storing sufficient spare parts to support rig operation.
  • Average number of rigs in 2012 was 28 versus 14 in 2011.
  • The total skilled employee headcount increased to 665 by the end of December 2012, compared with 325 in 2011, an increase of some 105% - demonstrating the growth trajectory of the Company.
  • A total of 106,581 man hours of internal training was conducted in 2012 compared to 33,210 man hours in 2011.
  • Increased China based working capital facility to USD 12m by year end.
  • Paid off USD 12.5m working capital facility in full from affiliate Green Dragon Gas Limited, further demonstrating the Company's increasing independence.

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

"We are pleased with the operational achievements through 2012 yearend. The drilling teams continue to succeed in pushing their accomplishments further and thus providing enhanced service capability to the clients. We expect this trend to continue in the years ahead.

The third party contracts awarded to Greka Drilling are validation of the knowledge, technical expertise, efficiencies and methodology accumulated over years of diligent work on the ground and under it. Utilization rates in 2012 exhibited the planned ramp up associated with the growth the Company set for itself and the associated training of skilled personnel. As a Company we grew at the fastest rate globally of any company known to us in our field of operation. We are an established go-to party in the industry for specialized drilling methods and we are known for pushing the boundaries as a pioneer in unconventional resources.

The Year of the Snake, an apt name that doubles for the way we drill, will see us capitalizing on the growth of unconventional resource exploitation with our skilled manpower and drilling rigs, which successfully doubled during the last year."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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