Greka Drilling awarded two new contracts, reduces board size

Asia-focussed unconventional oil and gas driller Greka Drilling announced on Tuesday that it has been awarded two new drilling contracts in China.

The AIM-traded company said the first contract was a turnkey contract with Greka Guizhou E&P, and the other was a contract with Bohai Drilling Engineering Company - a subsidiary of the China National Petroleum Corporation.

It said the work scope under the$4.9m turnkey GGZ contract consisted of site preparation, supply of all tangibles, services and drilling needed to complete 12 wells.

The programme consisted of two multi-well pads with one vertical and five directional wells to be drilled on each pad to an average depth of 850 metres.

Two of the company's GS130 rigs had been mobilized to commence the drilling of the 12 wells, which were expected to be completed by year-end.

Under the BDE contract, Greka said it would be a subcontractor to BDE, who is the newly-appointed principal drilling company for drilling all horizontal wells for its parent company CNPC.

BDE, a predominant oil and gas drilling company, had contracted the company's advanced CBM purpose built GD75 rigs, equipment and expertise to complete horizontal wells over two years with a $4.2minimum commitment.

In addition, Greka Drilling announced that two of its non-executive directors, David Turnbull and Richard Day, were stepping down from its board with immediate effect.

The board now comprised Randeep Grewal as executive chairman, and two non-executive directors, Bryan Smart and Sean Mulhearn.

“I am delighted with the signing of these two new contracts in addition to the previous three contracts from CNPC, announced earlier this year,” said chairman Randeep Grewal.

“In a strengthening China coal bed methane (CBM) market, Greka Drilling with our advanced GD75 CBM specific rigs is being seen by many operators as the drilling company of choice.

“With the current contracts in hand we expect to be utilising seven rigs by year end in China.”

Grewal said the signing of the strategic contract with Bohai was a “significant event” which was expected to evolve into a long-term relationship between the two companies, and create many opportunities for Greka Drilling as state-owned companies continued to ramp up their CBM drilling projects.

“I would like to express my thanks and appreciation for the contribution made by David and Richard to the Greka Drilling board, whose reduced size reflects the company's continued focus on costs while, despite improving prospects, its activity levels remain constrained by sector conditions.”