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Greka Drilling expecting stronger 2018 on rising demand in China

"With firm drilling contracts signed with state owned enterprises, we start 2018 with a materially stronger foundation than last year”
Greka drilling rig truck
Forty-one of the 48 wells drilled by the company in 2017 were in China

Greka Drilling Ltd (LON:GDL) boss Randeep Grewal is expecting a materially better 2018 thanks to rising demand for well drilling services in China.

"Though 2017 was still a challenging year, we saw a significant increase in drilling activity during the latter half of the year in China,” the Greka chairman said in a statement.

“We expect a stronger drilling mandate during 2018. With firm drilling contracts signed with state owned enterprises, we start 2018 with a materially stronger foundation than last year.”

READ: Greka Drilling wins two new PetroChina contracts; seeking clarity over India deal

Monday’s operating results for last year confirmed that 41 of 48 wells drilled by the company in 2017 were in China, and that’s a significant shift from the preceding twelve months (in 2016 only 5 of 33 wells were in China).

The drill contractor noted that it drilled 13 wells for G3 Exploration, up from 5 wells in 2016, and drilled 28 wells for other China based clients where none had been done the year before. Additionally, the company carried out ‘work overs’ on 52 existing wells for G3E in the year.

Meanwhile, in India 7 wells were drilled for Essar Oil during 2017 compared to 28 wells in 2016.

Measured in metres, the growth in operations is further highlighted. In 2017, the group drilled a total of 64,192 metres up from 39,553 metres in 2016.

The company also noted that 81% of the drilling, in metres, involved the use of Greka's in house MWD directional tools.

WATCH: 'Drought in drilling service sector is over' - Greka Drilling's Randeep Grewal

Looking ahead, in China, Greka noted that it has 35 remaining wells on contract in, meanwhile it expects to maintain its relationships (with CNPC, G3E and Petrochina) for additional mandates. The company is increasing its drilling fleet utilisation to 10 rigs, from 7, and it is to mobilise a second work-over rig.

“With the strong surge in drilling activity in China we expect to secure more drilling mandates and a greater drilling fleet utilization in 2018,” Grewal said.

In regards to the outlook for India, he added: “In India, with the pricing freedom around CBM, we would expect to see enhanced drilling activities in the years to come.

“Our focus will be to build upon our in country presence as the CBM expert and expand our customer base. 

“In the near term, we wish to get transparency from ONGC on its drilling commitment and planned activity. Once past contract matters have been concluded with our current customer Essar Oil, we would hope to enter a new mandate for drilling in 2018.

“Furthermore, we continue to discuss drilling campaigns with other operators within India."

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