Greka Drilling Limited (LON:GDL) has secured a drilling contract in China’s Shanxi province and says it is bullish on securing new contracts in India despite setbacks with some of its current partners.
The AIM-listed oil and gas developer said it had been awarded a drilling contract with the Shanxi CBM (coal bed methane) Exploration and Development Branch of PetroChina, a subsidiary of China National Petroleum Corp.
The new drilling contract will be deployed in PetroChina's CBM blocks - Fanzhuang and Zhengzhuang within Shanxi Province and is estimated to have a minimum value of US$1.3mln.
The contract, which is for one year, is part of a 240 well project where the company expects further wells to be assigned, with drilling planned to begin at the end of the second quarter.
Greka added that drilling activities were continuing under its other existing contracts with PetroChina, where six of its GD75 rigs are currently deployed. The company’s workover rigs were also continuing to engage in operations on G3 Exploration's GSS block.
In India, the firm said it had completed discussions with the Oil and Natural Gas Corporation (ONGC) regarding the Bokaro drilling contract announced on 16 November 2017 and confirmed that the contract had been terminated.
Greka said that despite a commitment to the proposed drilling contract, the development plan drawn up by ONGC was not in the best interests of the company.
The group also said that Essar had delayed the payment of around US$2mln to the company, which had resulted in corresponding delays in payments due by Greka to sub-contractors, however the company said local management was focusing efforts to resolve the situation.
Despite the setbacks, the firm remained bullish on prospects in India, saying it was continuing dialogue with several of India's leading CBM developers and was confident of being awarded drilling contracts in the expanding market.
Chairman of Greka Drilling, Randeep S. Grewal, said: "We are very pleased that China's flagship energy company - PetroChina CNPC has again awarded Greka Drilling another new drilling contract. With significant drilling activity on several of PetroChina CNPC's CBM blocks, we are playing a key role in executing our client's drilling programs.
He added: “In India, we are indeed disappointed that the Bokaro contract with ONGC could not be put back on the rails. Notwithstanding, we remain bullish on the prospects of entering into contracts with CBM developers in India, including ONGC, under better terms and conditions in the future. The Indian CBM market is developing well under the pricing freedom for CBM introduced by the incumbent Government. We continue to see India as an exciting market for many years to come and remain committed to our dual geography strategy."