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UPDATE - Greka Drilling bags US$65mln Indian drilling contract

AIM-listed Greka Drilling has won its first ever drilling contract in India, worth up to US$65 million
UPDATE - Greka Drilling bags US$65mln Indian drilling contract


AIM-listed Greka Drilling (LON:GDL) has won its first ever drilling contract in India, worth up to US$65 million (£40mln).

The company will drill 100 wells for Indian Energy giant Essar Oil at the Raniganj block in West Bengal, Block RG – activities which are thought will be completed by the end of 2014.

Greka drills for methane in coal beds primarily for former parent company Green Dragon Gas, which taps into unconventional sources of oil in China. 

But this deal forms part of Greka’s strategy of diversifying away from Green Dragon and winning its own third party contracts, as well as new partners outside of China.

Greka plans to shift five GD75 rigs from its current fleet in China to meet Essar’s desire to “expeditiously start their drilling programme”.

Drilling, which is expected to begin in the second quarter of 2014, will not affect ongoing work for Chinese customers during 2014, it added.

The company now has six customers on its books, including Green Dragon. 

Randeep Grewal, Greka’s chairman and CEO, said: “This is yet another milestone completed within the envisioned timeline for Greka Drilling

“The company has a clear objective of diversifying its client base, geographical operations and drilling completions. This contract achieves all such objectives.”

Stephen Hill, head of corporate communications at Greka, explained the strategy is to go after contracts with larger, better established companies.

“We’re not after putting a small order in place with a counterparty that may not be there tomorrow,” he told Proactive Investors.

“We really feel it’s very important that when we move into new countries, we’re aligned with the right people who need to deliver themselves.”

The shares raced higher in early deals but settled 2% higher at 13p each. This values the company at just above £50mln, meaning the contract itself is just £10mln shy of Greka’s total market value.

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