Investor Relations

Interim Results 2016

27 September 2016

Greka Drilling Limited (AIM: GDL), the largest independent and specialised unconventional gas driller in China, is pleased to announce its results for the six months ended 30 June 2016.

FINANCIAL HIGHLIGHTS

• Revenue of US$2.6 million (H1 2015: US$11.9 million)
• US$8.1 million of cash as at 30 June 2016 including restricted cash (US$2.4 million as at 31 December 2015)
• US$3.8 million bank loans as at 30 June 2016 (US$5.9 million as at 31 December 2015)
• Loss of US$5.5 million (H1 2015: loss of US$4.8 million)
• Secured US$5 million in loan financing from Guaranty Finance Investors LLC

OPERATIONAL HIGHLIGHTS

• In line with our guidance in February this year, activity levels have been very limited in the first half of 2016. GDL has drilled 10 wells (3 in China and 7 wells in India) in the first 6 months compared to 28 wells in the same period last year
• Of the wells drilled there was:
• 1 Vertical well in China with a total depth (“TD”) of 789 metres and completed in 13 days (spud to completion)
• 7 Directional wells in India which averaged 12 days, a 42% improvement on the average of 20 days in the same period in 2015. The fastest Directional well was drilled to TD 1,036 metres in 9.3 days
• 2 Horizontal wells in China with the fastest being drilled to TD of 1,658 metres in 28 days (spud to completion)
• In total there were 12,458.31 metres drilled (4,128.31 metres in China and 8,330 metres in India) compared to 26,367 metres in H1 2015
• The 8,330 metres drilled in India compares with a total of 9,920 metres in India for the FY 2015

H2 2016 OPERATIONS OUTLOOK

India

• Essar Oil Limited:
• Expected to drill 30 wells with 2 rigs deployed under the current contract
• Potential for deployment of a third rig under the current contract
• In advanced talks with new potential clients for deployment of three rigs in 2017

China:

• Green Dragon Gas has begun mobilising for a programme of up to 8 wells
• Bids to conclude multi-well programme prior to year-end

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

“We have previously advised that we expected this year to be very challenging while the oil and gas operators realign their portfolios to the new oil price environment. Unconventional drilling, the Company’s niche, has been largely suspended by most of the operators. During this period, we continued to take steps to reduce costs, improve our drilling efficiency and diversify our services and customer base. Indeed, this year we expect to have an equal client base between China and India.

In India, we won a new contract from Essar Oil to drill vertical and directional wells on a day-rate basis. We have completed 7 directional wells under this contract and hope to complete 30 wells with 2 rigs in the second half. Additionally, we are in advanced talks with other oil and gas operators to mobilise other rigs in the central part of India.”

In China, it is anticipated that a number of larger E&P companies, including Green Dragon Gas, will start their drilling programme for 2016 in the fourth quarter so as to conclude their objectives prior to year-end. GDL is well positioned and is in discussions in relation to carrying out this work. We remain confident about the market and the Company's longer term prospects in China.”

For further information on Greka Drilling, please refer to the Company’s website at www.grekadrilling.com or contact: