Unconventional oil and gas drilling contractor Greka Drilling (GDL:AIM) gains 57% to 4.24p as it wins a $15m, three-year contract with Indian state oil firm ONGC.
Greka is a spin-off from Green Dragon Gas (GDG:AIM) in 2011. It specialises in drilling on coal bed methane (CBM) projects, which target gas occurring in coal beds, using the LiFaBriC drilling technique developed on Green Dragon’s assets in China.
The company has been hit by a wider slowdown in the drilling services market.
It was among 17 bidders for the work on ONGC’s Bokaro CBM development.
ADVANCED TALKS ON OTHER WORK
The deal is still subject to contract but Greka is expected to be issued with a letter of intent before the end of April, at which point one of its semi-automated GD75 rigs will be mobilised within 90 days. The work includes drilling and mud services and the provision of necessary equipment.
Chairman and chief executive Randeep Grewal says: ‘Greka Drilling is also in advanced talks with other oil and gas operators in India to mobilize additional rigs in the country during 2017.
‘The Indian Government's progressive plan to develop domestic CBM gas resources was demonstrated in March this year when it approved market pricing freedom for all CBM produced and sold in India.’
This could help reduce the company’s reliance on Green Dragon for work. In 2015, for example, 80% of its revenue came from its former parent.
