After finally securing its initial optimum rig count, Greka Drilling (GDL) was able to drive revenues through 2012, but a steep rise in administration expenses ate into operating profits, which increased by just 1 per cent to $4.7m (from £3.2m last year). The group’s drill statistics point to strong operational progress, while growing industry acceptance of Greka’s proprietary LiFaBriC production method is reflected by third-party contracts secured with Chinese energy heavyweights CNPC and Sinopec.
Aside from the 46 per cent hike in administrative expenses, an additional $9.9m in borrowings pushed up finance costs to $1.3m (2011: $85,000). Comparable earnings also suffered due to a $833,000 reversal linked to exchange differences on the group’s foreign operations. Over the year, Greka managed to pay off all its affiliate working capital facility thereby ending the year without any affiliate debt.
Greka doubled the average number of operating rigs to 28 through 2012, thus enabling the group to drill 90 wells - an 80 per cent increase over the previous year. Greka also reduced its fastest completion times for vertical and LiFaBriC drills by 42 and 14 per cent respectively. The group's ability with regard to the LiFaBriC method has also been enhanced by an increase in the number of directional drilling specialists at its disposal from 51 to 79.
Macquarie gives a DCF value of 55p/share, and adjusted 2013 EPS of 8p/share.
| GREKA DRILLING (GDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 24.25p | MARKET VALUE: | £97m | |
| TOUCH: | 24-25p | 12-MONTH HIGH: | 41p | LOW: 7.75p |
| DIVIDEND YIELD: | NA | PE RATIO: | 75 | |
| NET ASSET VALUE: | 20¢ | NET DEBT: | 11% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 24.3 | 2.75 | 0.50 | nil |
| 2011 | 44 | 4.6 | 0.70 | nil |
| 2012 | 61 | 3.5 | 0.46 | nil |
| % change | +39 | - | - | - |
| £1 = $1.49 | ||||
