Unconventional energy player Green Dragon Gas (GDG) has announced plans to spin off its engineering unit and list it on London's Alternative Investment Market (Aim), as it previously did with subsidiary Greka Drilling (GDL).
The new unit, named Greka Engineering, will hold Green Dragon's engineering and technology businesses as well some pipeline and gas compression assets. It provides services to China's burgeoning unconventional gas industry and has around 125 employees. GDG shareholders will receive shares in the new entity as a 'dividend' from the parent company.
The demerger, slated for June, looks unlikely to hurt Green Dragon's core business. Last year, the engineering unit generated revenues of just $5.9m (£3.9m) and booked a net loss of $1.4m.
Describing the rationale behind the move, chief executive Randeep Grewal said: "Following the successful demerger of Greka Drilling in 2011, it has become increasingly clear that a similar opportunity exists for Green Dragon to demerge Greka Engineering which will allow that business to take full advantage of the exciting opportunities offered by the rapidly growing unconventional gas market globally in addition to its strong foothold in China… [This] dividend provides our existing shareholders an opportunity to continue to grow with this niche business or reward themselves, at their own discretion."
