TIDMGDL
RNS Number : 8698K
Greka Drilling Limited
27 September 2016
27 September 2016
GREKA DRILLING LIMITED
("Greka Drilling" or the "Company")
Interim Results 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:
o 1 Vertical well in China with a total depth ("TD") of 789
metres and completed in 13 days (spud to completion)
o 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
o 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:
o Expected to drill 30 wells with 2 rigs deployed under the
current contract
o 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
Companys website at www.grekadrilling.com or contact:
Sarah Lowther
Media Relations +44 (0)20 7016
Greka Drilling 9829
Azhic Basirov / David Jones / Ben Jeynes
Nominated Adviser and Broker +44 (0)20 7131
Smith & Williamson 4000
CHAIRMAN'S STATEMENT
Globally, the energy sector is still in its volatile state, but
much to the contrary, here in China, the situation is changing
drastically. Though there was little investment into CBM
exploratory activities by the majors including CNOOC (CUCBM), CNPC
and PetroChina in H1 of 2016, the Chinese government is reacting
and using this opportunity to abandon coal-fired iron and steel
plants and switch many factories to clean energy "gas" power. This
gasification plan is to fundamentally reduce the "smoggy" air which
has become an increasing concern.
CBM, as an important part of this clean energy family of fuel,
is expected to play a key role in this process. To rectify the
situation and rekindle the previous strong momentum and enthusiasm
to develop CBM, the Chinese government has recently raised the
subsidy on CBM development from RMB0.2 to RMB0.3 per CBM cubic
metre extracted. Furthermore, CBM development is high on the agenda
of China's Thirteenth Five-year Plan; three provinces have been
named as hot spot targets for CBM development which means more
preferential policies will be in place, including central
government granted low-interest loans. These three provinces are
Guizhou, Inner Mongolia and Xinjiang. These initiatives are
expected to attract CBM development companies and investors, and
should trigger another wave of CBM development. Greka Drilling is
well positioned in China to benefit from this opportunity.
In the first half of this year we focused on sustaining our
capabilities and business development. The organisation focused on
training, equipment maintenance, completing the 'end-of-well'
reports for all our historical drilled wells and optimised the
field crews to support a five rig operation.
In China, business development was focused on expanding the
offered services to coal mines, power generation plants and coal
gasification projects to promote our technologies and capacities
for drilling. The continuation of favourable polices being released
by the government has drawn a wider range of interested parties
into CBM development. Most of these new entrants do not have CBM
development experience and are eager to have Greka Drilling as
their technical partner. Although this will take time, we expect a
number of these discussions to convert into contracts.
Concurrently, in China, we look forward to Green Dragon Gas's
multi-well programme in Shanxi province which we expect will
include a combination of new and re-drilled LiFaBriC wells.
In India, we have two rigs working under contract for Essar on a
day-rate basis, and 16 vertical wells have been drilled so far.
While the existing programme may extend into a third rig, we expect
to conclude an additional thirty wells in the current contract.
Additionally, ONGC has committed itself to develop CBM and has
released a tender for the development of a block. Greka Drilling is
ideally suited to provide such services and we will be delivering
our offer next month.
We are pleased to have secured working capital lines during
these challenging times from Guaranty Finance Investors. While we
are quite confident of the significant potential for Greka Drilling
in China and India, these facilities have been supportive during
this year.
Randeep S. Grewal
Chairman
27 September 2016
Consolidated Statement of Comprehensive Income
Six months Six months Year ended
ended ended 30 31 December
30 June June 2015 2015
2016
US$'000 US$'000 US$'000
Note Unaudited Unaudited Audited
--------------------------------------- ----- ----------- ----------- -------------
Revenue 3 2,610 11,892 29,916
Cost of sales (3,921) (12,428) (23,951)
--------------------------------------- ----- ----------- ----------- -------------
Gross (loss)/profit (1,311) (536) 5,965
Administrative expenses (3,898) (3,914) (9,256)
--------------------------------------- ----- ----------- ----------- -------------
Total administrative expenses (3,898) (3,914) (9,256)
Loss from operations (5,209) (4,450) (3,291)
Finance income 4 84 1 3
Finance costs 5 (1,756) (480) (4,241)
--------------------------------------- ----- ----------- ----------- -------------
Loss before income tax (6,881) (4,929) (7,529)
Income tax charge 6 1,353 122 228
--------------------------------------- ----- ----------- ----------- -------------
Loss for the period (5,528) (4,807) (7,301)
Other comprehensive income/(expense):
Items that may be reclassified
to profit or loss:
--------------------------------------- ----- ----------- ----------- -------------
Exchange differences on
translation of foreign
operations 7 228 (88)
--------------------------------------- ----- ----------- ----------- -------------
Total comprehensive expense
for the period (5,521) (4,579) (7,389)
--------------------------------------- ----- ----------- ----------- -------------
(Loss)/profit for the
period attributable to:
- Owners of the company (5,615) (4,791) (7,246)
- Non-controlling interests 87 (16) (55)
--------------------------------------- ----- ----------- ----------- -------------
(5,528) (4,807) (7,301)
--------------------------------------- ----- ----------- ----------- -------------
Total comprehensive
(expense)/income attributable
to:
- Owners of the company (5,549) (4,622) (7,476)
- Non-controlling interests 28 43 87
--------------------------------------- ----- ----------- ----------- -------------
(5,521) (4,579) (7,389)
--------------------------------------- ----- ----------- ----------- -------------
Earnings per share
- Basic and diluted (in
US dollar) 7 (0.0141) (0.0121) (0.0184)
======================================= ===== =========== =========== =============
Consolidated Statement of Financial Position
As at As at 31
30 June December
2016 2015
US$'000 US$'000
Note Unaudited Audited
----------------------------- ----- -------------- ---------------
Assets
Non-current assets
Property, plant and
equipment 8 82,389 84,962
Intangible assets 343 388
Deferred tax assets 9 84 -
----------------------------- ----- -------------- ---------------
82,816 85,350
----------------------------- ----- -------------- ---------------
Current assets
Inventories 10 6,304 7,138
Trade and other receivables 11 3,555 3,363
Cash and bank balances 12 8,082 2,421
----------------------------- ----- -------------- ---------------
17,941 12,922
----------------------------- ----- -------------- ---------------
Total assets 100,757 98,272
----------------------------- ----- -------------- ---------------
Liabilities
Current liabilities
Trade and other payables 13 32,051 25,165
Loans and borrowings 14 3,770 5,852
Provisions - 585
----------------------------- ----- -------------- ---------------
35,821 31,602
----------------------------- ----- -------------- ---------------
Non current liabilities
Loans and borrowings 14 4,406 -
Financial liability 15 565 -
Deferred tax liabilities 9 - 1,184
----------------------------- ----- -------------- ---------------
4,971 1,184
Total net assets 59,965 65,486
----------------------------- ----- -------------- ---------------
Capital and reserves
Share capital 4 4
Share premium 77,186 77,186
Invested capital (1,533) (1,533)
Reserve fund 917 917
Foreign exchange reserve 921 855
Retained deficit (17,269) (11,654)
----------------------------- ----- -------------- ---------------
Total equity attributable
to owners of the Company 60,226 65,775
Non-controlling interests (261) (289)
----------------------------- ----- -------------- ---------------
Total Equity 59,965 65,486
----------------------------- ----- -------------- ---------------
Consolidated Statement of Changes in Equity
Equity
attributable
Foreign to owners
Share Share Invested Reserve exchange Retained of the Non-controlling
capital premium capital fund reserve deficit Company interests Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------- -------- --------- --------- ---------- --------- ------------- ------------- ---------------- ---------
At 01 January 2015
- audited 4 77,186 (1,533) 917 1,086 (4,409) 73,251 (376) 72,875
Loss for the
period - - - - - (4,791) (4,791) (16) (4,807)
Other
comprehensive
income:
- Exchange
difference on
translation
of foreign
operations - - - - 169 - 169 59 228
------------------- -------- --------- --------- ---------- --------- ------------- ------------- ---------------- ---------
Total
comprehensive
income/(expense)
for the period - - - - 169 (4,791) (4,622) 43 (4,579)
At 30 June 2015 -
unaudited 4 77,186 (1,533) 917 1,255 (9,200) 68,629 (333) 68,296
At 01 January 2016
- audited 4 77,186 (1,533) 917 855 (11,654) 65,775 (289) 65,486
(Loss)/profit for
the period - - - - - (5,615) (5,615) 87 (5,528)
Other
comprehensive
income/(expense):
- Exchange
difference on
translation
of foreign
operations - - - - 66 - 66 (59) 7
------------------- -------- --------- --------- ---------- --------- ------------- ------------- ---------------- ---------
Total
comprehensive
income/(expense)
for the period - - - - 66 (5,615) (5,549) 28 (5,521)
At 30 June 2016 -
unaudited 4 77,186 (1,533) 917 921 (17,269) 60,226 (261) 59,965
------------------- -------- --------- --------- ---------- --------- ------------- ------------- ---------------- ---------
Consolidated Statement of Cash Flow
6 months 6 months Year ended
ended 30 June ended 30 31 December
2016 June 2015 2015
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
------------------------------------ ------------------- -------------------- --------------
Operating activities:
(Loss)/profit before income
tax (6,881) (4,929) (7,529)
Income(loss) for last year
Adjustments for:
Depreciation 1,619 2,037 5,647
Amortisation of other intangible
assets 38 40 75
Loss on disposal of property,
plant and equipment - - 356
Finance (loss)/gains 1,329 156 3,629
Finance income (84) (1) (3)
Finance costs 427 324 612
------------------------------------ ------------------- -------------------- --------------
Operating cash flows before
changes in working capital (3,552) (2,373) 2,787
Decrease/(increase) in inventories 835 (889) (777)
(Increase)/decrease in trade
and other receivables (192) 2,323 2,292
Increase/(decrease) in trade
and other payables 6,301 5,154 (2,713)
------------------------------------ ------------------- -------------------- --------------
Cash generated from/(utilised
by) operations 3,392 4,215 1,589
Income tax payment (43) (172) (225)
------------------------------------ ------------------- -------------------- --------------
Net cash from operating
activities 3,349 4,043 1,364
------------------------------------ ------------------- -------------------- --------------
Investing activities:
Payments for purchase of
property, plant and equipment 98 (44) (359)
Transfers (to)/from restricted
cash (4,395) 1,526 3,849
Interest received 1 1 -
------------------------------------ ------------------- -------------------- --------------
Net cash (used in)/from
investing activities (4,296) 1,483 3,490
Financing activities
Proceeds from promissory 5,000 - -
note
Proceeds of short term loans 3,770 6,216 5,852
Repayment of short term
loans (5,852) (11,930) (11,242)
Finance costs paid (268) (551) (565)
------------------------------------ ------------------- -------------------- --------------
Net cash from/(used in)
financing activities 2,650 (6,265) (5,955)
------------------------------------ ------------------- -------------------- --------------
Net/increase/(decrease)
in cash and cash equivalents 1,703 (739) (1,101)
Cash and cash equivalents
at the beginning of the
year 353 1,737 1,737
------------------------------------ ------------------- -------------------- --------------
2,056 998 636
Effect of foreign exchange
rate changes (437) 261 (283)
------------------------------------ ------------------- -------------------- --------------
Cash and cash equivalents
at end of year 1,619 1,259 353
==================================== =================== ==================== ==============
Notes to Consolidated Interim Financial Statements
1. GENERAL INFORMATION
The consolidated unaudited interim financial information set out
in this report is based on the consolidated financial statements of
Greka Drilling and its subsidiary companies (together referred to
as the "Group").
2. ACCOUNTING POLICIES
The condensed consolidated financial information should be read
in conjunction with the annual financial statements for the year
ended 31 December 2015, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union except for IAS 34.
The interim financial statements have been prepared in
accordance with the accounting policies that are consistent with
the December 2015 financial statements and the same policies are
expected to apply for the year ended 31 December 2016. The
financial information for the six months to 30 June 2016 does not
constitute audited accounts of the Company or the Group. The
comparative financial information for the year ended 31 December
2015 in this interim report does not constitute statutory accounts
for that year. The auditors' report on those accounts was
unqualified and did not draw attention to any matters by way of
emphasis.
Basis of preparation
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the half-yearly consolidated financial statements.
The consolidated financial information is presented in United
States dollars and all values are rounded to the nearest thousand
dollars (US$'000) except when otherwise indicated.
The consolidated financial information has been prepared in
accordance with the requirements of the AIM Rules for Companies and
in accordance with IFRS as adopted by the European Union. The
consolidated financial information have been prepared using the
accounting policies which will be applied in the Group's financial
statements for the year ended 31 December 2016.
The preparation of consolidated financial information in
conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group's accounting
policies. The areas involving a higher degree of judgement or
complexity or areas where assumptions and estimates are significant
to the financial information are disclosed in note 2 to the
financial information in the 31 December 2015 annual report. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision only
affects that period or in the period of revision and future periods
if the revision affects both current and future periods.
3. REVENUE AND SEGMENTAL INFORMATION
The Group determines its operating segment based on the reports
reviewed by the chief operating decision-makers ("CODMs") that are
used to make strategic decisions.
The Group reports its operations as two reportable segments: the
provision of contract drilling services in the PRC and India. The
division of contract drilling operations into two reportable
segments is attributable to how the CODMs manage the business.
Drilling services revenue and management services revenue
represent the net invoiced value of contracted drilling services
and management services provided to two major customers, one in the
PRC (who is a related party) and the other in India.
Six months Six months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
China 1,959 8,785 25,686
India 651 3,107 4,230
------------ ------------ ------------
2,610 11,892 29,916
------------ ------------ ------------
As at As at
30 June 31 December
2016 2015
US$'000 US$'000
Segmental assets Unaudited Audited
China 80,642 94,180
India 18,505 19,504
Intercompany 1,610 (15,412)
--------------- -----------------
100,757 98,272
--------------- -----------------
As at As at
30 June 31 December
2016 2015
US$'000 US$'000
Segmental liabilities Unaudited Audited
China 15,874 11,492
India 3,817 3,973
Intercompany 21,101 17,321
--------------- -----------------
40,792 32,786
--------------- -----------------
4. FINANCE INCOME
Six months Six months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Change in FV of derivative 83 - -
Bank interest 1 1 3
----------- ----------- ------------
84 1 3
----------- ----------- ------------
5. FINANCE COSTS
Six months Six months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Interest expense on short term
loans 373 324 612
Foreign exchange loss 1,329 156 3,629
Amortisation of warrant costs 54 - -
----------- ----------- ------------
1,756 480 4,241
----------- ----------- ------------
6. TAXATION
Taxation for the Group's operations in the PRC is provided at
the applicable current tax rate of 25% on the estimated assessable
profits for the period. Taxation for operations in India is taxed
at 4.326% of gross revenue.
7. EARNINGS PER SHARE
Six months Six months Year ended
ended 30 ended 30 31 December
June 2016 June 2015 2015
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Earnings for the purpose of
basic and diluted loss per
share (5,615) (4,791) (7,301)
-------------------------- -------------------------- --------------------------
Weighted average number of
ordinary shares 398,245,758 398,245,758 398,245,758
-------------------------- -------------------------- --------------------------
Warrants were outstanding at the end of the period that could
potentially dilute basic earnings per share in the future. However,
due to losses incurred during the current period, the impact of
these share incentives would not be dilutive.
8. PROPERTY, PLANT AND EQUIPMENT
During the period, the Group incurred US$98,779 on additions to
plant and equipment (31 December 2015 - US$802,000).
9. DEFERRED TAXATION
As at Year ended
30 June 31 December
2016 2015
US$'000 US$'000
Unaudited Audited
Deferred tax liabilities
Opening balance 1,184 1,369
Temporary difference charge (1,986) 1,256
Tax losses recognised (718) (1,441)
---------------- -------------------------------
At the end of the period (84) 1,184
---------------- -------------------------------
The Group has not offset deferred tax assets and liabilities
across different jurisdictions. Cayman Island losses of US$962,000
(2015: US$2,618,000) do not expire under current tax legislation.
PRC tax losses of US$2,068,603 (2015: US$1,467,750) expire after 5
years.
10. INVENTORIES
As at Year ended
30 June 31 December
2016 2015
US$'000 US$'000
Unaudited Audited
Raw materials and consumables 6,304 7,138
---------- ------------
11. TRADE AND OTHER RECEIVABLES
As at Year ended
30 June 31 December
2016 2015
US$'000 US$'000
Unaudited Audited
Account receivable 810 1,190
Prepayments 1,122 1,103
Other receivables 1,623 1,070
----------- --------------
3,555 3,363
----------- --------------
12. CASH AND CASH EQUIVALENTS
As at Year ended
30 June 31 December
2016 2015
US$'000 US$'000
Unaudited Audited
Cash and Cash Equivalents (Un-restricted) 1,619 353
Cash and Cash Equivalents (restricted) 6,463 2,068
---------- ------------
8,082 2,421
---------- ------------
The restricted bank balance represents deposits placed in
financial institutions to secure bills payable of an equivalent
amount related to trade payables of US$129,690 and bank loans of
US$6,333,695.
13. TRADE AND OTHER PAYABLES
As at Year ended
30 June 31 December
2016 2015
US$'000 US$'000
Unaudited Audited
Trade payables and others 12,026 13,297
Notes payable 6,463 2,068
Amount due to related parties 13,562 9,800
---------- --- ------------
32,051 25,165
14. LOANS AND BORROWINGS
Bank name Period Balance Interest Repayment New loan Balance
as at rate as at
Dec 31 June
2015 30 2016
------------------ ---------- -------- --------- --------------------- --------------------- ---------
US$'000 Date Amount Date Amount US$'000
US$'000 US$'000
------------------ ---------- -------- --------- ---------- --------- ---------- --------- ---------
CITIC Bank One year 2,772 7.00% 14/4/2016 (2,772) 11/5/2016 1,810 1,810
------------------ ---------- -------- --------- ---------- --------- ---------- --------- ---------
SPD Bank One year 3,080 7.28% 6/1/2016 (3,080) 19/1/2016 1,960 1,960
------------------ ---------- -------- --------- ---------- --------- ---------- --------- ---------
Total for
Short term
loan 5,852 (5,852) 3,770 3,770
------------------------------ -------- --------- ---------- --------- ---------- --------- ---------
Guaranty Finance
Investors, Three
LLC year 7.00% 31/3/2016 4,406 4,406
------------------ ---------- -------- --------- ---------- --------- ---------- --------- ---------
Total for
Long term
loan 4,406 4,406
------------------------------ -------- --------- ---------- --------- ---------- --------- ---------
15. FINANCIAL LIABILITY
During the period, a warrant to subscribe for 35 million
ordinary shares was issued as part of the US$5m promissory note
agreement with Guaranty Finance Investors LLC. As the warrants are
exchangeable into variable number of shares, their fair values on
the grant date and reporting date were determined using the Black
Scholes model. The fair value of the warrants on the date of grant
and at period end was US$648,000 and US$565,000 respectively, with
the change in fair value of US$83,000 being recognised in the
income statement. On initial recognition the warrant's cost was
deducted from the loan balance of US$5m as it represents the loan
arrangement costs and is subsequently amortised over the term of
the loan.
16. RELATED PARTY TRANSACTIONS
Amounts due from/to related parties and corresponding
transactions
The related parties of the Group include companies that are
subsidiaries of Green Dragon Gas Ltd, Greka Engineering and
Technology Limited and Henan Greka Weino Alcohol Trading Limited.
All the related parties are under common management and control of
Mr. Randeep S Grewal.
As at 30 June 2016, the Group had the following balances due
to/from companies under common control of Mr Randeep S Grewal
-- Net payable to Green Dragon Gas Ltd of US$13.4m (2015: net payable: US$9.6m)
-- Net payable to Greka Engineering and Technology Ltd of
US$184,340 (2015: US$180,240)
These balances are unsecured, interest-free and repayable on
demand and represent receivables/payables for drilling and pre-well
services.
Related party transactions during the period are comprised
of:
-- Drilling services provided to Green Dragon Gas Ltd of
US$1,541,000 (2015: US$8,091,000)
-- Leasing income from Green Dragon Gas Ltd of US$327,000 (2015:
US$336,000), Greka Engineering and Technology group of US$25,000
(2015: US$27,000), and from Henan Greka Weino Alcohol Trading
Limited of US$2,000 (2015: US$1,000). The lease term was 1 year
from 1 January 2016 to 31 December 2016 and 1 January 2015 to 31
December 2015 respectively.
17. SUBSEQUENT EVENT
On 21 September 2016, the "Company" announced that it had
secured US$3 million in loan financing from Guaranty Finance
Investors LLC ("GFI"), the proceeds of which it expects to use for
working capital purposes. The first US$1.5 million tranche of the
loan has been received, and the second tranche of the same amount
will be paid to the Company by 28 October 2016. The loan, on which
interest is payable at the rate of 7% per annum, is repayable on 30
September 2019 and is unsecured (although first priority would be
granted to the GFI loan if the Company created any security over
its drilling rigs in relation to other indebtedness).
As part of the financing, the Company agreed to issue GFI with
warrants to subscribe for 21,000,000 new ordinary shares in the
Company (10,500,000 on the receipt of each tranche of the loan) at
an exercise price of 5p per share, representing a premium of 67% to
the Company's closing share price on 20 September 2016. The
warrants are exercisable at any time between 30 September 2017 and
30 September 2019. At any time after 30 September 2017 the Company
may elect to prepay the loan, provided that the amount repaid
(including interest paid previously) would provide GFI with a total
annual return of 25%; such prepayment would be deemed to have
redeemed the warrants in lieu of issuing new shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFERASIRFIR
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