Notice of Results and Trading Update

RNS Number : 8351V

Alkane Energy PLC

18 January 2013

 



18 January 2013

Alkane Energy plc

("Alkane" or "the Group")

Notice of Results and Trading Update

Notice of Results

Alkane Energy plc (AIM: ALK) the independent gas to power producer, today announces an update on trading ahead of the results for the year ended 31 December 2012 (the "period"), which Alkane will publish on 13 March 2013.

Trading Update

Trading for the year ended 31 December 2012 has been very encouraging, with output increasing 19% year on year. For the period, the Group expects to deliver full year electricity output of circa 167GWh (2011: 140GWh).  

Group output has shown a 44% increase to circa 101MWh in H2 2012 compared with H2 2011. This increase reflects the contribution of the seven sites acquired following the successful acquisition of Greenpark Energy Limited which was completed on 26 April 2012. These sites are producing greater output than originally anticipated.

Electricity pricing has shown greater stability over recent months with an expected average price of circa £52/MWh in the year to 31 December 2012 (2011: £51/MWh).  As at 31 December 2012, approximately 68% of the Group's expected 2013 output is contracted at an average price of £54/MWh.   

In December 2012, Alkane was granted planning permission to extract natural gas at Nooks Farm, Staffordshire to generate electricity using the Group's core gas to power skills. Preparation for drilling has commenced and the drill programme is expected to be completed in spring 2013.  The Nooks Farm site has estimated contingent resources of 1.5bcf of gas, which is expected to provide 2MW electricity output for up to 15 years.

In 2012, Alkane received orders for new biogas plants worth circa £4.0 million and continues to work on a number of further biogas opportunities.  Alkane has contracted 21MW of its Power Response capacity to the National Grid's UK Short Term Operating Reserve ("STOR") market up to March 2014.

The Group has more than 800km² of acreage under various onshore Petroleum Exploration and Development Licences ("PEDLs").  Alkane retains a 100% interest in the majority of these PEDLs, which extend to all of the hydrocarbons recoverable from these licences.  This would include any coal mine methane ("CMM"), natural gas, coal bed methane ("CBM") and shale gas.  The Board is evaluating the options open to the Group in relation to potential shale gas resources within its licensed portfolio.

The Board expects that the results for the year ended 31 December 2012 will be in line with market expectations. 

Commenting on the update, Chief Executive Officer, Neil O'Brien, said:

"We have continued to see strong growth in our core coal mine methane business and we are encouraged by our progress in related markets such as power response and biogas. The prospect of a shortfall in energy supply in the UK, as highlighted by Ofgem and the National Grid, reinforces our confidence about the continuing opportunities to the Group for further growth.  Given the high level of interest in UK onshore shale gas, Alkane is evaluating its options in relation to potential shale gas resources within its licensed portfolio."

For more information please contact:

Alkane Energy plc Neil O'Brien, Chief Executive Officer Steve Goalby, Finance Director	01623 827927 01623 827927
VSA Capital Limited Andrew Raca	020 3005 5000
Altium Capital Limited Adrian Reed Andrew Clarke	0845 505 4343
Hudson Sandler Nick Lyon Alex Brennan	020 7796 4133

More information is available on our website www.alkane.co.uk 

Notes to Editors:

Alkane Energy is one of the UK's fastest growing independent power generators. The Company operates mid-sized "gas to power" electricity plants providing both predictable and fast response capacity to the grid. Following the acquisition of Greenpark Energy Limited ("Greenpark"), Alkane now has a total of 70MW of installed generating capacity and an electrical grid capacity of 89MW.

Alkane's main operations are based on a portfolio of Coal Mine Methane ("CMM") sites. Alkane has the UK's leading portfolio of CMM licences, enabling the Company to extract gas from abandoned coal mines.

As CMM declines at any one site Alkane retains valuable generating capacity and a grid connection which we can move to power response. Power response sites are connected to mains gas and produce electricity at times of high electrical demand or in order to balance the electricity grid. Alkane now operates 25MW of power response on conventional gas post the Greenpark acquisition.

The Group operates from 20 mid-size (up to 10MW) power plants across the UK, 13 CMM, 4 conventional gas and 3 using both fuel sources, and sells this power through the electricity network, using standard modular reciprocating engines to generate the electricity. The engine units and other plant are designed to be flexible and transportable and this allows additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency.

The biogas market also provides a potential new business stream where we are making progress. Running on gas generated from the processing of organic waste will require exactly the same power assets and core gas and electricity skills as CMM.

The Group has more than 800km² of acreage under various onshore Petroleum Exploration and Development Licences ("PEDLs").  Alkane retains a full 100% interest in the majority of these PEDLs, which extend to all of the hydrocarbons recoverable from these licences.   This would include any CMM, natural gas, coal bed methane ("CBM") and shale gas.

 

END

 

 

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