Pro 2 Update

Alkane Energy PLC
12 July 2007


For immediate release                                             12th July 2007

                               Alkane Energy plc
                                   ('Alkane')

              ALKANE ENERGY ANNOUNCES PLATFORM FOR GROWTH AT PRO2

Alkane Energy plc (AIM:ALK) the international renewable energy company today
announces the re-financing of Pro2 Anlagentechnik GmbH ('Pro2'). An agreement
has been completed for new funding from German investors and banks, including
UmweltBank AG (Environment Bank) of Bavaria, which have a strong background in
financing renewable energy companies and projects in Europe. Their investment
has considerably strengthened the company's financial base and environmental
credibility.

The new investors have contributed €1.4 million in return for new equity in Pro2
which represents 25.5% of the enlarged issued share capital. The effective date
of this transaction is 1 January 2007. The existing shareholders are diluted
proportionately with Alkane's holding reducing from 51% to 38% and the Pro2
directors' holding from 49% to 36.5%. An advisory board, on which Alkane will
have one third of the representation, has been established to oversee management
of the company.

In addition to the equity investment, the new investors are helping Pro2 to
source new facilities for working capital and project finance. Negotiations
regarding the first tranche of this debt funding, totalling €3.9 million, are at
an advanced stage and are expected to be completed soon. It has been agreed that
upon completion of this first tranche of debt funding Alkane will be repaid €1
million of the €3 million working capital loan made to Pro2 in late 2005. The
balance of this loan will be repaid as soon as cash permits. In the UK, these
loan repayments will be utilised to drill new prospects in Alkane's licence
portfolio, and to invest in its mine gas development pipeline.

As a result of this transaction, Pro2 will be treated for reporting purposes as
an associated company of Alkane Energy plc rather than as a subsidiary. With
effect from 1 January 2007, Alkane will report its share of Pro2's results as
one line in the profit and loss account, rather than consolidating turnover and
costs by individual category. In the year to 31 December 2006, Pro2 contributed
£144,000 to group profits compared with a loss of £70,000 in 2005. Pro2's net
assets at the end of 2006 were £2,566,000.

Alkane and Pro2 have been considering for some time how best to fund the clear
growth opportunities available to Pro2 in the international climate change and
renewable energy markets. The Group's recent results have demonstrated these
opportunities but have also highlighted the working capital constraints that
Pro2 has been operating under. It has also become clear that with Alkane as the
controlling shareholder, Pro2 was not able to raise suitable debt and project
finance.

The Boards of Alkane and Pro2 believe that as a result of the equity funding
announced today, together with the debt funding expected to follow on, the
prospects for existing investors in both Alkane and Pro2 should be improved. In
addition, a well funded Pro2 will be in a position to better manage its cash
flow, increase its growth rate, and improve its margins and profits.

Dr. Cameron Davies, Chief Executive of Alkane, commented:

'The new equity funding announced today and the further finance in the pipeline
gives Pro2 a strong platform from which to deliver higher profits and better
value for Alkane's shareholders. Today's strong endorsement from the new
investors, with their background in European renewables, will be of great
benefit as Pro2 continues to exploit the rapidly growing international climate
change and renewable energy markets. Alkane's profits will benefit from this
growth even at the lower equity level and from the return of cash which we will
use to continue our active UK drilling programme and the roll-out of additional
mine gas power generation plants.'

For further information, please contact:

Alkane Energy plc                                                01623 827 927
Dr Cameron Davies, Chief Executive

Buchanan Communications                                          020 7466 5000
Ben Willey
Nick Melson



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