Trading Update

Alkane Energy PLC
06 March 2006

6 March 2006

For immediate release



                  Alkane Energy plc ('Alkane' or 'the Group')


                                 TRADING UPDATE


Alkane Energy, the international energy company that designs, builds, operates
and services climate change reduction and renewable electricity generation
plants, provides the following update on trading.


The Group's results for the year ended 31 December 2005 will be below market
expectations and the results will show an operating loss before exceptional
items.  Trading in the second half in the UK was adversely affected by
operational problems at a number of sites.  Two of Alkane's more mature coal
mine methane plants experienced problems under ground in the last quarter  and
work is ongoing to try to bring these back into service.  Three newer sites
suffered teething troubles and finished the year below budget.  Pro2 (Alkane's
51 per cent owned German subsidiary) also finished the year below budget.  Pro2
has a strong seasonal bias towards the final quarter and the level of sales
achieved in the final quarter of 2005 was less than expected.   In addition, the
results in the second half were adversely affected by one-off warranty claims
and provisions against trade debtors.  Pro2 is actively pursuing counter claims
against the original manufacturer of equipment relating to the warranty claims
and payment of the unpaid debtors.


In December 2005, Alkane lent Euro3.0 million to Pro2 to support its seasonal
working capital requirements.   Pro2 is expected to repay this loan in the first
half of 2006 as its working capital demands return to normal following the peak
trading period at the end of 2005.  The loan was not budgeted and has meant that
Alkane has had to delay investment in a number of new coal mine methane projects
in the UK and as a result management have reduced their budgets for 2006.


Despite the short term operational problems described above, the outlook for
mine gas power generation in the UK is excellent.  Alkane has a strong base of
operational coal mine methane sites underpinned by contracted electricity prices
of over £50/MWh. In addition, Alkane has an attractive pipeline of coal mine
methane sites to exploit in the UK to provide organic growth.


The outlook for Pro2 in Europe is also promising.  As at the end of February,
the business had secured a record firm order book covering over 70 per cent of
its 2006 budget.  It has recorded its first orders for flare systems, installed
to produce carbon credits, and is experiencing high demand for its containerised
biogas generation plants and associated services.


Looking beyond operational matters, the economic and political climate remains
very favourable for the renewable electricity and carbon credits markets in
which Alkane is a growing force. Both these markets are expected to be strong
drivers for sales and service over the next few years.


Preliminary results for the year ended 31 December 2005 will be released on 22
March 2006.


Enquiries:


Alkane Energy plc                                   Buchanan Communications
Dr Cameron Davies, Chief Executive                  Eric Burns, Account Director
Tel: [phone]                                   Tel: [phone]









                      This information is provided by RNS
            The company news service from the London Stock Exchange