RE: OIL BARREL NEWS14 Jul 2014 12:11
HI Bear
well can you have a look at the text. and one of us shareholders can email both ALKANE and OIL Barrel
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Alkane is a successful and orderly business. Each year this time of year it issues a pre-close trading update for the six month period to June 30 2014 and talks a little about what the second half might be like. This time twelve months ago it hinted that with the Maltby colliery acquisition being bedded down nicely in the first half, the second six months could see record growth in its core coal mine methane-to-power business. This turned out to be the case.
This year its headline story was the sale of its shale assets. Alkane was sitting on ten onshore UK licences covering 66,867 net acres; with two of them; PEDL 043 and PEDL169 in the Gainsborough Trough in the East Midlands Basin and PEDL 191 in the Bowland Basin, both in the UK Midlands and both thought to be highly prospective for shale gas.Alkane had been wondering what it would do with the assets. Really, it did not have the wherewithal to develop the acreage itself. It would have meant Alkane raising a sum not unadjacent to the company’s market cap of £52 million and this did not really seem an option. Onshore oil & gas specialist Egdon Resources has licences nearby and in an all-hare deal Egdon acquired all of Alkane’s shares making itself the third of the UK’s “Big 3” shale players.
Alkane walked away with 18 per cent of Egdon, and a seat on the board for Neil O’Brien, Alkane’s canny CEO. O’Brien said of the deal. “This transaction allows Alkane to concentrate its resources on our core electricity generating business.” It also led to a one off exceptional, after costs, pre-tax profit of around £ 9m. This will be reflected in the half year accounts.
As for the core gas-to-power business, however, the company suffered a blip, the first one in a long time. H1 output was circa 85GWh (H12013: 94GWh), as the Maltby site was offline for the majority of the spring period. But it was not all bad news. Despite weak near-term power prices, Alkane has 74 per cent of expected 2014 baseload output contracted at £53/MWh and 50 per cent of 2015 output at £54/MWh. House broker, VSA Corporate Finance says, its model assumes £53/MWh for 2014 and £52.5/MWh for 2015. Powermarket prices are currently around £49/MWh for 2015 and circa 52/MWh for 2016.
But the core business is not all there is. Alkane now devotes around 36MW of its capacity to power response activities. This means gas companies can earn money by participating in the UK fuel reserve programme in that they provide short term operating reserve to the National Grid when, at times of peak demand and when, say, wind farms do not work.
Alkane currently devotes 36 MW of its capacity (about on