EDR.L Regulatory News (EDR)

12 May 2014

Alkane Energy plc

Press comment

Alkane Energy plc (AIM: ALK) notes the press commentary on Saturday 10 May and confirms it is in advanced discussions with Egdon Resources plc ("Egdon") on a potential transaction involving an acquisition of Alkane's onshore shale assets for 40,000,000 ordinary shares in Egdon. As part of the potential transaction Egdon is also proposing to raise £7 million at 20 pence per share for working capital purposes.

The potential transaction and Egdon fundraising remain subject to finalisation. The potential transaction is expected to be conditional on approval of the fundraising by Egdon shareholders. A further announcement will be made in due course.

Notes to Editors

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Background information

Alkane 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 the Wheldale power response assets, Alkane now has a total of 90MW of installed generating capacity and an electricity grid capacity of 110MW.

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 can be redeployed 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 37.5MW of power response on mains gas.

The Group operates from 24 mid-size (up to 10MW) power plants across the UK, 16 CMM only, 6 mains gas only, and 2 using both fuel sources. Alkane uses standard modular reciprocating engines to generate the electricity and sells this power through the electricity network. The engine units and other plant are designed to be flexible and transportable allowing additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency.

Alkane has a range of core skills encompassing the entire project development cycle including planning and permitting, sourcing plant and managing the build and commissioning stage. This has enabled Alkane to establish a design, build & operate ("DBO") business for third party clients in the biogas and oil & gas industries.

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 licence areas. This includes any CMM, natural gas, coal bed methane ("CBM") or shale gas.

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