21 Dec 2009 07:00
21 December 2009
Alkane Energy plc
("Alkane" or the "Company")
Trading Update, Appointment of Non-Executive Director
and Collaboration Agreement
Alkane Energy plc (AIM: ALK), the profitable alternative energy company that owns and operates power generation plants using coal mine methane as fuel, today announces an update on trading ahead of the year end for the period to 31 December 2009.
Trading results for the first 11 months of the year have been very positive with revenue increasing by 22% compared to the same period in 2008. This increase reflects the contribution of additional sites at Bilsthorpe and Shirebrook commissioned in H2 2009, as well as an increase in power prices at existing sites. As a result, Alkane is on track to produce an estimated full year electricity output of 95GWh (2008: 91GWh). Overall, the Board expects that its results for the year to 31 December 2009 will be broadly in line with market expectations.
Furthermore, the Group continues to work on a number of new projects with three additional sites, at Florence in Staffordshire, Kings Mill in Nottinghamshire, and Newmarket in West Yorkshire, expected to start production in 2010. In addition, our tolling contract with GDF Suez, announced on 2 November 2009, assigns 7MW of excess capacity to GDF Suez and will generate revenues for Alkane of approximately £0.3 million per annum.
As the Board highlighted at the time of its interim results, electricity pricing remains extremely volatile. The Group's policy of forward selling power output is essential to allow us to plan for a sustained development and continue expansion in our total generating capacity which offsets lower prices and addresses business planning issues around price volatility. Overall, we expect electricity price volatility to continue into 2010, with forward prices currently forecast to be lower than those contracted in 2009. However the market is seeing more favourable forward prices for 2011 and 2012.
Appointment of Non-Executive
Alkane is pleased to announce the appointment of Joseph Darby as a Non-Executive Director of the Company, effective from 1 January 2010.
Mr Darby, 61, has been involved in the energy sector throughout his career. He spent eight years with Shell Petroleum before becoming Chief Executive of Thomson North Sea Ltd. He then performed a number of senior roles with LASMO plc and was Chief Executive Officer from 1993 to 2001.
Mr Darby is currently a Non-Executive Director at Premier Oil plc and Nordaq Energy plc, and is a Director at Mallards Reach (Oakley) Management Company and Sandleigh Limited. He was Non-Executive Chairman of Mowlem plc (2005 - 2006) and Faroe Petroleum plc (2003 - 2007), and has also previously held Non-Executive roles at BNFL plc, Centurion Energy Inc, Sellafield Ltd and Carillion JM Ltd.
John Lander, Chairman of Alkane, welcomed Joe to the Board and said:
"Joe Darby has a very successful track record in the energy sector. We are delighted that he is joining us and look forward to working with him and benefitting from his wide experience both in the energy sector and in non-executive roles."
Save for the disclosures above, there are no further disclosures to be made in accordance with Rule 17 and Schedule 2(g) of the AIM Rules.
Collaboration Agreement with TEG Group PLC
Alkane is also pleased to announce today a collaboration agreement with TEG Group PLC ("TEG"), an AIM listed green technology company, which develops and operates organic compositing and energy plants. As partners, Alkane and TEG will jointly bid for a range of anaerobic digestion facilities where TEG will provide waste contract and management services and Alkane will provide gas to power capabilities.
The intention of the agreement is that both parties will fund their own share of capital investment with profits generated being shared in proportion to funding. Alkane will provide the gas handling, gas engines and grid connections and TEG will be responsible for the construction and operation of the anaerobic digesters and waste handling.
Alkane will be in a position to deploy current engine and gas handling skills to this biogas source, where power pricing will benefit from renewable energy incentives (i.e. Renewable Obligation Certificates: ROCs). The operational footprint is likely to be similar in size to Alkane's existing facilities and also deploy remotely managed, base load running output.
Alkane and TEG have already entered joint bids on the current round of Welsh Assembly tenders in the biogas sector. There are also a number of other sites where planning and permitting is being progressed with the aim of securing funds and moving into the construction phase as soon as practical after the permitting process is complete.
Neil O'Brien, CEO of Alkane, commented on the collaboration agreement with TEG:
"I am delighted with this ground breaking collaboration agreement. This area of the waste to energy sector receives significant support through ROCs and is expected to be one of the high growth renewable sectors over the coming years. This agreement brings together the core skills of Alkane with those of TEG, increasing the available opportunities and reducing the operational and development risk for both parties."
Enquiries
| Alkane Energy plc Neil O'Brien, CEO Steve Goalby, Finance Director www.alkane.co.uk | Tel: 01623 827927 |
| Hudson Sandler Nick Lyon / Kate Hough | Tel: 020 7796 4133 |
| Altium Corporate Finance - Adrian Reed Corporate Broking - Chloe Ponsonby | Tel: 0845 505 4343 Tel: 020 7484 4079 |