Update on transfer of onshore shale gas business

5 June 2014

Alkane Energy plc

("Alkane" or "the Company")

Update on transfer of onshore shale gas business

Alkane Energy plc (AIM: ALK), the independent gas to power producer, notes the announcement made by Egdon Resources plc ("Egdon") earlier today in which Egdon stated that it is still awaiting consent from DECC to the proposed transfer of Alkane's rights over its shale interests in 10 licence areas.

Accordingly, the transaction that was announced on 13 May 2014 is now likely to complete on or around 12 June 2014 rather than 6 June 2014 as originally announced.

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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 base load 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 base load operations, where power is generated 24/7, are centred 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 through peak running, or in order to balance the electricity grid through participation in the National Grid's short term operating reserve programme ("STOR"). Participants in STOR are paid premium rates when called upon by the Grid to meet temporary supply shortages. Alkane now operates 43MW of power response on mains gas.

The Group operates from 24 mid-size (up to 10MW) power plants across the UK, 15 CMM only, 6 mains gas only, and 3 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 and 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").

The licences which are the subject of the transaction with Egdon include PEDL001, PEDL011, PEDL037, PEDL039, PEDL043, PEDL169 (net 20 per cent), PEDL191, PEDL161-162, PEDL202 and EXL253.

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