Coal bed methane specialist Alkane Energy is further expanding its production capacity with the acquisition of Greenpark Energy for £5.73m. The move which adds vital scale and should enhance earnings, since there's no fundraising with it.
Greenpark owns the equivalent of 8MW of production from coal mine methane as well as 21MW of power response, which is often contracted as standby by the large utilities to cope with demand surges, and a further 16MW of grid capacity. This equates to a 32 per cent increase in Alkane’s coal mine methane capacity and a 163 per cent rise in power response assets. The increased capacity in power response is a solid strategic move as the UK’s power market takes on board more renewable energy, where output can be more erratic.
Buying the assets, which include equipment with a book value of £9m, should contribute to cashflow immediately and complements the longer-term development of Alkane’s own portfolio. In 2011, Greenpark is estimated to have generated revenue of £3.4m and earnings of £1.9m.
Alkane also issued a trading update which detailed a 17 per cent increase in output in 2011 which should produce revenues of £9.5m. Average sales prices were £51 per mega watt hour, up from £44 the previous year and 60 per cent of 2012 production has been contracted at £56. Since then prices have fallen back to around £48/MWh so the overall price achieved in 2012 may be lower. The Greenpark output has not yet been contracted.
