Alkane is looking to fill the gap in the UK's power generation to be left by the estimated 25 per cent of nuclear and coal capacity that will be decommissioned over the next decade, a goal brought closer by the soon-to-be completed acquisition of rival Greenpark Energy.
The gas-to-power company currently has 13 generating sites, with a further two expected to be added by mid-year, most of which generate power from methane gas extracted from disused coal mines. The Greenpark deal adds a further nine operating sites and lifts generating capacity from 40 megawatts (MW) to around 70MW. As gas quantities decline from depleted coal mine methane sites, Alkane looks to convert its generators to 'power reserve' use, whereby they remain on standby to boost grid power at peak times.
The group also has an estimated 350bn cubic feet of coal bed methane resources (gas trapped in coal seams that haven't been mined). A deal with Aberdeen Drilling Management will see Aberdeen test and potentially drill the acreage over the next couple of years in return for a 50 per cent stake in the project.
Revenue growth in the year reflects higher output and pricing, and the delivery of Alkane's first biogas project. Broker Daniel Stewart is forecasting 2012 EPS of 2.9p, which incorporates the impact of the two acquisitions.
| ALKANE ENERGY (ALK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 21p | MARKET VALUE: | £20.9m | |
| TOUCH: | 21-22p | 12-MONTH HIGH: | 26p | LOW: 16p |
| DIVIDEND YIELD: | nil | PE RATIO: | 11 | |
| NET ASSET VALUE: | 21p | NET DEBT: | 29% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 4.27 | 0.85 | 0.93 | nil |
| 2008 | 5.19 | 1.95 | 2.17 | nil |
| 2009 | 6.29 | 2.08 | 2.24 | nil |
| 2010 | 6.62 | 1.30 | 1.93 | nil |
| 2011 | 9.50 | 1.67 | 1.92 | nil |
| % change | +44 | +28 | -1 | - |
