Derek Pain: Whether it's methane or shale, Alkane knows how to put its foot on the gas
Saturday 15 February 2014
The dash for shale gas should be adding a special glow to the power generator Alkane Energy, recruited to the "no pain, no gain" portfolio in August.
The group was surprisingly uncommunicative about its involvement in this still controversial area when it produced upbeat trading comments last month.
Yet it is sitting on a number of intriguing exploration and development prospects for shale gas – some, it appears, dating back to the 1990s. Last year's arrival on the shale scene of Centrica, parent company of British Gas, and the more recent appearance of French oil giant Total have, together with resounding political encouragement, served to generate a high degree of stock market interest.
In the United States, shale is already an outstanding success and is responsible for lowering energy prices dramatically. So far, Europe has displayed only modest interest. But in this country, shale is at last creating high excitement and a number of smallish companies are already on the bandwagon.
Production has yet to get going and there remains a high element of risk. In addition, certain environmental groups have protested rather hysterically against any development, as illustrated by the furious demonstrations in Sussex last year.
Additionally, of course, there remain doubts whether anything approaching the US performance can be repeated in this country, which does not enjoy the wide open and undeveloped spaces that abound across the Atlantic.
Alkane, in my view, is a better bet than other small players. At the moment its shale side merely consists of promising licences, not so far from Total's newly acquired interests. As far as I can gather, Alkane is still considering what to do with its shale potential. It could link with another party – presumably a much bigger operation that could absorb most of the costs involved – or go it alone. There is also the possibility of a rewarding sell-off.
My guess is that it will form an alliance with a substantial operation.
Whatever is decided, the company, unlike many other shale players, already embraces a lucrative business. And its highly successful electricity operation could become even more important because of the perceived shortage in a few years that could cause blackouts.
It is a generator with an intriguing role in the power game. Its major activity is capturing methane from abandoned coal mines and then converting it into electricity. The result is sold to the National Grid.
There are plenty of disused coal mines dotted around. One of the company's more recent additions is the old Maltby colliery in South Yorkshire, acquired last year from a former constituent of the "no pain, no gain" portfolio, Hargreaves Services, the coal to transport group. Its gas production in the six or so months under Alkane's ownership is ahead of expectations. Further, in a £1.5m deal, the group has just added to its power- response facilities. It has acquired a West Yorkshire establishment from SSE (Scottish & Southern Energy) that provides peak response and participation in National Grid's short-term power reserves programme.
Neil O'Brien, Alkane's chief executive, comments that the "industry faces increased risk of an energy gap over the coming years".
In its last reported year ,Alkane produced pre-tax profits of £2.3m. There should be a comfortable increase when it discloses its 2013 figures next month. Already it has said that revenue increased by 15 per cent.
The portfolio alighted on the shares at 40.75p; they have since topped 50p but probably slipped back a little on the failure to provide any shale update in the trading statement. As I write, the price is around 45p, but the indications are that some have set a target that is near the 90p mark.
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Hard-up Brits are pawning family assets to make ends meet
Simon Read: There may be trouble ahead for cohabiting couples who don’t make a will
Why the City Watchdog is concerned with the credit card industry
Money Insider: Would £150 make you switch banks?
Bargain Hunter: Find the deals that have real value beneath the Black Friday hype
- 1 I'm A Celebrity 2014: Jungle security stepped up after murder and 'suspicious death' near to camp
- 2 Black Friday 2014: Opening times for Asda, John Lewis, PC World, GAME and Argos
- 3 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 4 Girl, 7, gets Tesco to remove 'stupid' sign suggesting superheroes are 'for boys'
- 5 Jeremy Hunt: 'I took my children to A&E because I didn't want to wait for GP appointment'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Rochester by-election: Labour MP Emily Thornberry resigns after posting white van and England flags tweet
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
iJobs Money & Business
£16000 - £18000 per annum: Langley James : IT Support; Helpdesk, VMware; Manch...
£35000 - £450000 per annum + £3k car, £70k ote: h2 Recruit Ltd: Do you want to...
£Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...
£Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...
Day In a Page
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens