The arrival of Wildhorse Energy (LON:WHE) on the Alternative Investment Market this summer marked an opportunity for investors to back a business that believes it could have lucrative answers to some of the difficult energy questions faced by countries in Central Europe. Under the leadership of managing director Matt Swinney, Wildhorse is working on a pipeline of potential Underground Coal Gasification (UCG) projects in Hungary and also holds an interest in the country’s largest uranium deposit at Mecsek Hills.

For the Australia-based company the opportunities in Central Europe are significant because of the complex uncertainties over energy supply in the region. Insufficient domestic resources and the slow pace of developing commercial-level renewable energy has left a number of countries in the uncomfortable position of relying heavily on imports of Russian gas. While its projects are all in Hungary, Wildhorse has already identified future potential to move in to Poland, the Czech Republic and Germany. A recent paper by German think tank Bertelsmann Stiftung summed up the quandary faced by some of these Central European countries as being the flipside of the “resource curse”. As opposed to dealing with the challenges of sudden mineral wealth, countries such as Hungary find themselves with limited options for securing energy supply, it said.

In response, Wildhorse wants to use newer types of technology to produce a gas known as syngas, initially from Hungary’s underground coal resources, and then supply it to commercial buyers such as power stations. While the coal itself is deemed to be uneconomic to mine as a fuel in its own right, Underground Coal Gasification – or pumping in oxygen and steam to trigger a reaction that produces syngas – could be an answer. It is a solution that has already been accepted in countries such as Australia and Canada, whilst in the UK around 16 UCG licences have been issued by the government, mainly for projects near offshore. To do it, Wildhorse has assembled a team of UCG experts to develop its first project at Mecsek Hills and has cash of around £9.1 million to push it forward. The most recent addition is Chris Dinsdale, a former KPMG director in the firm’s Energy and Utilities Advisory Practice, who was involved in the pre-feasibility study at Mecsek Hills and subsequently joined Wildhorse as CFO.

While the UCG projects are the immediate…

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