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What changed in Montauk Renewables, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Montauk Renewables, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+375 added−377 removedSource: 10-K (2025-03-14) vs 10-K (2024-03-14)

Top changes in Montauk Renewables, Inc.'s 2024 10-K

375 paragraphs added · 377 removed · 269 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

73 edited+15 added−10 removed135 unchanged
Biggest changeRenewable Electricity Projects Site Location Capacity(1) Bowerman Power Irvine, CA 23.6 MW Security Cleveland, TX 3.4 MW Tulsa/AEL (3) Sand Springs, OK 3.2 MW Pico(2) Jerome, ID 2.3 MW Total 32.5 MW (1) Assumes inlet methane content of 56% and process efficiency of 91%, (2) Beginning in October 2020, we began reporting the result of operations of Pico within RNG, but Pico continues to generate Renewable Electricity.
Biggest changeRenewable Electricity Projects Site Location Capacity(1) Bowerman Power Irvine, CA 23.6 MW Tulsa/AEL Sand Springs, OK 3.2 MW Pico(1) Jerome, ID 2.3 MW Total 29.1 MW (1) Beginning in October 2020, we began reporting the result of operations of Pico within RNG, but Pico continues to generate electricity. * Assumes inlet methane content of 56% and process efficiency of 91%, - 9 - Table of Contents A critical component of our business is our ability to negotiate and maintain long-term fuel supply agreements at our project sites.
We sell the RNG produced from our projects under a variety of short-term and medium-term agreements to counterparties, with tenures generally varying from three years to five years. Our contracts with counterparties are typically structured to be based on varying natural gas price indices for the RNG produced.
We sell the RNG produced from our projects under a variety of short-term and medium-term agreements to counterparties, with tenures generally varying from three to five years. Our contracts with counterparties are typically structured to be based on varying natural gas price indices for the RNG produced.
Failure to maintain QF status may subject the project to additional regulatory requirements and may require the payment of refunds to customers and other costs or penalties. We are subject to the Clean Air Act which regulates the emissions of pollutants to protect the environmental and public health.
Failure to maintain QF status may subject the project to additional regulatory requirements and may require the payment of refunds to customers and other costs or penalties. We are subject to the Clean Air Act, which regulates the emissions of air pollutants to protect the environmental and public health.
Among other laws, we are subject to Subtitle D of the Resource Conservation and Recovery Act and other federal, state and local laws, which impose conditions on the handling of non-hazardous waste, including the emission of methane in landfills.
Among other laws, we are subject to Subtitle D of the Resource Conservation and Recovery Act and other federal, state and local laws, which impose conditions on the handling of hazardous and non-hazardous waste, including the emission of methane in landfills.
REC values are higher in states which require a percentage of total electricity to come from renewable resources. In states with no renewable energy requirements, RECs can have no value at all. In some markets, we have entered into PPAs under which we sell RECs bundled with the power being sold at a combined price.
REC values are higher in states that require a percentage of total electricity to come from renewable resources. In states with no renewable energy requirements, RECs can have no value at all. In some markets, we have entered into PPAs under which we sell RECs bundled with the power being sold at a combined price.
The Company’s common stock was also secondarily listed on the Johannesburg Stock Exchange under the trading symbol “MKR.” On January 26, 2021, the Company entered into a Loan Agreement and Secured Promissory Note (as amended, the “ Promissory Note”) with MNK. MNK is currently an affiliate of the Company and certain of the Company’s directors are also directors of MNK.
The Company’s common stock was also secondarily listed on the Johannesburg Stock Exchange under the trading symbol “MKR.” On January 26, 2021, the Company entered into a Loan Agreement and Secured Promissory Note (as amended, the “Promissory Note”) with MNK. MNK is currently an affiliate of the Company and certain of the Company’s directors are also directors of MNK.
Additionally, landfill gas (LFG) and gas from livestock digesters can be processed into pipeline-quality RNG by removing the majority of the non-methane components including carbon dioxide, water, sulfur, nitrogen, and other trace compounds. RNG, like traditional natural gas, is traded nationally.
Additionally, landfill gas and gas from livestock digesters can be processed into pipeline-quality RNG by removing the majority of the non-methane components including carbon dioxide, water, sulfur, nitrogen, and other trace compounds. RNG, like traditional natural gas, is traded nationally.
The Turkey location was approved to participate in the Piedmont Natural Gas Renewable Gas Pilot Program which is a step towards obtaining the New Renewable Energy Facility (“NREF”) designation under the North Carolina Utilities Commission.
The Turkey location was approved to participate in the Piedmont Natural Gas Renewable Gas Pilot Program which is a step towards obtaining the New Renewable Energy Facility (“NREF”) designation under the North Carolina Utilities Commission ("NCUC").
Lease termination typically requires the restoration of the leased area to its original condition. We have successfully ended leases on six of our former facilities. - 7 - Table of Contents Our RNG projects currently utilize three of the four proven commercial technologies available to process raw biogas into RNG, including: pressure swing absorption (“PSA”), Membrane Filtration and solvent scrubbing.
Lease termination typically requires the restoration of the leased area to its original condition. We have successfully ended leases on six of our former facilities. - 8 - Table of Contents Our RNG projects currently utilize three of the four proven commercial technologies available to process raw biogas into RNG, including: pressure swing absorption (“PSA”), Membrane Filtration and solvent scrubbing.
Because we are capturing waste methane and making use of a renewable source of energy, the RNG and Renewable Electricity we produce also generates valuable Environmental Attributes which we can monetize under federal and state renewable initiatives. RNG The RNG we process is pipeline-quality and can be used for transportation fuel when compressed (CNG) or liquefied (LNG).
Because we are capturing waste methane and making use of a renewable source of energy, the RNG and Renewable Electricity we produce also generates valuable Environmental Attributes which we can monetize under federal and state renewable initiatives. RNG The RNG we process is pipeline-quality and can be used for transportation fuel when compressed or liquefied.
For information regarding revenues and other information regarding our results of operations for each of our last two financial years, please refer to our financial statements included in this report and within “Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report. - 12 - Table of Contents Corporate Information Montauk Renewables, Inc. is incorporated in the State of Delaware.
For information regarding revenues and other information regarding our results of operations for each of our last two financial years, please refer to our financial statements included in this report and within “Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report. - 13 - Table of Contents Corporate Information Montauk Renewables, Inc. is incorporated in the State of Delaware.
We are required to document the QF status of each of our facilities in applications or - 10 - Table of Contents self-certifications filed with FERC, which typically require disclosure of upstream facility ownership, fuel and size characteristics, power sales, interconnection matters, and related technical disclosures.
We are required to document the QF status of each of our facilities in applications or - 11 - Table of Contents self-certifications filed with FERC, which typically require disclosure of upstream facility ownership, fuel and size characteristics, power sales, interconnection matters, and related technical disclosures.
These liabilities or compliance costs did not have a material effect on our capital expenditures or competitive position for fiscal 2023, nor do we expect them to have a material effect in the future. We believe we are in material compliance with all environmental regulations applicable to our operations. Inflation Reduction Act .
These liabilities or compliance costs did not have a material effect on our capital expenditures or competitive position for fiscal 2024, nor do we expect them to have a material effect in the future. We believe we are in material compliance with all environmental regulations applicable to our operations. Inflation Reduction Act .
Prices vary across the country based on weather, load patterns and local power and transmission restrictions. The Renewable Electricity produced at our biogas-to-electricity projects is sold under long-term contracts to creditworthy counterparties, typically under a fixed price with escalators.
Prices vary across the country based on weather, load patterns and local or regional power and transmission restrictions. The Renewable Electricity produced at our biogas-to-electricity projects is sold under long-term contracts to creditworthy counterparties, typically under a fixed price with escalators.
The current principal balance of the Promissory Note is $10,040 and the maturity date is December 31, 2033. The Company holds a security interest in 976,623 shares of common stock of the Company held by MNK. MNK is required to use the proceeds of any sale of the shares to repay the Promissory Note.
The current principal balance of the Promissory Note is $10,690 and the maturity date is December 31, 2033. The Company holds a security interest in 976,623 shares of common stock of the Company held by MNK. MNK is required to use the proceeds of any sale of the shares to repay the Promissory Note.
Products Sold The revenues Montauk receives from selling renewable energy consist of two main components. The first component is revenues from the commodity value of the natural gas or electricity generated, which we sell through a variety of term-length - 1 - Table of Contents agreements.
Products Sold The revenues Montauk receives from selling renewable energy consist of two main components. The first component consists of revenues from the commodity value of the natural gas or electricity generated, which we sell through a variety of term-length - 1 - Table of Contents agreements.
The amendment increased the amount of feedstock supplied to the facility for processing over a four-year period. As part of our overall capacity expansion at the Pico facility, in 2021 and 2022, we undertook significant efforts to improve the performance of the existing digestion process at our Pico facility.
The amendment increased the amount of feedstock supplied to the facility for processing over a four-year period. As part of our overall capacity expansion at the Pico facility, in 2021 and 2024, we undertook significant efforts to improve the performance of the existing digestion process at our Pico facility.
He is a certified public accountant and has over 25 years of business and financial management experience. - 13 - Table of Contents Kevin A. Van Asdalan . Mr. Van Asdalan has served as our Chief Financial Officer and Treasurer since January 2021. Prior to the Reorganization Transactions, Mr.
He is a certified public accountant and has over 25 years of business and financial management experience. - 14 - Table of Contents Kevin A. Van Asdalan . Mr. Van Asdalan has served as our Chief Financial Officer and Treasurer since January 2021. Prior to the Reorganization Transactions, Mr.
In 2023, we converted 100% of the monetization of our Renewable Electricity production and Environmental Attributes under fixed-price agreements. For our electricity sales, all of our customers with whom we have off-take agreements are investment-grade entities with low credit risk.
In 2024, we converted 100% of the monetization of our Renewable Electricity production and Environmental Attributes under fixed-price agreements. For our electricity sales, all of our customers with whom we have off-take agreements are investment-grade entities with low credit risk.
We expect that as we continue to scale up our business, our increased size, capabilities and access to capital will provide us with increased strategic acquisition opportunities. Valued-Added Service Offerings Over our three decades of experience, we have developed the full range of RNG project related capabilities from engineering, construction, management and operations, through EHS oversight and Environmental Attributes management.
We expect that as we continue to scale up our business, our increased size, capabilities and access to capital will provide us with increased strategic acquisition opportunities. - 6 - Table of Contents Valued-Added Service Offerings Over our three decades of experience, we have developed the full range of RNG project related capabilities from engineering, construction, management and operations, through EHS oversight and Environmental Attributes management.
During 2021, we entered into an agreement to sell a portion of our production as a renewable component of refinery fuel exports into the European Union’s Renewable Energy Directive from certain RNG production facilities that have achieved International Sustainability & Carbon Certification registration. This diversification strategy accounted for approximately 1.4% of the reduction in generation of D3 RINs in 2023.
During 2021, we entered into an agreement to sell a portion of our production as a renewable component of refinery fuel exports into the European Union’s Renewable Energy Directive from certain RNG production facilities that have achieved International Sustainability & Carbon Certification registration. This diversification strategy accounted for approximately 1.1% of the reduction in generation of D3 RINs in 2024.
Our Shade site is closed to accepting new waste, but is currently expected to continue to generate a commercial level of RNG for an additional ten years. Our operating RNG projects have an average expected remaining useful life of approximately 17 years.
Our Shade site is closed to accepting new waste, but is currently expected to continue to generate a commercial level of RNG for an additional ten years. Our operating RNG projects have an average expected remaining useful life of approximately 18 years.
Although RNG has the same chemical composition as natural gas from fossil sources, it has unique Environmental Attributes assigned to it through government incentive programs due to its origin from low-carbon, renewable sources, which we also monetize. RNG is priced in-line with the wholesale natural gas market, based on Henry Hub pricing, with regional variation according to demand.
Although RNG has the same chemical composition as natural gas from fossil sources, government incentive programs assign unique Environmental Attributes to it due to its origin from low-carbon, renewable sources, which we also monetize. RNG is priced in-line with the wholesale natural gas market, based on Henry Hub pricing, with regional variation according to demand.
As our biogas processing technology continues to improve and the required energy intensity of the RNG and Renewable Electricity production process is reduced, we expect that we will be able to enter new markets for our products. - 5 - Table of Contents Optimize Existing Assets and Project Portfolio and Opportunistically Develop New Projects Expanding Operations at Existing Project Sites .
As our biogas processing technology continues to improve and the required energy intensity of the RNG and Renewable Electricity production process is reduced, we expect that we will be able to enter new markets for our products. Optimize Existing Assets and Project Portfolio and Opportunistically Develop New Projects Expanding Operations at Existing Project Sites .
Similar to RINs, LCFS credits can be sold separately from the RNG fuel sold, allowing us to monetize LCFS credits for fuel produced and purchased outside of states that have LCFS programs. - 3 - Table of Contents RECs The primary Environmental Attributes derived from the production of electricity from renewable resources are RECs, which translate into additional revenues for units of Renewable Electricity produced.
Similar to RINs, LCFS credits can be sold separately from the RNG fuel sold, allowing us to monetize LCFS credits for fuel produced and purchased outside of states that have LCFS programs. RECs The primary Environmental Attributes derived from the production of electricity from renewable resources are RECs, which translate into additional revenues for units of Renewable Electricity produced.
The CA LCFS program requires producers of petroleum-based fuels to reduce the CI of their products, beginning with a quarter of a percent in 2011, a 10% total reduction in 2020, and a 20% total reduction in 2030.
The CA LCFS program requires producers of petroleum-based fuels to reduce the CI of their products, beginning with a quarter of a percent in 2011, a 10% total reduction in 2020, and a 30% total reduction in 2030.
The collection of the fuel supply is potentially easier at dairy farms than at landfills due to higher quality, more uniform feedstock, and potentially less volatility in inlet gas and biogas collection in a more controlled environment. During the second quarter of 2021, we amended our Pico feedstock agreement (“Pico Feedstock Amendment”).
The collection of the fuel supply is potentially easier at dairy farms than at landfills due to higher quality, more uniform feedstock, and potentially less volatility in inlet - 4 - Table of Contents gas and biogas collection in a more controlled environment. During the second quarter of 2021, we amended our Pico feedstock agreement (“Pico Feedstock Amendment”).
On July 12, 2023, the EPA issued final rules in the Federal Register which indicated that it will not be utilizing its cellulosic waiver authority to reduce cellulosic biofuel volume for 2023-2025, thus CWCs will not be available unless actual production is lower than the RVO. The EPA has indicated it will not utilize the CWC.
On July 12, 2023, the EPA issued final rules in the Federal Register which indicated that it will not be utilizing its cellulosic waiver authority to reduce cellulosic biofuel volume for 2023-2025, thus CWCs will not be available unless actual production is lower than the RVO.
No other single customer represented more than 10% of our total 2023 operating revenues. - 9 - Table of Contents Suppliers and Equipment Vendors The major technologies used by our projects for gas processing include solvent scrubbing PSA and membrane separation. For electricity generation, we use reciprocating engines.
No other single customer represented more than 10% of our total 2024 operating revenues. - 10 - Table of Contents Suppliers and Equipment Vendors The major technologies used by our projects for gas processing include solvent scrubbing PSA and membrane separation. For electricity generation, we use reciprocating engines.
We are subject to a qualification process similar to that for RINs, including verification of CI levels and other requirements, currently exists for CA LCFS credits. Our RNG projects are also impacted by state and federal gas quality standards.
We are subject to a qualification process for CA LCFS credits that is similar to that for RINs, including verification of CI levels and other requirements. Our RNG projects are also impacted by state and federal gas quality standards.
We have developed strong working relationships with our landfill site owners, including ten of 14 operating projects and other potential development projects each with Waste Management and Republic Services, the two largest waste companies in the United States, and actively seek to strategically extend our tenure at our project sites.
We have developed strong working relationships with our landfill site owners, including eight of 13 operating projects and other potential development projects each with Waste Management and Republic Services, the two largest waste companies in the United States, and actively seek to strategically extend our tenure at our project sites.
The second component is from the Environmental Attributes derived from the production of RNG and Renewable Electricity. Our current operating projects produce either RNG or Renewable Electricity by processing biogas from landfill sites or agricultural waste from livestock farms.
The second component consists of revenues from the Environmental Attributes derived from the production of RNG and Renewable Electricity. Our current operating projects produce either RNG or Renewable Electricity by processing biogas from landfill sites or agricultural waste from livestock farms.
We anticipate having this system migration completed in 2024. Competition There are several other companies operating in the renewable energy and waste-to-energy space, ranging from other project developers to service or equipment providers. Our primary competition is from other companies or solutions for access to biogas from waste.
We anticipate having this system migration complete in 2025. Competition There are several other companies operating in the renewable energy and waste-to-energy space, ranging from other project developers to service or equipment providers. Our primary competition is from other companies or solutions for access to biogas from waste.
Montauk also participates in industry trade groups, such as the RNG Coalition, to advocate policies and regulatory frameworks that support continued expansion of renewable energy in the United States. - 11 - Table of Contents The operation of our business may expose us to certain liabilities and compliance costs related to environmental matters.
Montauk also participates in industry trade groups, such as the RNG Coalition and American Biogas Council, to advocate policies and regulatory frameworks that support continued expansion of renewable energy in the United States. - 12 - Table of Contents The operation of our business may expose us to certain liabilities and compliance costs related to environmental matters.
Information About Our Executive Officers Below is a list of the names, ages, and positions of our executive officers, and a brief summary of the business experience of our executive officers (ages as of March 1, 2024). Name Age Position Sean F. McClain 49 President and Chief Executive Officer, Director Kevin A.
Information About Our Executive Officers Below is a list of the names, ages, and positions of our executive officers, and a brief summary of the business experience of our executive officers (ages as of March 1, 2025). Name Age Position Sean F. McClain 50 President and Chief Executive Officer, Director Kevin A.
We do not anticipate this proposed regulation will apply to our operations and could, combined with another public policy and private sector initiatives, increase interest in developing more renewable energy projects in the U.S. We will continue to monitor greenhouse gas regulatory initiatives in the U.S. and assess their potential relevance to our business and operations.
The regulation does not apply to our operations and could, combined with another public policy and private sector initiatives, increase interest in developing more renewable energy projects in the U.S. We will continue to monitor greenhouse gas regulatory initiatives in the U.S. and assess their potential relevance to our business and operations.
For the sale of Renewable Electricity and RECs, the City of Anaheim represented approximately 9.5% of our operating revenues in 2023. These sales occurred under a PPA between us and the City of Anaheim, in which electricity and RECs are sold at fixed prices.
For the sale of Renewable Electricity and RECs, the City of Anaheim represented approximately 9.3% of our operating revenues in 2024. These sales occurred under a PPA between us and the City of Anaheim, in which electricity and RECs are sold at fixed prices.
Renewable Natural Gas Site COD(1) Capacity (MMBtu/ day) (2) Source Rumpke Cincinnati, OH 1986 7,271 Landfill Atascocita Humble, TX 2002*/ 2018 5,570 Landfill McCarty Houston, TX 1986 4,415 Landfill Apex Amsterdam, OH 2018 2,673 Landfill Monroeville Monroeville, PA 2004 2,372 Landfill Valley Harrison City, PA 2004 2,372 Landfill Galveston Galveston, TX 2019 1,857 Landfill Renewable Electricity Generation Raeger Johnston, PA 2006 1,857 Landfill Site COD (1) Capacity (MW) Source Shade Cairnbrook, PA 2007 1,857 Landfill (3) Bowerman Irvine, CA 2016 23.6 Landfill Coastal Plains Alvin, TX 2020 1,775 Landfill Security Houston, TX (4) 2003 3.4 Landfill Southern Davidsville, PA 2007 928 Landfill AEL Sand Spring, OK 2013 3.2 Landfill Pico Jerome, ID 2020 903 Livestock (Dairy) Total Capacity (MW) 30.2 Total Capacity (MW) 33,850 = Renewable Natural Gas Project = Renewable Electricity Project (1) “COD” refers to the commercial operation date of each site.
Renewable Natural Gas Site COD(1) Capacity (MMBtu/ day) (2) Source Rumpke Cincinnati, OH 1986 7,271 Landfill Atascocita Humble, TX 2002*/ 2018 5,570 Landfill McCarty Houston, TX 1986 4,415 Landfill Apex Amsterdam, OH 2018 2,673 Landfill Monroeville Monroeville, PA 2004 2,372 Landfill Valley Harrison City, PA 2004 2,372 Landfill Galveston Galveston, TX 2019 1,857 Landfill Renewable Electricity Generation Raeger Johnston, PA 2006 1,857 Landfill Site COD (1) Capacity (MW) Source Shade Cairnbrook, PA 2007 1,857 Landfill (3) Bowerman Irvine, CA 2016 23.6 Landfill Coastal Plains Alvin, TX 2020 1,775 Landfill AEL Sand Spring, OK 2013 3.2 Landfill Pico Jerome, ID 2020 903 Livestock (Dairy) Total Capacity (MW) 26.8 Total Capacity (MMBtu) 32,922 = Renewable Natural Gas Project = Renewable Electricity Project (1) “COD” refers to the commercial operation date of each site.
Frank has over 30 years of regulatory and environmental compliance experience. - 14 - Table of Contents
Frank has over 30 years of regulatory and environmental compliance experience. - 15 - Table of Contents
Approximately 69% of our 2023 RNG production has been monetized under fuel supply agreements with expiration dates more than 15 years from December 31, 2023. Approximately 90% of our 2023 Renewable Electricity production has been monetized under fuel supply agreements with expiration dates more than 15 years from December 31, 2023.
Approximately 69% of our 2024 RNG production has been monetized under fuel supply agreements with expiration dates more than 15 years from December 31, 2024. Approximately 92% of our 2024 Renewable Electricity production has been monetized under fuel supply agreements with expiration dates more than 15 years from December 31, 2024.
Fuel Supply Agreement Summary RNG Projects Fuel Supply Agreement Expiration Dates Current Sites as of December 31, 2023 % of 2023 Total RNG Production Within 0-5 years 3 6.8 % Between 6-15 years 2 24.4 % Greater than 15 years 7 68.8 % Renewable Electricity Projects Fuel Supply Agreement Expiration Dates Current Sites as of December 31, 2023 % of 2023 Total Renewable Electricity Production Within 0-5 years 1 7.8 % Between 6-15 years 0 0 % Greater than 15 years(1) 2 88.9 % (1) Our Pico project continues to generate both RNG and Renewable Electricity and is accounted for above in the RNG Projects summary.
Fuel Supply Agreement Summary RNG Projects Fuel Supply Agreement Expiration Dates Current Sites as of December 31, 2024 % of 2024 Total RNG Production Within 0-5 years 2 7.8 % Between 6-15 years 3 32.3 % Greater than 15 years 6 60.0 % Renewable Electricity Projects Fuel Supply Agreement Expiration Dates Current Sites as of December 31, 2024 % of 2024 Total Renewable Electricity Production Within 0-5 years — 3.4 % Between 6-15 years — — % Greater than 15 years(1) 2 91.9 % (1) Our Pico project continues to generate both RNG and Renewable Electricity and is accounted for above in the RNG Projects summary.
In 2023, this has allowed us to maintain average production availability of approximately 90% at our RNG projects and 96% at our Renewable Electricity projects. We treat our existing assets as an integrated portfolio rather than a collection of individual projects.
In 2024, this has allowed us to maintain average production availability of approximately 92% at our RNG projects and 93% at our Renewable Electricity projects. We treat our existing assets as an integrated portfolio rather than a collection of individual projects.
While these project developments continue, we continue to engage with regulatory agencies in North Carolina related to the resulting power generation derived from swine waste to confirm its eligibility for Renewable Energy Credits under North Carolina’s Renewable Energy Portfolio Standards in anticipation of commercial production.
While these project developments continue, we continue to engage with regulatory agencies in North Carolina related to the resulting power generation derived from swine waste to confirm its eligibility for RECs under North Carolina’s Clean Energy and Energy Efficiency Portfolio Standards ("CEPS") in anticipation of commercial production.
We continue to design and plan for the development of the facility to be used for commercial production. We do not currently expect commercial production to commence until 2025 based on the current development timeline.
We continue to design and plan for the development of the Turkey, North Carolina facility to be used for commercial production. We do not currently expect commercial production to commence until 2026 based on the current development timeline.
Renewable Electricity Projects We currently own and operate the following three Renewable Electricity projects in California, Oklahoma, and Texas which, in the aggregate, have a total design capacity of approximately 30.2 MW. Our Renewable Electricity projects utilize reciprocating engine generator sets to generate electricity at landfills.
Renewable Electricity Projects We currently own and operate the following two Renewable Electricity projects in California and Oklahoma, which, in the aggregate, have a total design capacity of approximately 29.1 MW. Our Renewable Electricity projects utilize reciprocating engine generator sets to generate electricity at landfills.
In addition to revenues generated from our product sales, we also generate revenues by providing various value-added services to certain of our biogas site partners. In 2023 and 2022, our projects generated approximately 7.7% and 8.1%, respectively, of all D3 RINs in the United States.
In addition to revenues generated from our product sales, we also generate revenues by providing various value-added services to certain of our biogas site partners. In 2024 and 2023, our projects generated approximately 6.2% and 7.7%, respectively, of all CNG and LNG D3 RINs in the United States.
RNG Projects We currently own and operate 12 RNG projects across four states: Ohio (two), Pennsylvania (five), Texas (four) and Idaho (one) which, in the aggregate, have a total design capacity of approximately 33,850 MMBtu/day.
RNG Projects We currently own and operate 11 RNG projects across four states: Ohio (two), Pennsylvania (four), Texas (four) and Idaho (one) which, in the aggregate, have a total design capacity of approximately 32,922 MMBtu/day.
To that end, we actively identify and evaluate opportunities to acquire entities that will further our vertically-integrated services. - 6 - Table of Contents Our Current Operating Portfolio We currently own and operate 15 projects, 12 of which are RNG projects and three of which are Renewable Electricity projects.
To that end, we actively identify and evaluate opportunities to acquire entities that will further our vertically-integrated services. - 7 - Table of Contents Our Current Operating Portfolio We currently own and operate 13 projects, 11 of which are RNG projects and two of which are Renewable Electricity projects.
Van Asdalan 46 Chief Financial Officer and Treasurer James A. Shaw 52 Vice President of Operations Michael Barsch 50 Vice President of Business Development John Ciroli 53 Chief Legal Officer and Secretary Sharon Frank 67 Vice President of Environmental, Health and Safety Sean F. McClain . Mr.
Van Asdalan 47 Chief Financial Officer and Treasurer James A. Shaw 53 Vice President of Operations Michael Barsch 51 Vice President of Business Development John Ciroli 54 Chief Legal Officer and Secretary Sharon Frank 68 Vice President of Environmental, Health and Safety Sean F. McClain . Mr.
As of December 31, 2023, our operating RNG projects have an average expected remaining useful life of approximately 17 years and our operating Renewable Electricity projects have an average expected remaining useful life of approximately 26 years, including renewal periods.
As of December 31, 2024, our operating RNG projects have an average expected remaining useful life of approximately 18 years and our operating Renewable Electricity projects have an average expected remaining useful life of approximately 34 years, including renewal periods.
We temporarily idled RNG production at this facility in order to clean out settled solids in the digester, replace the cover of the digester, and make various other efficiency improvements. The Pico facility resumed operations during the first quarter of 2022.
We temporarily idled RNG production at this facility in order to clean out settled solids in the digester, replace the cover of the digester, and make various other efficiency improvements.
The terms of these contracts range up to 20 years, excluding renewal periods, with a weighted average remaining tenure of 14 years, based on 2023 electricity production.
The terms of these contracts range up to 19 years, excluding renewal periods, with a weighted average remaining tenure of 17 years, based on 2024 electricity production.
We routinely test the RNG produced at our facilities in order to ensure compliance with applicable pipeline gas quality standards. We monitor regulatory trends and developments in the U.S. regarding the regulation of greenhouse gas emissions. We are aware the EPA proposed the regulation of methane emissions, a greenhouse gas, from oil and gas facilities in November 2021.
We routinely test the RNG produced at our facilities in order to ensure compliance with applicable pipeline gas quality standards. We monitor regulatory trends and developments in the U.S. regarding the regulation of greenhouse gas emissions. The EPA published final regulations for methane emissions, a greenhouse gas, from oil and gas facilities in March 2024.
Valero, GE Warren, and HF Sinclair represented approximately 31.6%, 16.8% and 16.8%, respectively, of our operating revenues in 2023 from the sale of Environmental Attributes. We sell RINs to numerous RIN off-take parties and our largest RIN off-taker as a percentage of revenue can vary year to year given the short-term nature of these contracts.
Valero, GE Warren, Exxon and Mercuria represented approximately 17.6%, 15.7%, 13.8% and 11.8%, respectively, of our operating revenues in 2024 from the sale of Environmental Attributes. We sell RINs to numerous RIN off-take parties and our largest RIN off-taker as a percentage of revenue can vary year to year given the short-term nature of these contracts.
RNG Projects Site Location Capacity* Rumpke Cincinnati, OH 7,271 MMBtu/day Atascocita Humble, TX 5,570 MMBtu/day McCarty Houston, TX 4,415 MMBtu/day Apex Amsterdam, OH 2,673 MMBtu/day Monroeville Monroeville, PA 2,372 MMBtu/day Valley Harrison City, PA 2,372 MMBtu/day Galveston Galveston, TX 1,857 MMBtu/day Raeger Mountain Johnstown, PA 1,857 MMBtu/day Shade Cairnbrook, PA 1,857 MMBtu/day Coastal Plains Alvin, TX 1,775 MMBtu/day Southern Davidsville, PA 928 MMBtu/day Pico Jerome, ID 903 MMBtu/day Total 33,850 MMBtu/day * Assumes inlet methane content of 56% for all sites other than Pico, which assumes inlet methane content of 62%, and process efficiency of 91%.
RNG Projects Site Location Capacity* Rumpke Cincinnati, OH 7,271 MMBtu/day Atascocita Humble, TX 5,570 MMBtu/day McCarty Houston, TX 4,415 MMBtu/day Apex (1) Amsterdam, OH 2,673 MMBtu/day Monroeville Monroeville, PA 2,372 MMBtu/day Valley Harrison City, PA 2,372 MMBtu/day Galveston Galveston, TX 1,857 MMBtu/day Raeger Mountain Johnstown, PA 1,857 MMBtu/day Shade Cairnbrook, PA 1,857 MMBtu/day Coastal Plains Alvin, TX 1,775 MMBtu/day Pico Jerome, ID 903 MMBtu/day Total 32,922 MMBtu/day (1) The capacity for Apex will increase to approximately 5,273 when we commission the second facility in the second quarter of 2025. * Assumes inlet methane content of 56% for all sites other than Pico, which assumes inlet methane content of 62%, and process efficiency of 91%.
In 2022, we filed a provisional patent application pertaining to a combustion-based oxygen removal condensate neutralization technology we developed. The provisional patent covers a new low pH neutralization technology designed to mitigate unfavorable pH condensate that is produced when wastewater is removed from the biogas conversion process.
The provisional patent covers a new low pH neutralization technology designed to mitigate unfavorable pH condensate that is produced when wastewater is removed from the biogas conversion process. In 2024, we filed a provisional patent application pertaining to a renewable natural gas processing skid that we developed.
We established our operating portfolio of 12 RNG and three Renewable Electricity projects through self-development, partnerships, and acquisitions that span six states.
We established our currently operating portfolio of eleven RNG and two Renewable Electricity projects and development projects through self-development, partnerships, and acquisitions that span seven states.
Montauk Ag Renewables In the second quarter of 2021, through our wholly owned subsidiary, Montauk Ag Renewables, we completed the 2021 asset purchase related to developing technology to recover residual natural resources from waste streams of modern agriculture and to refine and recycle such waste products through proprietary and other processes to produce high quality renewable natural gas, bio-oil and biochar (the “Montauk Ag Renewables Acquisition”).
Montauk Ag Renewables In 2021, through our wholly owned subsidiary, Montauk Ag Renewables, we completed an asset purchase related to developing technology to recover residual natural resources from waste streams of modern agriculture and to refine and recycle such waste products through proprietary and other processes to produce high quality renewable natural gas to generate renewable electricity, to generate North Carolina swine RECs, and to produce micronutrient organic fertilizer alternatives (the "Montauk Ag Renewables Acquisition”).
We subsequently closed on a transaction to acquire approximately 146 acres and an approximately 500,000 square foot existing structure in Turkey, North Carolina where we plan to consolidate and expand the production processes purchased in the Montauk Ag Renewables Acquisition. We continue to work with our engineer of record through the optimization of improvements to the now patented reactor technology.
We subsequently closed on a transaction to acquire approximately 146 acres and an approximately 500,000 square foot existing structure in Turkey, North Carolina where we plan to consolidate and expand the production processes purchased in the Montauk Ag Renewables Acquisition.
These include competitive salary structures, bonus programs and competitive benefits, as well as paid time off, sick leave, disability coverage, group term life insurance, and a retirement savings program. We also offer our employees tuition reimbursement for job-related education and training opportunities. We have also begun leadership and developmental training for our director and manager level employees.
To succeed in a competitive labor market, we have developed and implemented various recruitment and retention strategies. These include competitive salary structures, bonus programs and competitive benefits, as well as paid time off, sick leave, disability coverage, group term life insurance, and a retirement savings program. We also offer our employees tuition reimbursement for job-related education and training opportunities.
We completed the design of the digestion capacity expansion project in the third quarter of 2022, commenced construction of the digestion expansion, and expect the project to be completed in 2024. We currently expect the dairy to begin delivering the final increase in feedstock volumes during 2025.
We completed the design of the digestion capacity expansion project in 2022, commenced construction of the digestion expansion, and commissioned the digestion expansion project in 2024. We currently expect the dairy to begin delivering the final increase in feedstock volumes during 2025 when we will make the final payment to the dairy as required under the Pico Feedstock Amendment.
Our Turkey, NC location has been accepted into the Piedmont Natural Gas Renewable Gas Pilot Program. We are at the beginning stages of developing the opportunities associated with Montauk Ag Renewables and can give no assurances that our plans related to this acquisition will meet our expectations.
("Piedmont") for the Turkey, NC location, with the agreement structured to coincide with the development timeline at that location, which has been accepted into the Piedmont RNG Pilot Program. We continue to develop the opportunities associated with Montauk Ag Renewables and can give no assurances that our plans related to this acquisition will meet our expectations.
As with LFG and dairy farms, biogas from both swine farms and WRRFs qualify for D3 RINs under the RFS program. We believe our demonstrated versatility to operate processing facilities using multiple fuel supply sources will give us a competitive advantage in these markets relative to other new entrants who have only demonstrated capabilities with one fuel supply source.
We believe our demonstrated versatility to operate processing facilities using multiple fuel supply sources will give us a competitive advantage in these markets relative to other new entrants who have only demonstrated capabilities with one fuel supply source.
As a result, CA LCFS credits represent a revenue stream incremental to the value RNG producers receive for RINs. For livestock digester RNG projects, CA LCFS credits are a substantial revenue driver.
As a result, CA LCFS credits represent a revenue stream incremental to the value RNG producers receive for RINs. For livestock digester RNG projects, CA LCFS credits are a substantial revenue driver. We have four projects that are currently approved and eligible to earn CA LCFS credits, one of which is a livestock digester RNG project.
Our employee population is comprised of a mix of field operations personnel and office-based professionals. As of December 31, 2023, none of our employees were represented by a collective bargaining unit or labor union. We consider our employee relations to be good across our organization.
As of December 31, 2024, none of our employees were represented by a collective bargaining unit or labor union. We consider our employee relations to be good across our organization. Health and Safety Safety, including the health of our employees, is one of our core values and a priority across our operations.
In January 2024, we received notification from the North Carolina Utilities Commission that the Turkey, NC location was approved for an NREF and Certificate of Public Convenience and Necessity. In March 2024, we submitted an amendment to our NREF application for which we expect a decision on the NREF designation during 2024.
In January 2024, we received notification from the NCUC that the Turkey, NC location was approved for an NREF and Certificate of Public Convenience and Necessity. In October 2024, our amended NREF application was approved.
Employee Development and Training The success and growth of our business is significantly correlated with our ability to recruit, train, promote and retain talented individuals at all levels of our organization. To succeed in a competitive labor market, we have developed and implemented various recruitment and retention strategies.
The 2023 TRIR national average was 2.4 for all industries. We continue to focus on practices and measures to lower our TRIR. Employee Development and Training The success and growth of our business is significantly correlated with our ability to recruit, train, promote and retain talented individuals at all levels of our organization.
Intellectual Property We rely on a combination of patent, trademark, copyright and trade secret laws, employee and third-party nondisclosure/confidentiality agreements and license agreements to protect our intellectual property. We acquired certain technology associated with the Montauk Ag Renewables Acquisition for which we received a patent during 2021 with a term of 20 years.
We continue to provide leadership and developmental training for our executive, director and manager level employees. Intellectual Property We rely on a combination of patent, trademark, copyright and trade secret laws, employee and third-party nondisclosure/confidentiality agreements, non-compete, and license agreements to protect our intellectual property.
Like dairy farms, biogas production from swine farms is a nascent biogas industry, with less than 1% of swine farms with biogas processing capabilities. Additionally, roughly 23% of WRRFs have biogas processing facilities, however, most process biogas for electricity production creating additional opportunities for acquisition and conversion to RNG facilities.
Additionally, while a larger percentage of WRRFs have biogas processing facilities, many process biogas for electricity production creating - 5 - Table of Contents additional opportunities for acquisition and conversion to RNG facilities. As with LFG and dairy farms, biogas from both swine farms and WRRFs qualify for D3 RINs under the RFS program.
Our health and safety strategy is designed to proactively identify, mitigate and eliminate conditions that could result in serious injury or fatality. We also routinely train our employees on health and safety practices applicable to their job function and provide them all necessary personal protective equipment to perform their job in a safe manner.
We also routinely train our employees on health and safety practices applicable to their job function and provide them all necessary personal protective equipment to perform their job in a safe manner. Our recordable cases and total recordable incident rate (“TRIR”), excluding COVID-19 related incidents, was 2.89 and 0.00 in 2024 and 2023, respectively.
Health and Safety Safety, including the health of our employees, is one of our core values and a priority across our operations. We are committed to developing a strong health and safety culture that reduces injuries and illness whenever possible.
We are committed to developing a strong health and safety culture that reduces injuries and illness whenever possible. Our health and safety strategy is designed to proactively identify, mitigate and eliminate conditions that could result in serious injury or fatality.
We have seven projects which are currently approved and eligible to earn CA LCFS credits, and we expect the revenue generated by CA LCFS credits to increase as we continue to develop and bring additional livestock digester projects online over the next few years. Several states in the United States also have or are considering adopting this model.
We expect the revenue generated by CA LCFS credits to increase as we continue to develop and bring additional livestock digester projects online over the next few years. On January 3, 2025, CARB submitted to the State of California Office of Administrative Law ("OAL") proposed amendments to the LCFS regulations.
We cannot speculate on exactly how the IRA will be implemented; however, the Act does contain numerous incentives for the production of clean energy which may impact our products. Employees and Human Capital Resources Employee Profile We employed 151 people on December 31, 2023, located in California, Idaho, Ohio, Oklahoma, Pennsylvania, North Carolina and Texas.
We cannot speculate on exactly how the IRA will be implemented; however, the Act does contain numerous incentives for the production of clean energy which may impact our products. President Trump signed Executive Order 14154 on January 20, 2025, which immediately paused the disbursement of funds under the IRA.
Removed
The improvement project impacted the timeline for modeling Pico’s initial CI Score pathway model and subsequent auditing approval by CARB. During the fourth quarter of 2022, we learned through CARB that our dairy project CI Score Pathway would be - 4 - Table of Contents subject to a public comment period.
Added
On December 5, 2024, the EPA proposed rules to partially waive the 2024 cellulosic biofuel volume requirement using the general waiver authority and revise the associated percentage standard under the RFS. Despite this proposed rule, the EPA has indicated it will not utilize the CWC.
Removed
Due to this public comment period, we received approval of our score during the first quarter of 2023. This public comment period followed the completion of the validation of the CI Score, which CARB finalized in the first quarter of 2023.
Added
This rule has not yet been finalized and, under the current administration’s rollback of climate policies, it is not certain when or if it will be finalized in 2025.
Removed
We began releasing gas from storage during the third quarter of 2022 and recognized revenues from a portion of the RINs generated and completed storage release during the third quarter of 2022. We committed RINs and recognized revenues from RINs generated in the fourth quarter of 2022.
Added
The EPA is still expected to release the 2026 RVO in March 2025, according to the Fall Unified Agenda and Regulatory Plan from the White House Office of Management and Budget, published on Friday December 13, 2024.
Removed
We have relocated certain assets from Magnolia, NC to Turkey, NC and have recorded an impairment of approximately $1,393 in 2022 related to assets which will no longer be used in the production process. We continue our capital development improvements and have not yet reached commercial operations at the Turkey location.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, several other factors related to the development and operation of individual renewable energy projects could adversely affect our business, including: • regulatory changes that affect the demand for or supply of Environmental Attributes and the prices thereof, which could have a significant effect on the financial performance of our projects and the number of potential projects with attractive economics; • changes in energy commodity prices, such as natural gas and wholesale electricity prices, which could have a significant effect on our revenues; • changes in pipeline gas quality standards or other regulatory changes that may limit our ability to transport RNG on pipelines for delivery to third parties or increase the costs of processing RNG to allow for such deliveries; • changes in the broader waste collection industry, including changes affecting the waste collection and biogas potential of the landfill industry, which could impede the LFG resource that we currently target for our projects; • substantial construction risks, including the risk of delay, that may arise due to forces outside of our control, including those related to engineering and environmental problems, as a result of inclement weather or labor disruptions; • operating risks and the effect of disruptions on our business, weather conditions, catastrophic events such as fires, explosions, earthquakes, droughts and acts of terrorism, and other force majeure events on us, our customers, suppliers, distributors and subcontractors; • the ability to obtain financing for a project on acceptable terms or at all and the need for substantially more capital than initially budgeted to complete projects and exposure to liabilities as a result of unforeseen environmental, construction, technological or other complications; • - 17 - Table of Contents • entering into markets where we have less experience, such as our projects for biogas recovery at livestock farms; • exposure to liabilities as a result of unforeseen environmental, construction, technological or other complications; • failures or delays in obtaining desired or necessary land rights, including ownership, leases, easements, zoning rights and building permits; • a decrease in the availability, pricing and timeliness of delivery of raw materials and components, necessary for the projects to function; • obtaining and keeping in good standing permits, authorizations and consents from local city, county, state and U.S. federal governments as well as local and U.S. federal governmental organizations; • penalties, including potential termination, under short-term and long-term contracts for failing to deliver RNG in accordance with our contractual obligations; • unknown regulatory changes RNG which may increase the transportation cost for delivering under contracts in place; • the consent and authorization of local utilities or other energy development off-takers to ensure successful interconnection to energy grids to enable power sales; and • difficulties in identifying, obtaining and permitting suitable sites for new projects.
Biggest changeIn addition, several other factors related to the development and operation of individual renewable energy projects could adversely affect our business, including: • regulatory changes, whether as a result of the new presidential administration or otherwise, that affect the demand for or supply of Environmental Attributes and the prices thereof, which could have a significant effect on the financial performance of our projects and the number of potential projects with attractive economics; • changes in energy commodity prices, such as natural gas and wholesale electricity prices, which could have a significant effect on our revenues; • changes in pipeline gas quality standards or other regulatory changes that may limit our ability to transport RNG on pipelines for delivery to third parties or increase the costs of processing RNG to allow for such deliveries; • changes in the broader waste collection industry, including changes affecting the waste collection and biogas potential of the landfill industry, which could impede the LFG resource that we currently target for our projects; • substantial construction risks, including the risk of delay, that may arise due to forces outside of our control, including those related to engineering and environmental problems, as a result of inclement weather or labor disruptions; • operating risks and the effect of disruptions on our business, weather conditions, catastrophic events such as fires, explosions, earthquakes, droughts and acts of terrorism, and other force majeure events on us, our customers, suppliers, distributors and subcontractors; • the ability to obtain financing for a project on acceptable terms or at all and the need for substantially more capital than initially budgeted to complete projects and exposure to liabilities as a result of unforeseen costs or environmental, construction, technological or other complications; • entering into markets where we have less experience, such as our projects for biogas recovery at livestock farms; - 18 - Table of Contents • exposure to liabilities as a result of unforeseen environmental, construction, technological or other complications; • failures or delays in obtaining desired or necessary land rights, including ownership, leases, easements, zoning rights and building permits; • a decrease in the availability and timeliness of delivery of raw materials and components necessary for the projects to function or an increase in the costs of raw materials and components due to, among other reasons, inflation, tariffs, duties, taxes or assessments; • obtaining and keeping in good standing permits, authorizations and consents from local city, county, state and U.S. federal governments as well as local and U.S. federal governmental organizations; • penalties, including potential termination, under short-term and long-term contracts for failing to deliver RNG in accordance with our contractual obligations; • unknown regulatory changes RNG which may increase the transportation cost for delivering under contracts in place; • the consent and authorization of local utilities or other energy development off-takers to ensure successful interconnection to energy grids to enable power sales; and • difficulties in identifying, obtaining and permitting suitable sites for new projects.
We depend, in part, on Environmental Attributes, which are federal, state and local government incentives in the United States, provided in the form of RINs, RECs, LCFS credits, rebates, tax credits and other incentives to end users, distributors, system integrators and manufacturers of renewable energy projects, that promote the use of renewable energy.
We depend on Environmental Attributes, which are federal, state and local government incentives in the United States, provided in the form of RINs, RECs, LCFS credits, rebates, tax credits and other incentives to end users, distributors, system integrators and manufacturers of renewable energy projects, that promote the use of renewable energy.
Although no similar qualification process currently exists for LCFS credits, we expect such a process to be implemented and would expect to seek qualification on a state-by-state basis under such future programs. Changes to the LCFS program require annual verification of the CI score assigned to a project.
Furthermore, although no similar qualification process currently exists for LCFS credits, we expect such a process to be implemented and would expect to seek qualification on a state-by-state basis under such future programs. Changes to the LCFS program require annual verification of the CI score assigned to a project.
We cannot assure you that we will be able to extend existing fuel supply agreements at their historic revenue levels or at all when they expire. - 18 - Table of Contents Our agreements contain complex price adjustments, calculations and other terms based on gas price indices and other metrics, the interpretation of which could result in disputes with counterparties that could affect our results of operations and customer relationships.
We cannot assure you that we will be able to extend existing fuel supply agreements at their historic revenue levels or at all when they expire. - 19 - Table of Contents Our agreements contain complex price adjustments, calculations and other terms based on gas price indices and other metrics, the interpretation of which could result in disputes with counterparties that could affect our results of operations and customer relationships.
The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results. - 21 - Table of Contents Regulatory Risks The reduction or elimination of governmental economic incentives for renewable energy projects or other related policies could adversely affect our business, financial condition and results of operation.
The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results. - 22 - Table of Contents Regulatory Risks The reduction or elimination of governmental economic incentives for renewable energy projects or other related policies could adversely affect our business, financial condition and results of operation.
The ownership interests in the land subject to these easements, leases and rights-of-way may be subject to mortgages securing loans or other liens (such as tax liens) and other easement, lease rights and rights-of-way of third parties - 16 - Table of Contents (such as leases of oil or mineral rights) that were created prior to our projects’ easements, leases and rights-of-way.
The ownership interests in the land subject to these easements, leases and rights-of-way may be subject to mortgages securing loans or other liens (such as tax liens) and other easement, lease rights and rights-of-way of third parties - 17 - Table of Contents (such as leases of oil or mineral rights) that were created prior to our projects’ easements, leases and rights-of-way.
We cannot assure you that we will be able to identify - 19 - Table of Contents attractive opportunities outside of our current area of focus or acquire or develop such projects at a price and on terms that are attractive or that, once acquired or developed, such projects will operate profitably.
We cannot assure you that we will be able to identify attractive opportunities outside of our current area of focus or acquire or develop such projects at a price and on terms that are attractive or that, once acquired or - 20 - Table of Contents developed, such projects will operate profitably.
Govender have entered into a Consortium Agreement whereby they agree to act together when voting our common stock in the election of directors, among other matters. The parties to the Consortium Agreement beneficially owned, in the aggregate, approximately 52.3% of our common stock as of February 28, 2024.
Govender have entered into a Consortium Agreement whereby they agree to act together when voting our common stock in the election of directors, among other matters. The parties to the Consortium Agreement beneficially owned, in the aggregate, approximately 52.3% of our common stock as of February 28, 2025.
We currently operate seven renewable energy projects (six RNG projects and one Renewable Electricity project) on landfills operated by Waste Management and two RNG projects on landfills operated by Republic Services. Our projects located on Waste Management operated landfills represented 37.3% and 38.9% of our revenue in 2023 and 2022, respectively.
We currently operate seven renewable energy projects (six RNG projects and one Renewable Electricity project) on landfills operated by Waste Management and two RNG projects on landfills operated by Republic Services. Our projects located on Waste Management operated landfills represented 38.5%, 37.3% and 38.9% of our revenue in 2024, 2023 and 2022, respectively.
We expect to have quarterly variations in the revenues from the projects in which we generate revenue from the sale of RINs that we are unable to sell through forward contracts. - 20 - Table of Contents Our revenues may be subject to the risk of fluctuations in commodity prices.
We expect to have quarterly variations in the revenues from the projects in which we generate revenue from the sale of RINs that we are unable to sell through forward contracts. - 21 - Table of Contents Our revenues may be subject to the risk of fluctuations in commodity prices.
Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
However, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.
In addition, we may be required to incur significant costs to protect against and remediate damage caused by these disruptions or security breaches in the future that could have a material adverse effect on our business. We rely on the technology, infrastructure, and software applications of certain third parties in order to host or operate some of our business.
In addition, we may be required to incur significant costs to protect against and remediate damage caused by these disruptions or security breaches in the future that could have a material adverse effect on our business. - 27 - Table of Contents We rely on the technology, infrastructure, and software applications of certain third parties in order to host or operate some of our business.
Additional information regarding the senior credit facility and the Amended Credit Agreement can be found in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Our failure to comply with these covenants could result in the declaration of an event of default and cause us to be unable to borrow under the Amended Credit Agreement.
Additional information regarding the senior credit facility and the Amended Credit Agreement can be found - 29 - Table of Contents in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Our failure to comply with these covenants could result in the declaration of an event of default and cause us to be unable to borrow under the Amended Credit Agreement.
If we are unable to grow and - 24 - Table of Contents manage the capacity that we expect from our projects in our anticipated timeframes, it could adversely affect our business, financial condition and results of operations.
If we are unable to grow and - 25 - Table of Contents manage the capacity that we expect from our projects in our anticipated timeframes, it could adversely affect our business, financial condition and results of operations.
See “—Operational Risks—“The concentration in revenues from five of our projects and geographic concentration of our projects expose us to greater risks of production interruptions from severe weather or other interruptions of production or transmission” for additional information. - 25 - Table of Contents Our business is subject to risks arising out of climate change, which could result in increased operating costs.
See “—Operational Risks—“The concentration in revenues from five of our projects and geographic concentration of our projects expose us to greater risks of production interruptions from severe weather or other interruptions of production or transmission” for additional information. Our business is subject to risks arising out of climate change, which could result in increased operating costs.
In the event that we fall out of favor with either of these landfill - 28 - Table of Contents operators due to a dispute, problems with our operations at one of their facilities or otherwise, the landfill operator may seek to terminate the related project and be less inclined to work with us on future projects.
In the event that we fall out of favor with either of these landfill operators due to a dispute, problems with our operations at one of their facilities or otherwise, the landfill operator may seek to terminate the related project and be less inclined to work with us on future projects.
Our projects located on Republic Services operated landfills represented 22.2% and 25.1% of our revenue in 2023 and 2022, respectively.We are dependent upon Waste Management and Republic Services to operate and maintain their landfill facilities and provide a continuous supply of waste for conversion to RNG and Renewable Electricity.
Our projects located on Republic Services operated landfills represented 24.6%, 22.2% and 25.1% of our revenue in 2024, 2023 and 2022, respectively. We are dependent upon Waste Management and Republic Services to operate and maintain their landfill facilities and provide a continuous supply of waste for conversion to RNG and Renewable Electricity.
Our Atascocita, McCarty, Galveston and Coastal Plains projects are located within 20 miles of each other near Houston, Texas and seven of our other RNG projects are located in relatively close proximity to each other in Pennsylvania and Ohio.
Our Atascocita, McCarty, Galveston and Coastal Plains projects are located within 20 miles of each other near Houston, Texas and six of our other RNG projects are located in relatively close proximity to each other in Pennsylvania and Ohio.
In connection with certain acquisitions, we could acquire, or be required to provide indemnification against, environmental liabilities that could expose us to material losses. In addition, claims for damages to persons or property, including natural resources, may result from the EHS impacts of our operations.
In connection with certain acquisitions, we could acquire, or be required to - 23 - Table of Contents provide indemnification against, environmental liabilities that could expose us to material losses. In addition, claims for damages to persons or property, including natural resources, may result from the EHS impacts of our operations.
For example, controlled companies are not required to have: • a board that is composed of a majority of “independent directors,” as defined under the Nasdaq rules; • a compensation committee that is composed entirely of independent directors; and • director nominations that are made, or recommended to the full board of directors, by its independent directors, or by a nominations/governance committee that is composed entirely of independent directors.
For example, controlled companies are not required to have: • a board that is composed of a majority of “independent directors,” as defined under the Nasdaq rules; • a compensation committee that is composed entirely of independent directors; and - 31 - Table of Contents • director nominations that are made, or recommended to the full board of directors, by its independent directors, or by a nominations/governance committee that is composed entirely of independent directors.
Regional events, such as gas transmission interruptions, regional availability of replacement parts and service in the event of equipment failures and severe weather events in either of those geographic regions have previously adversely affected, and if the future could adverse - 15 - Table of Contents affect, our RNG production and transmission.
Regional events, such as gas transmission interruptions, regional availability of replacement parts and service in the event of equipment failures and severe weather events in either of those geographic regions have previously adversely affected, and if the future could adversely - 16 - Table of Contents affect, our RNG production and transmission.
Any failure to adopt, delay in implementing, expiration, repeal or modification of these programs and regulations, or the adoption of any programs or regulations that encourage the use of other energy sources over renewable energy, could adversely affect our business, financial condition and results of operations.
Any failure to adopt, delay in implementing, expiration, repeal or modification of these programs and regulations, or the adoption of any programs or regulations - 24 - Table of Contents that encourage the use of other energy sources over renewable energy, could adversely affect our business, financial condition and results of operations.
As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to - 30 - Table of Contents Section 404 until the date we are no longer an emerging growth company.
As an emerging growth company, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404 until the date we are no longer an emerging growth company.
We may rely on any or all of these exemptions so long as we remain a controlled company. - 31 - Table of Contents The concentration of our capital stock ownership may limit our stockholders’ ability to influence corporate matters and may involve other risks.
We may rely on any or all of these exemptions so long as we remain a controlled company. The concentration of our capital stock ownership may limit our stockholders’ ability to influence corporate matters and may involve other risks.
Operational problems, such as degradation of our project’s equipment due to wear or weather or capacity limitations or outages on the electrical transmission network, could also affect the amount of energy that our projects are able to deliver.
Operational problems, such as degradation of our project’s equipment due to wear or weather or capacity limitations or outages on the electrical transmission network, could also affect - 26 - Table of Contents the amount of energy that our projects are able to deliver.
Other than the patented technology acquired through the Montauk Ag Renewables Acquisition and our internally developed condensate neutralization technology, we do not have any exclusive rights to any of the technologies that we utilize, and our competitors may currently use and may be planning to use identical, similar or superior technologies.
Other than the patented technology acquired through the Montauk Ag Renewables Acquisition, our internally developed condensate neutralization technology and an RNG processing skid we developed, we do not have any exclusive rights to any of the technologies that we utilize, and our competitors may currently use and may be planning to use identical, similar or superior technologies.
Our senior credit facility consists of an $80.0 million principal amount term loan, of which $64.0 remains outstanding as of December 31, 2023, and a $120.0 million revolving credit line, which is undrawn as of December 31, 2023. This facility may not be sufficient to meet our financial needs as our business grows.
Our senior credit facility consists of an $80.0 million principal amount term loan, of which $56.0 remains outstanding as of December 31, 2024, and a $120.0 million revolving credit line, which is undrawn as of December 31, 2024. This facility may not be sufficient to meet our financial needs as our business grows.
Any such opposition may be taken into account by government officials responsible for granting the relevant permits, which could result in the permits being delayed or not being granted or being granted solely on the condition that we carry out certain corrective measures to the proposed project.
Any such opposition may be considered by government officials responsible for granting the relevant permits, which could result in the permits being delayed or not being granted or being granted solely on the condition that we carry out certain corrective measures to the proposed project.
We are also subject to a separate third party’s annual attestation review. The Quality Assurance Plan provides a process for RIN owners to follow, for an affirmative defense to civil liability, if used or transferred Quality Assurance Plan verified RINs were invalidly generated.
We are also subject to a separate third party’s annual attestation review. The QAP provides a process for RIN owners to follow, for an affirmative defense to civil liability, if used or transferred QAP verified RINs were invalidly generated.
In a December 1, 2022 proposed rule, EPA proposed to not utilize its cellulosic waiver authority for the years 2023-2025. However, if actual production is lower than the RVO, the EPA will have discretion to utilize CWC.
In a December 1, 2022 proposed rule, EPA proposed to not utilize its cellulosic waiver authority for the years 2023-2025. However, if actual production is lower than the RVO, the EPA will have discretion to utilize CWC. This rule was finalized in July 2023.
For example, we produced fewer MMBTu and MWh in the third quarter of 2023 compared with the third quarter of 2022 due to dry weather conditions and higher ambient temperatures.
Furthermore, we produced fewer MMBTu and MWh in the third quarter of 2023 compared with the third quarter of 2022 due to dry weather conditions and higher ambient temperatures.
Present and future environmental laws and regulations, and interpretations of those laws and regulations, applicable to our - 22 - Table of Contents operations, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse effect on our results of operations and financial condition.
Present and future federal and state environmental laws and regulations, and interpretations of those laws and regulations, applicable to our operations, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial expenditures that could have a material adverse effect on our results of operations and financial condition.
ITEM 1A. RISK F ACTORS. This Annual Report on Form 10-K contains forward-looking information based on our current expectations.
ITEM 1A. RISK FACTORS. This Annual Report on Form 10-K contains forward-looking information based on our current expectations.
Our business could be negatively affected by security threats, including cybersecurity threats and other disruptions. - 27 - Table of Contents As a renewable energy producer, we face various security threats, including among others, computer viruses, malware, ransomware, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the internet, attachments to emails, persons with access to systems inside our organization, cybersecurity threats to gain unauthorized access to sensitive information or to expose, exfiltrate, alter, delete or render our data or systems unusable, threats to the security of our projects and infrastructure or third-party facilities and infrastructure, such as processing projects and pipelines, natural disasters, threats from terrorist acts and war.
As a renewable energy producer, we face various security threats, including among others, computer viruses, malware, ransomware, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the internet, attachments to emails, persons with access to systems inside our organization, cybersecurity threats to gain unauthorized access to sensitive information or to expose, exfiltrate, alter, delete or render our data or systems unusable, threats to the security of our projects and infrastructure or third-party facilities and infrastructure, such as processing projects and pipelines, natural disasters, threats from terrorist acts and war.
For the years ended December 31, 2023 and 2022, excluding the effect of derivative instruments, approximately 68.4% and 72.4%, respectively, of operating revenues were derived from these locations.
For the years ended December 31, 2024 and 2023, excluding the effect of derivative instruments, approximately 69.1% and 68.4%, respectively, of operating revenues were derived from these locations.
Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at our plants.
Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at our plants under federal or state law.
We are required to register an RNG project with the EPA and relevant state regulatory agencies. Further, we qualify our RINs through a voluntary Quality Assurance Plan, which typically takes from three to five months from first injection of RNG into the commercial pipeline system.
We are required to register an RNG project with the EPA and relevant state regulatory agencies to generate Environmental Attributes. As a participant of the EPA's RFS program, we qualify our RINs through a voluntary Quality Assurance Plan, which typically takes from three to five months from first injection of RNG into the commercial pipeline system.
We also face the challenge of supporting our older systems and implementing necessary upgrades. If we experience a problem with the functioning of an important IT system or a security breach of our IT systems, including during system upgrades or new system implementations, the resulting disruptions could have a material adverse effect on our business.
If we experience a problem with the functioning of an important IT system or a security breach of our IT systems, including during system upgrades or new system implementations, the resulting disruptions could have a material adverse effect on our business.
Renewable Fuel Standards for 2023 through 2025 remain subject to finalization. Any new government regulations applicable to our renewable energy projects or markets for renewable energy may result in significant additional expenses or related development costs and, as a result, could cause a significant reduction in demand for our renewable energy.
Any new government regulations applicable to our renewable energy projects or markets for renewable energy may result in significant additional expenses or related development costs and, as a result, could cause a significant reduction in demand for our renewable energy.
Additionally, we do not carry key personnel insurance for any of our management executives, and the loss of any key employee or our inability to recruit, develop and retain these individuals as needed, could adversely affect our business, financial condition and results of operations. - 32 - Table of Contents Our ability to pay regular dividends on our common stock is subject to the discretion of our Board of Directors.
Additionally, we do - 32 - Table of Contents not carry key personnel insurance for any of our management executives, and the loss of any key employee or our inability to recruit, develop and retain these individuals as needed, could adversely affect our business, financial condition and results of operations.
Our specific focus on the renewable energy sector exposes us to risks related to the supply of and demand for energy commodities and Environmental Attributes, the cost of capital expenditures, government regulation, world and regional events and economic conditions, and the acceptance of alternative power sources.
Our specific focus on the renewable energy sector exposes us to risks related to the supply of, demand for and the ultimate price of energy commodities and Environmental Attributes, inflation, taxes, tariffs, duties or other assessments on necessary equipment, the cost of capital expenditures, government regulation, world and regional events and economic conditions, and the acceptance of alternative power sources.
We have significant customer concentration, with a limited number of customers accounting for a substantial portion of our revenues. In 2023, sales to Valero, GE Warren and HF Sinclair represented approximately 22.0%, 11.7% and 11.7%, respectively of our operating revenue.
We have significant customer concentration, with a limited number of customers accounting for a substantial portion of our revenues. In 2024, sales to Valero, GE Warren, ExxonMobil and Mercuria represented approximately 17.6%, 15.7%, 13.8 and 11.8%, respectively of our operating revenue.
During 2023, RNG production at our McCarty, Rumpke, Atascocita and Apex facilities accounted for approximately 16.2, 18.8%, 21.0% and 9.9% of our RNG revenues, respectively, and 14.5%, 24.7%, 20.2% and 9.9% of the RNG we produced during 2023, respectively.
During 2024, RNG production at our Atascocita, Rumpke, McCarty and Galveston facilities accounted for approximately 20.3%, 18.9%, 16.4% and 11.0% of our RNG revenues, respectively, and 18.7%, 21.4%, 15.0% and 8.7% of the RNG we produced, respectively.
During 2023, Renewable Electricity production at our Bowerman Power LFG, LLC (“Bowerman”) facility accounted for approximately 89.7% of our Renewable Electricity Generation revenues and 80.3% of the Renewable Electricity we produced during 2023.
During 2024, Renewable Electricity production at our Bowerman Power LFG, LLC (“Bowerman”) facility accounted for approximately 92.2% of our Renewable Electricity Generation revenues and 82.6% of the Renewable Electricity we produced during 2024.
Under the Amended Credit Agreement, we are required to maintain: • a fixed charge coverage ratio of at least 1.20 to 1.00; and • a total leverage ratio of not more than 3.25 to 1.00 as of the end of any fiscal quarter from June 30, 2023 through June 29, 2024 and 3.00 to 1.00 after June 30, 2024.
Under the Amended Credit Agreement, we are required to maintain: • a fixed charge coverage ratio of at least 1.20 to 1.00; and • a total leverage ratio of not more than 3.00 to 1.00.
Further, we typically make a large investment in the project prior to receiving the regulatory approval and RIN qualification. By registering each RNG project with the EPA’s voluntary Quality Assurance Plan, we are subject to quarterly third-party audits and semi-annual on-site visits of our projects to validate generated RINs and overall compliance with the RFS program.
Further, we typically make a large investment in the project prior to receiving the regulatory approval and RIN qualification. BRRR now requires that all RNG producers register their projects and use a Quality Assurance Plan (QAP). QAPs required third-party audits and semi-annual on-site visits of projects to validate generated RINs and overall compliance with the RFS program.
RECs are created through state law requirements for utilities to purchase a portion of their energy from renewable energy sources. 76% and 70% of our operating revenues for 2023 and 2022, respectively, were generated from the sale of Environmental Attributes.
There can be no assurance that EPA will meet its proposed timelines for these actions. RECs are created through state law requirements for utilities to purchase a portion of their energy from renewable energy sources. 74% and 76% of our operating revenues for 2024 and 2023, respectively, were generated from the sale of Environmental Attributes.
For example, we recently entered into an agreement with European Energy North America under which we supply biogenic carbon dioxide for the creation of e-methanol.
For example, we have entered into an agreement with European Energy North America under which we supply biogenic carbon dioxide for the creation of e-methanol and have announced a pilot project with Emvolon in which we will recover and convert biogas into green methanol.
If an event of default occurs, we may not be able to cure it within any applicable cure period, or at all. As of December 31, 2023, we were in compliance with all covenants. Variable rate indebtedness under our Amended Credit Agreement may adversely affect our business, financial condition and results of operations.
If an event of default occurs, we may not be able to cure it within any applicable cure period, or at all. As of December 31, 2024, we were in compliance with all covenants.
If we identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may be unable to accurately or timely report our financial condition or results of operations, which may adversely affect our business.
If some investors find our common stock to be less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. - 30 - Table of Contents If we identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may be unable to accurately or timely report our financial condition or results of operations, which may adversely affect our business.
Our projects rely on interconnections with and access to electric distribution and transmission facilities and gas transportation pipelines that are owned and operated by third parties, and as a result, are exposed to risks related to such facilities’ development and operational curtailment risks.
This could cause us to experience interruption in our production and distribution of renewable energy and generation of related Environmental Attributes, difficulty retaining current relationships and attracting new relationships, or harm our brand, reputation or growth. - 28 - Table of Contents Our projects rely on interconnections with and access to electric distribution and transmission facilities and gas transportation pipelines that are owned and operated by third parties, and as a result, are exposed to risks related to such facilities’ development and operational curtailment risks.
Our common stock will have no contractual or other legal right to dividends.
Our ability to pay regular dividends on our common stock is subject to the discretion of our Board of Directors. Our common stock will have no contractual or other legal right to dividends.
We rely upon the capacity, reliability and security of our IT and data security infrastructure and our ability to expand and continually update this infrastructure in response to the changing needs of our business. Our existing IT systems and any new IT systems may not perform as expected.
Cybersecurity and Information Technology Risks A failure of our IT and data security infrastructure could have a material adverse effect on our business and operations. We rely upon the capacity, reliability and security of our IT and data security infrastructure and our ability to expand and continually update this infrastructure in response to the changing needs of our business.
For 2022, sales to ExxonMobil, Valero, and the City of Anaheim represented approximately 32.0%, 17.0%, and 7.6%, respectively of our operating revenues. Five customers made up approximately 70.7% and 69.0% of our accounts receivable as of December 31, 2023 and 2022, respectively.
In 2023, sales to Valero, GE Warren and HF Sinclair represented approximately 22.0%, 11.7% and 11.7%, respectively of our operating revenue. Five customers made up approximately 68.2% and 70.7% of our accounts receivable as of December 31, 2024 and 2023, respectively.
Removed
Since the number of LCFS credits for RNG generated on dairy farms is significantly greater than the number of LCFS credits for RNG generated at landfills, we are substantially more dependent upon the revenue from LCFS credits for the commercial viability of the dairy farm project.
Added
For example, certain of our Houston-based operating sites were impacted by severe weather events during the first nine month of 2024 including multiple day extended outages from Hurricane Beryl in July 2024.
Removed
In January 2021, President Biden issued an executive order directing all federal agencies to review and take action to address any federal regulations, orders, guidance documents, policies, and any similar agency actions promulgated during the prior administration that may be inconsistent with the current administration’s policies and to address climate change.
Added
On December 12, 2024, EPA proposed a partial waiver of 2024 Cellulosic Biofuel Volume Requirements due to the projected shortfall of D3 RINs available to meet the 2024 RVO. This proposal is still pending and, with a new presidential administration, it is unknown when this proposed rule will be finalized (if at all) in 2025.
Removed
The federal agencies review of previous agency actions remain ongoing. In January 2021, President Biden also issued an executive order solely targeting climate change. Pursuant to these executive orders, on February 19, 2021 the United States formally rejoined the Paris Climate Agreement, an international treaty that provides for the cutting of carbon emissions every five years, beginning in 2023.
Added
In addition, under the RFS, EPA was required to finalize RVO volumes for 2026 by November 1, 2024 but did not meet that deadline.
Removed
In August 2022, President Biden signed into law the Inflation Reduction Act, which includes incentives for development and production of renewable energy. These incentives include grants, loan guaranties, development funding, investment tax credits, and production tax credits. At this time, we cannot predict the outcome of any of these executive actions on our operations.
Added
According to the White House Office of Management and Budget’s Fall Unified Agenda and Regulatory Plan, published on December 13, 2024, EPA indicates that it expects in March 2025 to (i) publish a rule finalizing its December 12, 2024 proposed partial waiver of 2024 Cellulosic Biofuel Volume Requirements and (ii) propose RVO volumes for 2026 (which EPA expects to finalize in December 2025).
Removed
In addition, in June 2019, the EPA issued the final Affordable Clean Energy (“ ACE ”) rule and repealed the Clean Power Plan (the “ CPP ”), which had previously established standards to limit carbon dioxide (CO 2 ) emissions from existing fossil-fueled power generation facilities.
Added
In January 2025, President Trump’s Putting America First in International Environmental Agreements executive order withdrew the United States from the United Nations Framework Convention on Climate Change’s (UNFCCC) Paris Agreement, which aims to reduce net greenhouse gas emissions by 61% below 2005 levels by 2030.
Removed
Under the ACE rule, emissions from electric utility generation facilities would be regulated only through the use of various “inside the fence” or onsite efficiency improvements and emission control technologies. In contrast, the CPP allowed facility owners to reduce emissions with “outside the fence” measures, including those associated with renewable energy projects.
Added
This order also withdrew the United States from any similar climate-related agreements made under the UNFCCC. The stated purpose of Trump’s Initial Rescissions of Harmful Executive Orders and Actions executive order is to retract certain practices of President Biden, including those addressing public health and the environment, the climate crisis and climate-related financial risks.
Removed
On January 19, 2021, the United States Court of Appeals for the D.C. Circuit vacated the ACE rule and remanded the rule back to EPA - 23 - Table of Contents for reconsideration of the “best system of emission reduction.” On February 22, 2021, the D.C.
Added
The order rescinds identified initiatives related to environmental justice, clean energy and electric vehicles, and energy and infrastructure.
Removed
Circuit subsequently issued an order allowing EPA to promulgate new standards in lieu of reviving the CPP. In June 2022, however, the U.S. Supreme Court reversed the D.C. Circuit’s decision on the ACE rule and remanded the case back to the D.C. Circuit. The U.S.
Added
These executive orders present risks to federal incentives available to promote renewable energy, as can be seen in the Unleashing American Energy executive order signed by President Trump that explicitly calls for an immediate pause of the disbursement of funds under the IRA and the Infrastructure Investment and Jobs Act, both of which contain renewable energy incentives.
Removed
Supreme Court restricted the EPA’s authority to regulate GHGs from existing power plants under Section 111(d). The U.S.
Added
Since 2015, EPA has been attempting to regulate carbon dioxide (CO 2 ) emissions from existing fossil-fuel fired electric power generation facilities under section 111(d) of the Clean Air Act.
Removed
Supreme Court concluded that Congress did not grant the EPA authority under the CAA to demand generation-shifting to achieve reduction of GHG emissions, but the court did not hold that the EPA is limited in future rulemakings to just the heat-rate improvements that made up the ACE rule. On remand from the Supreme Court, the D.C.
Added
Depending on how these regulations are structured, they could result in favorable treatment for renewable energy, as happened with the 2015 Clean Power Plan, which allowed facility owners to reduce emissions with “outside the fence” measures, including those associated with renewable energy projects.
Removed
Circuit in October 2022 upheld EPA's repeal of the CPP, and it granted the parties' motion to hold the remaining challenges to the ACE rule in abeyance, as EPA indicated it intended to repeal the ACE rule and issue a new proposed regulation for GHG from electric generating units.
Added
EPA’s first two efforts to regulate these emissions from power generation facilities, including the Clean Power Plan and the later Affordable Clean Energy Rule, have been struck down through a combination of changes in administration and judicial review. EPA’s most recent regulation is the 2024 Power Plant GHG Rule, which was published on May 9, 2024.
Removed
To ensure that the ACE rule is not implemented in the interim period, EPA issued a direct final rule in March 2023, delaying the deadlines for states to submit implementation plans for the ACE rule.
Added
The Power Plant GHG Rule rule includes performance-based mechanisms for EGUs burning coal and incentivizes the early retirement of coal-fired plants by having less stringent (or no) emission limits for plants that agree to retire by certain dates. States are required to submit their individual compliance plans by May 11, 2026.
Removed
On May 23, 2023, the EPA published a proposed rule that would vacate the ACE rule, establish emissions guidelines in the form of CO2 emissions limitations for certain existing fossil-fueled power generation facilities and would require states to develop state plans that establish standards of performance for such facilities that are at least as stringent as the EPA’s emissions guidelines.
Added
State plans could include compliance flexibilities such as emission trading. However, the Power Plant GHG Rule has been heavily litigated, and EPA recently filed a motion that was granted to hold the case in abeyance so that new leadership at EPA can review the rule and consider next steps.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese providers supply ongoing services including consulting services, access to a virtual CISO, threat monitoring and detection, threat response and mitigation strategies, updates on emerging trends and developments and policy and procedure guidance. Other service providers offer targeted assistance such as security and forensic expertise on an as needed basis. We also maintain cybersecurity insurance.
Biggest changeA s part of this process, we rely significantly on third-party providers to assist us with our cybersecurity risk management and strategy. These providers supply ongoing services including consulting services, access to a virtual CISO, threat monitoring and detection, threat response and mitigation strategies, updates on emerging trends and developments with policy and procedure guidance.
From time to time, members of our executive management team and our directors of Information Technology and Internal Audit provide updates to the Audit Committee and the Board of Directors regarding cybersecurity incidents and cybersecurity planning. - 33 - Table of Contents
From time to time, - 33 - Table of Contents members of our executive management team and our directors of Information Technology and Internal Audit provide updates to the Audit Committee and the Board of Directors regarding cybersecurity incidents and cybersecurity planning .
We believe that this program will better enable us to identify and manage material risks from cybersecurity threats related to our third-party service providers. As of December 31, 2023, we have not identified any risks from cybersecurity threats (including any previous cybersecurity incidents) that have materially affected us, our business strategy, our results of operations or our financial condition.
We believe that this program will better enable us to identify and manage material risks from cybersecurity threats related to our third-party service providers. As of December 31, 2024, we have not identified any risks from cybersecurity threats (including any previous cybersecurity incidents) that have materially affected us, our business strategy, our results of operations or our financial condition.
Our director of Information Technology is an active ISC 2 accredited member with 14 years of information technology experience, namely in developing solutions focused on private and hybrid cloud computing systems for small scale organizations.
Our director of Information Technology is an active ISC 2 accredited member with 15 years of information technology experience, namely in developing solutions focused on private and hybrid cloud computing systems for small scale organizat ions.
In accordance with our overall enterprise risk management process, our executive management team supervises our director of Information Technology and director of Internal Audit to assess, identify and manage material risks from cybersecurity threats. As part of this process, we rely significantly on third-party providers to assist us with our cybersecurity risk management and strategy.
In accordance with our overall enterprise risk management process, our executive management team supervises our director of Information Technology to assess, identify, report and manage material risks from cybersecurity threats and relies on our director of Internal Audit to assess, identify and report those risks.
Added
Other service providers offer targeted assistance such as security and forensic expertise on an as needed basis. We also maintain cybersecurity insurance.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe currently own and operate 15 projects, 12 of which are RNG projects and three of which are Renewable Electricity projects. See “Item 1. Business—Our Current Operating Portfolio” for further descriptions of our projects, which information is incorporated into this item by reference.
Biggest changeWe currently own and operate 13 projects, 11 of which are RNG projects and two of which are Renewable Electricity projects. See “Item 1. Business—Our Current Operating Portfolio” for further descriptions of our projects, which information is incorporated into this item by reference.
ITEM 2. PROP ERTIES. We own approximately 174 acres in Turkey, NC for which we are using to develop Montauk Ag Renewables. Montauk Ag Renewables is reported in our Renewable Electricity Generation segment. Our principal executive office is located in Pittsburgh, Pennsylvania.
ITEM 2. PROP ERTIES. We own approximately 216 acres in Turkey, NC for which we are using to develop Montauk Ag Renewables. Montauk Ag Renewables is reported in our Renewable Electricity Generation segment. Our principal executive office is located in Pittsburgh, Pennsylvania.
We lease an approximate 24,000 square foot office space at this site for approximately $43,000 per month pursuant to a lease which expires on April 30, 2033. We also lease an 8,400 square foot regional office and warehouse to service our sites in Houston, Texas, pursuant to a lease which expires on December 31, 2026, for approximately $5,000 per month.
We lease an approximate 24,000 square foot office space at this site for approximately $45,000 per month pursuant to a lease which expires on April 30, 2033. We also lease an 8,400 square foot regional office and warehouse to service our sites in Houston, Texas, pursuant to a lease which expires on December 31, 2026, for approximately $8,000 per month.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 34 PART II 35 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 35 ITEM 6. RESERVED 37 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 38 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 54 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 34 PART II 35 ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 35 ITEM 6. RESERVED 37 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 38 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 56 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAny such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, and other factors that our Board of Directors may deem relevant. - 36 - Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
Biggest changeAny such determination will also - 36 - Table of Contents depend upon our business prospects, results of operations, financial condition, cash requirements and availability, and other factors that our Board of Directors may deem relevant.
Our 2023 peer group, which is comprised of companies that we believe have comparable characteristics and are in the same industry or line-of-business, consists of Ameresco, Inc., Aemetis, Inc., Anaergia, Inc., Clean Energy Fuels Corp., Gevo, Inc., and Opal Fuels, Inc.
Our 2024 and 2023 peer group, which is comprised of companies that we believe have comparable characteristics and are in the same industry or line-of-business, consists of Ameresco, Inc., Aemetis, Inc., Anaergia, Inc., Clean Energy Fuels Corp., Gevo, Inc., and Opal Fuels, Inc. Our 2022 peer group consisted of Aemetis Inc., Clean Energy Fuels Corp., and Gevo Inc.
The following performance graph and related information is being furnished and shall not be deemed “soliciting material” or “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that section, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it into reference into such filing. - 35 - Table of Contents 1/22/21 3/21 6/21 9/21 12/21 3/22 6/22 Montauk Renewables, Inc. 100.00 116.49 73.87 108.29 98.84 108.00 96.91 NASDAQ Composite 100.00 102.95 112.92 112.66 122.18 111.25 86.46 2022 Peer Group 100.00 121.76 85.76 78.41 54.99 65.34 34.06 2023 Peer Group 100.00 105.94 94.35 87.29 88.23 89.02 50.82 9/22 12/22 3/23 6/23 9/23 12/23 Montauk Renewables, Inc. 168.18 106.36 75.89 71.75 87.85 85.92 NASDAQ Composite 83.08 82.43 96.48 109.07 104.77 119.22 2022 Peer Group 38.35 34.48 27.97 34.11 25.33 26.02 2023 Peer Group 64.52 55.01 47.23 49.77 42.25 35.22 Dividend Policy The Company did not pay any dividends in the fiscal year ended December 31, 2023 and currently intends to retain future earnings, if any, to finance the operations, growth and development of its business.
The following performance graph and related information is being furnished and shall not be deemed “soliciting material” or “filed” with the SEC for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that section, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent we specifically incorporate it into reference into such filing. - 35 - Table of Contents 1/22/21 3/21 6/21 9/21 12/21 3/22 6/22 9/22 12/22 Montauk Renewables, Inc. 100.00 116.49 73.87 108.29 98.84 108.00 96.91 168.18 106.36 NASDAQ Composite 100.00 102.95 112.92 112.66 122.18 111.25 86.46 83.08 82.43 Peer Group 100.00 105.94 94.35 87.29 88.23 89.02 50.82 64.52 55.01 3/23 6/23 9/23 12/23 3/24 6/24 9/24 12/24 Montauk Renewables, Inc. 75.89 71.75 87.85 85.92 40.12 54.97 50.24 38.38 NASDAQ Composite 96.48 109.07 104.77 119.22 130.32 141.36 145.26 154.48 Peer Group 47.23 49.77 42.25 35.22 28.09 27.16 33.85 27.12 Dividend Policy The Company did not pay any dividends in the fiscal year ended December 31, 2024 and currently intends to retain future earnings, if any, to finance the operations, growth and development of its business.
Prior to that time, there was no established public trading market for the Company’s common stock. Holders of Montauk Common Stock As of March 8, 2024, there were 12 holders of record of 143,623,805 shares of Montauk common stock outstanding as of such date.
Prior to that time, there was no established public trading market for the Company’s common stock. Holders of Montauk Common Stock As of March 7, 2025, there were 12 holders of record of 143,717,391 shares of Montauk common stock outstanding as of such date.
Removed
With Opal Fuels, Inc. having sufficient trading activity to be included in our 2023 peer group, we refined our 2023 peer group to companies in the same industry or line-of-business. Our 2022 peer group consisted of Aemetis Inc., Clean Energy Fuels Corp., and Gevo Inc.
Added
Securities Authorized for Issuance Under Equity Compensation Plans The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. Issuer Repurchases of Equity Securities None. Recent Sales of Unregistered Securities None.
Removed
Issuer Repurchases of Equity Securities None. Use of Proceeds from Sale of Registered Securities On January 21, 2021, our Registration Statement on Form S-1, as amended (File No. 333-251312) (the “ Registration Statement ”), was declared effective by the SEC in connection with the IPO. The underwriter for the IPO was Roth Capital Partners.
Removed
A total of 3,399,515 shares of our common stock were sold pursuant to the Registration Statement, which was comprised of (1) 2,702,500 shares of new common stock issued by the Company and (2) 697,015 shares of the Company’s common stock held by MNK.
Removed
The 3,399,515 shares were sold at an offering price of $8.50 per share and resulting in net proceeds to the Company of approximately $15.0 million, after deducting the underwriting discount of approximately $1.6 million and offering expenses payable by the Company of approximately $6.2 million. The IPO closed on January 26, 2021.
Removed
No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities or (iii) any of our affiliates.
Removed
From the closing of the IPO through December 31, 2023, approximately $15.0 million of the net proceeds from the IPO have been used by Montauk for the following: the Montauk Ag Asset Acquisition in May 2021, the purchase of the real-estate and property in October 2021 related to Montauk Ag, and subsequent development activities related to Montauk Ag Renewables.
Removed
An immaterial amount has been used relating to other possible acquisitions and projects. As of December 31, 2023, all net proceeds were used by the Company. Recent Sales of Unregistered Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeConsolidated EBITDA is defined under the Amended Credit Agreement as net income plus (a) income tax expense, (b) interest expense, (c) depreciation, depletion, and amortization expense, (d) non-cash unrealized derivative expense, (e) any extraordinary, unusual, or non-recurring cash expenses and/or losses not exceeding $500,000 in the aggregate to the extent not included in the determination of operating income on MEH’s consolidated statements of profits and loss, (f) subject to Comerica’s approval, which may be granted or withheld in its reasonable credit judgment, any extraordinary, unusual, or non-recurring cash expenses or losses to the extent not included in the determination of operating income on MEH’s consolidated statements of profits and losses exceeding $500,000 in the aggregate, (g) any extraordinary, unusual, or non-recurring non-cash expenses and/or losses not included in the determination of operating income on MEH’s consolidated statements of profits and loss, and (h) any extraordinary, unusual, or non-recurring non-cash expenses and/or losses included in the determination of operating income on MEH’s consolidated statements of profits and loss, plus, to the extent not included in the calculation of net income, the amount of dividends and distributions paid by the Excluded Entities (as defined in the Amended Credit Agreement) to MEH during such period minus the sum of (j) any non-cash unrealized derivative income during such period, (k) any extraordinary, unusual or non-recurring cash or non-cash income and/or gains not included in the determination of operating income on MEH’s consolidated statements of profits and loss, (l) any extraordinary, unusual, or non-recurring non-cash income and/or gains included in the determination of operating income on MEH’s consolidated statements of profits and loss, all as determined on a consolidated basis for MEH and its subsidiaries (excluding the Excluded Entities except where an Excluded Entity is specifically included in the calculation) in accordance with GAAP.
Biggest changeConsolidated EBITDA is defined under the Amended Credit Agreement as net income plus (a) income tax expense, (b) interest expense, (c) depreciation, depletion, and amortization expense, (d) non-cash unrealized derivative expense and (e) any other extraordinary, unusual, or non-recurring adjustments to certain components of net income, as agreed upon by Comerica in certain circumstances.
We believe that we will have sufficient cash flows from operations and borrowing availability under our credit facility to meet our debt service obligations and anticipated required capital expenditures (including for projects under development) for the next 12 to 24 months. However, we are subject to business and operational risks that could adversely affect our cash flows and liquidity.
We believe that we will have sufficient cash flows from operations and borrowing availability under our credit facility to meet our debt service obligations and anticipated required capital expenditures (including for projects under development) for the next 12 to 24 months. However, we are subject to business, operational, and political risks that could adversely affect our cash flows and liquidity.
Also in the proposed rules is a phase out of avoided methane crediting for dairy and swine manure pathways by 2040 for CNG usage and through 2045 for RNG used to produce hydrogen. The RNG deliverability/book and claim provisions for out-of-region projects will be eliminated for all projects that break ground after 2030.
Also in the rules is a phase out of avoided methane crediting for dairy and swine manure pathways by 2040 for CNG usage and through 2045 for RNG used to produce hydrogen. The RNG deliverability/book and claim provisions for out-of-region projects will be eliminated for all projects that break ground after 2030.
RECs We generate RECs through our production and conversion of landfill methane into Renewable Electricity in various states, including California, Oklahoma, and Texas. These states have various laws requiring utilities to purchase a portion of their energy from renewable resources. Our operating costs are associated with the production of Renewable Electricity.
RECs We generate RECs through our production and conversion of landfill methane into Renewable Electricity in various states, including California and Oklahoma. These states have various laws requiring utilities to purchase a portion of their energy from renewable resources. Our operating costs are associated with the production of Renewable Electricity.
Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments. - 43 - Table of Contents Factors Affecting Operating Expenses Our operating expenses include royalties, transportation, gathering and production fuel expenses, project operating and maintenance expenses, general and administrative expenses, depreciation and amortization, net loss (gain) on sale of assets, impairment loss and transaction costs. • Project Operating and Maintenance Expenses: Operating and maintenance expenses primarily consist of expenses related to the collection and processing of biogas, including biogas collection system operating and maintenance expenses, biogas processing, operating and maintenance expenses, and related labor and overhead expenses.
Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments. - 44 - Table of Contents Factors Affecting Operating Expenses Our operating expenses include royalties, transportation, gathering and production fuel expenses, project operating and maintenance expenses, general and administrative expenses, depreciation and amortization, net loss (gain) on sale of assets, impairment loss and transaction costs. • Operating and Maintenance Expenses: Operating and maintenance expenses primarily consist of expenses related to the collection and processing of biogas, including biogas collection system operating and maintenance expenses, biogas processing, operating and maintenance expenses, and related labor and overhead expenses.
Realized prices for - 44 - Table of Contents Environmental Attributes monetized in a year may not correspond directly with that year’s production as attributes may be carried over and subsequently monetized. We may elect to not commit to transfer all available RINs in a given period which could impact our revenue and operating profit.
Realized prices for - 45 - Table of Contents Environmental Attributes monetized in a year may not correspond directly with that year’s production as attributes may be carried over and subsequently monetized. We may elect to not commit to transfer all available RINs in a given period which could impact our revenue and operating profit.
The Amended Credit Agreement is subject to customary events of default, and contemplates that we would be in default if, for any fiscal quarter (x) the average monthly D3 RIN price (as determined in accordance with the Amended Credit Agreement) is less than $0.80 per RIN and (y) the consolidated EBITDA for such quarter is less than $6.0 million.
The Amended Credit Agreement is subject to customary events of default, and contemplates that we would be in default if, for any fiscal quarter (x) the average monthly D3 RIN price (as determined in accordance with the Amended Credit Agreement) is less than $0.80 per RIN and (y) the consolidated EBITDA for such quarter is less than $6,000.
As to the remaining long lived asset groups, the Company further concluded, based on our annual cashflow assessment conducted for monitoring potential indicators of impairment, that the cashflows to be generated are significantly in excess of their carrying values of our operating sites primarily due to the lengths of the underlying gas rights agreements and the Company did not - 53 - Table of Contents record any other impairments related to its cash flows assessment.
As to the remaining long lived asset groups, the Company further concluded, based on our annual cashflow assessment conducted for monitoring potential indicators of impairment, that the cashflows to be generated are significantly in excess of their carrying values of our operating sites primarily due to the lengths of the underlying gas rights agreements and the Company did not record any other impairments related to its cash flows assessment.
Montauk Ag Asset Acquisition In 2021, through a wholly-owned subsidiary Montauk Ag Renewables, we completed an asset purchase related to developing technology to recover residual natural resources from the waste streams of modern agriculture and to refine and recycle such waste products through proprietary and other processes in order to produce high quality renewable natural gas and recapture nitrogen, phosphorus, and micronutrient organic fertilizer alternatives (the “Montauk Ag Renewables Acquisition”).
Montauk Ag Asset Acquisition In 2021, through a wholly-owned subsidiary Montauk Ag Renewables, we completed an asset purchase related to developing technology and a centralized processing location to recover residual natural resources from the waste streams of modern agriculture and to refine and recycle such waste products through proprietary and other processes in order to produce high quality renewable natural gas and recapture nitrogen, phosphorus, and micronutrient organic fertilizer alternatives (the “Montauk Ag Renewables Acquisition”).
Blue Granite RNG Project In 2023, we announced the planned entrance into South Carolina with the development of a new landfill gas-to-RNG facility. The planned project is expected to contribute approximately 900 MMBtu per day of production capacity upon commissioning.
Blue Granite RNG Project In 2023, we announced the planned entrance into South Carolina with the development of a new landfill gas-to-RNG facility. The planned project was expected to contribute approximately 900 MMBtu per day of production capacity upon commissioning.
Our RNG revenues from Environmental Attributes are recorded net of a portion of Environmental Attributes shared with off-take counterparties as consideration for such counterparties using the RNG as a transportation fuel. We have certain pathway provider sharing arrangements expiring throughout 2024.
Our RNG revenues from Environmental Attributes are recorded net of a portion of Environmental Attributes shared with off-take counterparties as consideration for such counterparties using the RNG as a transportation fuel. We had certain pathway provider sharing arrangements expiring throughout 2024.
Our debt before issuance costs (in thousands) is as follows: December 31, 2023 December 31, 2022 Term loan $ 64,000 72,000 Revolving credit facility — — Debt before debt issuance costs $ 64,000 $ 72,000 Amended Credit Agreement On December 21, 2021, the Company entered into the Fourth Amendment to the Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Amended Credit Agreement”), with Comerica Bank (“Comerica”) and certain other financial institutions.
Our debt before issuance costs (in thousands) is as follows: December 31, 2024 December 31, 2023 Term loan $ 56,000 64,000 Revolving credit facility — — Debt before debt issuance costs $ 56,000 $ 64,000 Amended Credit Agreement On December 21, 2021, the Company entered into the Fourth Amendment to the Second Amended and Restated Revolving Credit and Term Loan Agreement (the “Amended Credit Agreement”), with Comerica Bank (“Comerica”) and certain other financial institutions.
From time to time, we may be parties to legal proceedings arising in the normal course of business which could increase our legal expenses. We expect increased general and administrative expenses associated with our ongoing development of Montauk Ag Renewables in 2024.
From time to time, we may be parties to legal proceedings arising in the normal course of business which could increase our legal expenses. We continue to expect increased general and administrative expenses associated with our ongoing development of Montauk Ag Renewables in 2025.
See Note 14 to our audited consolidated financial statements for additional information. Intangible Assets Separately identifiable intangible assets are recorded at their fair values upon acquisition. We account for intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Finite-lived intangible assets include interconnections, customer contracts, and trade names and trademarks.
See Note 14 to our audited consolidated financial statements for additional information. - 54 - Table of Contents Intangible Assets Separately identifiable intangible assets are recorded at their fair values upon acquisition. We account for intangible assets in accordance with ASC 350, Intangibles—Goodwill and Other. Finite-lived intangible assets include interconnections, customer contracts, and trade names and trademarks.
Under the Amended Credit Agreement, we are required to maintain the following ratios: • a Total Leverage Ratio (as defined in the Amended Credit Agreement) of not more than 3.25 to 1.00 as of the end of any fiscal quarter from June 30, 2023 through June 29, 2024, and 3.00 to 1.00 as of the end of any fiscal quarter from June 30, 2024 and thereafter.; and • as of the end of each fiscal quarter, a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) of not less than 1.2 to 1.0.
Under the Amended Credit Agreement, we are required to maintain the following ratios: • a Total Leverage Ratio (as defined in the Amended Credit Agreement) of not more than 3.00 to 1.00 as of the end of any fiscal quarter from June 30, 2024 and thereafter; and • as of the end of each fiscal quarter, a Fixed Charge Coverage Ratio (as defined in the Amended Credit Agreement) of not less than 1.2 to 1.0.
At two of our projects, we have operating and management agreements by which we earn revenue for managing the wellfield collection systems.
At two of our projects, McCarty and Galveston, we have operating and management agreements by which we earn revenue for managing the wellfield collection systems.
Once construction has been completed on the first phase and the facility has been fully commissioned, the project will provide sufficient capacity to satisfy the Duke REC agreement through the deployment of up to eight operational processing lines at the Turkey Creek facility.
Once the first phase and the facility has been fully commissioned, the project will provide sufficient capacity to satisfy the Duke REC agreement through the deployment of up to eight operational processing lines at the Turkey Creek facility.
Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments. Comparison of Years Ended December 31, 2023 and 2022 The following table summarizes the key operating metrics described above, which metrics we use to measure performance.
Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments. - 46 - Table of Contents Comparison of Years Ended December 31, 2024 and 2023 The following table summarizes the key operating metrics described above, which metrics we use to measure performance.
During 2023, we had $2,505 of off-balance sheet arrangements of outstanding letters of credit. These letters of credit reduce the borrowing capacity of our revolving credit facility under our Amended Credit Agreement. Certain of our contracts require these letters of credit to be issued to provide additional performance assurances. There have been no usage against these outstanding letters of credit.
During 2024, we had $2,185 of off-balance sheet arrangements of outstanding letters of credit. These letters of credit reduce the borrowing capacity of our revolving credit facility under our Amended Credit Agreement. Certain of our contracts require these letters of credit to be issued to provide additional performance assurances. There have been no usage against these outstanding letters of credit.
The Amended Credit Agreement, which is secured by substantially all of our assets and assets of certain of our subsidiaries, provides for a five-year $80,000 term loan and a five-year $120,000 revolving credit facility. As of December 31, 2023, $64,000 was outstanding under the term loan and we had no outstanding borrowings under the revolving credit facility.
The Amended Credit Agreement, which is secured by substantially all of our assets and assets of certain of our subsidiaries, provides for a five-year $80,000 term loan and a five-year $120,000 revolving credit facility. As of December 31, 2024, $56,000 was outstanding under the term loan and we had no outstanding borrowings under the revolving credit facility.
For discussion and analysis of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on March 16, 2023.
For discussion and analysis of our results for the year ended December 31, 2023 compared to the year ended December 31, 2022 , refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on March 14, 2024.
As of December 31, 2023, we were in compliance with all financial covenants related to the Amended Credit Agreement.
As of December 31, 2024, we were in compliance with all financial covenants related to the Amended Credit Agreement.
The term loan amortizes in quarterly installments of $2,000 through December 2024, quarterly installments of $3,000 from 2025 through the maturity, with a final payment of $32,000, on December 21, 2026. Interest rates were 6.11% and 4.12% at December 31, 2023 and 2022, respectively.
The term loan amortizes in quarterly installments of $2,000 through December 2024, quarterly installments of $3,000 from 2025 through maturity, with a final payment of $32,000, on December 21, 2026. Interest rates were 6.01% and 6.11% at December 31, 2024 and 2023, respectively.
This section generally discusses our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This section generally discusses our results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
We continue to design and plan for the development of the Turkey, NC facility to be used for - 39 - Table of Contents commercial production. We expect the Magnolia, NC location to be used for various feedstock processing needs. Based on our current development timeline expectations, we expect to commence significant revenue generating activities in 2025.
We continue to design and plan for the development of the Turkey, NC facility to be used for commercial production. We expect the Magnolia, NC location to be used for various feedstock processing needs. Based on our current development timeline expectations, we expect to commence significant revenue generating activities in 2026.
During 2022, we did not have off-balance sheet arrangements other than outstanding letters of credit of approximately $3,905. We have contractual obligations involving operating leases. See Note 19 to our audited consolidated financial statements for further information related to the lease obligations. We have other contractual obligations associated with our fuel supply agreements.
During 2023, we did not have off-balance sheet arrangements other than outstanding letters of credit of approximately $2,505. We have contractual obligations involving operating leases. See Note 19 to our audited consolidated financial statements for further information related to the lease obligations. We have other contractual obligations associated with our fuel supply agreements.
At full first phase capacity, we anticipate the ability to process feedstock from over 120 thousand hog spaces per day, which equates to over 200 tons of daily waste collection.
At full first phase capacity, we anticipate the ability to process feedstock from over 200 hog spaces per day, which equates to over two hundred tons of daily waste collection.
Liquidity and Capital Resources Sources of Liquidity At December 31, 2023 and 2022, our cash and cash equivalents, net of restricted cash, was $73,811 and $105,177, respectively. We intend to fund development projects using cash flows from operations and borrowings under our revolving credit facility.
Liquidity and Capital Resources Sources of Liquidity At December 31, 2024 and 2023, our cash and cash equivalents, net of restricted cash, was $45,621 and $73,811, respectively. We intend to fund development projects using cash flows from operations and borrowings under our revolving credit facility.
Separate from our cash flows assessment, we identified discrete events and recorded impairment of We identified discrete events and recorded impairment of $902 and $4,852 for 2023 and 2022, respectively. See Note 3 to our audited consolidated financial statements for further information related to asset impairments.
Separate from our cash flows assessment, we identified discrete events and recorded impairment of We identified discrete events and recorded impairment of $1,586 and $902 for 2024 and 2023, respectively. See Note 3 to our audited consolidated financial statements for further information related to asset impairments.
We are one of the largest U.S. producers of RNG, having participated in the industry for over 30 years. We established our operating portfolio of 12 RNG and three Renewable Electricity projects through self-development, partnerships, and acquisitions that span six states.
We are one of the largest U.S. producers of RNG, having participated in the industry for over 30 years. We established our currently operating portfolio of 11 RNG and two Renewable Electricity and development projects through self-development, partnerships, and acquisitions that span seven states.
All of our Renewable Electricity production is monetized under fixed-price PPAs from our existing operating projects. • Corporate Revenues: Corporate reports realized and unrealized gains or losses under our gas hedge programs.
All of our Renewable Electricity production is monetized under fixed-price PPAs from our existing operating projects. • Corporate Revenues: Corporate reports realized and unrealized gains or losses under our gas hedge programs. We do not have any active gas hedge programs.
At December 31, 2023, we had debt before debt issuance costs of $64,000, compared to debt before debt issuance costs of $72,000 at December 31, 2022.
At December 31, 2024, we had debt before debt issuance costs of $56,000, compared to debt before debt issuance costs of $64,000 at December 31, 2023.
Our Pico facility earnout increased approximately 12.8% during 2023 compared to 2022 based on our current estimate of the present value of the earnout. Royalties, transportation, gathering and production fuel expenses decreased as a percentage of RNG revenues to 21.0% for 2023 from 21.6% in 2022.
Our Pico facility earnout decreased approximately 33.3% during 2024 compared to 2023 based on our current estimate of the present value of the earnout. Royalties, transportation, gathering and production fuel expenses decreased as a percentage of RNG revenues to 18.7% for 2024 from 21.0% in 2023.
For additional information regarding the Amended Credit Agreement, see the sections entitled “Description of Indebtedness" and Note 13 to our audited consolidated financial statements. Capital Expenditures We have historically funded our growth and capital expenditures with our working capital, cash flow from operations and debt financing. We expect our non-development 2024 capital expenditures to range between $14,000 and $17,000.
For additional information regarding the Amended Credit Agreement, see the sections entitled “Description of Indebtedness" and Note 13 to our audited consolidated financial statements. - 51 - Table of Contents Capital Expenditures We have historically funded our growth and capital expenditures with our working capital, cash flow from operations and debt financing.
All revenue is recognized when we satisfy our performance obligation(s) under the contract (either implicit or explicit) by transferring the promised product to the customer either when (or as) the customer obtains control of the product. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer.
All revenue is recognized when we satisfy our performance obligation(s) - 53 - Table of Contents under the contract (either implicit or explicit) by transferring the promised product to the customer either when (or as) the customer obtains control of the product.
Royalty Payments Royalties, transportation, gathering, and production fuel expenses in 2023 were $34,861, a decrease of 9,302 (21.1%) compared to $44,163 in 2022. We make royalty payments to our fuel supply site partners on the commodities we produce and the associated Environmental Attributes.
Royalty Payments Royalties, transportation, gathering, and production fuel expenses in 2024 were $31,502, a decrease of 3,359 (9.6%) compared to $34,861 in 2023. We make royalty payments to our fuel supply site partners on the commodities we produce and the associated Environmental Attributes.
The PPA at this site expires during 2024 at which time we estimated that the revenues from this site would significantly decrease adversely impacting this sites future cash flows from operations. The effective date of the sale is October 1, 2024.
The proceeds received were in excess of the carrying value of the site. The PPA at this site expired during 2024 at which time we estimated that the revenues from this site would significantly decrease adversely impacting this sites future cash flows from operations. The effective date of the sale was October 1, 2024.
Historically, we have evaluated opportunities which we decided not to pursue further due to the prospective project not meeting our internal investment thresholds or a lack of success in a competitive bidding process.
Historically, we have evaluated opportunities which we decided not to pursue further due to the prospective project not meeting our internal investment thresholds or a lack of success in a competitive bidding process. To the extent we seek to pursue a greater number of projects or bidding for projects becomes more competitive, our expenses may increase.
Our 2024 capital plans include preventative maintenance expenditures, wellfield expansion projects, critical spare expenditures, and other specific facility improvements. Additionally, we currently estimate that our existing 2024 development capital expenditures will range between $135,000 and $150,000.
We expect our non-development 2025 capital expenditures to range between $14,000 and $17,000. Our 2025 non-development capital plans include preventative maintenance expenditures, wellfield expansion projects, critical spare expenditures, other specific facility improvements, and information technology improvements. Additionally, we currently estimate that our existing 2025 development capital expenditures will range between $100,000 and $150,000.
Our net cash flows used in investing activities has historically focused on project development and facility maintenance. For 2023, our capital expenditures were $63,091, of which $18,593, $13,655, and $13,092, were related to the ongoing development of the Montauk Ag Renewables, Pico facility digestion capacity increase and second Apex RNG facility, respectively.
For 2023, our capital expenditures were $63,091, of which $18,593, $13,655, and $13,092, were related to the ongoing development of the Montauk Ag Renewables, Pico facility digestion capacity increase and second Apex RNG facility, respectively.
Bowerman RNG Project In 2023, we announced a planned development of a renewable natural gas landfill project in Irvine, CA at the Frank R. Bowerman Landfill. The project is anticipated to process the large and growing volumes of biogas in excess of the existing capacity of the REG facility.
We intend to contract with additional farms to secure feedstock sources for future production processes. Bowerman RNG Project In 2023, we announced a planned development of a renewable natural gas landfill project in Irvine, CA at the Frank R. Bowerman Landfill to process the large and growing volumes of biogas in excess of the existing capacity of the REG facility.
However, the EPA did not set a new date for a revised eRIN program. The cellulosic biofuel volumes in the final rule for 2024 and 2025 are lower than the proposed volume as they do not include cellulosic biofuel from eRINs.
The cellulosic biofuel volumes in the final rule for 2024 and 2025 are lower than the proposed volume as they do not include cellulosic biofuel from eRINs.
While these project developments continue, we continue to engage with regulatory agencies in North Carolina related to the resulting power generation derived from swine waste to confirm its eligibility for Renewable Energy Credits under North Carolina’s Renewable Energy Portfolio Standards in anticipation of commercial production.
Regulatory update Our progress with regulatory agencies in North Carolina related to the resulting power generation derived from swine waste to confirm its eligibility for RECs under North Carolina’s Renewable Energy Portfolio Standards in anticipation of commercial production remains ongoing.
We manage against the risk of these fluctuations through forward sales of RINs, although currently we only sell RINs in the calendar year they are generated. We have not entered into commitments to transfer significant RINs generated from 2024 production.
The sale of RINs, which is subject to market price fluctuations, accounts for a substantial portion of our revenues. We manage against the risk of these fluctuations through forward sales of RINs, although currently we only sell RINs in the calendar year they are generated. We have not entered into commitments to transfer significant RINs generated from 2025 production.
Development opportunities include: up to five LFG RNG sites, waste water treatment RNG, and CNG distribution opportunities. If we ultimately enter into definitive agreements for any of these opportunities, we expect to incur material capital expenditures related to either acquisitions costs or development costs, or both.
If we ultimately enter into definitive agreements for any of these opportunities, we expect to incur material capital expenditures related to either acquisitions costs or development costs, or both.
RNG Production Our RNG production levels are subject to fluctuations based on numerous factors, including: Disruptions to Production: Disruptions to waste placement operations at our active landfill sites, severe weather events, or failure or degradation of our or a landfill operator’s equipment or interconnection or transmission problems could result in a reduction of our RNG production.
We place a primary focus on managing production volumes and operating and maintenance expenses as these factors are more controllable by us. - 43 - Table of Contents RNG Production Our RNG production levels are subject to fluctuations based on numerous factors, including: Disruptions to Production: Disruptions to waste placement operations at our active landfill sites, severe weather events, or failure or degradation of our or a landfill operator’s equipment or interconnection or transmission problems could result in a reduction of our RNG production.
The proposed rules will increase the stringency of CI reduction targets from 20% to 30% in 2030 and create a 2045 target of 90%. This reduction would have the potential impact of reducing the number of net credits in the program. However, the industry may see pricing volatility including potential increase to LCFS credit prices.
In December 2023, CARB released the formal proposal for new LCFS rules. The proposed rules will increase the stringency of CI reduction targets from 20% to 30% in 2030 and create a 2045 target of 90%. This reduction would have the potential impact of reducing the number of net credits in the program.
Utility interconnection, both inbound to and outbound from our centralized Turkey, NC processing facility is dependent on factors outside of our control. Our current construction timeline and costs are subject to delays or costs increases, respectively.
Utility interconnection, both inbound to and outbound from our centralized Turkey, NC processing facility is dependent on factors outside of our control. Regulatory development and offtake negotiations could delay our ability to fully optimize or meet the timing expectations related to revenue producing activities. Our current construction timeline and costs are subject to delays or costs increases, respectively.
The RINs are government incentives that are generated through our renewable operating projects and not a result of physical attributes of our RNG production. The RINs that we generate are able to be separated and sold as credits independently from the energy produced. Therefore, no cost is allocated to the RIN when it is generated.
The RINs that we generate are able to be separated and sold as credits independently from the energy produced. Therefore, no cost is allocated to the RIN when it is generated.
We currently estimate the first phase of the project will annually produce approximately 45 to 50 thousand MWh equivalents through the combination of 190 to 200 thousand MMBtu and 25 to 30 thousand MWh.
We currently estimate the first phase of the project will annually produce approximately 45 to 50 MWh equivalents through the combination of 190 to 200 MMBtu and 25 to 30 MWh. We also estimate that at full processing capabilities, the first phase of the project will additionally produce annually 17 to 20 tons of organic fertilizer alternatives.
Revenue Recognition Our revenues are comprised of renewable energy and the related Environmental Attribute sales provided under a variety of short-term and medium-term agreements with our customers.
Actual results may differ from these estimates, and such estimates may change if the underlying conditions or assumptions change. Revenue Recognition Our revenues are comprised of renewable energy and the related Environmental Attribute sales provided under a variety of short-term and medium-term agreements with our customers.
With target commissioning in 2026, we continue to expect the capital investment to range between $85,000 - $95,000, which is anticipated to have production nameplate capacity of approximately 3,600 MMBtu per day, assuming currently forecasted biogas feedstock volumes that are projected to be available from the host landfill at the time of commissioning.
The project is anticipated to have production nameplate capacity of approximately 3,600 MMBtu per day, assuming currently forecasted biogas feedstock volumes projected to be available from the host landfill at the time of commissioning. We continue to incur capital expenditures for this project.
We intend to utilize these transition periods, which may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act.
We intend to utilize these transition periods, which may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the transition periods afforded under the JOBS Act. - 55 - Table of Contents Recent Accounting Pronouncements For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 to our consolidated financial statements.
The revolving and term loans under the Amended Credit Agreement bear interest at the BSBY Margin or Base Rate Margin based on our Total Leverage Ratio (in each case, as those terms are defined in the Amended Credit Agreement). - 49 - Table of Contents The Amended Credit Agreement contains customary covenants applicable to us and certain of our subsidiaries, including financial covenants.
The revolving and term loans under the Amended Credit Agreement bore interest at the BSBY Margin or Base Rate Margin based on our Total Leverage Ratio (in each case, as those terms are defined in the Amended Credit Agreement) as of September 30, 2024.
Our fuel supply agreements are typically structured as 20-year contracts, providing long-term visibility into the margin impact of future royalty payments. - 47 - Table of Contents Depreciation Depreciation and amortization in 2023 was $21,158, an increase of $458 (2.2%) compared to $20,700 in 2022. The increase is associated with the timing of capital investments placed into service in 2023.
Our fuel supply agreements are typically structured as 20-year contracts, providing long-term visibility into the margin impact of future royalty payments. Depreciation, Depletion and Amortization Depreciation, depletion and amortization in 2024 was $23,515, an increase of $2,357 (11.1%) compared to $21,158 in 2023 .
RNG operating profit for 2023 was $59,286, a decrease of $35,153 (37.2%) compared to $94,439 in 2022. Renewable Electricity Generation operating loss for 2022 was $595, a decrease of $6,424 (91.5%) compared to $7,019 in 2022. Non-GAAP Financial Measures: The following table presents EBITDA and Adjusted EBITDA, non-GAAP financial measures for each of the periods presented below.
RNG operating profit for 2024 was $56,032, a decrease of $3,254 (5.5%) compared to $59,286 in 2023. Renewable Electricity Generation operating loss for 2024 was $2,823, an increase of $2,228 (374.5%) compared to $595 in 2023. Non-GAAP Financial Measures: The following table presents EBITDA and Adjusted EBITDA, non-GAAP financial measures for each of the periods presented below.
Key drivers for the long-term growth of RNG include the following factors: • Regulatory or policy initiatives, including the federal RFS program and state-level low-carbon fuel programs in states such as California and Oregon, that drive demand for RNG and its derivative Environmental Attributes (as further described below). • Efficiency, mobility and capital cost flexibility in RNG operations enable it to compete successfully in multiple markets.
Key Trends Market Trends Affecting the Renewable Fuel Market We believe rising demand for RNG is attributable to a variety of factors, including growing public support for renewable energy, U.S. governmental actions to increase energy independence, environmental concerns increasing demand for natural gas-powered vehicles, job creation, and increasing investment in the renewable energy sector. - 41 - Table of Contents Key drivers for the long-term growth of RNG include the following factors: • Regulatory or policy initiatives, including the federal RFS program and state-level low-carbon fuel programs in states such as California and Oregon, that drive demand for RNG and its derivative Environmental Attributes (as further described below). • Efficiency, mobility and capital cost flexibility in RNG operations enable it to compete successfully in multiple markets.
In connection with the sale, we secured fuel supply agreement amendments to extend the terms of our existing RNG operating facilities, Atascocita and Coastal Plains.
In connection with the sale, we secured fuel supply agreement amendments to extend the terms of our existing RNG operating facilities, Atascocita and Coastal Plains. RNG Facility Sale In December 2024, we entered into an asset purchase agreement to sell an RNG site for a purchase price of $1,000.
We are working with the landfill host but have currently experienced lower volumes of feedstock available to be processed at the McCarty facility. • Our processing of increased Pico feedstock during first half of 2024 may be impacted while we expand the receiving capacity associated with the Pico digestion capacity increase. • Quality of Biogas: We are reliant upon the quality and availability of biogas from our site partners.
We are working with the landfill host but continue to have lower volumes of feedstock available to be processed at the McCarty facility. • Quality of Biogas: We are reliant upon the quality and availability of biogas from our site partners.
Delays in commencement of production or extended commissioning issues at a new project or a conversion project would delay any realization of production from that project. Pricing Our Renewable Natural Gas and Renewable Electricity Generation segments’ revenues are primarily driven by the prices under our off-take agreements and PPAs and the amount of RNG and Renewable Electricity that we produce.
Pricing Our Renewable Natural Gas and Renewable Electricity Generation segments’ revenues are primarily driven by the prices under our off-take agreements and PPAs and the amount of RNG and Renewable Electricity that we produce.
The increase is primarily related to the Fourth Amended and Restated Loan Agreement and Secured Promissory Note amended during 2023. Contractual Obligations and Commitments Off-balance sheet arrangements comprise those arrangements that may potentially impact our liquidity, capital resources and results of operations, even though such arrangements are not recorded as liabilities under GAAP.
Contractual Obligations and Commitments Off-balance sheet arrangements comprise those arrangements that may potentially impact our liquidity, capital resources and results of operations, even though such arrangements are not recorded as liabilities under GAAP. Our off-balance sheet arrangements are limited to the outstanding letters of credit and operating leases described below.
For the year ended December 31, Change 2023 2022 Change % (in thousands, unless otherwise indicated) Revenues Renewable Natural Gas Total Revenues $ 156,455 $ 196,218 $ (39,763 ) (20.3 %) Renewable Electricity Generation Total Revenues $ 18,449 $ 17,170 $ 1,279 7.4 % RNG Metrics CY RNG production volumes (MMBtu) 5,499 5,522 (23 ) (0.4 %) Less: Current period RNG volumes under fixed/floor- price contracts (1,287 ) (1,278 ) (9 ) 0.7 % Plus: Prior period RNG volumes dispensed in current period 368 372 (4 ) (1.1 %) Less: Current period RNG production volumes not dispensed (358 ) (378 ) 20 (5.3 %) Total RNG volumes available for RIN generation (1) 4,222 4,238 (16 ) (0.4 %) RIN Metrics Current RIN generation ( x 11.727) (2) 49,508 49,697 (189 ) (0.4 %) Less: Counterparty share (RINs) (5,203 ) (5,275 ) 72 (1.4 %) Plus: Prior period RINs carried into current period 739 140 599 427.9 % Less: CY RINs carried into next CY (108 ) (739 ) 631 (85.4 %) Total RINs available for sale (3) 44,936 43,823 1,113 2.5 % Less: RINs sold (44,936 ) (43,823 ) (1,113 ) 2.5 % RIN Inventory — — — 0.0 % RNG Inventory (volumes not dispensed for RINs) (4) 358 368 (10 ) (2.7 %) Average Realized RIN price $ 2.71 $ 3.25 $ (0.54 ) (16.6 %) Operating Expenses Renewable Natural Gas Operating Expenses $ 80,762 $ 86,068 $ (5,306 ) (6.2 %) Operating Expenses per MMBtu (actual) $ 14.69 $ 15.59 $ (0.90 ) (5.8 %) REG Operating Expenses $ 13,730 $ 14,910 $ (1,180 ) (7.9 %) $/MWh (actual) $ 70.77 $ 78.47 $ (7.70 ) (9.8 %) Other Metrics Renewable Electricity Generation Volumes Produced (MWh) 194 190 4 2.1 % Average Realized Price $/MWh (actual) $ 95.10 $ 90.37 $ 4.73 5.2 % (1) RINs are generated the month following the month gas is produced and dispensed.
For the year ended December 31, Change 2024 2023 Change % (in thousands, unless otherwise indicated) Revenues Renewable Natural Gas Total Revenues $ 157,983 $ 156,455 $ 1,528 1.0 % Renewable Electricity Generation Total Revenues $ 17,753 $ 18,449 $ (696 ) (3.8 %) RNG Metrics CY RNG production volumes (MMBtu) 5,587 5,499 88 1.6 % Less: Current period RNG volumes under fixed/floor-price contracts (1,546 ) (1,287 ) (259 ) 20.1 % Plus: Prior period RNG volumes dispensed in current period 358 368 (10 ) (2.7 %) Less: Current period RNG production volumes not dispensed (291 ) (358 ) 67 (18.7 %) Total RNG volumes available for RIN generation (1) 4,108 4,222 (114 ) (2.7 %) RIN Metrics Current RIN generation ( x 11.727) (2) 48,177 49,508 (1,331 ) (2.7 %) Less: Counterparty share (RINs) (4,824 ) (5,203 ) 379 (7.3 %) Plus: Prior period RINs carried into current period 108 739 (631 ) (85.4 %) Less: CY RINs carried into next CY (6,822 ) (108 ) (6,714 ) 6216.7 % Total RINs available for sale (3) 36,639 44,936 (8,297 ) (18.5 %) Less: RINs sold (36,639 ) (44,936 ) 8,297 (18.5 %) RIN Inventory — — — 0.0 % RNG Inventory (volumes not dispensed for RINs) (4) 291 358 (67 ) (18.7 %) Average Realized RIN price $ 3.28 $ 2.71 $ 0.57 21.0 % Operating Expenses Renewable Natural Gas Operating Expenses $ 82,916 $ 80,762 $ 2,154 2.7 % Operating Expenses per MMBtu (actual) $ 14.84 $ 14.69 $ 0.15 1.1 % REG Operating Expenses $ 14,734 $ 13,730 $ 1,004 7.3 % $/MWh (actual) $ 79.22 $ 70.77 $ 8.45 11.9 % Other Metrics Renewable Electricity Generation Volumes Produced (MWh) 186 194 (8 ) (4.1 %) Average Realized Price $/MWh (actual) $ 95.45 $ 95.10 $ 0.35 0.4 % (1) RINs are generated the month following the month gas is produced and dispensed.
As we self-market a significant portion of our RINs, a decision not to commit to transfer available RINs during a period will impact our revenue and operating profit. We determined not to transfer a significant amount of D3 RINs generated and available for transfer during the first quarter of 2024.
Recent Developments RINs Generated but Unsold Our profitability is highly dependent on the market price of Environmental Attributes, including the market price for RINs. As we self-market a significant portion of our RINs, a decision not to commit to transfer available RINs during a period will impact our revenue and operating profit.
A contract’s transaction price is allocated to each distinct performance obligation. We allocate the contract’s transaction price to each performance obligation using the product’s observable market standalone selling price for each distinct product in the contract. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring our products.
A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. We allocate the contract’s transaction price to each performance obligation using the product’s observable market standalone selling price for each distinct product in the contract.
For the year ended December 31, 2023 and 2022, income tax expense was $3,418 and $8,048, respectively and has been calculated resulting in an annual effective tax rate (“AETR”) of 18.61%, respectively. Operating Profit (Loss) for the Years Ended December 31, 2023 and 2022 Operating profit in 2023 was $23,640, a decrease of $20,926 (47.0%) compared to $44,566 in 2022.
For the year ended December 31, 2024 and 2023, income tax expense was $2,443 and $3,418, respectively. The 2024 effective tax rate was 20.1% and the 2023 effective tax rate was 18.6%. Operating Profit (Loss) for the Years Ended December 31, 2024 and 2023 Operating profit in 2024 was $16,123, a decrease of $7,517 (31.8%) compared to $23,640 in 2023.
At the project level, this includes all labor and benefit costs, ongoing corrective and proactive maintenance, project level utility charges, rent, health and safety, employee communication, and other general project level expenses.
At the project level, this includes all labor and benefit costs, ongoing corrective and proactive maintenance, project level utility charges, rent, health and safety, employee communication, and other general project level expenses. Unanticipated feedstock processing or gas conditioning equipment failures occurring outside our planned preventative maintenance program can increase project operating and maintenance expenses and reduce production volumes.
Also, our Tulsa facility operating and maintenance expenses increased approximately $532 as a result of scheduled preventative maintenance interval costs and wellfield operational maintenance Royalties, transportation, gathering and production fuel expenses for our Renewable Electricity facilities for 2023 were $1,985, an increase of $161 (8.8%) compared to $1,824 in 2022 and as a percentage of Renewable Electricity Generation segment revenues increased from 10.6% to 10.8%.
Royalties, transportation, gathering and production fuel expenses for our Renewable Electricity facilities for 2024 were $1,973, a decrease of $12 (0.6%) compared to $1,985 in 2023, and as a percentage of Renewable Electricity Generation segment revenues increased from 10.8% for 2023 to 11.1% for 2024.
Historically, we have taken advantage of these opportunities on a gradual basis at our merchant electricity facilities, such as Atascocita and Coastal Plains.
Upon completion of a conversion, we expect that the increase in revenue upon commencement of RNG production will more than offset the loss of revenue from Renewable Electricity production. Historically, we have taken advantage of these opportunities on a gradual basis at our merchant electricity facilities, such as Atascocita and Coastal Plains.
As such, revenue is recorded net of allowances and customer discounts as well as net of transportation and gathering costs incurred. To the extent applicable, sales, value add, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis.
To the extent applicable, sales, value add, and other taxes collected from customers and remitted to governmental authorities are accounted for on a net (excluded from revenues) basis. The nature of our contracts may give rise to several types of variable consideration, such as periodic price increases.
The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and forecasting future profitability by tax jurisdiction. - 52 - Table of Contents We evaluate our deferred tax assets at reporting periods on a jurisdictional basis to determine whether adjustments to the valuation allowance are appropriate considering changes in facts or circumstances.
The evaluation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and forecasting future profitability by tax jurisdiction.
Our operating revenues are priced based on published index prices which can be influenced by factors outside our control, such as market impacts on commodity pricing and regulatory developments. Strategic decisions to not monetize RINs available to be transferred will have an impact on our operating revenues and operating profit.
Our operating revenues are priced based on published index prices which can be influenced by factors outside our control, such as market impacts on commodity pricing and regulatory developments. With our royalty payments structured as a percentage of revenue, royalty payments fluctuate with changes in revenues.
Unanticipated feedstock processing or gas conditioning equipment failures occurring outside our planned preventative maintenance program can increase project operating and maintenance expenses and reduce production volumes. • Royalties, Transportation, Gathering and Production Fuel Expenses: Royalties represent payments made to our facility hosts, typically structured as a percentage of revenue.
The timing of gas conditioning and process equipment preventative maintenance intervals could impact the timing and amount of our operating and maintenance expenses within a given quarter. • Royalties, Transportation, Gathering and Production Fuel Expenses: Royalties represent payments made to our facility hosts, typically structured as a percentage of revenue.
We continue to design and plan for the development and location of the facility as we continue to incur capital expenditures. We continue to review various alternatives related to interconnection opportunities as part of our considerations for offtake options with the understanding those alternatives may differ from initial development project assumptions.
We continue to review various alternatives related to interconnection opportunities as part of our considerations for offtake options with the understanding those alternatives may differ from initial development project assumptions, included but not limited to physical and virtual and fixed interconnections. We are also reviewing alternatives for this site around producing energy other than RNG.
The majority of our 2024 development capital expenditures are related to our ongoing development of Montauk Ag Renewables, the second Apex facility, the Blue Granite RNG project Bowerman RNG project, and our EENA CO2 project.
For 2024, our capital expenditures were $62,323, of which $27,847, $12,643, and $8,759, were related to the ongoing development of the Montauk Ag Renewables, second Apex RNG facility, and Bowerman RNG project, respectively.
(4) Represents gas production on which RINs are not generated. - 45 - Table of Contents Results of Operations Comparison of Years Ended December 31, 2023 and 2022 The following table summarizes our revenues, expenses and net income for the periods set forth below: For the year ended December 31, Change 2023 2022 Change % Total operating revenues $ 174,904 $ 205,559 $ (30,655 ) (14.9 )% Operating expenses: Operating and maintenance expenses 59,762 57,267 2,495 4.4 % General and administrative expenses 34,403 34,139 264 0.8 % Royalties, transportation, gathering and production fuel 34,861 44,163 (9,302 ) (21.1 )% Depreciation, depletion and amortization 21,158 20,700 458 2.2 % Gain on insurance proceeds — (313 ) 313 (100.0 )% Impairment loss 902 4,852 (3,950 ) (81.4 )% Transaction costs 178 185 (7 ) (3.8 )% Total operating expenses 151,264 160,993 (9,729 ) (6.0 )% Operating income $ 23,640 $ 44,566 $ (20,926 ) (47.0 )% Other expenses (income): 5,274 1,324 3,950 298.4 % Income before income taxes: 18,366 43,242 (24,876 ) (57.5 )% Income tax expense 3,418 8,048 (4,630 ) (57.5 )% Net income $ 14,948 $ 35,194 $ (20,246 ) (57.5 )% Revenues for the Years Ended December 31, 2023 and 2022 Total revenues in 2023 were $174,904, a decrease of $30,655 (14.9%) compared to $205,559 in 2022.
(4) Represents gas production on which RINs are not generated. - 47 - Table of Contents Results of Operations Comparison of Years Ended December 31, 2024 and 2023 The following table summarizes our revenues, expenses and net income for the periods set forth below: For the year ended December 31, Change 2024 2023 Change % Total operating revenues $ 175,736 $ 174,904 $ 832 0.5 % Operating expenses: Operating and maintenance expenses 66,663 59,762 6,901 11.5 % General and administrative expenses 36,286 34,403 1,883 5.5 % Royalties, transportation, gathering and production fuel 31,502 34,861 (3,359 ) (9.6 )% Depreciation, depletion and amortization 23,515 21,158 2,357 11.1 % Impairment loss 1,586 902 684 75.8 % Transaction costs 61 178 (117 ) (65.7 )% Total operating expenses 159,613 151,264 8,349 5.5 % Operating income $ 16,123 $ 23,640 $ (7,517 ) (31.8 )% Other expenses: 3,946 5,274 (1,328 ) (25.2 )% Net income before income taxes: 12,177 18,366 (6,189 ) (33.7 )% Income tax expense 2,443 3,418 (975 ) (28.5 )% Net income $ 9,734 $ 14,948 $ (5,214 ) (34.9 )% Revenues for the Years Ended December 31, 2024 and 2023 Total revenues in 2024 were $175,736, an increase of $832 (0.5%) compared to $174,904 in 2023.
We have approximately $13,042 in federal tax credit carryforwards that expire 20 years from the date incurred, which will begin to expire in tax year 2026. We have pre-tax state net operating loss carryforwards of $18,059 which will begin to expire in tax year 2026.
As of December 31, 2024 and 2023, we had approximately $12,274 and $13,042, respectively, federal tax credit carryforwards that expire 20 years from the date incurred, which will begin to expire in tax year 2026. As of December 2024, we continue to carry state NOL balances in Pennsylvania and Florida from 2023.
As the landfill host continues to increase waste intake, we believe that the additional 2,100 MMBtu per day of production capacity will allow us to process the currently forecasted increase in biogas feedstock volumes from this increase in waste intake.
As the landfill host increases waste intake, we believe the additional 2,100 MMBtu per day of production capacity will enable us to process the forecasted increase in biogas feedstock volumes. We continue to expect there will be a period where we have excess availability capacity after the second facility is commissioned while the landfill host increases their waste intake.
This strategy has been an increasingly attractive avenue for growth since 2014 when RNG from landfills became eligible for D3 RINs. However, during the conversion of a project, there is a gap in production while the electricity project is offline until it commences operation as an RNG facility, which can adversely affect us.
However, during the conversion of a project, there is a gap in production while the electricity project is offline until it commences operation as an RNG facility, which can adversely affect us. This timing effect may adversely affect our operating results as a result of our potential conversion of Renewable Electricity projects.
Internal Control Over Financial Reporting There were no changes during 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. - 51 - Table of Contents Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in conformity with GAAP and require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures.
Critical Accounting Policies and Estimates Our consolidated financial statements are prepared in conformity with GAAP and require our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
Final volumes for cellulosic biofuel were set at 838, 1,090 and 1,376 million RINs for the three years 2023, 2024 and 2025, respectively. The EPA did not finalize the eRIN program in this ruling, however, it indicated that it will continue to work on potential paths forward for the eRIN program.
The EPA did not finalize the eRIN program in this ruling, however, it indicated that it will continue to work on potential paths forward for the eRIN program. However, the EPA did not set a new date for a revised eRIN program.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−0 removed6 unchanged
Biggest changeWe have prepared a sensitivity analysis to estimate our exposure to market risk with respect to changes in interest rates. Based on our analysis, which may differ from actual results, a hypothetical increase in our effective borrowing rate of 10% would not have a material effect on our annual interest expenses and consolidated financial statements.
Biggest changeBased on our analysis, which may differ from actual results, a hypothetical increase in our effective borrowing rate of 10% would not have a material effect on our annual interest expenses and consolidated financial statements. - 56 - Table of Contents Credit Risk We have certain financial and derivative instruments that subject us to credit risk.
The estimated annual impact of a hypothetical 10% decrease in the average realized price per RIN would have a negative effect on our operating profit of approximately $10.9 million. RNG and Renewable Electricity Pricing Risk The price of RNG and Renewable Electricity changes in relation to the market prices of wholesale gas and wholesale electricity, respectively.
The estimated annual impact of a hypothetical 10% decrease in the average realized price per RIN would have a negative effect on our operating profit of approximately $7.0 million. RNG and Renewable Electricity Pricing Risk The price of RNG and Renewable Electricity changes in relation to the market prices of wholesale gas and wholesale electricity, respectively.
We use interest rate swaps to set the variable interest rates under the Amended Credit Facility at a fixed interest rate to manage our interest rate risk. As of December 31, 2023, we had $64.0 million outstanding under the Amended Credit Facility. Our weighted average interest rate on variable debt balances during 2023 was approximately 6.11%.
We use interest rate swaps to set the variable interest rates under the Amended Credit Facility at a fixed interest rate to manage our interest rate risk. As of December 31, 2024, we had $56.0 million outstanding under the Amended Credit Facility. Our weighted average interest rate on variable debt balances during 2024 was approximately 6.01%.
Our analysis, which may differ from actual results, was based on a 2024 estimated NYMEX average Index Price of approximately $2.373/MMBtu and our actual 2023 gas production sold pursuant to contracts that do not provide for a fixed or floor price.
Our analysis, which may differ from actual results, was based on a 2025 estimated NYMEX average Index Price of approximately $3.851/MMBtu and our actual 2024 gas production sold pursuant to contracts that do not provide for a fixed or floor price.
We have prepared a sensitivity analysis to estimate our exposure to market risk with respect to RIN prices. Our analysis, which may differ from actual results, was based on a 2024 estimated D3 RIN Index price of approximately $3.06 and our actual 2023 RINs sold.
We have prepared a sensitivity analysis to estimate our exposure to market risk with respect to RIN prices. Our analysis, which may differ from actual results, was based on a 2025 estimated D3 RIN Index price of approximately $2.42 and our actual 2024 RINs sold.
In particular, during 2022, we entered into derivative transactions to hedge our exposure to the market price of wholesale gas. We did not enter into a 2023 derivative contract to hedge a portion of our RNG production. We have prepared a sensitivity analysis to estimate our exposure to market risk with respect to the market price of wholesale gas.
We did not enter into a derivative contract to hedge a portion of our RNG production for 2024 or 2023. We have prepared a sensitivity analysis to estimate our exposure to market risk with respect to the market price of wholesale gas.
We are also subject to credit risk due to concentration of our RNG receivables with a limited number of significant customers. This concentration increases our exposure to credit risk on our receivables, since the financial insolvency of these customers could have a significant impact on our results of operations. - 55 - Table of Contents
This concentration increases our exposure to credit risk on our receivables, since the financial insolvency of these customers could have a significant impact on our results of operations. - 57 - Table of Contents
Credit Risk We have certain financial and derivative instruments that subject us to credit risk. These consist of our commodity hedging derivatives and interest rate swaps contracts. We are exposed to credit losses in the event of non-performance by the counterparties to our financial and derivative instruments.
These consist of our commodity hedging derivatives and interest rate swaps contracts. We are exposed to credit losses in the event of non-performance by the counterparties to our financial and derivative instruments. We are also subject to credit risk due to concentration of our RNG receivables with a limited number of significant customers.
The estimated annual impact of a hypothetical 10% decrease in the market price of wholesale gas would have a negative effect on our operating profit of approximately $0.8 million. - 54 - Table of Contents Interest Rate Risk In order to maintain liquidity and fund a portion of development and working capital needs, we have the Amended Credit Facility, which bears a variable interest rate based on BSBY (the Bloomberg Short-Term Bank Yield Index rate plus a margin based on our Total Leverage Ratio (in each case, as those terms are defined in the Amended Credit Agreement).
Interest Rate Risk In order to maintain liquidity and fund a portion of development and working capital needs, we have the Amended Credit Facility, which bears a variable interest rate based on SOFR index rate plus a margin based on our Total Leverage Ratio (in each case, as those terms are defined in the Amended Credit Agreement).
Added
The estimated annual impact of a hypothetical 10% decrease in the market price of wholesale gas would have a negative effect on our operating profit of approximately $1.2 million.
Added
We have prepared a sensitivity analysis to estimate our exposure to market risk with respect to changes in interest rates.

Other MNTK 10-K year-over-year comparisons