Montauk energy(MNTK) - 2024 Q3 - Quarterly Report

Operations and Projects - Montauk Renewables operates 12 RNG and two Renewable Electricity projects across eight states, making it one of the largest U.S. producers of RNG[83]. - The Second Apex RNG Facility is expected to contribute 2,100 MMBtu/day of production capacity, with an estimated capital expenditure of $30,000-$40,000, anticipated to commence operations in Q2 2025[88][89]. - The Bowerman RNG Project in California is projected to have a capacity of 3,600 MMBtu/day, with capital investment expected between $85,000 and$95,000, and commissioning anticipated in 2027[91]. - A contract for the delivery of 140 thousand tons per year of biogenic CO2 was signed, with delivery expected to begin in 2027 and capital investment estimated between $65,000 and$75,000[92][93]. - The first phase of the North Carolina development project is expected to require a capital investment of $140,000-$160,000, with sufficient capacity to satisfy the Duke REC agreement upon completion[95]. - The Turkey, NC facility is expected to begin generating revenues in 2025, with a rolling commissioning schedule for processing lines through the second half of 2025[98]. - A collaboration with Emvolon aims to transform methane emissions into green methanol, with a pilot project expected to produce up to 15 thousand gallons annually, potentially scaling to 2,400 gallons[101]. - The company is expanding into livestock farm projects, which are projected to provide a lucrative opportunity due to higher LCFS credit values compared to landfill projects[104]. - The company is exploring various strategic growth opportunities, including up to three LFG RNG and wastewater treatment RNG projects[170]. Financial Performance - Total revenues for Q3 2024 were $65,917, an increase of$10,229 (18.4%) compared to $55,688 in Q3 2023, primarily driven by an increase in self-marketed RINs[124]. - Renewable Natural Gas (RNG) total revenues reached$61,750 in Q3 2024, up by $10,815 (21.2$50,935 in Q3 2023[122]. - Total operating revenues for the nine months ended September 30, 2024, were $148,042 million, an increase of$19,945 million (15.6%) compared to $128,097 million in the same period of 2023[140]. - Renewable Natural Gas segment revenues increased to$134,575 million, up $20,247 million (17.7$114,328 million in the first nine months of 2023[143]. - Net income for Q3 2024 was $17,048, an increase of$4,114 (31.8%) compared to $12,934 in Q3 2023[123]. - Operating income for the first nine months of 2024 was$25,944 million, an increase of $9,773 million (60.4$16,171 million in the same period of 2023[157]. - The company generated $43,071 in cash from operating activities for the first nine months of 2024, compared to$19,587 in the same period of 2023, marking a 119.9% increase[171]. Production and Sales Metrics - In Q1 2023, 11,215 RINs were available for sale, with 2,949 sold, resulting in a 26.3% sales rate; by Q4 2023, the sales rate increased to 99.0% with 10,796 sold out of 10,904 available[87]. - RNG production volumes for Q3 2024 were 1,392 MMBtu, a slight increase of 12 MMBtu (0.9%) compared to 1,380 MMBtu in Q3 2023[125]. - Current RIN generation for Q3 2024 was 12,374, a decrease of 524 (4.1%) from 12,898 in Q3 2023[122]. - Total RINs available for sale increased by 1,382 (9.5%) to 15,896 in Q3 2024 compared to 14,514 in Q3 2023[122]. Expenses and Income - Total operating expenses for Q3 2024 were $43,209, an increase of$4,302 (11.1%) compared to $38,907 in Q3 2023[123]. - General and administrative expenses rose to$10,037 in Q3 2024, up by $2,189 (27.9$7,848 in Q3 2023[123]. - Operating and maintenance expenses for Renewable Electricity facilities in Q3 2024 were $2,703, an increase of$483 (21.8%) compared to $2,220 in Q3 2023[131]. - Impairment losses in Q3 2024 were$533, an increase of $482 (945.1$51 in Q3 2023[133]. Market and Regulatory Environment - The demand for Renewable Natural Gas (RNG) is driven by regulatory initiatives, efficiency in operations, and increasing use of compressed natural gas (CNG) vehicles[102]. - The EPA set final volumes for cellulosic biofuel at 838 million D3 RINs for 2023, 1,090 million for 2024, and 1,376 million for 2025, indicating a growing market for RNG[106]. - The pricing of Environmental Attributes, including RINs, is subject to volatility, impacting overall revenue generation[116]. Capital Expenditures and Debt - Capital expenditures for the first nine months of 2024 totaled $53,334, with significant investments in Montauk Ag Renewables and the Bowerman RNG project[172]. - The company expects 2024 non-development capital expenditures to range between$14,000 and $16,000, while development capital expenditures are estimated between$55,000 and $65,000[169]. - As of September 30, 2024, total debt before debt issuance costs was$58,000, down from $64,000 at December 31, 2023[162]. - The term loan under the Amended Credit Agreement has an interest rate of 6.12$2,000 through 2024[164]. - The company is in compliance with all applicable financial covenants under the Amended Credit Agreement as of September 30, 2024[167]. Impairment and Asset Evaluation - The company recorded impairment of $1,232 million and$777 million for the nine months ended September 30, 2024, and 2023, respectively[190]. - The recoverability of finite-lived and indefinite-lived intangible assets is assessed based on future cash flows associated with gas rights agreements, which are expected to exceed carrying amounts[189]. - The fair value of impaired assets is determined by the present value of expected future cash flows, which may vary significantly from actual results due to market conditions[188]. - The company evaluates its deferred tax assets at each reporting period, considering both positive and negative evidence for future realization[186]. - Intangible assets with finite useful lives are amortized on a straight-line basis and evaluated for impairment when circumstances indicate potential non-recoverability[187]. Accounting and Compliance - The company is classified as an emerging growth company, allowing it to delay the adoption of new accounting standards[191]. - There have been no material changes in market risk disclosures since the 2023 Annual Report[192].