Montauk Renewables releases first quarter 2022 results

Montauk Renewables, a renewable energy company specializing in the management, recovery and conversion of biogas into renewable natural gas (RNG) based in Pittsburgh, has announced financial results for the first quarter of 2022.  

Total revenues in the first quarter of 2022 were $32.1 million, an increase of $700,000 or 2.3 percent compared with $31.4 million in the first quarter of 2021. The primary driver of this related to an increase of 81.2 percent in realized renewable identification numbers (RIN) pricing during the first quarter of 2022 of $3.46 compared with $1.91 in the first quarter of 2021 was the primary driver for this increase.  

Additionally, an increase in natural gas index prices of 84 percent in the first quarter of 2022 of $4.95 compared with $2.69 in the first quarter of 2021 also contributed to the increase. Offsetting these increases were lower revenues recognized under counterparty sharing arrangements of $200,000 in the first quarter of 2022 compared with $3.8 million in the first quarter of 2021. Finally, losses of $3.5 million associated with Montauk’s gas commodity hedging program reduced revenues in the first quarter of 2022.   

“Our profitability is highly dependent on the market price of Environmental Attributes, including the market price for RINs,” says Kevin Van Asdalan, the chief financial officer of Montauk. “The industry experienced volatile D3 RIN index prices during the first quarter...Though the average market price of D3 RINs during the first quarter was approximately $3.25, the market price declined as low as $2.85 and generally decreased during the first quarter of 2022. We viewed this reduction in price as temporary and determined not to transfer a significant amount of D3 RINs generated and available for transfer.”  

Asdalan says as a result of this decision, the company ended with 4.4 million RINs in inventory, compared with 600,000 RINs in Q1 2021. The market price has since improved, and the company has made agreements to transfer all RINs and the majority of RINs expected to be generated in Q2. The average price of these commitments is $3.40. The company has not made significant commitments for RINs beyond Q2.  

Non generally accepted accounting principles adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) of $7 million, which increased 221.8 percent compared with the first quarter of 2021. EBITDA for Q1 was 3.8 million, an increase of 10.3 million or 158.6 percent compared with an EBITA of -6.5 million for Q1 2021.  

Operating and maintenance expenses for Montauk’s RNG facilities in the first quarter of 2022 were $9.6 million, an increase of $2 million or 25.8 percent compared with $7.6 million in the first quarter of 2021. Montauk says the primary reason for the increase is because its Houston-based facilities were favorably impacted by lower utility rates during the first quarter of 2021, due to the winter storm in Texas.

Total general and administrative expenses were $8.5 million in the first quarter of 2022, a decrease of $12 million or 58.5 percent compared with $20.5 million in the first quarter of 2021. Of the total in the first quarter of 2021, $14.4 million related to stock-based compensation costs associated with Montauk’s initial public offering and reorganization transactions.   

Operating losses in the first quarter of 2022 were $1.7 million, a decrease of $10.6 million or 86.5 percent compared with an operating loss of $12.2 million in the first quarter of 2021. Net loss in the first quarter of 2022 was $1.1 million, a decrease of $13.2 million or 92.2 percent compared with a net loss of $14.3 million in the first quarter of 2021.  

The company says it produced 1.4 million metric million British thermal units (MMBtu) of RNG during the first quarter of 2022, an increase of less than 100,000 compared with 1.3 million MMBtu produced in the first quarter of 2021.   

The company’s Galveston facility produced an increase of 100,000 more MMBtu in the first quarter of 2022 compared with the first quarter of 2021, because of higher inlet gas due to wellfield changes and plant efficiency optimization of process equipment. Montauk says it produced about 45 thousand megawatt-hours (MWh) in renewable electricity in the first quarter of 2022, a decrease of 2,000 MWh or 4.2 percent compared with the 47 thousand MWh produced in the first quarter of 2021. This decrease was driven by preventative engine maintenance at the Bowerman facility, which produced 2,000 MWh less in the first quarter of 2022 compared with the first quarter of 2021.  

Looking forward into 2022, the company expects RNG revenues to range between $181 and $226 million. It expects RNG production volumes expected to range between 5.5 and 6.7 million MMBtu  

The company says it expects renewable electricity revenues to range between $17 and $20 million. Renewable Electricity production volumes are expected to range between 188 and 230 thousand MWh.